Coming off a year marked by pandemic upheaval and rapid consumer shifts, shoe gamers likely entered 2021 with the same sentiment that was top of mind for many consumers: it can only go up from here. .
Indeed, decent digital trends across the board, fiscal stimulus, and a promising vaccine rollout have all served to boost brands and retailers in the industry. At the same time, the athletic, athleisure and comfort categories remain robust, and some brands, Steve Madden being one example, say they are seeing signs that the apparel and fashion categories are rebounding.
Yet a supply chain crisis at the nation’s busiest ports threatens to hamper the progress of many retail businesses. In fact, Steve Madden CEO Ed Rosenfeld told investors that just as consumers are interested in dressy, fashionable shoes for Easter, a backlog at West Coast ports could prevent these products from selling. reach buyers.
Here, an overview of the big trends impacting footwear right now.
A situation in the ports
Caleres Inc., Wolverine World Wide Inc., Nordstrom and The Gap Inc. are among the other names in bold that have lamented the bottleneck situation which is occurring primarily in the ports of Los Angeles and Long Beach in California – which make up nearly half of the US total. States import from Asia. The difficult supply chain situation is the culmination of increased shipping volumes due to increased consumer demand as well as a shortage of workers.
So far, companies have valued the costs of delayed shipments at millions of dollars. Caleres CEO Diane Sullivan told analysts on a call to discuss the company’s fourth quarter results this month that the company currently faces between $60 million and $70 million in inventory. delayed. Received. Sullivan, who is also chairman of the board, said about $50 million of that inventory belongs to Famous Footwear and about $10 million to $20 million goes to the portfolio of brands, which includes Sam Edelman, Vionic and Allen Edmonds.
The backlog at Ports is particularly frustrating for companies like Caleres and Steve Madden – the latter pegged its impact in the first quarter of the Ports saga at $30 million – which market watchers had deemed fairly well positioned before COVID. -19. Even during the crisis, these companies had been able to preserve much of their cash and remain relatively nimble. Now, with more stimulus hitting the bank accounts of millions of Americans and the rollout of the COVID-19 vaccine showing promising signs, brands and retailers are poised to slow the risk of a rebound. At the same time – as had been the case during past port delays – low-cost retailers like Ross, TJ Maxx, Burlington and Marshalls may be able to take advantage of opportunistic buying resulting from off-season and overstock merchandise. of stocks in major brands.
Brick and mortar – One click away
It’s no secret that the digital component of retail has received a huge boost due to the coronavirus: in fact, Jane Hali & Associates analyst Jessica Ramirez told FN last month addressing the third quarter results of Michael Kors and Jimmy Choo, parent of Capri Holdings, that “If you are not doing well in e-commerce right now, then something is seriously wrong. According to a report published this month by Adobe, from March 2020 to February 2021, COVID-19 gave e-commerce an additional $183 billion boost, which is almost the size of the last shopping season. holiday season, where $188.2 billion was spent online between November and December 2020. In total, during the 12-month period from March to February 2021, $844 billion was spent online. (For reference, in calendar year 2020, $813 billion was spent online, representing a 42% growth from 2019.)
But that doesn’t mean brands and retailers are ready to abandon stores – instead, many companies are realizing the value of a strategy that effectively marries all channels (i.e. omnichannel), in some cases making stores more important than ever. (According to a recent study by Coresight Research, US retailers announced the collective opening of 3,344 stores for 2021, approximately 39.5% more openings than announced at the same time in 2020.)
For example, retailers like Nordstrom and DSW are doubling down on their investments in omnichannel services such as online shopping for in-store pickup and online shopping for in-store delivery. Others, Dick’s Sporting Goods and discount seller Burlington, are increasingly aggressive about expanding stores. In an announcement accompanying its fourth quarter financial results this month, Burlington revealed that it would increase its number of physical stores to 2,000, from the previous goal of increasing to 1,000 locations, which had been established in as part of the chain’s initial public offering in 2013. Additionally, at the end of the fourth quarter, the retailer operated 761 units in 45 states and Puerto Rico.
In February, Dick’s Sporting Goods announced plans to open five new outposts in the month alone. Following these openings, Dick’s now has 728 locations in 47 states.
The paradox of the product
Retail revenue reports have largely bolstered the strength of categories such as comfort and athletics, which were booming before the global health crisis but rose further as performance athletes shut down and novices increasingly turned to outdoor pursuits like running and hiking.
Hoka One One, for example, proved to be a strong driver for Deckers Brands in the third quarter, with sales up 52.1% to $141.6 million. And Under Armour, which has struggled to find its footing in the North American market in recent years by leaning more into performance categories, has seen gains thanks to the rise in outdoor activities.
“Everything indicates that we are going to be much more focused on a healthy lifestyle, and that means you need performance products as opposed to athleisure products,” said Matt Powell, senior sports industry adviser. at The NPD Group Inc. regarding UA’s recent turnaround. success. “A year ago I was criticizing Under Armor because we were in a major athleisure cycle and they stuck to performance. It looks like after the pandemic the market is going to come back to them.”
Meanwhile, categories like dress and fashion footwear – which consumers deprioritized last year amid shutdowns and working from home – are also starting to see a resurgence.
Steve Madden CEO Ed Rosenfeld told analysts last month that the company was “doing very well” in the sandals category and that customers were responding to dress styles and “anything with big jewelry.” [and] oversized ornament [as well as] woven.
Roger Rawlins, CEO of parent company DSW Designer Brands, also told analysts this month that the company plans to focus on three key brands in its Camuto portfolio, all of which are focused on fashion and lifestyle. clothing: Vince Camuto, Lucky and Jessica Simpson.
The company’s line starring Jennifer Lopez – which debuted last February – is also set to be relaunched, with its primary focus in the fashion footwear space.