The footwear market - Italy

1.2 The world market is growing strongly

Evolution and forecast of footwear sales World, ****-****, billion dollars Source: ****

The graph above shows the evolution and forecast of footwear sales by value (***) over the period ****-****. The market is growing fairly steadily over the period.

The forecast shows a steady growth trend for footwear sales in the up to ****, with a market value of $***.* billion by ****. Over this forecast period, the market value grows at a CAGR of *.* percent. The year **** was a drag on the forecast made before the Covid-** crisis, in fact there was a -**.*% drop in production.

The top end of the market accounts for about **% of the global footwear market, and Italian companies reacted very well to the **** crisis: in fact, they recovered much faster than lower-end footwear.

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Top ** global footwear manufacturers World, ****, millions of pairs Source: ****

The chart above shows the world's top ** shoe manufacturers. The huge production gap between China (***) is immediately apparent. Italy is also in the ranking, as the only European country that emerges among the top world players.

1.3 A very strong domestic production

Italian footwear production has always been one of the most important in the world. As seen in the previous part (***), Italy is the **th largest footwear producer in the world, and consequently its turnover is very high.

In addition, what contributes significantly to high production is the name of Made in Italy, which always makes the whole world dream. In fact, Italy's high-end footwear achieved sales representing more than *.* billion euros, the highest component of all.

From the graph below, it is clear that the companies' sales halved between **** and ****, and this decline has not been made up in ****, where sales are still well below the **** results. The market expects to reach pre-pandemic numbers at the close of the year ****, but no concrete timeframe can be defined, considering the difficult international situations.

Turnover of footwear companies Italy, ****-****, in billion euros Source: ****

1.4 Foreign trade driven by luxury

Italian footwear trade with the rest of the world suffered greatly from the Covid-** crisis, and even today this market is marked by a difficult recovery (***).

As for footwear exports, there are consistent improvements that give positive signs for recovery. In fact, compared to ****, exports as a whole mark a +**.* percent and in terms of quantity a +**.* percent. Italy's main trading partners have all had a positive recovery, marked by almost double-digit increases.

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Exports and imports of footwear Italy, ****-****, in billions of euros Source: ****

The graph above shows the evolution of Italian footwear exports and imports with the world. As can be seen, the **** crisis strongly impacted the market.

Footwear exports Italy, ****, in % Source: ****

Footwear imports Italy, ****, in % Source: ****

Of the **.* billion euros of exports realized in ****, the luxury footwear segment (***) counted for as much as **.* percent, a figure that strongly helped the economy and the Italian footwear sector recover after the sharp decline in ****.

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1.5 Covid-19 impact on the market: still a difficult recovery

The year **** for the footwear sector closed with a strong increase over **** (***) is slightly compromising this market, as Russia is an important partner for Italian footwear, especially in the luxury sector.

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The slow market recovery during **** confirmed **** as annus horribilis for Italian footwear. In addition to the decline in the value of exports and imports, there have also been consequences on the value of production and labor: many layoffs have been made in manufacturing companies, employment in the footwear industry is therefore in sharp decline.

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2.1 The habits of Italian households

Italian household purchases by commodity segment show the following results:

Increase in Italian household spending compared to **** Italy, ****, in % Source: ****

The main segments of the footwear market show clear signs of recovery, in the case of women's and sports shoes and sneakers even in double digits. Despite this, levels are still well below ****. In detail, the women's segment is -** percent lower than in ****, and the sneakers and sports segment is -* percent lower. [***]

Footwear consumption by Italians Italy, ****-****, in millions of pairs Source: ****

According to the Fashion Consumer Panel in **** the purchasing behaviors of Italian households have changed a lot compared to ****, in terms of consumption and spending. In detail:

Behaviors of Italian households Italy, ****, in % Source: ****

In concrete volume terms, the -**.* percent less footwear purchased corresponds to ** million fewer pairs.

The reduction in the average price spent is explained by the absence of the need to buy footwear for going out, and therefore staying at home did not require particularly expensive shoes. In fact, slippers (***) cost little, and so there is the impression that spending was significantly reduced when there was a change in the items purchased.

Finally, online shopping in **** accounted for **.* percent of the value ...

2.2 Italians' consumption: age, prices, sales channels

Age:

Italian household consumption by age of consumers Italy, ****, in millions of pairs Source: ****

The graph above highlights the amount of pairs of footwear used by consumer age group and gender. It is clear from the graph that in almost all age categories (***) that females dominate consumer demand.

Overall, children and adolescents up to age ** have a fairly homogeneous demand, which in most cases results from purchases made by their parents (***).

Finally, the female part of the over-** population is the most important customer base for producers.

Prices:

Italian household consumption by retail price range Italy, ****, in % Source: ****

The graph above summarizes annual household consumption by price range of footwear. The graph differentiates the quantity bought and the value on the total Italian footwear market. The change between the two percentages immediately stands out for the footwear categories over €**,***. In fact, from this segment on, value has more weight on the market than quantity. This can be explained by the small number of households that can afford to spend that much on footwear, and of the value per pair of shoes in the somewhat more high-price category.

Sales channels:

Italian household consumption: sales channels Italy, ****-****, in % Source: ****

Finally, the last ...

2.3 What drives Italians to buy a certain type of footwear

A **** research by Eurispes reveals the most important factors for Italians before buying a pair of shoes. Among these we find in particular:

Key characteristics for purchase Italy, ****, in % Source: ****

From these results, it is clear the importance for * out of ** Italians of the comfort of the shoe purchased. Despite the results, for the female category of the population it is heels that dominate demand, with about * pairs purchased per year. The male part of the population, on the other hand, prefers to buy sneakers, with the same frequency as women for heels, so * pairs per year.

Time of purchase:

These averages of * footwear purchases per year suggest that Italians tend to buy shoes every * months, but this is not exactly the case. Again the Eurispes results lead to the following conclusions, on the frequencies of purchase:

Footwear purchase frequency for Italians Italy, ****, in % Source: ****

From the graph above, we can see that most Italians buy shoes every * to * months. Only a small portion of Italians are in the extremes: either more than * time per month (***).

3.1 Footwear manufacturing companies in the country

Cribis ' **** report reveals some peculiarities about the composition of Italian companies operating in the footwear sector. The findings highlight the following compositions:

Composition of companies in the footwear sector Italy, ****, in % Source: ****

The manufacture of machinery for industry, refers to equipment for processing leather, hide, and other materials for footwear.

Thus, on the Italian territory, companies mainly operate in retail, and again according to the same report mentioned above, the breakdown of companies in this sector is as follows:

Source: ****

What kind of legal companies are the firms in the sector:

Finally, in ****, according to Istat, the number of companies operating in the sector were:

Footwear manufacturing companies: * *** (***) Footwear trade companies: ** *** (***) Footwear trade intermediary companies: ** *** (***)

From surveys conducted by Cribis, the legal form of Italian companies in the sector is:

Legal form of companies in the footwear sector Italy, ****, in % Source: ****

The legal form chosen, in most cases, does not allow for much international openness. In fact, **.* percent of companies have a low level of internationalization. In addition, since they are often companies founded several decades ago, one can also note a fairly low level of digitalization (***).

3.2 Employment in the sector

Employment in the footwear industry has suffered greatly from the Covid-** crisis. In fact, the number of employees has been declining since ****.

Number of employees in the footwear sector Italy, ****-****, in whole numbers Source: ****

After a significant increase between **** and **** (***). The industry's workforce is in sharp decline due to Covid-**, and the economic performance of businesses still far from pre-pandemic levels does not suggest that employment will soon return to the same previous level.

Distribution of firms by number of employees Italy, ****, in % Source: ****

Distribution of employees in companies Italy, ****, in % Source: ****

From these two graphs it can be concluded that the majority of Italian companies have few employees, and this is also consistent with the legal form of the companies (***).

3.3 The dynamism of Italian companies

Italian footwear companies are an important engine for the country's dynamism. In this part, the most dynamic regions will be highlighted. The paramenter used will be each region's contribution to international trade (***), measured as a percentage.

Thus, from the results on the **** performance of Italian companies, we find the following breakdown:

Footwear exports by Italian region Italy, ****, in % Source: ****

Veneto is the most dynamic region, this is not surprising given the high concentration of companies of all types in the region, and the great dynamism of northern Italy. Then next we find Tuscany, which from a national perspective is a major producer of leather and leather goods.

4.1 The different types of footwear on the market

There are several categories of consumer footwear. The footwear market can be segmented according to product use:

Casual and leisure footwear: these shoes can be covered with leather, synthetic materials, and rubber or fabric. There are many different models, depending on gender and use (***). They are generally marketed by shoe manufacturers or fashion clothing and accessories companies Sports shoes: are shoes intended for or inspired by the practice of a sport (***). They are often marketed by sports equipment manufacturers or fashion apparel and accessories companies Indoor footwear Work and safety shoes

4.2 The price trend

Italy has the highest export prices for footwear in the world. In ****, it reaches $**.** per pair, which is twelve times the price of the Chinese pair (***).

In ****, the average export price in the world's ** most dynamic market countries was as follows:

Average export price of the world's top** exporters World, ****, in USD Source: ****

From the graph above you can see a huge difference between Italy (***). There is a $** difference between the two, which gives Italian footwear a certain connotation on the international scene. This is why Made in Italy has gained all this notoriety and success.

In the Italian territory, the average price of a pair of shoes is stiamated in **** at **.*€, with a consumption of * pairs per capita, which gives an average annual expenditure of about ***€ per year per capita.

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4.3 The most commonly used materials

Footwear is produced using a variety of materials, the most popular being:

Leather and leather Synthetic Rubber Fabric

Italian footwear manufacturing companies are also involved in the marketing of these materials, and others.

Exports and imports by upper material Italy, ****, in % Source: ****

These data presented in the graph above are from ****, then the year of the crisis. Compared to ****, the export results are in slight decline. In fact, exports for the most popular materials for footwear production have been reduced, in detail:

-**% for leather footwear -**% for synthetic footwear -**.*% for textile footwear -*% for rubber footwear

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The footwear production process:

There are four essential points for footwear production:

Cutting. At this stage, you go to cut the material chosen for the shoe (***). Sewing. At this stage, the upper is assembled by various sewing machines. Assembly. At this stage, the sewn upper is assembled using a dummy that resembles a human-shaped foot, which differs according to model and size. Finishing. At this stage, the entire production process is finished, assembling the last pieces: the heel, heels, sole...

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5.1 European regulation

For the manufacture and distribution of footwear, there are European-wide rules that manufacturers must follow.

All rules can be found at the following link.

Globally, the European standards deal with:

About equal purchase information On export control, brokering, technical assistance, transit and transfer of dual-use items On market surveillance and product conformity On the approximation of the laws, regulations and administrative provisions of the Member States concerning the labeling of materials used in the main components of footwear for sale to the consumer

All of these rules are inscribed in an excellent complementarity to the existing national system.

5.2 The national rules

From a national perspective, there are no specific rules for the marketing and production of shoes.

The only ones that may have some interest in this section are work shoes, called safety shoes, under EN ISO number *****.

In this part, the legislation regarding this type of work footwear will be briefly described.

The standard states that the shoes must be equipped with a protective, *** joule resistant toe cap, that is, it must withstand, without breaking, the fall of a ** kg weight from a height of half a meter. In other words, work shoes must have protection against mechanical hazards (***).

More information can be found at the following link.

6.1 Segmentation of actors

• Decathlon Italie
• Nike
• Zalando
• Gucci
• Prada Groupe
• Primadonna Collection
• Geox