Import Duties and COVID-19 Trampling the Footwear Industry

June 19, 2020


The footwear industry has undergone vast changes over the years as more and more manufacturing has left the US for China, Vietnam, Indonesia and other locations. Today, it is estimated that 99% of shoes sold in the U.S. are imported.

China Remains the Largest Country for U.S. Footwear Imports

According to the Footwear Distributors and Retailers of America, the top three countries for US Imports

Ranked by Dollar Amount

China - 50%
Vietnam – 26%
Indonesia – 6.2%

Ranked by Volume

China - 50%
Vietnam – 20.4%
Indonesia – 4.6%

COVID-19 and Tariffs Impact U.S. Footwear Imports

However, the pandemic’s economic fallout combined with tariffs from the trade war with China has resulted in U.S. footwear imports declining 19.1% for the year through April according to the U.S Commerce Department’s Office of Textile & Apparel (OTEXA). Leading the decline was China, declining 34.2%. However, footwear imports from Vietnam, Cambodia and Germany increased 3.8%, 30% and 13.7% respectively.

U.S. imports will likely be depressed for a while due to COVID-19 as April footwear sales in the US totaled $1.2 billion, a 56% decline on the same last month last year. Total footwear sales in the last 12 months, ending April 2020, amounted to US$31.5 billion, an 8% fall year-on-year.

Athletic Shoes Win the Race

Not all footwear has seen declines though. According to NPD Group, athletic brands that were outperforming the market before the pandemic continued to do so, and those that underperformed did not improve. Two standout brands in April were Hoka One One and On Running, both of which had strong increases despite the steep declines within the overall market.

Meanwhile, leisure and performance shoes were down 50% and fashion footwear dropped 66%. Sales of slippers actually increased 12% in April from March as consumers outfitted themselves for comfort at home, as noted by NPD Group.

Product Returns Play Significant Role

Despite e-commerce sales increasing and benefiting some shoe brands, shopping online can see return rates as high as 30%, according to industry estimates. When consumers don’t have the ability to try on the product or see it in-person before purchase, the seller must learn to cope with the results.

According to a survey conducted by returns solutions provider, Optoro, 97% of shoppers said they would continue to buy from a brand where they had a positive experience, while a bad experience would deter 89% from ever coming back. Clearly, flexible returns policies are an option to improve the customer experience. Optoro noted that “By creating a wider returns window, retailers can spread out any spikes over time and build long-term customer loyalty.”

Covid Impact on Return Policies

COVID-19 has changed many retailers’ returns policies. According to the USA Today, Kohl’s extended its return policy of 180 days by an additional 30 days and returned merchandise is kept off the sales floor for 48 hours. Since April 20, Walmart has temporarily stopped accepting returns of food, paper goods, home cleaning supplies, pharmacy, apparel, and health and beauty items.

Sales of shoes and apparel will likely pick up as the pandemic eases and stores fully reopen. In particular, as we approach the holiday season in the second half of the year, growth in sales is expected.

 


ABOUT SPEND MANAGEMENT EXPERTS

Spend Management Experts provides strategic guidance to optimize your supply chain. Using cost modeling technology and market intelligence, we help companies with their transportation, distribution and fulfillment spend. Often large shippers can reduce their spend across the supply chain by 20% or more. We specialize in reducing distribution costs, increasing efficiencies, dynamic reporting, greater budgeting and forecasting accuracy and optimizing supply chain execution. We leverage our proprietary models to identify savings and build negotiation strategies based on data and business cases. As industry experts, our fresh approach provides clients with straightforward details on exactly how savings are derived. Spend Management Experts is your competitive edge, delivered.

Connect with Spend Management Experts on TwitterLinkedIn, and the Spend Management Experts blog.

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Import Duties and COVID-19 Trampling the Footwear Industry

June 19, 2020


The footwear industry has undergone vast changes over the years as more and more manufacturing has left the US for China, Vietnam, Indonesia and other locations. Today, it is estimated that 99% of shoes sold in the U.S. are imported.

China Remains the Largest Country for U.S. Footwear Imports

According to the Footwear Distributors and Retailers of America, the top three countries for US Imports

Ranked by Dollar Amount

China - 50% Vietnam – 26% Indonesia – 6.2%

Ranked by Volume

China - 50% Vietnam – 20.4% Indonesia – 4.6%

COVID-19 and Tariffs Impact U.S. Footwear Imports

However, the pandemic’s economic fallout combined with tariffs from the trade war with China has resulted in U.S. footwear imports declining 19.1% for the year through April according to the U.S Commerce Department’s Office of Textile & Apparel (OTEXA). Leading the decline was China, declining 34.2%. However, footwear imports from Vietnam, Cambodia and Germany increased 3.8%, 30% and 13.7% respectively. U.S. imports will likely be depressed for a while due to COVID-19 as April footwear sales in the US totaled $1.2 billion, a 56% decline on the same last month last year. Total footwear sales in the last 12 months, ending April 2020, amounted to US$31.5 billion, an 8% fall year-on-year.

Athletic Shoes Win the Race

Not all footwear has seen declines though. According to NPD Group, athletic brands that were outperforming the market before the pandemic continued to do so, and those that underperformed did not improve. Two standout brands in April were Hoka One One and On Running, both of which had strong increases despite the steep declines within the overall market. Meanwhile, leisure and performance shoes were down 50% and fashion footwear dropped 66%. Sales of slippers actually increased 12% in April from March as consumers outfitted themselves for comfort at home, as noted by NPD Group.

Product Returns Play Significant Role

Despite e-commerce sales increasing and benefiting some shoe brands, shopping online can see return rates as high as 30%, according to industry estimates. When consumers don’t have the ability to try on the product or see it in-person before purchase, the seller must learn to cope with the results. According to a survey conducted by returns solutions provider, Optoro, 97% of shoppers said they would continue to buy from a brand where they had a positive experience, while a bad experience would deter 89% from ever coming back. Clearly, flexible returns policies are an option to improve the customer experience. Optoro noted that “By creating a wider returns window, retailers can spread out any spikes over time and build long-term customer loyalty.”

Covid Impact on Return Policies

COVID-19 has changed many retailers’ returns policies. According to the USA Today, Kohl’s extended its return policy of 180 days by an additional 30 days and returned merchandise is kept off the sales floor for 48 hours. Since April 20, Walmart has temporarily stopped accepting returns of food, paper goods, home cleaning supplies, pharmacy, apparel, and health and beauty items. Sales of shoes and apparel will likely pick up as the pandemic eases and stores fully reopen. In particular, as we approach the holiday season in the second half of the year, growth in sales is expected.  
ABOUT SPEND MANAGEMENT EXPERTS Spend Management Experts provides strategic guidance to optimize your supply chain. Using cost modeling technology and market intelligence, we help companies with their transportation, distribution and fulfillment spend. Often large shippers can reduce their spend across the supply chain by 20% or more. We specialize in reducing distribution costs, increasing efficiencies, dynamic reporting, greater budgeting and forecasting accuracy and optimizing supply chain execution. We leverage our proprietary models to identify savings and build negotiation strategies based on data and business cases. As industry experts, our fresh approach provides clients with straightforward details on exactly how savings are derived. Spend Management Experts is your competitive edge, delivered. Connect with Spend Management Experts on TwitterLinkedIn, and the Spend Management Experts blog.

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