Continued outsourcing and low levels of consumer spending left the industry reeling
Los Angeles, CA (PRWEB) May 05, 2013
This industry has one foot in the grave. With manufacturers shifting operations overseas and cheap imports penetrating the US market, revenue for the Shoe and Footwear Manufacturing industry has fallen at an average annual rate of 1.4% over the five years to 2013. According to IBISWorld industry analyst Nikoleta Panteva, “Many companies have moved away from manufacturing footwear in the United States and are focusing on designing, wholesaling and marketing branded shoes.” The credit and financial crises of the past few years have led to extremely low levels of consumer spending, negatively affecting sales of discretionary items like shoes. This struggling industry is not likely to experience more double-digit drops, though; most large footwear manufacturers have already moved operations overseas, and the rate of growth in international outsourcing is expected to stabilize. In fact, industry revenue is expected to inch up in 2013 to $2.0 billion, boosted by growth in downstream demand from wholesalers and retailers.
The number of companies in the Shoe and Footwear Manufacturing industry has also declined; from 2008 to 2013, the number of enterprises fell from 890 to an estimated 798. “Many new operators lack supply chain contracts with importers and are unable to send production offshore,” explains Panteva, “which has caused them to lose out on margins.” This decline has pushed some players out of the industry because they were unable to sustain profitable operations.
Meanwhile, well-recognized names like Nike have tightened their stronghold on the shoe supply chain. While Nike accounts for a negligible portion of industry revenue, its brand recognition and effective cost controls have allowed it to remain at the forefront of the shoe sector. The sole major player in the industry, New Balance, makes only about 25.0% of its US-market shoes domestically, marking a shift in production location even for long-standing US shoe manufacturers.This industry's low concentration reflects a largely fragmented market that has a mix of small players. Most large footwear companies, such as Nike and Adidas, manufacture nearly all of their products outside of the country. This practice has increased over the past few years as large manufacturers discontinue production in the United States, instead focusing domestic activities on design and wholesale of footwear.
Projected declines will be less drastic than the substantial drops that occurred at the start of this decade because the industry will stabilize at a lower base. Imports will continue to infiltrate the industry. For more information, visit IBISWorld’s Shoe and Footwear Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
This industry manufactures footwear for men, women and children. They may manufacture rubber and plastic footwear, protective footwear, house slippers and slipper socks. Operators also manufacture men's or women's footwear designed for dress, street and work. These products also include men's or women's shoes with rubber or plastic soles and leather or vinyl uppers.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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