According to a report by Verdict Research the specialist accounted for more than 50% of footwear sales in 2001. Of the UK's top eight footwear specialists, eight saw profit margins fall or made a loss in 2006 and Verdict said this trend had continued through 2007 with Dolcis finally succumbing and collapsing into administration earlier this week.
However the market as a whole grew by 4.6% to £8,484 million in 2007, a marked improvement on 2006's growth rate of 0.7%. 2007 saw the fastest rate of growth since 2003 but although shoppers bought more shoes the prices were lower and competition was higher which hit the specialists further.
Verdict Research said that cost inflation had compounded problems for the specialists. Despite rising costs, footwear retailers are unable to increase prices due to the high level of competition in the market, particularly from the likes of New Look and Primark and the clothing retailers.
Verdict Research analyst Carol Ratcloffe said: "Specialists have fought against the growing competition by opening new stores to fuel sales growth but, with sector profitability sliding, this is compounding their problems. Footwear retailers need to focus on improving sales densities in their existing stores before adding new outlets. While many have already invested in developing new store formats, they need to accelerate these efforts to catch up with the rising standards set by clothing specialists."