The NPD Group’s footwear industry 2014 mid year check-up revealed a healthy but distracted business grappling with seasonality issues, interchangeable dress and casual product, and customer demand for unique in-store experiences.
During the National Shoe Retailers Association (NSRA)’s State of the U.S. Footwear Industry Insights and Outlook presentation in Las Vegas Sunday, Beth Goldstein, fashion footwear industry analyst for The NPD Group, said overall retail sales are “moving in the right direction” and that footwear in particular saw sales grow 5 percent from $53.3 billion in 2012 to $56.28 in 2014. A robust boot business, innovation in performance footwear and a growing men’s market are just a few of the bright spots in footwear that Goldstein named.
However, there were trade-offs, including the ongoing battle between online and brick-and-mortars. In-store purchases accounted for 80 percent of footwear sales during the first half of the year, however, Goldstein reported that online was responsible for 80 percent of the category’s total growth. She added, “What is an online sale these days?” With an increasing number of retailers adding in-store kiosks for shoppers to place online orders, and order online, pick up in-store services, Goldstein said, “the lines between brick-and-mortar and online are getting blurry.”
And in a role reversal, Goldstein said more e-commerce companies are opening their first brick-and-mortars, like online footwear boutique Piperlime and jewelry e-tailer Bauble Bar, which both have stores in Manhattan’s SoHo neighborhood. She added, “Consumers are expecting more. They want the best experience and they want what they want, when they want it, whatever way they can have it.”
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As a result, retailers are pulling out all the stops to keep shoppers engaged. Goldstein said the first half of 2014 saw major retailers trying to improve experiences by adding restaurants to stores (i.e. Brooks Brother’s steakhouse located next to its Manhattan flagship), carrying exclusive collaborations, and through renovations, primarily to footwear and accessories floors.
Up next, Goldstein said expect to see more retailers and brands upgrading their men’s floors, or opening stores dedicated to men’s product. She named Michael Kors as one major women’s brand poised to take a piece of the men’s market. While women’s footwear continues to generate the majority of sales—60 percent from January 2014 to June 2014, compared to men’s with 30 percent—men’s footwear contributed 40 percent of the industry’s overall growth, more than any other group.
Additionally, performance footwear for both men and women proved to be opportunistic areas during the first half of the year, accounting for a quarter of total footwear sales. Still, footwear is a fashion business, with trendy styles biting off a 75 percent chunk of footwear sales from January to June 2014, but as Goldstein revealed, it is becoming increasingly difficult to differentiate casual from dress and work from casual. Similarly, product that is geared toward Millennials is resonating with the 55-year-old and above demographic. “Consumers are shopping for footwear with an ‘anything goes’ mindset,” she said, noting that lifestyle sneakers garnered a lot of attention during the spring, as did dress sandals, but sales for staples like pumps, leather sandals and ballet flats leveled off. Likewise, men’s fashion and work boot sales grew, but boat shoes and oxfords declined.
A tough winter and cold spring stretched out the fashion boot season—even in areas like Dallas, Houston and Phoenix—but Goldstein said retailers were not prepared to fully take advantage of the demand and was weakened by low stock. “Seasonality remains a challenge. It isn’t a new topic, but we need to look at what we can do to alight the retail schedule to match consumer mindset,” she said.
Looking ahead, Goldstein forecasts a slow start to the fall shopping season. “They are not emotionally ready to buy fall fashion,” she said. Goldstein expects parents to spread out their back-to-school shopping across online and in-store channels, and to buy closer to need. To close out the year, expect to see fierce competition for consumers’ holiday dollars as retailers will ramp up their omnichannel efforts. Goldstein said, “Retailers are going to have to try a lot of new things to find a way to stay relevant.”