A. Industry Analysis:
1. Industry size, growth, profitability, and forecast of demand, in dollars and units if possible.
2. Size and Characteristics of product segments
The Shoe Industry consists of a multitude of footwear categories, varying in utility, style and occasion. When overseeing the market for the shoe industry, we must look at the influence of all shoe trades universally to comprehensively understand how the disparities in sales relate to the needs of specific regions. Worldwide the footwear industry holds great aptitude for expansion, with a strong hold on over $256 billion in market value . When geographically segmenting the market, the United Sates represents 27.9% of the market at $71.7 billion, leading the market is Europe grasping 38.4% of the market at $98.4 billion and the Asia-Pacific region holding 19.1% of the market at $49 billion; the rest of the world makes up the remaining 14.6% of the market at $37.5 billion. Between 2008 and 2012, the average growth rate domestically has been 4.1%; in Europe and Asia-Pacific markets the growth rate was 1.7% and 4.8% respectively (see Exhibit 1).
Exploring the profitability of this industry, domestically retailers are struggling to maintain high profit margins. The solid industry growth expected for the coming years is highly supported by the economic turnaround in 2011, however many small retailers are feeling the pressure of low-cost imports . Reduced imports and the continued shifting of manufacturing operations to low-cost countries, creates a trickle down effect onto the fragmented market of companies, with a mix of small and large participants (see Exhibit 2). Increases in price-setting control of wholesalers, are causing downst...
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...gtip shoes, oxford styled, boat shoes or sling-backs. Dress shoes represent approximately 19% of the market.
D. Competitive Analysis
1. Who are the key players in this industry and what are their marketing strategies? 2. What is the nature of competitive rivalry?
Although footwear retailing is highly fragmented, the market is dominated by large retail groups, between whom there is a high degree of rivalry.
However, fixed costs for retail operations are not prohibitively high and therefore, smaller companies easily co-exist within the market. Furthermore, this allows relatively easy expansion of output capacity, which enhances rivalry.
There is a high degree of diversity between retailers, with dedicated shoe retailers competing with apparel retailers and large supermarket chains.
Overall, rivalry between footwear retailers is assessed as moderate.
Per Kowitt (2014) T. J. Max, due to its size and capital, buys an enormous amount of merchandise upfront from suppliers and still obtain excellent prices and their suppliers also benefit from the same economies of scale. Consequently, the vendors also grow and rather sell to T.J. Maxx than the department stores. This addresses Porter’s Five Forces that Shape Strategy regarding two entry barriers of 1) supply-side economies of scale and 2) demand-side benefits of scale (Porter, 2008).
The large retailers have many options when it comes to selecting suppliers. The scale of operations of Walmart, for example, give it tremendous bargaining power, and this has enabled its cost leadership in the industry. As will be discussed further in the next question, Trader Joe’s has an extensive supply of private labels; it is argued that private labels enable strategic bargaining power of supermarkets. The retailers are able to imitate the national brands under a lower-priced private label, thus the national brand manufacturers must provide better negotiation terms with the retailers (Meza and Sudhir, 2009). Technology may also strengthen the supermarkets purchasing power, as their point-of sale data provides information on what is not selling, or what is selling. They are able to purchase the popular items in larger amounts, possibly strategically negotiating prices and obtain the low-selling items at reduced
Some dominant economic features of this industry include the number of rivals, the number of buyers, vertical integration, and supply/demand conditions. The number of rivals in this industry varies on the scope of how large or small the firm is. Larger rivals include Whole Foods and Walmart and smaller rivals include Lucky’s Food Market and Pathmark. For example, Walmart has a highly differentiated product selection. it offers various forms of products that are ‘identical’ to better convenience its consumers. Walmart also has large channels of distribution where its “shippers are always on the lookout for ways to speed product from source through supply chains to the consumer” (Walmart, 2014 Pg.1). The number of buyers in this industry is consumers who are buying large volumes of products, where these buyers do not necessarily have any buying power. The majority of of grocery stores are in the retail industry, where larger involvement occurs from integrating operations, and suits the industry as a competitive
Rivalry among established firms is fierce. There are several factors that illustrate this: established market players (6.1). The product is highly standardized and the switching costs of the customers are low. Players are aggressive (6.2)
In this wholesale retail industry, the major key players are Costco, Sam’s Club, Walmart, and Target. Other e-commerce businesses like Amazon are also considered the rivals of Costco and other primarily brick-and-mortar businesses. The level of rivalry among existing players is high due to many reasons. First of all, it is easy for the customers to switch their memberships if they are unsatisfied with the company’s products or services. Since the annual fee of membership at Sam’s Club is ten dollars lower than that of Costco, Costco customers can switch their membership to Sam’s Club anytime they want. Many wholesale retailers have similar items, which means that there are no product differentiations among the companies. In addition to that,
China is one of the world's biggest manufacturing hubs and a top choice for companies from around the globe. China has over 30year’s experience in producing goods for Western markets and now represents a huge part of the global consumer market. Compared to many of its neighbouring countries, China does a better job at retaining its place in the low-end industry segment. To be honest, it's cheaper to manufacture in China. This was why Sport Shoe Inc. had decided to manufacture in Pacific Rim.
Over the past ten years, the shoes market has grown over 32% in terms of spent dollars (Statistic Brain Research Institute, 2015), while the Canadian market grew 8.5% from 2003 to 2012 which is the last official year information. (GC Canadian Industry Statistics, 2016). Total year sales on both countries reaches more than $35 billion (American Dollars) and women’s shoes represents 41% of the North American shoes businesses, and 76% of it is divided in Dress and casual shoes, the main Steve Madden focus. That makes the sector very attractable and competitive, so the companies have to be up to the challenge of reinventing themselves through time, retaining their current customers and trying to capture new ones.
To further build our business, we will leverage out tremendous brand equity, dominant position in fashion-forward footwear, and industry-leading design team and will work to ensure that Steve Madden Ltd. emerges as a global lifestyle branded company.” They really want to make sure they are delivering the right trends and products for their customers and expand to a lifestyle brand. The vision statement for Steve Madden “Give fashion forward men and women a unique way to express their individuality through style resulted in millions of customers worldwide and propelled his designs to the forefront of the fashion industry.” The vision is constantly changing for Steve Madden and wanting to keep up to date with the latest trends and fashion statements keeps them innovative and different from their competitors Guess and Kenneth
For an extended period of time shoes have been an integral part of the modern consumer’s life. According to the vast majority of fashionably inclined individuals, shoes can either make or break a person’s entire appearance, which explains why people invest their hard earned coins into comfortable abodes for their feet. Particularly, the annual budget consumers spend on shoes in the United States is approximately $20 billion dollars, and $6.46 billion dollars stem from running shoes alone. This is what initially piqued my interest and compelled me to interview a manager from one of most popular shoe stores known as Footlocker. As a side note, the interviewee was only willing to share the information because he is no longer an employee of
Shoe stores, people love them hate them but cannot keep away from them. Let’s be honest everyone loves shoes. Two big shoe stores at the Mall are Champs and Footlocker these stores are notorious for having the newest styles, trends and up to date freshest shoes. These two stores are very similar in some aspects but in some are very opposite varying in their placement of merchandise,sales, price’s, staff, and appearance. But in overall it comes down to who has the best sales and customer service which both are very similar.
The Shoe Industry consists of a multitude of footwear categories, varying in utility, style and occasion. When overseeing the market for the shoe industry, we must look at the influence of all shoe trades universally to comprehensively understand how the disparities in sales relate to the needs of specific regions. The global retail market within the shoe industry currently represents $185 billion, driven primarily by Asian and Latin American economies and is expected to reach $211.5 billion by 2018. The growth rate globally was 6% between 2004 and 2008, contrasting to the 2% compound annual growth from 2008 to 2012. The United States holds over 24% of the overall industry size it projected over $48 billion in annual revenue in 2012. Domestically, the growth rate has been flat at 0.3%. On a unit volume basis, global footwear consumption for 2012 is approximately 11,421.3 million (in pairs), where the United States makes up roughly 2,741.1 million (in pairs). By 2018 the U.S. Census Bureau has forecasted a steady decline within demand domestically of 3% and an increase of 1% globally.
is like the concepts of mass customization (Pine et al., 1993; Lau, 1995), Shoes of Prey didn’t start it business on the base of mass customization. The business started due to one co-founder’s passion for bespoke shoes. They didn’t do anything for the market investment about customization high-quality woman shoes. Although some sports brands like Adidas or Nike has simple customization services for shoes, there was no competitors doing the customization business for high-quality woman shoes, and they thought it was a chance for
Charles & Keith, a well-recognized women’s footwear brand was established in 1996 in Singapore Amara shopping centre by the two young brothers, Charles Wong and Keith Wong. The company began its foreign market venture in 2000. To date, Charles and Keith has a presence in more than 20 major cities around the world. The brand are well-known internationally today with the vision “to be the most admired fashion-forward company” and the mission “to offer high quality products and services, with a commitment to perfection” in mind all the time (Charles & Keith, 2013).
Most people in the world gratefully have the chance to make their own choices and decisions every day. One of those choices and decisions that they make is what they are going to put on their feet for the day. Unknowingly the decision of what type of shoe a person wears for a specific day will affect their entire day. There are also many factors that contribute to what type or style of shoes a person buys or wears such as economic status, design, usefulness, and popularity. As of today, there are various types of shoes which are sandals, heels, boots and athletic and casual shoes.
Initially we are targeting the people of Oxford. Oxford is the academic hub in United Kingdom. The first preference will be preparing shoes for the people having inappropriate sizes (either too small or too large). We are also focusing on the people with the standard sizes who want to design the shoe according to his/her own preferences and the person with the standard size will also be focused. We are also providing the after sales services. For instance, if a shoe is ripped or cracked within the certain time we offer a free repair.