More than two-thirds of Italian shoe makers expect their revenues to fall by over 20 percent this year, assuming no worsening of the Covid-19 situation this autumn.
In a survey carried out in July by Confindustria Moda’s research center, and released by the footwear association Assocalzaturifici, showed that 52 percent of respondents expect a drop varying from 20 to 50 percent, 13 percent foresee a decline of 50-70 percent and 4 percent a drop of more than 70 percent. Only 1 percent anticipate an increase in sales and 5 percent forecast stable revenues. A further 10 percent predict a decline of 1 to 10 percent and 15 percent a decrease of 10-20 percent.
Overall, the sector is expected to suffer a 23.8 percent decrease in turnover in 2020, representing a lost in revenues of €3.4 billion. Due to the situation created by the Covid-19 pandemic, 73.5 percent of companies have had to revise their investments plans.
For the first half of the year, Confindustria Moda estimated that footwear manufacturers suffered a 36.3 percent year-on-year drop in revenues, representing a decline of €2.6 billion, with sales down by 34.2 percent in the second quarter, with 34 percent of companies suffering a shortfall of more than 50 percent.
Confindustria Moda’s estimates are in line with industrial production data released by the Italian statistics office Istat, that calculated a 34.9 percent year-on-year contraction in the first half following falls of 55.1 percent in March, 89.3 percent in April, 38.9 percent in May and 23.2 percent in June.
Confindustria Moda’s survey also pointed to a 30.2 percent year-on-year fall in orders during the second quarter, with 72 percent of shoe makers estimated to have registered a more than 20 percent drop.
The footwear industry continued to shrink with the number of companies down by 1.8 percent, or 77 units, to 4,249 at the end of June when compared with end 2019. The overall employee headcount decreased by 0.7 percent, or 520 people, to 74,370.
When widening the panel to include component producers, the number of companies that have shut down reaches 161 and the number of job losses totals 1,295. All main shoe producing regions registered a decline in companies, except Campania, which was up by three units. The main decreases were for the Marche region with a net loss of 63 firms, followed by Tuscany, down by 43 units, and Lombardy, down by 21.
The number of employees in the hides, leather and footwear sector that benefited from a temporary, government-sponsored layoff scheme called “cassa integrazione” surged due to the Covid-19 related lockdowns and restrictions. The number of authorized requests filled by the industry grew by 878.3 percent to 38.98 million hours.
Domestic consumption down by 30.0% in value
Italian manufacturers were hit by a decline in domestic consumption and exports.
In Italy, shoe sales fell by 30.0 percent to €2,044 million in the first half, with all product categories affected, according to a Sita Ricerca analysis. Excluding sneakers, men’s shoes were down by 35.1 percent and women’s shoes by 36.5 percent. Sport shoes and sneakers decreased by 27.6 percent. Demand for slippers, clogs and flip-flops fell by 11.8 percent, but outperformed the rest of the market as consumers bought footwear to be used at home during the lockdown.
In volume, domestic demand fell by 25.1 percent to 54.68 million pairs.
Retail prices in Italy fell by 6.6 percent on average to €37.39 a pair, partly due to the greater share of lower cost slippers and lounge footwear. All categories experienced a decline in prices, except slippers, clogs and flip-flops up by 2.7 percent to €13.29, with the women’s segment up by 5.2 percent to €14.14. However, the sharpest decrease was for traditional women’s shoes, down 4.3 percent to €49.61 a pair.
Unsurprisingly, online sales for footwear rose by 60.0 percent in volume and by 42.2 percent in value in the first semester, to represent 26.5 percent of total sales. At the end of 2019, e-commerce totaled 14.1 percent of shoe sales.
Exports down by over a quarter
Italian shoe exports fell by 25.4 percent year-on-year in value to €3,789 million in the first half and by 26.4 percent in volume to 78.7 million pairs. The average export price rose by 1.3 percent to €48.17, driven by a 20.7 percent growth for slippers to €11.01.
Among main regions, exports to the European Union decreased by 20.9 percent in value to €1,708 million, while exports to other European countries, the largest being Switzerland, the U.K., Norway and Turkey, dropped by 21.5 percent to €990.2 million.
Shipments to Eastern Europe and to the Commonwealth of Independent States contracted by 28.9 percent to €142.4 million and those to North America by 38.9 percent to €344.6 million.
Exports to the Middle East decreased by 36.8 percent to €87.4 million and sales to other Asian countries by 29.8 percent to €439.3 million.
Switzerland was the single largest export market, down by 17.8 percent to €733.2 million in value and by 25.8 percent in volume to 6.6 million pairs. The country acts as a logistics hub for many fashion brands. France ranked second, down by 27.0 percent to €581.7 million, and by 32.5 percent in volume to 13.1 million pairs, as many Italian shoe makers supply French brands. Germany was third, down by 17.1 percent to €418.5 million and down by 16.6 percent in volume to 13.7 million pairs, making it the largest export market in volume.
Overall Italian imports fell by 17.8 percent in the six-month period to €2,191 million. In volume, shipments fell by 18.7 percent to 148.1 million pairs while the average import price per pair was €14.80, up by 1.1 percent.
Italian imports from China were down by 8.2 percent in value to €382.6 million, followed by France, down by 19.9 percent to €251.4 million, and Germany, down by 10.5 percent to €180.9 million.
In the first half, Italy’s overall trade surplus in footwear narrowed by 33.8 percent year-on-year to €1,598 million.