Athletic shoes accounts for the biggest market share in shoe retail, with basketball and cross training are the most popular category in this segment. Industry reports, however, show that this segment has been on a decline.

Both the men and women s market segments are growing. Price-wise, however, men s shoes are more expensive than women s shoes.

Level of Competition

Competition in the industry is strong. There are a number of established players in the shoe industry with established market positions, brands and reputations. A mall often houses several shoe stores, mostly the major players. Major players in this industry have numerous retail outlets throughout the US, while smaller players are generally independently owned and operated in one or two locations.

Competition also comes from department store with well-appointed shoe departments; discount shoe stores and outlets, as well as general merchandise discounters such as Wal-Mart and K-mart. The Internet is also emerging as a source of competition as a growing number of users are becoming more comfortable shopping shoes online.

To be able to compete in the industry, your shoe store must offer the following:

• Excellent service
• Courteous and well-trained staff
• Diversity in product selection
• Competitive pricing
• Functional store design

Factors Affecting Demand for Shoes

As a retailer, the first rule is to understand the triggers for purchasing your product. Knowing the factors affecting demand for shoes enables you to respond more quickly to the needs of the market.

Below are the common factors affecting demand for shoes:

• Price. US consumers are extremely price conscious and value driven. Four out of every ten pairs of shoes in America is sold at a discount. The essence of consumers demand response is to buy less at high prices and more at lower prices. Consumers are generally price-conscious when buying shoes: they often come to a store with a threshold price (say $150) and then they look for a pair within their budget and best fits their criteria. Others even select low-priced items to be able to buy several pairs, without going above their budget. With the advent of discount shoe stores, even branded shoes can be bought at significant discounts. Unless you are catering to high-income market where clients buy several Manolo Blahniks or Jimmy Choo shoes at a single purchase, you need to carefully check how your market is responding to your prices.

• Demographics. The characteristics and size of the population also impacts the demand for shoes. Heavily populated areas like cities have greater demands for shoes relative to smaller towns.

The demographics of the area surrounding your store also impact the selection of your merchandise. If your store is located in the beach area, you need to stock up on sandals, flip-flops and other must-have beach shoe items. If you are located in the middle of the busy downtown area or business section of your town, you may find that corporate and formal shoes are in greater demand relative to other shoe types.

• Changes in Disposable Income. Income dictates the choice and frequency of purchase of shoes. A family with increasing incomes may find itself having more money available for the purchase of shoes. A family with shrinking income, however, may find shoe purchase at the bottom of their priority.

For a high-income area, you can expect a strong demand for brand names, particularly high-end types of shoes. Low-income areas are more likely to be price-conscious: your customers will demand good quality shoes for lower prices.

• Weather. Weather is a major determinant in the selection and choices of shoes. Sandals and thongs see a surge in popularity during the hot summer months, while boots are in great demand during the colder months. Your inventory needs to take into account the seasons in buying your inventory.

• Fashion Trends. Fashion dictates what sells for shoes. The fashion runways exert heavy influence on what will be seen on the shelves of shoe stores. Fashion creates demand for the current must have items: it can be clogs the past season and ballet shoes the following season. Hence, it is critical to be on the lookout for the next fashion must have item and make sure that you will be able to cater to the needs of the fashionistas. The drawback, of course, is when you overstock on a particular style when the fashion trends have already moved to the next must have shoes.

• Target market. Your target market specifically their age and buying power -- also shapes the look, feel, styles and product offerings of your shoe store. Baby boomers (those born from 1946 to 1964) as well as older members of the Generation Y (born from 1977 to 1994) typically have greater wealth, and can therefore, afford to buy more expensive shoes. Today s younger generations including teenagers have greater spending money (e.g. parents credit cards, higher allowances) and can afford to shop shoes for themselves.

• Economic Factors. The shoe industry typically follows the volatility of economic swings and downturns. A surging economy often leads to good sales, while sales may take a nosedive during economic recessions and bust.

June 22, 2004