Women's Footwear, Except Athletic

SIC 3144

Companies in this industry

Industry report:

This category covers establishments engaged in the production of women's footwear designed primarily for dress, street, and work. Establishments engaged in the production of athletic shoes and misses', children's, infants', and babies' footwear are classified in SIC 3149: Footwear, Except Rubber, Not Elsewhere Classified. Establishments primarily engaged in the production of rubber or plastic footwear are classified in SIC 3021: Rubber and Plastics Footwear, and those manufacturing orthopedic extension shoes are classified in SIC 3842: Orthopedic, Prosthetic, and Surgical Appliances and Supplies.

Industry Snapshot

The U.S. women's footwear industry is dominated by large companies that design and manufacture a wide variety of shoes each year. A steady market of consumers eager for new styles, along with the short life span of a pair of shoes, have produced lucrative profits for the nation's well-established footwear manufacturers. According to the American Apparel and Footwear Association (AAFA), U.S. consumers purchased nearly 2.29 billion pairs of shoes in 2005. However, imports dominate the U.S. shoe market, with only 34 million, or less than 3 percent, produced in the United States. In relation to the overall footwear industry, women's models accounted for about 12 percent, or 4.2 million, of all shoes produced by manufacturers in the United States.

The import of foreign-made footwear has been the biggest problem for domestic shoe manufacturers as comparably stylish but lower priced models made outside the United States continue to dominate the market. Approximately 98 percent of shoes sold in the United States in the mid-2000s were made abroad, arriving primarily from China. These imports were able to undercut their U.S. counterparts in large part due to the lower labor and production costs incurred by foreign shoe companies. As a result, total industry shipments declined significantly throughout the late 1990s, falling from $703 million in 1997 to $373 million in 2000. By the mid-2000s, total value of shipments in the industry had fallen below $250 million.

In the late 2000s, total industry shipments continued to fall before reaching $174.6 million in 2008. While imports remain a huge challenge for women's footwear manufacturers, the global economic downturn placed further strain on the industry as a whole.

Organization and Structure

Unveiling a wide assortment of new shoe styles each season is how industry leaders regularly improve their product lines and increase their market shares. A key aspect of this process involves the work of a shoe company's in-house design staff, which develops appropriate new versions of their firm's basic products by monitoring European and U.S. fashion trends. As this is one of the most expensive parts of the entire manufacturing process, more U.S. companies have attempted to reduce overall costs by relocating many preliminary manufacturing tasks to foreign factories where labor expenses are lower. Nevertheless, shoes are frequently returned to the United States for a number of final production steps, at which point the finished footwear is distributed to stores across the nation. Marketing teams from each manufacturer then negotiate with retail outlets and department stores in an effort to place as many of their company's products on display shelves as possible. Competition is fierce, and dramatic shifts within the industry based on the smallest stylistic or structural innovation are commonplace. To keep up with these changes, much of the industry's design, marketing, and management personnel meet at annual trade gatherings like the Fashion Footwear Association of New York show, the National Shoe Fair, and Shoes in New York.

Background and Development

The U.S. market for women's footwear was significantly transformed in the late 1990s. The shift was driven by two distinct yet interrelated trends. First, women came to prefer comfort over style when selecting their footwear. A late 1990s study cited by Footwear News revealed that 82 percent of women ranked comfort ahead of fashion on their list of shoe-buying criteria. Second, with the proliferation of "casual Fridays" and other corporate dress-down occasions, a greater number of women wore less formal shoes to work. As a result, women's dress shoe sales fell more than 30 percent over the decade, and those of pumps fell nearly 37 percent in the same period. However, sales of casual shoes soared, becoming the second most popular market in the U.S. behind athletic shoes. As the massive baby boom generation ages, the market for women's casual footwear was expected to continue to expand, as these consumers sought more comfortable shoes.

Despite the growth of the casual footwear segment of the women's shoe market, U.S. footwear manufacturers continued to lose ground to their foreign rivals. Although the total number of pairs of women's non-athletic shoes produced in the United States remained relatively constant throughout the late 1990s, domestic shoe companies controlled a dwindling percentage of that market. Nearly 93 percent of all shoes purchased in the United States in the late 1990s were manufactured abroad, an increase of 4.1 percent from 1994. Imported women's footwear, which reached nearly 533 million pairs in the late 1990s, dwarfed the 37 million pairs manufactured domestically that year. Nearly 7 million pairs of these shoes were exported from the United States.

Although comfort shoes held their ground, there was a return in popularity of women's shoes outside the comfort category in the mid-2000s. Emily Holt noted in WWD, "Once Carrie Bradshaw [from the television series Sex and the City] entered America's collective consciousness, teetering around town in sky-high spikes, the days of Melanie Griffith's Working Girl--wearing bright white tennis shoes with her business suit--were over. Women's love affair with shoes has reached new heights." However, imports saturated the U.S. shoe market, with women's shoes produced in the United States accounting for less than 1 percent of sales of women's shoes. Although women's shoe purchases increased 23 percent between 2001 and 2004, import numbers increased 23 percent, showing that all market growth was satisfied by imports.

Most women's shoe designers, including U.S. designers, conduct the majority of their design business in Italy. After the shoe design is complete, the production is outsourced, primarily to China, which accounted for the production of nearly 85 percent of all non-rubber shoes and 86 percent of all women's shoes purchased in the United States in 2005.

Ongoing industry consolidation and increasing mass production were expected to increase pressure on price points on the lower-end market, with fewer styles and brands making their way to store shelves. However, high-end products were expected to retain their "handcrafted" status and high prices. In addition, Footwear News predicted in 2005 that e-commerce would soon account for over 25 percent of all shoe sales. The low overhead costs of operating without a brick-and-mortar business may allow some smaller U.S. shoe producers to find a niche to fill in the market.

Current Conditions

According to industry statistics, there were an estimated 87 establishments engaged in the production of women's footwear designed primarily for dress, street, and work. Valued at $174.6 million in 2008, the industry employed 3,057 workers. The majority of women's footwear were located in California, New York, and Texas. Collectively, these states held more than 47 percent of industry share.The women's footwear, except athletic, segment shipped products worth $134 million. Other categories included women's dress shoes, women's sandals, women's orthopedic shoes, and women's canvas or leather boots.

Total shoe purchases per family continued to be impacted by the generally weak retail economy in both 2007 and 2008. Industry insiders expected continued struggle throughout 2009.

Industry Leaders

Nine West Group Inc., founded in 1977, manufactures and markets such venerable brands as Nine West, Easy Spirit, Bandolino, Enzo Angiolini, and Calico. Purchased by Jones Apparel in 1999, Nine West produces its shoes in Italy, Brazil, and China. As the top designer and leading seller of women's shoes in the United States, Nine West Group sells its shoes, as well as clothing and accessories, through approximately 600 outlet and retail locations as well as through department, specialty, and independent shoe stores. Parent company Jones Apparel posted 2008 revenues of $3.6 billion, while subsidiary Nine West Group Inc. reported $225 million in 2008 revenue.

Kenneth Cole Productions Inc., also a relative newcomer to the women's footwear industry, is another market leader. Established in 1982, this publicly traded company, of which founder Kenneth Cole controls about 45 percent, had approximately 1,800 employees and 2008 sales of $492.3 million. The company, which also sells apparel and accessories, markets its shoes through 80 outlet stores and in approximately 7,500 department and specialty stores nationwide. Kenneth Cole Productions Inc. reported revenues up marginally.

The Stride Rite Corp. is another a key player in the industry, although its women's division is only one part of its overall footwear operation. With 3,100 employees and major brands that include Grasshoppers, Keds, Sperry Top-Sider, Stride Rite, and Tommy Hilfiger (licensed), the company reported 2006 sales of $706.8 million. The Massachusetts-based Stride Rite boomed in the 1980s by remarketing its lightweight canvas Keds sneaker, a standard product it made for more than 70 years. The renewed success of this casual shoe led to the re-emergence of a similar product line, under the Grasshoppers label, which was aimed at older women. Models in this line included Keds-style canvas casuals, leather casuals, espadrilles, and leather sandals. The company was acquired by Collective Brands, which owns Payless ShoeSource, in August 2007.

Brown Shoe Company, Inc., based in St. Louis, Missouri, owns well-known brands such as Buster Brown, Naturalizer, Dr. Scholl's, and LifeStride. Established in 1878, Brown Shoes continued to expand during the mid-2000s, purchasing Bennett Footwear Group, LLC (BFG). Other brands, including Franco Sarto and Via Spiga were added in 2005. The company operates 920 Famous Footwear stores and 360 Naturalizer stores, in addition to marketing its brands in department and specialty stores nationwide. The company had 12,400 employees and posted revenues for 2009 of $2.2 billion. Brown Shoe Company was purchased by Bennett Footwear Group, based in Newton, Massachusetts, in 2005.

While many key players in the women's footwear business emphasized dress-oriented models, the continuing popularity of casual footwear based on athletic-shoe styling and comfort revolutionized the women's shoe industry. Footwear manufacturers, including many athletic shoe companies, jumped into this niche in the early 1990s and began offering comfortable quasi-athletic shoes made with leather uppers and an emphasis on unique styling. This trend coincided with a general relaxation of office dress codes and created a new half-casual, half-workplace type of shoe.

Skechers U.S.A., Inc. reaped the rewards of catering to this rapidly-growing market. Skechers was established in 1992 by Robert Greenberg, co-founder of the popular L.A. Gear athletic footwear company in the early 1980s. Greenberg retained control of approximately 90 percent of Skechers. Recognizing that younger consumers had tired of the athletic shoes sported by their baby boomer parents, Skechers debuted an array of rugged leather casual shoes, which were a phenomenal hit with consumers. Although they utilized popular athletic-shoe materials and compressed air-cushioning pockets that were placed in the heel and the front of each sole, Skechers were intended primarily to complement casual apparel. Targeting 12- to 25-year-old consumers, Skechers designed advertising that featured teenage skateboarders sporting Skechers shoes and plenty of attitude. The strategy was successful. The company's burgeoning sales were even more impressive, having tripled between 1995 and 1998. Sales in 1998 grew 102 percent to reach $372.7 million. The company continued to expand its operations, and by 2008, revenues were $1.4 billion with over 4,100 employees. Skechers sells its trendy shoes at U.S. department and specialty stores and at 100 of its independently owned retail stores. The company outsources its shoe production primarily to China.

Workforce

Footwear manufacturers based in the United States have increasingly moved their production operations overseas to boost their profits. As a result, imports have gained a substantial foothold in the U.S. footwear market. By 2004, more than 98 percent of all non-rubber footwear designed for U.S. wear was produced outside the United States. This shift away from domestic footwear manufacture has had obvious consequences on the U.S. workers once employed in the industry. Between 1968 and 1995, 1,200 U.S. shoe factories closed, resulting in the loss of nearly 180,000 manufacturing jobs. By 2005, fewer than 17,900 Americans were employed in the footwear industry, down from 82,500 in 1990 and 233,400 in 1968. In the women's footwear industry, the number of employees fell from 10,442 in 1997 to less than 4,000 in the mid-2000s. Between 1967 and 2004 more than 800 U.S. shoe factories closed. Between 1995 and 2004, 79 shoe factories closed, and overall production numbers fell 84 percent. Employment in the general footwear manufacturing industry (including women's and men's footwear, house slippers, rubber and plastics footwear, and other footwear) decreased from 17,562 in 2002 to 15,631 in 2005. In 2005, 12,722 of these employees worked in production, earning an average hourly wage of $11.63. Employment in the general footwear manufacturing industry fell 6.9 percent between 2006 and 2007. Of the reported 16,200 employees, 13,500 were production workers who earned an average hourly wage of $12.31.

The surge of footwear production away from the United States also affected foreign workers. Factories are often relocated to countries noted for their dearth of government regulations on working conditions, health and safety matters, and the right to unionize.

America and the World

Manufacturers of women's footwear in the United States continued to face strong competition from cheaper imports. The amount of imported shoes on the U.S. market increased exponentially in the last quarter of the twentieth century. In 1968, 175 million pairs were imported, and in 2004, 1.8 billion were imported. The majority of these shoes came from China, which accounted for almost 86 percent of all women's shoes imports. Chinese factories produced nearly 86 percent of all imported shoes sold in the United States in 2005, followed by Brazil, Indonesia, Vietnam, and Italy.

U.S. companies learned to reduce costs further by shipping cut footwear patterns to plants in Third World countries, where they were either partially or completely assembled. The firms did this because it was cheaper for the footwear to be only partially assembled abroad, since U.S. companies pay a lower duty (typically 5 percent) on unfinished goods being re-exported to the United States. The final, less labor-intensive manufacturing details such as bottoming, finishing, and packing are then completed at home.

Research and Technology

Like other industries, the production and sale of U.S. women's footwear was changed greatly by computer technology. Companies invested large sums of money to integrate the latest electronic equipment into all facets of their operations. In the research and development segment, the use of computer-aided design (CAD) is common, and many firms integrated it with computer-aided manufacturing (CAM) processes. The combination allowed shoes to be produced in the United States more quickly and accurately, which dramatically lowered production costs but eliminated jobs. The women's footwear industry also brought robotics technology into the manufacturing process, utilizing robots to move shoes from one production module to the next. Computers are also used extensively in the industry's management sector, usually tracking production figures and coordinating them with distribution results and sales totals.

During the mid-2000s, designers attempted to combine comfort and style using new technologies, with predictions that customized fit could be soon become more popular and more widely available. Howard Davis, a professor of footwear design at Parsons School of Design, told Footwear News in 2005, "Self-adjusting shoes will be shoes of the future because the consumer will demand real and serious comfort." Davis predicted the eventual introduction of shoes with computer chips to provide an accurate fit and shoes with sensors that respond to heat and cold.

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