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3 Strategic Upsides to Sourcing Footwear in Brazil

The footwear industry is evolving, with continuous shifts in trends, material innovations and—after many decades of China dominance—sourcing locales.

Sourcing at Magic’s virtual panel on Thursday highlighted the sector’s transformation, from the rise of footwear production capabilities in new markets to best practices to finding supply chain partners.

Ruisa Korndorfer Scheffel, an analyst for Brazilian footwear trade group Abicalçados, said that the country’s footwear manufacturing capabilities are blossoming—and the world is beginning to take notice. “Brazil is the fourth largest footwear producer in the world, and is the largest outside of Asia,” she said. In 2019, Brazil was responsible for the creation of more than 908 million pairs of shoes, spread across 6,000 companies across the country, she added.

“Historically, the U.S. market is the first destination for Brazilian footwear,” Scheffel said, as Americans consume about one-fifth of Brazil’s total footwear exports. Even through the turbulence of 2020, U.S. brands like Steve Madden, Tory Burch, American Eagle, Calvin Klein, Vans, Adidas, Nike and Kate Spade took in 94 million pairs of shoes from the country, to the tune of $658 million.

While the bulk of Brazil’s footwear is bought domestically, the country has been on the upswing with American brands in recent seasons. Amid countless issues plaguing Asian sourcing, from long lead times to rising labor costs and trouble with logistics, Brazil’s geographical closeness offers a significant advantage. “The proximity with U.S. ensures that the deliveries to the customers are fast and cheaper than from other countries, either by air or by sea,” Scheffel said.

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The country’s producers have also augmented their capabilities in line with the demands of global brands, she added. While Brazil is primarily known for its artisan leather footwear, manufacturers are branching out into new materials, like textiles, meshes and foams and popular styles like sneakers.

Brazilian manufacturers have taken a special interest in crafting comfort technology and offering extended sizing, she added, serving shoppers with issues like bunions or diabetes, as well as those who simply prefer easy-wearing styles. What’s more, advancements in production processes are allowing the company’s makers to scale operations and craft shoes at higher volumes to meet the needs of large labels. Some factories can make up to 500,000 pairs a day, she said.

But unlike many global footwear hubs, Scheffel said, “Brazil has the advantage that we are very flexible in terms of minimums,” allowing small brands to do business without breaking the bank. Some factories require a minimum order of just 24 pairs, she added. “We can produce smaller quantities, and work on a fast reorder process,” she said—a boon to footwear upstarts looking to test and react rather than buy into vast stores of inventory.

According to Viktor Taan, director of business development for New York Activewear & Footwear Sourcing (NYAFS), minimum order quantities (MOQs) can represent a “curse and a barrier” for new brands.

Building out a range of products is “all about how we work around the MOQ,” he said. “And that actually requires a lot of conversation and planning, because an experienced supply chain partner will understand who you are, where you are, and where you want to go.”

Sourcing groups like NYAFS can also help burgeoning brands unlock access to desirable components and  materials—also subject to high MOQs—that will allow them to create the product features that shoppers desire most, he said. “Footwear is slightly different than apparel because a flat shoe can have as many as 12 to 15 components—it’s not just fabric that’s sewn together,” he added. “It can get very complicated, so it’s very much a coordinated effort to produce something that is excellent product and a commercial success.”

More broadly, Taan recommended that new footwear brands outline their five-year plans with their sourcing agency partners. “With a long-term partnership we can help steer them in the right direction, so that growth is strategically planned and they have greater access to new product innovations,” he said. They should also be honest and upfront about their financial goals, as well as their intentions for distribution, as these factors impact margins and can help sourcing partners seek out the most beneficial supplier relationships. It isn’t just about getting the cheapest price on materials, he added, but finding the highest quality components at the best value to the brand.

“My advice would be really to think like a mathematician before you start thinking like an innovator,” he said. “We need to know, ‘What is your DNA? What is your business model? What makes your brand click? What makes people want to buy your shoes?’ so we can amplify that with the resources that we have,” he added. NYAFS works with a multitude of component and material suppliers, “so we don’t know which weapon to give you if we don’t know how you compete in the marketplace,” Taan said.