By Emily Black, Content Executive and Analyst at IMRG
Unlike most categories that IMRG tracks on The IMRG Capgemini Digital Dashboard, footwear had a difficult time across the pandemic. It was one of the worst performing categories in 2020, due to the UK lockdowns. There was less demand for shoes, particularly those considered formalwear, as much of the population took to walking around their house in slippers. The only real footwear demand was in trainers, as athleisure saw an uplift during the beginning of the pandemic. However, growth was still negative overall, at -9% for 2020. We can see the huge drop in revenue in March 2020, when the first lockdown begun, followed by consistently poor year-on-year (YoY) growth for the rest of the year.
Then, in 2021, footwear made a return in the third UK lockdown with +4.4% growth for the year, before dropping back down by May, as the high street reopened. The uplift in YoY growth in 2021 can be read as both good, and bad. This is because, whilst revenue did grow, it didn’t have much competition from the year before, when growth rates were low, therefore this growth appears better than it was, building on previously negative rates.
One interesting observation which came out of our data tracking, is the difference in appetite for specialist, and non-specialist footwear. The graph shows us that non-specialist footwear saw lower revenue growth in 2020, during the lockdowns, whilst specialist footwear rose, up until the high street reopened in May 2021, after the UK’s third lockdown. After the reopening of the high street, specialist remained very clearly lower than non-specialist when it comes to their sales growth.
This data may well be reflective of the extra time and spare income people had whilst working from home. Customers had extra time to choose the right pair of shoes, and – for some demographics at least – more money to spend on them from specialist retailers.
Based on the previous year’s growth rates for the twelve month total, footwear has had a turbulent couple of years. In 2018, it saw good growth, at 16%, dropping to 2.5% in 2019—perhaps signalling what ‘normal’ pre-pandemic growth might look like. Then, in 2020, as the UK slipped into its first lockdown, footwear dropped to -9%. In 2021, it saw a +4.4% total, redeeming itself from the lockdown decrease the year before.
I spoke to a variety of industry thought-leaders, in order to understand what they were seeing in the online footwear retail sphere. There were some interesting key trends and patterns emerging when I listened to their insight.
Joe Till, UK & Nordics Sales Director at OneStock said, “Prior to the pandemic athleisure certainly was a growing trend within the UK footwear market, but looking at the sales data over the period demand definitely peaked when the UK voted with their feet! Given the fact that most of us were locked down and working from home it is really not that surprising; using our limited outside time to explore the great outdoors and rekindle former pursuits. This unexpected surge in demand for specialist footwear does however highlight some key challenges for retailers – demand planning, stock fragmentation and fulfilment agility. I am sure next time around that most retailers will be much wiser and not miss sales opportunities through product unavailability.”
Nicole Morton, Cross-Border Solutions Manager, at Avalara, said that, “In the case of footwear, the content and construction of the various parts of a shoe are key elements, and can significantly impact tariff and duty rates. Getting HS Codes right when selling footwear internationally is crucial so customers receive their new shoes on time and pay the right price at checkout. Many customers aren’t aware of their HS codes, let alone know they need to update them. From the conversations I have with customers daily, I estimate 70-80% of retailers are using incorrect codes for some of the markets they sell into.”
Bobbie Ttooulis, Group Marketing Director of GFS, observed, “We saw very strong online sales and consequently, parcel shipment volumes across all GFS customer retailers during the two lockdowns. In footwear specifically, volumes increased by an average of 39% over the pandemic. Post-pandemic, we saw a dip in volumes from around September 2021 – some of this was due to shoppers returning to the high street to do their shopping. The main contributing factor however, was major supply chain disruption causing delays in the availability and distribution of stock. Having said that, overall volumes are significantly up compared to pre-Covid and we expect them to stay this way as buying patterns have changed. It’s clear that online shopping has become an intrinsic part of consumer shopping habits and that there has been a considerable shift to online spend that will only continue.”
Rory O’Connor, Founder and CEO of Scurri, suggested that, “Globally, the pandemic caused many countries to shut down commerce, at least in the physical sense, to a huge extent and while ecommerce thrived, the impact of in-person store closures as well as offices shutting was still felt by the sector as a whole. Huge numbers of people faced pay cuts and were made redundant, and the global economic outlook had shifted into a recession, with an increasing number of people making changes to their levels of expenditure. Due to this, discretionary items such as apparel and footwear took a hit in sales.
Lack of consumers was not the only issue for the footwear industry, as supply chain issues caused chaos for retailers and suppliers of all kinds of goods. Many manufacturing facilities globally were shut down, or had limited numbers of staff, making processes slower and more expensive.
Despite this, some smaller sub-sectors of the footwear industry did see growth, as consumer needs shifted with the new ‘from home’ lifestyles. Athleisure saw huge rises in revenue, and runners soon replaced heels and suit shoes for many in the corporate world. Additionally we saw mass increases in the sale of slippers and other comfortable footwear products, with brands such as Ugg and Birkenstock refocusing their offerings on this new phenomenon. In the UK, from March 2020 to September 2020 both men’s and women’s slippers sales increased by 46% to £36.8m.”
DPDgroup’s Ecommerce director, Hervé Crochet suggests, “In our 2021 New Commerce study on consumer behaviour in the UK and across Europe, London-based Claire Parham, one of the six participating ethnologists, revealed a novel trend where shoppers act more like collectors seeking out items with high resale value. Looking more specifically to fashion, the main product category bought online, we’ve noticed a maintained and growing popularity for high-end fashion sneakers selling over the £1000 mark on footwear sites, a niche market that could benefit specialised retailers both on- and offline.”
Lengow found that, “63% of consumers like the idea of discovering products online that they weren’t even looking for (Facebook). Discovery Commerce targets consumers who don’t know what they want but are open to suggestions: those in discovery mode rather than search mode. The idea is to suggest products based on their purchase history, web searches or interests — using data collected through advertising and harnessed through machine learning — even if the consumer hasn’t (yet) expressed a preference for a particular item. Whilst with traditional commerce it is the client who finds the right product, Discovery Commerce inverts the process: it is the product that seeks out the right target.
Social networks play a big role here, providing brands with an ecosystem that supports personalised product recommendations aimed at consumers, using advertising formats adapted to ‘discovery shopping’. Take the case of Dynamic Ads on Facebook and Instagram. Dynamic Ads display product offers according to the user’s interests, previous actions or intentions.
The idea is to suggest the right product at the right moment via personalisation, made possible by using personal data provided by the Internet user. Product offers are customised and they hit the mark! Pinterest Ads work in the same way. For example, a Facebook user who shows an interest in football (they join a dedicated group, read football-related posts, etc.) will receive recommendations for a pair of football boots or even tickets for a local match.”
Naji El-Arifi, Head of Innovation at Wunderman Thompson Commerce, suggested, “One way that brands and retailers can keep buyers interested in specialist footwear, in particular shoes that come at a higher price point, is by testing out new sales channels that are inherently engaging and offer direct interaction. The advent of digital marketplaces and the metaverse has brought an entirely new prospect through digital versions of products that we have become accustomed to in-store. At the end of last year, Nike invested in a shoe company that make NFTs and sneakers in the virtual world. The sports brand wanted to tap into consumers’ desire for instantaneous and creative footwear, elevating the draw that Nike has always had and understanding how habits towards purchasing footwear is evolving.
“It’s also indicative of the wider impact that the metaverse is having on retail and the way that shoppers engage with brands. Digital avatars are quickly becoming part of people’s identity with our research finding that over two in five (41%) gamers consider their avatar to be part of their identity; a further 56% are more likely to buy from brands that feature in their favourite games. It’s clear to see how creating digital experiences could be incredibly rewarding, not just for the consumer but for the brands that can connect with shoppers in these new digital arenas. And it shows why a company like Nike partnered with Fortnite as a way to tap into existing and new target markets that are being formed online.”
To conclude, the most popular trends that we’ve seen across the past few years in footwear, show that whilst some groups have more time and money due to savings from lockdowns, they might be more likely to invest in specialist attire. The pandemic wasn’t good news for footwear, however, the category seems to have bounced back, based on a relatively steady rate of growth for 2021 as a whole. The future looks bright for footwear, as the category has stood its ground.