The declining profitability of German specialty retailers is threatening to reduce the number of stores operating in the market, according to the BDSE, the German shoe retailers’ association. The average gross profit achieved by its member shrank to 37.7 percent in 2004, a decrease of 0.4 percentage points from the previous year.
Their profitability could decline further if the new government decides to go ahead with a planned increase in the German value-added tax (VAT), which would have to be compensated by an increase of between 3.8 and 8 percent in the retailers’ mark-ups to offset the related additional costs.
There are 5,800 footwear stores currently in Germany, with about 10,800 shops. People employed within the German shoe retail business total 67,000. Of these people, 64 percent are part-time employees, 27 percent are full-time employees and every 10th shop-owner or family member is involved in the selling process.
The BDSE is predicting flat sales of shoes at the retail level in Germany this year, or an increase of 0.5 percent at the most, after a 3 percent drop in 2004. A change in the economy is unlikely to lead to any higher growth rates for the foreseeable future.
In the 1st half of 2005, total imports of footwear in Germany rose by 5.7 percent in volume to 235.3 million pairs, and their average selling price per pair dropped by 7.1 percent to €7.94. Imports of leather shoes grew by 7.8 percent to 100.77 million pairs, but their average price fell by 9.5 percent to €12.64 per pair. In this product category, imports of children’s shoes rose by 16.9 percent, men’s shoes were up by 15.9 percent, while women’s shoes increased by 19.9 percent. Imports of leather sandals instead decreased by 14.5 percent.
Germany imported 8.3 percent more shoes with plastic uppers, an increase that was partly due to a 55 percent increase for women’s shoes to 12.5 million pairs. Imports of rubber shoes declined by 9.7 percent, whereas canvas shoes grew by 2.8 percent.
Total shoe exports from Germany increased by 48.4 percent to 72.8 million pairs during the 1st half of 2005, but this was due mainly to a 111.7 percent jump in plastic shoes to 25.6 million pairs. In fact, the average selling price of exported shoes fell by 26.2 percent to €12.33 a pair. Exports of leather footwear climbed by only 18.9 percent during the period to 30.9 million pairs, with an increase of 7.5 percent in children’s shoes in spite of the demise of Elefanten. Exports of men’s leather shoes grew by 13.3 percent to 6.3 million pairs. For women’s leather shoes, there was a 29.4 percent jump to 11.3 million pairs.