The latest survey conducted by Anci, the trade association of the Italian footwear industry, has confirmed that the situation among its members is raising concerns because of a decline in production and domestic consumption, accompanied by a slowdown in the growth of exports and an increase in the number of companies complaining about liquidity problems and late payments by their customers.
Italy's shoe production, which started rising again in 2009, is now declining. Based on the results of its survey, Anci has determined that Italy's footwear production registered a 4.8 percent drop in volume for the first nine months of 2012. Average price increases of 2.4 percent domestically and 3.3 percent on foreign markets still led to an overall drop of 2.1 percent estimated for the industry's turnover in terms of value.
According to the latest available trade statistics, the Italian footwear industry exported a total of 152.5 million pairs of shoes in the eight months between January and August 2012, about 12.6 million of pairs less than the same period in 2011. Thanks to higher average prices, export sales continued to rise in terms of value, reaching a level of €5.36 billion for the period, but the growth rate has been gradually declining from one quarter to the next. A year-on-year improvement of 5.7 percent in the first quarter was followed by a 3.8 percent increase in the second quarter and by a modest 1.4 percent in July and August. Preliminary data suggest that there was a decline in export value in September.
The markets of the European Union, where seven out of 10 pairs of Italian shoes are exported every year, were most affected by the economic crisis in the first eight months of 2012, with declines of 12.5 percent in volumes and 4.7 percent in value compared with the January-August period of 2011. For Germany, the Netherlands and Austria, the negative trends ranged between 15 percent and 20 percent in volume and between 8 percent and 10 percent in value. Double-digit drops were experienced in both volumes and value for Spain, Poland and Greece. In the case of France, Italy's top target market, exports fell by 9 percent in volume, but grew by 1.2 percent in value.
Outside Europe, the results were much more satisfactory, with exports to Russia rising by 17.1 percent in value and by 11.2 percent in volume. The growth was particularly remarkable in the case of Kazakhstan, with Italy's exports to that country up by 30 percent in value. The growth in Italy's exports to Ukraine slowed down but still registered an increase of 6.7 percent in value and 0.2 percent in volume.
Exports to the Far East marked an overall 28.4 percent increase in value. Sales in Japan, Hong Kong, China and South Korea grew by 16.5 percent, 26.5 percent, 60 percent and 36 percent, respectively. The “China+Hong Kong” aggregate absorbed a total turnover of €252 million, representing Italy's seventh largest market. In the Middle East, exports rose by 16.7 percent in value, with increases of 16.3 percent in the United Arab Emirates and 25 percent in Saudi Arabia.
The good results in these regions were driven by the joint efforts of individual companies and a number of promotional initiatives by Anci, backed by the Italian government and ICE, Italy's foreign trade institute. The year 2013 will be marked by the first edition of Micam in Shanghai in April.
Meanwhile, the first nine months of 2012 were characterized by a sharp decline in Italians' expenditures on footwear, after four years of stagnation. Italy's domestic shoe consumption suffered estimated decreases of 3.8 percent in volume and 4.2 percent in value during the period, according to the fashion consumer panel of Sita Research. The women's shoe segment, in particular, registered an estimated drop of 5 percent in both volume and value, with low-cut women's walking shoes down by 10 percent. Sales of children's and junior shoes also registered a negative performance on the domestic market, going down by 5.4 percent in value. These segments are historically less sensitive to cyclical phases.
Italy's shoe imports decreased, too, helping to improve the country's trade balance in the sector. In the first eight months of last year, they fell by 13.1 percent in volume, down to 225.5 million pairs. They declined by 3.8 percent in value, due to a rise in average prices of 10.8 percent.
For the coming months, the outlook for the Italian shoe sector is highly uncertain, as the deterioration of the international economic situation is combined with the instability of the domestic market, due in part to the government's austerity program and the political elections due to be held in the country next month. Anci's survey shows that 37 percent of Italy's shoemakers are expecting a further drop in production, and 50 percent of them are anticipating lower orders from the domestic market in the first half of 2013. The outlook is less pessimistic on the export front: 22 percent of respondents expect a general decline in foreign orders in the first half of the year but 41 percent of them expect stability, and 37 percent remain generally optimistic on this score.
Calling for “a new momentum,” Cleto Sagripanti, president of Anci, says that the absolute priority is to reduce taxes, especially on labor. The number of companies active in the shoe sector in Italy remains higher than at the end of 2010, but in the course of 2012, it fell by 3.4 percent to a total of 5,414. The number of their employees declined by 0.8 percent to 80,273.