Consumers simply aren’t spending on apparel like they used to — as illustrated by a drop in sales for most major retailers this year, including major brands, like Macy’s, Kohl's and Gap — but if there’s one area of the apparel industry that consumers are still spending on, it's definitely shoes, according to numbers crunched by Euromonitor.
Since 2010, footwear sales have grown at a higher rate than the rest of the apparel industry, growing at a compound annual growth rate (CAGR) of 6 percent from 2010 to 2015, compared to just 4 percent CAGR for the rest of the apparel industry, according to Euromonitor.
And the demand for new shoes — especially sneakers — doesn’t appear as though it will slow down anytime soon, as TechNavio Infiniti Research forecasts the global footwear market will reach $216 billion in sales by 2019.
Sales of women’s and children’s footwear alone is expected to lead to a $31.2 billion increase in U.S. sales by 2020, according to Euromonitor.
“Footwear continues to outpace apparel, driven by a wider assortment of products, the proliferation of athleisure and fashion’s infiltration into men’s and children’s footwear,” according to Euromonitor’s report on the footwear industry entitled “Comfort Conquers the Global Footwear Market.”
Fashion is largely fueling the rise in footwear sales, as many consumers, especially millennials, “prefer matching their footwear with their daily outfits,” according to the TechNavio report.
“The population in the age group between 14 [and] 30 years is relatively more fashion-conscious and contributes considerably to the replacement purchase of footwear.”
Comfort is also a “major priority” for consumers when it comes to footwear, but not at the expense of style. Fortunately, for many consumers, these two trends are dovetailing nicely in the recent boom in casual athletic gear, which is becoming more and more acceptable as clothing outside of the gym as well.
For example, Skechers' sales increased by 32 percent in 2015, according to the Euromonitor report.
“With the proliferation of athleisure, consumers are less inclined to compromise on comfort for style,” according to the Euromonitor report.
The footwear market is also getting a big boost from the popularity and high visibility of sneakers and athletic shoes.
Sports footwear grew even faster than the sales of other footwear between 2010 and 2015, with a CAGR of 7 percent during that time, and that figure is also expected to grow in coming years as brands realize the value of a successful sports footwear marketing campaign and partnerships with popular athletes and teams.
“The increase in marketing initiatives by vendors is also expected to contribute to the market growth during the forecast period,” according to the TechNavio report. “Celebrity-endorsed fashion, sponsoring sports teams and attracting consumers through social media are some marketing initiatives adopted by vendors. For instance, during 2014, Adidas entered a 10-year sponsorship agreement with Manchester United for $1.13 billion for advertising their brand.”
Nike’s Instagram followers jumped by almost 30 million users in 2015 alone.
For a brand, aligning with the right athlete or team at the right time can mean some pretty big bucks for all involved.
Morgan Stanley estimated recently that the partnership between Under Armour and Stephen Curry, the NBA’s reigning two-time MVP, has been worth about $14 billion to the sports apparel company. Curry and his Golden State Warriors' meteoric rise to the top of the NBA pantheon also helped increase sales of Under Armour’s basketball shoes 350 percent in a year.
And everybody knows how popular Michael Jordan and his trendy Air Jordan line of shoes and sports apparel products has been for Nike over the years. Nike has made billions selling Jordan’s gear since the mid-80s, and Forbes estimated that Jordan himself now nets about $100 million annually from the arrangement, putting his net worth north of $1 billion and helping to make him the first majority owner of an NBA franchise (the Charlotte Hornets) who was also a former player.
As apparel sales continue to drop, all these positive trends for the footwear industry suggest that maybe more apparel brands might want to start thinking about getting into the footwear game.
It’s a booming market, after all.