The Italian footwear association said Wednesday that despite a steady recovery from 2008, which saw Italian production drop under 200 million pairs, 2014 could end on a disappointing note. While export growth outside the European Union increased in 2013, helping bring production back over the 200 million mark, data from third quarter 2014 confirmed that demand from overseas and in Italy is weakening.
As a result, Assocalzaturifici president Cleto Sagripanti said, “For many companies this means having very volatile and discontinuous order backlogs, with high risks in terms of credit. Hence the fear of the triple-dip, another setback on the road to recovery towards 2008 pre-crisis levels.”
The research shows that demand for Italian footwear in Eastern European countries, namely Russia, Ukraine and Kazakhstan, is tapering off. Overall export volume in the region decreased 17.5% and dipped 21.4% in value. Demand for Italian footwear is also cooling off in the Netherlands, which reported a 10.4% decrease in quantity during third quarter 2014. However, other EU nations, including France, Germany and Spain reported positive numbers.
The Far East shows a less brilliant performance, as well. Japan, in particular, proves to be problematic for the Italian footwear industry, with export values down 5.3% and the amount of pairs down 5.6%.
Sagripanti noted, “The export situation is very worrying, mainly because certain countries, our historic customers, such as Russia, Ukraine and Japan, are in the throes of an economic crisis that cannot avoid having repercussions on our companies. It will require some time for other countries to take their place and this constitutes the real risk of this new decline that seems to be looming on the horizon.”
Italian footwear is facing woes at home, too. After a slowdown in 2013, domestic consumption continues to be negative. Purchase of Italian households declined 3.5% in quantity and by as much as 6.7% in spending. The average footwear price is down 3.3%, spurred on by heavy promotions and discounts, and steep competition from less expensive imports. According to the Assocalzaturifici, footwear imports are recovering, with volume of imports up 8.3% in Q3 2014.
Sagripanti said the industry must prepare for a new competitive scenario, similar to the way companies had to re-organize their businesses in 2008. However, he noted that not all companies are able to afford the efforts and investments required to make these changes.
“That is why we have launched the idea of a tax credit of 50 percent for expenditure in innovation in terms of web processes and services,” he said. “Today, made-in-Italy does not mean just manufacturing in Italy, but also consumer perception of this value and therefore offering a service. The web and social media are communication and consumer dialogue tools for industry players. They are indispensable and that is why we must launch a digitalization plan for the industry, designed and implemented with our small medium-sized enterprises in mind.”
The organization is also calling for the Italian government to reduce the taxation of investments for the renewal of collections and production of samples—two integral parts of the footwear making business—as well as help boost its labor force.
As Sagripanti explained, “We have witnessed over the years a slow erosion of our manufacturing capability. We must therefore ask the institutions, government and social partners, responsible for the labor market for an intervention in favor of young people and workers at risk or those unemployed, in order to put them into work through the innovative formula of the service contract [such as] on-the-job training related to the concrete needs of local footwear manufacturers.”