From higher wages to the increasing cost of cotton, Footwear Distributors and Retailers of America (FDRA) shares five trends impacting footwear retailers’ bottom line.
Footwear retailers began the year on the right foot.
FDRA reported that U.S. Shoe stores hit nearly $3 billion in sales in January—a near-record that could hint to a positive year ahead. Spending on footwear reached a seasonally-adjusted, annualized $77.3 billion in January, up 2.2% year-over-year.
Sales slowed in February.
The cost of men’s footwear took a surprising dip in February, down 1.5%. FDRA’s latest U.S. Retail Footwear Price report showed women’s footwear prices were also down.
Hourly employees are earning more.
Store wages are increasing quickly, meaning retailers must grapple with tighter margins. FDRA’s recent Shoe Store Employment Recap showed that average hourly earnings in footwear stores increased 5.8% year-over-year. The increase was the fastest in over a year, outpacing hourly earnings in all other key retail sectors in the past month.
Footwear duties are increasing, too.
Footwear imports increased 5.5% in January and footwear duties increased at an even higher rate. The FDRA estimates the footwear industry’s duty bill in 2017 is going to be just shy of $3 billion.
Watch oil and cotton prices.
The fluctuating costs of materials balance one another out. FDRA said oil prices are on the decline, resulting in lower prices for synthetics and rubber. However, the price of cotton is increasing, hitting a new 32 month high.