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Stepping forward

Key figures from across the footwear industry were invited to dinner at Scott’s in London’s Mayfair to discuss the challenges they face in the year ahead.

Footwear appears to be bucking the trend and performing better than clothing, but issues surrounding the supply base, product innovation and the uncertain economic environment are creating challenges for brands, suppliers and retailers alike.

To instigate the evening’s discussion and delve deep into the concerns of the footwear industry, Drapers asked the diners what keeps them awake at night.

Jeremy Todd, Jones Bootmaker: I’m positive about the future. There is a lot of uncertainty but as an industry we have the opportunity to rise above it and keep on growing.

Justin Burzynski, Dune Group: The challenges are sourcing in general and the stiff pressures on cost while trying to maintain a competitive product offer.

Sally Ambrose, Marks & Spencer: For me, it’s thinking exactly how next year will pan out, how bullish to be and supplier base challenges.

Stephen Sanders, Shoon: Exchange rates and mortgage rates. It’s the big numbers keeping me awake.

Kevin Wisby, Russell & Bromley: Worrying about what the next big thing is - children are much more instrumental in the purchase [of kids’ shoes].

Will Smyth, Clarks: How we are going to get through the big change in pricing over the next 12 months, the big impact of [rising] VAT and how [increased] costs will knock on to the recommended retail price, and how consumers will react to that.

Drapers: How is business, and what are your expectations in the run-up into Christmas?

SA: We are selling above plan, but the supplier base is finding it difficult to react to repeat orders. It’s the other side of the year when VAT kicks in that I’m worried about. But we have invested money in marketing campaigns and have a more comprehensive offer to back that up.

JT: I’m quietly confident, and we have bought for Christmas already so we have to live with that. After Christmas, there is usually a little bit of a lull anyway. February is never a great month for anyone so it’s difficult to separate a normal February with one affected by a VAT rise and other increases.

JB: Boots are doing well with a great like-for-like increase at the back end of this year, but spring is going to be tricky.

Craig Barrett, Russell & Bromley: I’m cautiously optimistic as our business is London-centric and we had a strong summer, particularly in London. As you radiate away from London, it’s more challenging.

SS: My big concern more than VAT is interest rates. If inflation kicks in people will see that as significant. There’s been a long period of disposable income based on low mortgage rates.

Stuart Paver, Pavers: I don’t believe VAT will have a significant effect. We operate with an older client, who has savings and won’t be earning much on them [with low interest rates], but if interest rates rise, their income increases. If someone will pay £100 for a pair of shoes, they will still buy them for £102.

Diane Knight, John Lewis: We are seeing double-figure increases across all three areas [men’s, women’s, kids’ footwear] and boots are definitely the biggest [sellers] across all. I’m seeing a 60% to 70% increase each week on boots, which we didn’t plan for. But this has affected court shoe sales a little bit.

Drapers: The issue of repeat stock was mentioned as a challenge. What are your experiences of that?

JB: Suppliers can’t make boots as quickly as we need them and it’s hard to get the right materials. Factories are in a situation where the retailers are crying out for stock.

WS: Production has been difficult and we were careful with what we bought; we weren’t expecting [sales] to be as good as they have been. Clarks Originals has been phenomenal in the UK, and worldwide we have almost trebled our business, but because we use crêpe and it’s a natural material, we can’t just turn the tap on again. Materials-wise, we’re struggling; we consume about 85% of crêpe worldwide and if you get a big explosion in crêpe like there is in the marketplace at the moment across men’s and women’s footwear, it’s tough to handle.

Willie Fletcher, Gore: There has been a sea of change between the purchaser and the manufacturer in terms of lead times and capacity. The factories have the power. From us looking in, manufacturers now have the power with increased labour costs, exchange rates and legislation.

SP: China’s domestic market is so buoyant and in demand. The UK, with 60 million people, is not interesting [to manufacture for] anymore. In another 10 years the UK will start manufacturing footwear again because China won’t be interested. It’s a different world out there and we have to get used to being part of that world.

Michael Fiennes, Shoon: The mindset of the last 10 to 15 years of the industry is that price deflation is the way it should be. If we can get some price inflation, it could be an opportunity for us. If the whole level is going to rise people will adjust to that.

SA: It’s important to hold on to our opening price point stance; that USP can play into our hands as we are good at innovation and value and make sure we tick the box on the ethical side, too. We are trying to bite at both ends [core and fashion] and it’s working. [The customer is being given] a really credible offer on leather and synthetic that she didn’t have before.

WF: In men’s brown shoes [the mainstream market], the area has been bereft of real innovation and [trend] stories to drive it. I think the footwear industry can take a leaf from the car industry. If you take a BMW, five years ago the entry price was £20,000 and the same car now is £27,000, but that’s not inflation, that’s adding another story: reversing lights, cruise control - stories that cover the additional cost.

WS: You have to have something extra in there for your money. I think the BMW example is quite valid. You have to build things into [the product]; you can’t just put an extra £5 or £10 on it.

Michael Donaghy, Donaghy’s and Independent Footwear Retailers Association: The problem for the independent sector was that suppliers were cautious with stock and now nothing is there.

Brian McCluskey, Office: The last two to three years, I’ve pushed price points up, and like-for-like sales are 10% up. Brands are moving price points and I’m moving on VAT to the customer. New Look and Primark have scared footwear retailers into thinking they have to compete at their price points.

WS: Like a lot of retailers we made the mistake of chasing the supermarkets a couple of years ago and it’s taken a while to change consumers’ perception back. We can’t beat the discounters, prices will go up and we have to build extra things and added value into our footwear.

JT: When you go back to price points, perhaps footwear has lost out and tracked apparel down in price. Footwear has followed apparel to get to a point whereby it’s trying to track down to the lowest price, trying to compete with New Look and Primark, but it’s not where you want to go with footwear and we particularly don’t want to go there.

BM: We do not have a quality-driven customer but it’s still about that added value. The initial price is not key; it’s the sell-through.

JB: We’ve been moving prices up while trade is good, so it gives us the confidence to be more bullish with price architecture. People will be more discerning with what they are spending [next year]. I don’t see next year being hugely up on this year.

SS: Part of our game is to try and push brands into educating them that it doesn’t have to be that cheap. Some brands are pushing to take their product to an unnecessarily low price.

SP: There is a great band of flexibility if the product is right.

The guests

Willie Fletcher

Gore-Tex Footwear

Diane Knight

Women’s footwear buyer, John Lewis

Jeremy Todd

Managing director, Jones Bootmaker

Justin Burzynski

Product and supply director, Dune Group

Michael Donaghy

Owner, Donaghy’s

Sally Ambrose

Buying manager footwear and accessories group, Marks & Spencer

Stephen Sanders

Managing director, Shoon

Angela Robb

Gore-Tex Footwear

Kevin Wisby

Head of kids’ footwear, Russell & Bromley

Will Smyth

National account manager, Clarks

Stuart Paver

Owner, Pavers

Michael Fiennes

Owner, Shoon

Craig Barrett

Head of retail operations, Russell & Bromley

Brian McCluskey

Chief executive, Office

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