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Allbirds’ Marketing Agency Dissects Footwear Market Movement

The return of seasonal promotions is bringing an end to the strong average order value comps the footwear industry saw in e-commerce during the first few months of the year.

Footwear data from Belardi Wong, a direct-to-consumer marketing agency that works with brands like Birkenstock, Allbirds, Crocs and Hoka, showed e-commerce AOV declined—by 1 percent—for the first time this year in July. Year-over-year comparisons peaked in April, when AOV was up 13 percent, and has been falling ever since, coming in up 6 percent in May and 3 percent in June. As of July, year-to-date AOV among the New York agency’s footwear clients was up 7 percent year-to-date compared to the same period a year ago.

The firm’s revenue data reveals a similar, but less conclusive, decline in sales. After soaring 24 percent year over year in April, e-commerce revenue among Belardi Wong’s more than 50 footwear clients grew 17 percent in May, 19 percent in June and 10 percent in July. Session growth peaked at plus-18 percent in June, but dropped to 10 percent growth in July. E-commerce conversion, meanwhile, has consistently improved since March. In July, it turned positive for the first time since February, according to the company’s data. Year-to-date, revenue and sessions are up 17 percent and 14 respectively, while conversion is down 3 percent.

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Comfort footwear like Birkenstock sandals is showing “surprising strength.”

What increase in AOV footwear firms are seeing is “largely” due to price increases, Belardi Wong president Polly Wong noted. “The cost of goods is in increased, the product costs, distribution costs, marketing costs, everything is increased, and so we are seeing generally an increase in AOV,” she told Sourcing Journal.

The return of seasonal promotions began eating into those AOV gains in May, Wong noted. With big-box retailers turning to promotions as they find themselves with too much inventory, the DTC brands that typically avoid discounting will find themselves competing for wallet space in the back half of the year, she predicted.

“We’re going to see some heavy promotional discounting and so we could see, also with the economic downturn, that affluent consumers are spending down as well,” Wong said. “I do think, more than ever, brands that are traditionally not promotional are going to be forced to try to be somewhat promotional to compete with the discounting we’re going to see from big box retailers.”

“Momentarily” in the third quarter, these markdowns may even surpass pre-pandemic levels “because there’s that much product out there,” she added. After the backlog of products clears, however, Wong believes promotional levels will return to where they were prior to the pandemic.

High heels had a moment in spring 2022.

The Covid-era casualization shift, however, is showing no signs of reversing. Belardi Wong continues to “see really surprising strength in both comfort footwear and active footwear,” Wong said. Formal footwear, meanwhile, is where brands are seeing the most challenges, she added.

“There was a moment this spring where we did see kind of a surge in high heels, for example,” Wong continued. “Unfortunately, it seems… the demand in that category seems to have softened very quickly. So maybe she was buying some more formal shoes for Easter or an event in the spring, but very quickly, we’ve seen the formal shoe category has again, been seeing very soft performance.”

Year-to-date, Belardi Wong’s “more formal” brands have experienced “much slower” growth, with sales flat to up 7 percent, she said. Wong expects this to continue into the back half of the year, with the possibility of another “blip” in formal footwear sales “just based on need.” Full-year, she predicted formal shoes could grow 3 percent to 5 percent year over year, versus 10 percent to 15 percent growth in other categories.