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FDRA President on Sourcing Woes and the Demand for Innovation

In 2014, Footwear Distributors and Retailers of America (FDRA) made headway in its quest for making footwear a more compliant industry with the release of its Footwear Production Code of Conduct, and the organization aims to the momentum running high in 2015 with a renewed focus on eliminating tariffs on footwear.

Vamp spoke to FDRA president Matt Priest about the organization’s goals for 2015. Here, Priest shares the hurdles and prospects facing footwear in 2015 and the markets to watch.

How would you describe the state of the U.S. footwear industry going into 2015?
Priest: The state of the U.S. footwear industry is strong, stable and dynamic. We continue to be amazed by the ingenuity and creativity of our industry, especially as they address sourcing shifts in Asia and other supply chain challenges. We are grateful for the opportunity to serve the industry in any way we can.

It was a busy year for the FDRA. What were some highlights in 2014?
Priest: 2014 was an amazing year for FDRA as we experienced substantial growth and provided an array of enhanced services for our members in this the organizations 70th year in existence. The biggest highlights were our geopolitical report on the South China Sea that predicted unrest just months prior to the riots in Vietnam, our updated Global Footwear Sourcing Assessment and our successful footwear sourcing event in New York that uniquely dilled down to a SWOT analysis of footwear production in six countries.

I think the launch of our Footwear Production Code of Conduct will also be a game changer with it comes to factory compliance in 2015. It just goes to show what can be accomplished when an industry’s association is singularly focused on the industry’s needs and priorities.

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What were some highlights in 2014 for the footwear industry as a whole?
Priest: I think 2014 will be remembered as the year when our industry really enhanced how we serve consumers. New technology is changing the way we are selling shoes at both retail and how those shoes are made and distributed around the world. Customization and innovation are revolutionizing footwear manufacturing and enhancing consumer choice within the footwear industry. It’s our job to ensure that pertinent policy keeps up with this ongoing change and that footwear is more easily accessible to consumers all over the world no matter how and where they are buying our shoes.

What were some setbacks?
Priest: West Coast port congestion and labor unrest were undeniably the industry’s biggest setback in 2014. As an industry, we work diligently to reduce costs, increase quality, and shorten our supply chain to sell as many shoes as possible. It’s frustrating to have something that impacts these tireless efforts so dramatically ultimately be out of our control. Let’s hope the PMA and ILWU come to an agreement as soon as possible.

Do you see the U.S. footwear market growing in 2015?
Priest: After several years of little or no growth at retail, we do anticipate more positive movement in the footwear market in 2015 since consumers should have access to additional discretionary income with the decline in gas prices and increase in employment. We hope these trends bode well for mid single digit percentage growth in 2015.

What are some of the biggest hurdles the footwear sector is facing in 2015?
Priest: Sourcing will continue to be an on going issue facing footwear companies as sourcing shifts play out and the industry continues the process of diversifying its sourcing base. With the recent slow in commodities pricing impacting footwear production, we might see some supply chain costing relief but that shouldn’t slow or eliminate our industry’s need to expand the number of countries from which it sources.

Consumer data security should be on the tops of all our minds as we enter 2015. With so many retailers and other large organizations falling victim to cyber attacks in 2014, the industry should be focused on implementing strategies that curb the threat of such an attack and assure our customers that our industry is focused on protecting their information. I can’t think of a more distinctive way to enhance your competitiveness than to focus on protecting your internal and external systems.

Lastly, as with any year, all segments of our industry will need to be focused on designing, developing, manufacturing, shipping, distributing and selling the most innovative, desirable, fashionable and sought-after footwear in the world.

Which manufacturing countries should the industry watch closely in 2015?
Priest: With global footwear manufacturing it is always important to be focused on China to determine what percentage of its U.S. market share will it continue to shed as it has for several years now. All eyes will be on Vietnam’s continued growth and its impact on capacity. With the Trans-Pacific Partnership (TPP) negotiations possibly coming to a close, anticipation will continue to drive Vietnam’s growth.

Beyond Asia, concern over the extension of the African Growth and Opportunity Act (AGOA) beyond its current expiration date of Sept. 30, 2015 will make investors in Ethiopia a bit nervous. FDRA will continue to push for extension of the AGOA program as soon as Congress considers this important program. FDRA will continue to provide sourcing intel to its members and via its annual Footwear Sourcing Assessment, so stay tuned.

What is on the FDRA’s agenda for 2015?
Priest: We have big plans for 2015——some of which will be unveiled throughout the year. We will continue our focus on eliminating the more than $2.5 billion our industry pays in import taxes each year. This will come through our engagement on TPP, AGOA, the Miscellaneous Tariff Bill (MTB) and other important trade initiatives.

We will also help our members stay focused on data security and sourcing changes and host an industry-wide Footwear Innovation Summit in Washington, DC on May 7, focused on policy, retail and industry innovation. It’s going to be another monumental year for the footwear industry’s trade association.