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Value footwear lands on its feet in recession

The value footwear market has grown as sales fall across the rest of the sector. But are shoppers’ habits changing for good or will value players’ success fade with the downturn?

If footwear is your business, then times have been tough lately. With chains such as Dolcis and Stead & Simpson having fallen on hard times, it is easy to suppose selling footwear is a short cut to administration. Yet while this may be true for the mid-market, the story is different for the value operators, including the clothing chains.

As seen in many other parts of the retail sector, the value market is experiencing almost buoyant conditions during the recession – with sales lifted by shoppers’ contradictory impulses to budget their spending yet also keep buying – particularly at the younger, more recession-proof end of the market.

According to figures compiled by market research agency TNS Worldpanel Fashion, the value of women’s footwear sales in the 24 weeks to July 19 rose 2% at the clothing multiples – where footwear tends to be cheaper – versus the comparable period last year, to command an 18.4% share of the total market. Discounters’ share rose 1.8% to represent 6.9% of the market over the same period.

Bucking the market

TNS estimates that total market expenditure on women’s footwear in the 24 weeks to July 19 dropped 1% to £1.15bn year on year. However, volumes grew 6%, reflecting the flight to value by customers, and the average price of women’s footwear fell 6% from £20.53 to £19.31 over the period.

Total expenditure in the cheapest 60% of women’s footwear items is estimated to have been flat (see chart), down 2% in the mid-priced 30% of items and up 1% in the most expensive 10%
of items.

TNS Worldpanel Fashion client manager Elaine Giles says: “Particularly in women’s footwear, discounters continue to gain share while clothing multiples are also performing
very well.

In terms of pricing, the cheaper end of the women’s footwear market has outperformed. Sales in this market are flat year on year but this is a very positive performance given the declines seen elsewhere in the market.”

She adds that product types “more suited to the grab and go approach of retailing seen in discounters and multiples” have performed well. Giles cites the growth in demand for sandals, particularly flat gladiator-style sandals, canvas footwear and flip-flops, as examples.

Talk to retailers operating at the value end of the spectrum and it is hard to counter the optimism that pervades the conversation. Anthony Smith, managing director of Shoe Zone, the budget footwear retailer that boasts 550 outlets around the country and which rescued Stead & Simpson last year, says: “It’s a growth market. We didn’t have a great year last year. But that was one year of pain. Now we’re looking in good shape.”

Malcolm Collins, buying, merchandise and design director for footwear and accessories at fast fashion retailer New Look – which has just opened its first standalone footwear shop in Bristol – agrees. “The entry price to mid-market is still a great place to be You have to offer value, but things are good,” he says.

New Look is already looking for other locations for the standalone footwear store concept and is set to carry out a 10-store trial across the UK.

And then there is value fashion giant Primark. It is understood that on opening day at its new four-floor store in Bristol last month, 7,500 pairs of shoes were sold. Volumes of this kind, sold from a space equivalent to a small high street footwear store of old, are as much an exercise in keeping shelves filled as in having the right stock on them. This is supermarket-style footwear retailing.

However, it is not just price or the downturn that has contributed to the value footwear market’s success. Giles points out that the growth of the value footwear market predates the recession. “There has been a fundamental shift in mentality in buying footwear,” she says. “It has been driven by availability and the clothing and value specialists have driven the market by having fast fashion styles that people can afford.”

Mintel senior fashion analyst Katrin Magnussen says: “Whenever you look in a fashion magazine, it’s quite normal to see New Look and even Primark shoes in there. They’re picking up on catwalk styles really quickly; they are not going to run out of steam soon.”

Peacocks has also capitalised on the opportunity the value footwear market presents. Director of accessories Sarah O’Shea says shoppers know that they are not going to get “superb leather” when they buy a pair of value shoes, but it is the retailer’s job to build ranges that will “suit people’s purses”. Practically, this means that a shopper walking into Peacocks will pay £10 for a pair of ballet pumps or £25 for “hero” product – for example, a pair of biker boots.

To take best advantage of the market growth, most of the value footwear merchants are improving store environments for their shoppers. Smith says: “We’ll have refitted 70 of our stores this year,” while Collins adds: “You still need to be able to make the environment a pleasurable one for the shopper.”

All of which means that value footwear retailers are set to successfully ensure that they become embedded as part of the consumer’s shopping psyche, rather than just a passing fad.

But the lines become blurred when examining where value retailing ends and the mid-market begins, as some retailers introduce good, better, best offers to broaden their appeal. Shoe Zone’s offer starts at £1.99 and runs up to £24.99, but at New Look “there are a series of lead-in prices across all categories”, according to Collins.

If a shopper heads for a New Look store there are £20 boots on offer, but there are also options heading up to £75, firmly in the mid-market. Collins warns that there is a point at which low price can be counter-productive: “People become suspicious about the quality. Price is not the be-all and end-all.”

Protected by volumes

The notion that value equates to ultra-low prices in the footwear market is, therefore, open to question. However, “the million dollar question”, according to Magnussen, is what happens when the economy improves? According to Mintel, the UK footwear market will be worth £5.5bn in 2009, down from £5.6bn last year. The point is that volumes may not be down, but revenues are. 

Ultimately, however, it looks as if the sheer size of the volumes being sold by the major value footwear retailers will work to their advantage. “When we come out of recession there will be less companies in the field,” says Smith.

The market is also waiting with bated breath for the European Commission’s decision on whether to axe import tariffs on leather footwear from China. The decision is due in October and the sector is largely optimistic the duties will be lifted, albeit in stages, which will ease some margin pressure.

One thing’s for sure, the value footwear merchants are well placed to maintain the market share they have annexed.

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