With high return rates, expensive manufacturing, and complex SKU management, footwear has long been a tricky segment for apparel and fashion brands. That’s why it’s so important for companies to keep a close eye on the twists and turns of the footwear market so they can stay ahead in this competitive landscape.
Fortunately for you, Ryder E-commerce has created a round-up of the key footwear industry trends for 2023 so you can focus on your business, not research:
Supply chain constraints coupled with rising prices have hit the global footwear market hard, with sales in Q3 and Q4 of 2022 being much weaker than expected. A survey by AlixPartners found that 43% of women and almost a third of men said that shoe shopping was a lower priority due to inflation.
In a period of economic decline, it’s hardly surprising that footwear purchases are not top of mind. But this picture is complicated by how the footwear market spans from essential items like sports shoes to discretionary purchases like fashion footwear. This means that not every brand will be affected equally by the downturn.
Yet even the seemingly indomitable sneaker market is showing signs of a struggle, with the 19.5% growth experienced in 2021 dropping to just a 2.7% increase in 2022. A surprising result is that dress shoes are making a comeback, with 45% of American and British men reportedly planning to buy dress shoes during 2023.
This challenging combination of tough economic times and changing tastes makes it tough for footwear brands to find reliable market insights. In the meantime, brands should be using this period to reposition their offerings and understand what their core customer wants.
Traditionally, footwear has been one of the most challenging products for consumers to buy online. After all, no amount of photos or sizing information can tell customers how a pair of shoes is going to feel on their feet.
Not surprisingly, e-commerce footwear sales saw a significant increase during the COVID-19 pandemic as physical storefronts were shuttered due to stay-at-home restrictions. Yet this trend hasn’t reversed with the comeback of physical retail.
According to the 2022 PowerReviews’ State of Apparel & Footwear Shopping survey, 74% of footwear purchases are now occurring online, with casual footwear proving the most popular at 96%, followed by athletic footwear (84%).
So, why are customers feeling so comfortable shopping online for shoes?
The answer lies in part with the technological advancements in Augmented Reality and Virtual Reality – and footwear brands’ growing investment into these tools to assist online shoppers. Adidas, Nike, and Hoka are just some footwear companies that have launched their own AR initiatives to boost sales – and even more importantly – to lower return rates.
Footwear exhibits the largest return volumes in e-commerce at rates as high as 35%, outstripping accessories and apparel. AR and VR offer the ability to refine the shopping experience with more information to make good purchasing decisions, which is why larger e-commerce companies are also following suit. Both Amazon and Google launched virtual try-on tools for footwear ahead of the 2022 holiday season, showing a wider shift within the footwear industry to make online shopping for shoes easy and seamless.
As part of the wider shift towards D2C e-commerce, many influential retail brands chose to drop wholesale partnerships in favor of communicating directly with their customers and increasing their profit margins – and footwear is no exception. Nike decided in 2021 to drop long-term retail partnerships including DSW, Urban Outfitters, and Amazon, achieving 50% D2C sales at the end of 2022.
But not everything is quite so rosy in the D2C e-commerce landscape. Growing acquisition costs and difficulty achieving profitability are all reasons why a growing number of footwear brands are keeping a beady eye on the wholesale market.
Direct-to-consumer darling Allbirds has found out the hard way that relying solely on direct channels has made it challenging to grow brand awareness, and the sustainable shoe brand is now testing wholesale partnerships with the likes of REI and Zalando.
And Nike? They recently invited their remaining retailer partners to its campus for the first time in three years, indicating a slowdown in the brand’s withdrawal from wholesale. It’s notable that while Nike’s store network is growing, it remains just 37% of the size of Footlocker, its largest wholesale partner. In sum, it’s no longer a question of D2C vs. wholesale, but how to balance both channels to get the best of both worlds.
As the footwear market continues to fragment into different occasion-based categories, there’s a growing for further customization services that allow consumers to bring their own style to their pairs. According to Expert Market Research, the custom shoes market is expected to grow at a CAGR of 5.9% from 2023 to 2028.
Brands including Nike, Vans, and Converse have long offered customization services for an additional fee. But the biggest growth in custom footwear is set to occur in the running shoe category. This is hardly surprising, as running shoe construction and the demands of high-intensity activities provide numerous opportunities for high-end customization beyond just look and style.
Superfeet is one brand taking advantage of new technologies to reduce the cost of custom footwear products. Customers visit one of their store locations to get a foot scan that maps their gait and natural arch, data which is used to 3D print insoles that are fully customized to that shoppers’ needs. This growth of customization within the manufacturing process itself is an emerging space full of opportunity for vertically-integrated brands.
The consumer desire for sustainability in retail has traditionally come with one major caveat; they aren’t willing to pay more for more eco-friendly products. Yet there are signs of a longer-term shift in attitudes. 64% of consumers say that they are willing to pay more for sustainable footwear, so long as it is marketed correctly.
With concerns growing about greenwashing and dishonest marketing, transparency is now a sought-after trait. CGS’ annual Retail & Sustainability Survey found that 50% of U.S. consumers don’t think that brands are demonstrating their sustainable practices well enough, while 27%think brands could be doing more.
Although not traditionally known for sustainability, sportswear brand Puma is making big strides forward in circular footwear. Their latest sustainability target aims to have sustainable components in 90% of its footwear by 2025, which includes developing recycled leather, rubber, and polyurethane which can be efficiently recycled in-house. Earth Brand has taken sustainability beyond just the footwear itself, with a commitment to use only FSC-certified recyclable paper and soy-based inks in their packaging.
Despite a shift within this market, cost continues to be the biggest barrier to consumers adopting more sustainable purchasing habits, with 52% of adult consumers saying that the cost of sustainable products is a problem. Footwear brands will need to focus on affordability if they’re going to grow this consumer segment.
The footwear industry is continuing to evolve rapidly, which is putting unique demands on brands and retailers who are trying to keep pace with consumer expectations. Changing popularity for different styles and the wider industry shift back towards wholesale retail are significant challenges to manage independently. As an expert in footwear fulfillment, Ryder E-commerce by Whiplash is a reliable 3PL partner that can assist you in managing high inventory complexity and reverse logistics without slowing down your operation.