Brazilian shoe manufacturers lost 30 percent of their export volume in the last few years, due in part to the strong value of their national currency and a desire to satisfy the growing domestic demand. As these two variables have changed, many Brazilian shoe companies have been looking again at export markets to fill their production lines.
Domestic shoe consumption fell by an estimated 4 percent to 784 million pairs last year, contributing to a drop in Brazil's shoe production of 2.8 percent to 877 million pairs, and the demand is expected to decline by a further 0.2 percent in 2015. Instead, the volume of Brazilian shoe exports increased by 5.4 percent to 129.5 million pairs in 2014, but average prices went down.
Exports still declined by 11.2 percent in dollars and by 12 percent in volume during the first six months of this year, but they went up in value during the month of June. With the Brazilian real stabilizing at a low level since the beginning of 2015, foreign orders are apparently again on the rise in volume and value, especially at companies that are offering shoes with a high design content.
This was confirmed through interviews conducted at the Francal show in São Paulo earlier this month. Paquetà, for example, expects that its sales outside Brazil will grow by about 40 percent to nearly €20 million this year. With the help of a new European consultant, the parent company of Dumond, Capodarte and Lily's Closet has reorganized its product development operations to be more in tune with export demand. Sales have been particularly buoyant lately in other parts of South America, Asia and Australia. A new partner in China plans to set up 20 Capodarte stores in its country over the next three-four years.
One of the best-known Brazilian shoe designers, Jorge Bischoff, is predicting a 30 percent increase in foreign exports this year. It saw many new customers at Francal. Like Jorge Bischoff, several Brazilian companies including also Dakota and Klin have boosted their export departments lately.
An official of Klin expressed surprise at the number of visitors from as far away as Japan that he had received at his stand at Expo Riva Schuh show in Italy in June, indicating renewed foreign interest in Brazilian footwear, reversing previous trends. The company makes about 30,000 pairs of children's shoes per day, but in recent years, its export share had declined from 30 to 5 percent of the total volume.
A survey of Brazilian exhibitors at Expo Riva Schuh indicated that they signed contracts worth $3.3 million at the fair, 22 percent more than one year ago. Stronger foreign interest in Brazilian footwear had already been shown in May at the new SICC fair at Gramado, in the southern Brazilian state of Rio Grande do Sul, where visitors from Vivarte and other important European retail groups were reported.
Some 400 brands showed their new products for the first time on a surface of 15,000 square meters at Gramado. Important players in the state such as Piccadilly and West Coast did not exhibit at Francal, but they showed their new collections at Gramado and at this week's GDS show in Düsseldorf. With a total of 850 firms (including many suppliers of luggage, handbags and other accessories), the fair in São Paulo remained an important event for the national and international markets. Reacting to the competition from SICC, Francal has decided to advance its dates to June 26-29 next year.
Exports went down last year at Sapatoterapia, a well-known manufacturer of comfort shoes, but orders in hand indicate that they may grow again by 30 percent in 2015. Its collection, which now includes a more basic line with an entry price level of €25 per pair, attracted interest from various foreign buyers at Francal, including one from Russia.
Bottero saw many foreign buyers coming back to Francal after several years of absence, particularly from France, Russia, South America and the U.S. One of the reasons is that its ballerinas are now about $5 cheaper than before. The value of the Brazilian real has decline by more than 20 percent, but in general, prices in dollars have dropped by only around 15 percent because of increases in raw materials and wages, said an official of Democrata, which is anticipating a 20 percent increase in foreign deliveries this year.
In contrast with the other companies interviewed by us at the fair, Schutz indicated that it is using the lower value of the real to offer better mark-ups for foreign retailers, in order to avoid watering down the positioning of the brand, which it is offering to consumers in the U.S. through a web store, supporting it through a fashion blogger.
The Brazilian shoe industry association, Abicalçados, is particularly bullish at this time about the U.S. market, which remains the biggest export outlet for Brazilian footwear companies, in view of the strengthening economy in the country. With an extended range of products and a new warehouse in Florida like the one it has in the U.K., Anatomic & Co. has started to do business with Nordstrom.
Meanwhile, Abicalçados and Apex Brasil, the national export promotion agency, are trying to spend their export promotion budget more efficiently than before by inviting mainly big buyers who are genuinely interested in purchasing Brazilian footwear to the Brazilian shoe shows. A delegation of buyers from Sears/K-Mart in the U.S. got the VIP treatment at Francal, together with the representatives of major retailers in Colombia and Russia, and one of the members of the U.S. team indicated to us that they “will probably write some paper (orders)” after the show.
The U.S., Russia and Colombia have been selected as “focus countries” for the promotion of Brazilian footwear abroad, along with Germany, Mexico, China and the United Arab Emirates.
With a new project management structure, Abicalçados is following a new process for the invitation of foreign buyers. Those who are interested in participating in Abicalçados' Image Program are interviewed before they come over to determine the type of footwear in which they are interested prior to the organization of match-making sessions with the appropriate producers.
Abicalçados plans to organize “virtual show windows” for Brazilian companies participating in the FN Platform show in Las Vegas, and possibly also for theMicam in Milan. The association will have a stand at the Chic fair in Shanghai in October, but will first organize a trade mission to Beijing at the end of September.