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Page 1: The Global Footwear Market: Athletic and non-Athletic Shoes

The Global Footwear Market:Athletic and non-Athletic Shoes

August 2009

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THE GLOBAL FOOTWEAR MARKET: ATHLETIC AND NON-ATHLETIC SHOES

AUGUST 2009

The Global Footwear Market: Athletic and non-Athletic Shoes has been prepared by Packaged Facts. We serve consumer products companies and allied businesses in the United States and abroad with a complete line of research publications.

Packaged Facts market intelligence reports are specifically designed to aid the action-oriented executive by providing a thorough presentation of essential data and concise analysis.

Vice President of Publishing Don Montuori Publisher Tatjana Meerman Research Director David Sprinkle Communications Associate Daniel Granderson Author Cogitamus Consulting Publication Date August 2009

LA2091872 1-59814-280-1

All rights reserved. No part of this report may be reproduced without permission of the publisher.

Copyright © 2009 Packaged Facts

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The Global Footwear Market Table of Contents

August 2009 © Packaged Facts i

Table of Contents

The Global Footwear Market: Athletic and non-Athletic Shoes

Chapter 1: Executive Summary .................................................. 1 Scope of Report .........................................................................................1

Product Categories..............................................................................................1 Methodology...............................................................................................2

Global Footwear Market .............................................................. 3 Global Footwear Market Rises 2% Driven by Asia, Latin America ........3

Figure 1–1: Global Footwear Retail Market, 2004–2008 (in billions $)................3 Unit Volume Declines Globally .................................................................4

Figure 1–2: Global Footwear Retail Market Unit Volume, 2004–2008 (in millions of pairs).........................................................................................4

U.S. Footwear Retail Market........................................................ 5 U.S. Footwear Market Flat .........................................................................5

Figure 1–3: U.S. Footwear Retail Market and Percent of Global Footwear Market, 2004–2008 (in billions $)....................................................................5

U.S. Unit Volume Declines ........................................................................6 Figure 1–4: U.S. Footwear Apparent Consumption by Volume and Percent of

Global Footwear Market, 2004–2008 (in millions of pairs) .............................6 Imports Dominate U.S. Market ..................................................................6

Figure 1–5: Share U.S. Footwear Import Volume by Top 10 Countries of Origin, 2008 (%)..............................................................................................7

U.S. Footwear Sales by Consumer Group & Major Product Category ..7 Figure 1–6: Share of U.S. Footwear Retail Sales by Consumer Group and

Major Product Category, 2008 (%) .................................................................8 Global Footwear Market Forecast .............................................. 9

Global Footwear Market to Reach $238 Billion by 2013 .........................9 Figure 1–7: Global Footwear Retail Market Forecast, 2008–2013 (in billions $).9 Global Unit Volume Consumption to Reach 12.1 Billion Pairs ..........................10 Figure 1–8: Global Footwear Retail Market Unit Volume Forecast, 2008–2013

(in millions of pairs).......................................................................................10 U.S. Footwear Market ................................................................ 11

U.S. Footwear Market to Suffer from Thriftier Consumer Habits.........11 Figure 1–9: U.S. Footwear Retail Market Forecast, 2008–2013 (in billions $) ..11 Unit Volume Declines Globally ..........................................................................12 Figure 1–10: U.S. Footwear Retail Market Unit Volume Forecast, 2008–2013

(in millions of pairs).......................................................................................12 Footwear Retail Sales by Major Channels............................... 13

Figure 1–11: Share of U.S. Footwear Sales by Major Channel, 2008 (%) ........13

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Chapter 1: Executive Summary [cont.]

Competitive Landscape .............................................................14 Footwear Market Highly Fragmented .................................................... 14

Table 1–1: Selected Footwear Marketers with Footwear Sales Greater Than $1 Billion, 2004–2008 (in millions $)............................................................. 14

Marketplace and Consumer Trends..........................................15 Down Economy Means Thriftier Consumer .......................................... 15

Fashion and Footwear Industries Feeling the Pinch ......................................... 15 Figure 1–12: Quarterly Clothing and Clothing Accessory Store Sales,

1992–Q1, 2009 (in billions $)........................................................................ 16 Consumer Footwear Expenditures........................................................ 16 Kids Footwear Has Three Protections................................................... 16 Company Ethics and Added Values Important to Consumers............ 17 Counterfeiting, a Dangerous Business ................................................. 17 Industry Hopes to See End Depression-Era Tax .................................. 18 Style and Innovation Trends: Personalized Footwear ......................... 18 Comfort versus Style: Footwear No longer Easily Categorized.......... 19 Technology Offers Good Shoes and Good Health ............................... 19 Aggressive Designs Versus Staid Style................................................ 20

Marketing Outreach....................................................................21 Recession Time to Engage Loyal Consumers...................................... 21

Integration Important as Media Preferences Shift ............................................. 21 Jimmy Choo Out of The Shoe Box Thinking ..................................................... 22

Virtual Marketing and Etail Make Most of Recession Dollars.............. 22 All the Simplicity of Email .................................................................................. 22

Make Use of Alternative Advertising Media .......................................... 23 The Puma Past Masher..................................................................................... 23

Behavioral Targeting in Diverse Consumer Market ............................. 23 Word-of-Mouth Increasingly Important ................................................. 24

Social Networking to Play Big Part in WOM...................................................... 24 Don’t Forget the Human Touch ......................................................................... 24

Product Placement Opportunities Abound........................................... 24 Nike Active in Broadcast Placement ................................................................. 25

Reliance on Sports Icons Shifting More to Celebrity ........................... 25 Payless and Summer Rayne Oakes Go Green................................................. 26

Footwear Consumer...................................................................27 Men’s Athletic Footwear Penetration Levels Highest at 20%.............. 27

Table 1–2: Total Consumer Penetration Levels for Men’s Footwear Bought in the Past 12 Months, 2004-2009 (%) ......................................................... 27

Women’s Non-Athletic Footwear Penetration Levels Highest at 23%....................................................................................................... 28 Table 1–3: Consumer Penetration Levels for Women’s Footwear Bought in

the Past 12 Months, 2004-2009 (%)............................................................. 28

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Chapter 1: Executive Summary [cont.] For Footwear, Consumers Shop Wal-Mart Most ...................................28

Table 1–4: Consumer Penetration Levels for Stores Shopped Most Often for Shoes, by Women, Men and Total Population, 2006-2008 (%) .........30-31

Chapter 2: The Market ............................................................... 33

Scope of Report .......................................................................................33 Product Categories............................................................................................33

Methodology.............................................................................................34 Global Footwear Market ............................................................ 35

Global Footwear Market Rises 2% Driven by Asia, Latin America ......35 European Growth Tempers ...............................................................................35 U.S. Drags the Global Market Down .................................................................35 Figure 2–1: Global Footwear Retail Market, 2004–2008 (in billions $)..............36 Global Five-Year Growth at 6%.........................................................................36 Table 2–1: Global Footwear Retail Market and Year-over-Year Percentage

Change, 2004–2008 (in millions $) ...............................................................37 Unit Volume Declines Globally ...............................................................37

Figure 2–2: Global Footwear Retail Market Unit Volume, 2004–2008 (in millions of pairs).........................................................................................................38

Table 2–2: Global Footwear Retail Market Unit Volume and Year-over-Year Percentage Change, 2004–2008 (in millions of pairs)..................................38

U.S. Footwear Retail Market...................................................... 39 U.S. Footwear Market Flat .......................................................................39

Figure 2–3: U.S. Footwear Retail Market and Percent of Global Footwear Market, 2004–2008 (in billions $)..................................................................39

U.S. Market Losing Global Dominance .............................................................40 Table 2–3: U.S. Footwear Retail Market and Year-over-Year Percentage

Change, 2004–2008 (in millions $) ...............................................................40 U.S. Unit Volume Declines ......................................................................40

Figure 2–4: U.S. Footwear Apparent Consumption by Volume and Percent of Global Footwear Market, 2004–2008 (in millions of pairs) ...........................41

Table 2–4: U.S. Footwear Apparent Consumption by Volume and Year-over-Year Percentage Change, 2004–2008 (in millions of pairs) .........................41

Imports Dominate U.S. Market ................................................................42 Figure 2–5: U.S. Footwear Import Volume and Percent of Apparent

Consumption, 2004–2008 (in millions of pairs)............................................42 Table 2–5: U.S. Footwear Import Volume and Year-over-Year Percentage

Change, 2004–2008 (in millions of pairs) .....................................................43 China Imports Declining ....................................................................................43 Is Vietnam the New China for U.S. Imports?.....................................................43 Table 2–6: U.S. Footwear Import Volume by Top 10 Countries of Origin, 2004–

2008 (in millions of pairs)..............................................................................44 Figure 2–6: U.S. Footwear Import Volume Shares, by Top 10 Countries of

Origin, 2008 (%)............................................................................................44

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Chapter 2: The Market [cont.] U.S. Footwear Sales by Consumer Group: Women, Men, Kids .......... 45

Table 2–7: U.S. Footwear Retail Market by Consumer Group, Women, Men, Kids, 2004–2008 (in millions $) .................................................................... 45

Figure 2–7: Share of U.S. Footwear Retail Market by Consumer Group, 2008 (%)....................................................................................................... 46

U.S. Footwear Sales by Major Product Category ................................. 46 Table 2–8: U.S. Footwear Retail Market by Major Product Category, 2004–2008 (in millions $) ............................................................................. 47 Figure 2–8: Share of U.S. Footwear Retail Market by Major Product Category,

2008 (%) ....................................................................................................... 47 U.S. Footwear Sales by Consumer Group & Major Product Category................................................................................................. 48

Women’s, Children’s Athletic Footwear Strong ................................................. 48 Men’s, Children’s Non-Athletic Decline ............................................................. 48 Table 2–9: U.S. Footwear Retail Market by Consumer & Major Product Type,

2004–2008 (in millions $) ............................................................................. 48 Women’s Non-Athletic, Men’s Athletic Growth Stable....................................... 49 Figure 2–9: Share of U.S. Footwear Retail Sales by Consumer Group and Major Product Category, 2008 (%)................................................................ 49

Global Footwear Market Forecast.............................................50 Global Footwear Market to Reach $238 Billion by 2013....................... 50

Figure 2–10: Global Footwear Retail Market Forecast, 2008–2013 (in billions $) ................................................................................................. 50 Global Growth at Annual Rate of 4% ................................................................ 51 Table 2–10: Global Footwear Retail Market and Year-over-Year Percentage

Change, 2008–2013 (in millions $)............................................................... 51 Global Unit Volume Consumption to Reach 12.1 Billion Pairs .......................... 51 Figure 2–11: Global Footwear Retail Market Unit Volume Forecast, 2008–2013 (in millions of pairs) ................................................................... 52 Table 2–11: Global Footwear Retail Market Unit Volume Forecast and Year-over-Year Percentage Change, 2008–2013 (in millions of pairs)........ 52

U.S. Footwear Market .................................................................53 U.S. Footwear Market to Suffer from Thriftier Consumer Habits ........ 53

Figure 2–12: U.S. Footwear Retail Market Forecast, 2008–2013 (in billions $) ................................................................................................. 53 U.S. Global Market Share to Drop Two Points by 2013 .................................... 54 Overall Growth Estimated at 1% Annually to Reach $48.4 Billion .................... 54 Table 2–12: U.S. Footwear Retail Market Forecast and Year-over-Year

Percentage Change, 2004–2008 (in millions $) .......................................... 54 Segments to Show Similar Growth.................................................................... 54 Table 2–13: U.S. Footwear Retail Market Forecast by Consumer Group & Major Product Category, 2008–2013 (in millions $)...................................... 55 Unit Volume Declines Globally .......................................................................... 55

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Chapter 2: The Market [cont.] Figure 2–13: U.S. Footwear Retail Market Unit Volume Forecast, 2008–2013 (in millions of pairs) ...................................................................56 Table 2–14: U.S. Footwear Retail Market Unit Volume Forecast and Year-over-Year Percentage Change, 2004–2008 (in millions of pairs) ........56

Chapter 3: Retail & Distribution................................................ 57

Overview...................................................................................................57 Footwear Distribution Method and Class ..............................................57

Method: Wholesale or Direct .............................................................................57 Class: Authorized or Mass.................................................................................58

Footwear Retail Channels Overview ......................................................58 Shoe Stores.......................................................................................................59 Discount Shoe Stores........................................................................................59 Sporting Goods and Athletic Shoe Stores.........................................................59 General Merchandise: Mass Discounters..........................................................60 General Merchandise: Department Stores and National Chains.......................60 Apparel: Specialty Apparel Stores.....................................................................60 Apparel: Off-Pricers...........................................................................................60 Non-Store Retail: Catalog .................................................................................60 Non-Store Retail: The Internet ..........................................................................61

Footwear Retail Sales by Major Channels............................... 62 Shoe Stores Remain the Medium of Choice .....................................................62 Table 3–1: U.S. Footwear Retail Market by Major Channel, 2004–2008 (in millions $).................................................................................................62 General Merchandise Stores Still Second, but Struggling.................................63 Apparel Stores Less of a Force.........................................................................63 Sporting Goods Stores on the Rise...................................................................63 Catalogs Tried and True, Internet Still on Trial..................................................63 Zappos.com Gets in Step..................................................................................64 Figure 3–1: Share of U.S. Footwear Sales by Major Channel, 2008 (%) ..........65 Footwear as a Percent of Retailer Sales by Channel........................................65 Table 3–2: U.S. Footwear Retail Sales as a Percent of Selected Retail Channel Sales, 2004–2008 (%)....................................................................66

Retail Channels and Stores by Consumer Preference........... 67 Footwear Consumers Prefer to Shop at Specialty Apparel Stores....................67 Figure 3-2: Consumer Penetration Levels for Type of Retail Shopped Most

Often for Shoes, by Adult Users, 2008 (%)..................................................67 Wal-Mart, Payless Still Top Choice for Consumers...........................................68 Kohl’s Hopes Celebrity Will Kick Sales Up a Notch...........................................68 Economy Hard on Off-Pricers Too ....................................................................68 And from Behind Comes Famous Footwear .....................................................68 Table 3-3: Consumer Penetration Levels for Stores Shopped Most Often for Shoes, by Adult Users, 2006-2008 (%) ..............................................69-70

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Chapter 4: Competitive Landscape...........................................71 Overview .................................................................................................. 71 Footwear Market Highly Fragmented .................................................... 71

Nike the Global Leader...................................................................................... 71 Adidas at Number 2........................................................................................... 71 Other Top Competitors: Puma, Asics, New Balance, C&J Clark ...................... 72 Table 4–1: Selected Footwear Marketers with Footwear Sales Greater Than

$1.0 Billion, 2004–2008 (in millions $).......................................................... 72 Athletic Footwear Market More Concentrated at Top........................................ 72 Niche Athletic Sales Lower but Offerings Diverse............................................. 73 Nike Leads U.S. Footwear Market with Double-Digit Share.............................. 73 Followed By Adidas, Jones Apparel in Single Digits ......................................... 73 Privately Held Companies Share Considerable ................................................ 73 Table 4–2: Selected Global Footwear Marketers with U.S. Sales, 2004–2008 (in millions $) ............................................................................. 74 Figure 4–1: Share of U.S. Footwear Wholesale Market by Selected Company, 2008 (%)...................................................................................... 75

Consolidation and Strategic Acquisitions All but Stopped................. 75 Nike on the Prowl? ............................................................................................ 76 Skechers Diggin’ in Its Heelys........................................................................... 76 LaCrosse Footwear, Inc. Expands with Sustainable Acquisition....................... 77

Selected Company Profiles .......................................................78 Nike, Inc.......................................................................................78

Overview .................................................................................................. 78 Performance ............................................................................................ 79

Figure 4–2: Nike, Inc. Total Net Sales, 2005–2009 (in millions $) .................... 80 Table 4–3: Nike, Inc. Total Net Sales and Year-over-Year Percentage Change, 2005–2009 (in millions $)............................................................... 80 Sales by Product Category................................................................................ 81 Figure 4–3: Share of Nike, Inc. Total Net Sales by Product Category, 2009 (%) ................................................................................................................ 81 Sales by Geographic Region............................................................................. 82 Figure 4–4: Share of Nike, Inc. Total Net Sales by Geographic Region, 2009

(%) ................................................................................................................ 82 Footwear Sales Solid Despite Economy ........................................................... 83 Figure 4–5: Nike, Inc. Footwear Net Sales and Percent of Total Net Sales,

2005–2009 (in millions $) ............................................................................. 83 Table 4–4: Nike, Inc. Total Net Sales and Year-over-Year Percentage Change, 2005–2009 (in millions $)............................................................... 84 Cole Haan, Converse and Other Sales Did Suffer ............................................ 84 Figure 4–6: Nike, Inc. Net Sales of Cole Haan, Converse & Other Products and Percent of Total Net Sales, 2005–2009 (in millions $) .......................... 85 Table 4–5: Nike, Inc. Total Net Sales and Year-over-Year Percentage Change, 2005–2009 (in millions $)............................................................... 85

Brand Portfolio ........................................................................................ 86 Table 4–6: Nike Brand Portfolio ........................................................................ 86

Timeline of Significant Events ............................................................... 87 Table 4–7: Nike Timeline of Significant Events ................................................. 87

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Chapter 4: Competitive Landscape [cont.] Under Armour, Inc. .................................................................... 88

Overview...................................................................................................88 Performance.............................................................................................88

Figure 4–7: Under Armour, Inc. Total Net Sales, 2004–2008 (in millions $) .....89 Table 4–8: Under Armour, Inc. Total Net Sales and Year-over-Year Percentage Change, 2004–2008 (in millions $)............................................90 Sales by Product Category................................................................................90 Figure 4–8: Share of Under Armour, Inc. Total Net Sales by Product Category, 2008 (%).......................................................................................91 Sales by Geographic Region.............................................................................92 Figure 4–9: Share of Under Armour, Inc. Total Net Sales by Geographic Region, 2008 (%)..........................................................................................92 Footwear Sales See Astounding Incremental Growth.......................................92 Figure 4–10: Under Armour, Inc. Footwear Net Sales and Percent of Total Net Sales, 2004–2008 (in millions $) ............................................................93 Table 4–9: Under Armour, Inc. Total Net Sales and Year-over-Year Percentage Change, 2004–2008 (in millions $)............................................93

Product Portfolio......................................................................................94 Table 4–10: Under Armour Footwear Product Portfolio ....................................94

Timeline of Significant Events................................................................95 Table 4–11: Under Armour Timeline of Significant Events................................95

Skechers, USA Inc. .................................................................... 96 Overview...................................................................................................96 Performance.............................................................................................97

Figure 4–11: Skechers USA, Inc. Total Net Sales, 2004–2008 (in millions $) ..97 Table 4–12: Skechers USA, Inc. Total Net Sales and Year-over-Year

Percentage Change, 2004–2008 (in millions $)............................................98 Sales by Channel ..............................................................................................98 Figure 4–12: Share of Skechers USA, Inc. Total Net Sales by Channel, 2008 (%) .......................................................................................................98 Sales by Geographic Region.............................................................................99 Figure 4–13: Share of Skechers USA, Inc. Total Net Sales by Geographic

Region, 2008 (%)..........................................................................................99 Product Portfolio......................................................................................99

Table 4–13: Skechers USA Footwear Product Portfolio..................................100 Table 4–14: Skechers USA Licensed Footwear Product Portfolio ..................101

Timeline of Significant Events..............................................................102 Table 4–15: Skechers USA Timeline of Significant Events .............................102

Jones Apparel Group .............................................................. 103 Overview.................................................................................................103 Performance...........................................................................................104

Figure 4–14: Jones Apparel Group Total Net Sales, 2004–2008 (in millions $)...............................................................................................105

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Chapter 4: Competitive Landscape [cont.] Table 4–16: Jones Apparel Group Total Net Sales and Year-over-Year

Percentage Change, 2004–2008 (in millions $) ......................................... 105 Sales by Channel ............................................................................................ 106 Figure 4–15: Share of Jones Apparel Group Total Net Sales by Channel, 2008 (%) ..................................................................................................... 106 Sales by Geographic Region........................................................................... 107 Figure 4–16: Share of Jones Apparel Group Total Net Sales by Geographic

Region, 2008 (%)........................................................................................ 107 Footwear Sales ............................................................................................... 107 Figure 4–17: Jones Apparel Group Footwear & Accessories Net Sales and

Percent of Total Net Sales, 2004–2008 (in millions $)) .............................. 108 Table 4–17: Jones Apparel Group Total Net Sales and Year-over-Year

Percentage Change, 2004–2008 (in millions $) ......................................... 108 Brand & Product Portfolio .................................................................... 109

Table 4–18: Jones Apparel Group Footwear Product Portfolio....................... 109 Timeline of Significant Events ............................................................. 110

Table 4–19: Jones Apparel Group Timeline of Significant Events .................. 110 Deckers Outdoor Corporation.................................................111

Overview ................................................................................................ 111 Performance .......................................................................................... 111

Figure 4–18: Deckers Outdoor Total Net Sales, 2004–2008 (in millions $) .... 112 Table 4–20: Deckers Outdoor Total Net Sales and Year-over-Year Percentage Change, 2004–2008 (in millions $) ......................................... 112 Sales by Channel ............................................................................................ 113 Figure 4–19: Share of Deckers Outdoor Total Net Sales by Channel, 2008 (%) .............................................................................................................. 113 Sales by Geographic Region........................................................................... 114 Figure 4–20: Share of Deckers Outdoor Total Net Sales by Geographic Region, 2008 (%)........................................................................................ 114

Brand Portfolio ...................................................................................... 115 Table 4–21: Deckers Outdoor Footwear Product Portfolio.............................. 115

Timeline of Significant Events ............................................................. 116 Table 4–22: Deckers Outdoor Timeline of Significant Events ......................... 116

Adidas AG .................................................................................117 Overview ................................................................................................ 117 Performance .......................................................................................... 118

Figure 4–21: Adidas AG Total Net Sales, 2004–2008 (in millions $) .............. 118 Table 4–23: Adidas AG Total Net Sales and Year-over-Year Percentage

Change, 2004–2008 (in millions $)............................................................. 119 Sales by Product ............................................................................................. 119 Figure 4–22: Share of Adidas AG Total Net Sales by Channel, 2008 (%) ...... 120 Sales by Geographic Region........................................................................... 120 Figure 4–23: Share of Adidas AG Total Net Sales by Geographic Region, 2008 (%) ..................................................................................................... 121 Sales by Division ............................................................................................. 122

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Chapter 4: Competitive Landscape [cont.] Figure 4–24: Share of Adidas AG Total Net Sales by Geographic Region, 2008 (%) .....................................................................................................122 Footwear Sales Grew 11% in 2008.................................................................123 Figure 4–25: Adidas AG Total Footwear Net Sales and Percent of Total Net

Sales, 2004–2008 (in millions $).................................................................123 Table 4–24: Adidas AG Total Footwear Net Sales and Year-over-Year

Percentage Change, 2004–2008 (in millions $).........................................124 Brand Portfolio.......................................................................................124

Table 4–25: Adidas AG Footwear Brand Portfolio...........................................124 Timeline of Significant Events..............................................................125

Table 4–26: Adidas AG Timeline of Significant Events ...................................125 Genesco, Inc. ........................................................................... 126

Overview.................................................................................................126 Performance...........................................................................................127

Figure 4–26: Genesco Inc. Total Net Sales, 2004–2008 (in millions $) ..........127 Table 4–27: Adidas AG Total Net Sales and Year-over-Year Percentage

Change, 2004–2008 (in millions $) .............................................................128 Sales by Division .............................................................................................128 Figure 4–27: Share of Genesco Inc. Total Net Sales by Division, 2008 (%) ...129

Brand Portfolio.......................................................................................129 Table 4–28: Genesco Inc. Footwear Brand Portfolio.......................................130

Timeline of Significant Events..............................................................130 Table 4–29: Genesco Inc. Timeline of Significant Events ...............................130

Crocs......................................................................................... 131 Overview.................................................................................................131 Performance...........................................................................................131

Figure 4–28: Crocs, Inc. Total Net Sales, 2004–2008 (in millions $) ..............133 Table 4–30: Crocs, Inc. Total Net Sales and Year-over-Year Percentage

Change, 2004–2008 (in millions $) .............................................................133 Sales by Product .............................................................................................133 Figure 4–29: Share of Crocs, Inc. Total Net Sales by Channel, 2008 (%) ......134 Sales by Geographic Region...........................................................................134 Figure 4–30: Share of Crocs, Inc. Total Net Sales by Geographic Region, 2008 (%) .....................................................................................................135 Footwear Sales ...............................................................................................135 Figure 4–31: Crocs, Inc. Total Footwear Net Sales and Percent of Total Net Sales, 2004–2008 (in millions $) ..........................................................136 Table 4–31: Crocs, Inc. Total Footwear Net Sales and Year-over-Year

Percentage Change, 2004–2008 (in millions $)..........................................136 Brand Portfolio.......................................................................................137

Table 4–32: Crocs, Inc. Footwear Brand Portfolio...........................................137 Timeline of Significant Events..............................................................138

Table 4–33: Crocs, Inc. Timeline of Significant Events ...................................138

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Chapter 5: Marketplace and Consumer Trends .....................139 Thriftiness Hot in a Down Economy.................................................... 139

The Return of the Cobbler............................................................................... 139 Figure 5–1: Total Sales for Footwear and Leather Goods Repair

Establishments, 2003–2007 (in millions $) ................................................. 140 Consumers Cut Back ...................................................................................... 140 Figure 5–2: Quarterly Retail & Foodservice Sales, 1992–Q1, 2009 (in billions $) ............................................................................................... 141 Figure 5–3: Quarterly Personal Consumption Expenditures (PCE), 1992–Q1, 2009 (in trillions $) ..................................................................... 142 Fashion and Footwear Industries Feeling the Pinch ....................................... 142 Figure 5–4: Quarterly Clothing and Clothing Accessory Store Sales, 1992–Q1, 2009 (in billions $)...................................................................... 143 High-End Branded Footwear Toughing it Out ................................................. 144

Consumer Footwear Expenditures...................................................... 144 Figure 5–5: Average Annual Footwear Expenditure Per Consumer Unit: All

Consumers Units, 2003–2007 ($)............................................................... 145 Table 5–1: Average Annual Footwear Expenditure Per Consumer Unit by

Household Income Before Tax, 2003–2007 ($).......................................... 146 Table 5–2: Average Annual Footwear Expenditure Per Consumer Unit by Age of Reference Person, 2003–2007 ($) .................................................. 146 Table 5–3: Average Annual Footwear Expenditure Per Consumer Unit by Race or Ethnic Origin of Reference Person, 2003–2007 ($) ..................... 147 Table 5–4: Average Annual Footwear Expenditure Per Consumer Unit by

Region, 2003–2007 ($)............................................................................... 147 Table 5–5: Average Annual Footwear Expenditure Per Consumer Unit by

Education Level, 2003–2007($)................................................................. 147 Kids Footwear Has Built-In Protections .............................................. 148

38 Million Kids by 1212 ................................................................................... 148 Figure 5–6: Population Forecast of U.S. Kids Age 3–11, 2008–2012 (in millions) ................................................................................................. 149 An Influential Force with Buying Power........................................................... 149 Figure 5–7: Spending Power Forecast of U.S. Kids Age 3–11, 2008–2012 (in billions $) ............................................................................................... 150 Cool Licenses Trump All ................................................................................. 150 Figure 5-8: The Inchworm Shoe...................................................................... 151 Kids Express Themselves with Crocs’s Jibbitz Charms.................................. 152

Company Ethics and Added Values Important to Consumers.......... 152 Global Consumers: Will Spend More on Ethical Brands ................................. 152 Green Particularly Important to Youth to a (Price) Point ................................. 153 Sustainable Initiatives are Financially Viable .................................................. 153 Deckers Finds a Simple Way to Sustainability ................................................ 153 Naturalizer and Dress for Success.................................................................. 154 TOMS Shoes One for One .............................................................................. 154 Danner and the Fallen Officers Drive .............................................................. 154

Counterfeiting, a Dangerous Business ............................................... 155 Staggering Consequences .............................................................................. 155 Counterfeit Counter-Intelligence...................................................................... 156

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Chapter 5: Marketplace and Consumer Trends [cont.] Industry Hopes to See End Depression-Era Tax.................................156

Style and Innovation Trends................................................... 158 Free to Re-Invent Me..............................................................................158 Make Me Unique: Personalized Footwear............................................158

Figure 5-9: Adidas’ Customizable Mi Originals................................................159 Work Shoes Get the Custom Treatment .........................................................159 Emotional Pulls the Shoes Strings Too ...........................................................159 High End Activity .............................................................................................160 Interchangeable Shoes ...................................................................................160 Figure 5-10: Sandals with Interchangeable Upper or Band.............................160

Finding Comfort in a Pair of Shoes ......................................................161 Comfort versus Style: Footwear No Longer Easily Categorized .....................161 Shoe Comfort Gets More Accessible ..............................................................161 Comfort Shoe Brands Break the Mold.............................................................161 Figure 5-11: Privo’s Acacia Slip-on with Flex-Fit .............................................162 Figure 5-12: Indigo’s Sweetie Pump with ABS Heel........................................162 Figure 5-13: Unstructured’s Un.radke Ankle Boot ...........................................162 Figure 5-14: Kigo Footwear .............................................................................163 Fashion Finds Comfort ....................................................................................163 Figure 5-15: RSVP Lyndsey Cushioned by Foot Petals..................................163

The Science of Footwear.......................................................................163 Figure 5-16: Optimus Prime inspired Nike Air Trainer "Transformers"............164 Under Armour Gets Sophisticated...................................................................164 Technology Offers Good Shoes and Good Health ..........................................165 Better Health Through Earthly Footwear at Sky-High prices...........................165 Spas, Fitness Experts Saw Opportunity ..........................................................165 Figure 5-17: Masai Barefoot Technology Kaya ...............................................166 Figure 5-18: Fit Flops Sandal ..........................................................................166 Figure 5-19: Z-Coil Freedom ...........................................................................166 Experts Conflicted on Fitness Shoe Promises ................................................166

Fall Footwear Stylings: 1980s Revisited, Strong Embellishments and Colors, Aggressive Heels and Boots,.......................................167

Women’s Footwear Goes Retro, Aggressive ..................................................167 Retro Designs Not New...................................................................................168 A No-Frills Backlash in the Offing?..................................................................168

Chapter 6: Marketing Outreach............................................... 169

Recession Time to Engage Loyal Consumers ....................................169 Integration Important as Media Preferences Shift ...........................................169 Jimmy Choo Takes It Down a Notch ...............................................................170 More Strategies to Reach Price Conscious Consumers .................................170

Virtual Marketing and Etail Make Most of Recession Dollars ............171 More People Cocooning and Online in Recession..........................................171 All the Simplicity of Email ................................................................................171

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Chapter 6: Marketing Outreach [cont.] Make Use of Alternative Advertising Media ........................................ 173

Alternative Media Increasingly Important, Especially Among the Young ........ 173 The Puma Past Masher................................................................................... 174

Behavioral Targeting in Diverse Consumer Market ........................... 174 Word-of-Mouth: Added-Value for Marketers and Consumers........... 175

Footwear Clubs Breed WOM .......................................................................... 175 Social Networking to Play Big Part in WOM.................................................... 175 Proof That WOM Works .................................................................................. 176 Don’t Forget the Human Touch ....................................................................... 176

Product Placement Opportunities Abound......................................... 177 Nike Active in Broadcast Placement ............................................................... 177

Reliance on Sports Icons Shifting More to Celebrity ......................... 177 What Do Kelly Ripa and Eddie Van Halen Have in Common? ....................... 178 Appropriate and Authentic Celebrity Relationships ......................................... 178 Payless and Summer Rayne Oakes Go Green............................................... 179 Candie’s Taps Britney to Connect with Young Consumers............................. 179

If the License Fits, Wear It .................................................................... 180 Table 6-1: License! Global Selected Top Global Licensees in the Footwear

Category, 2008 ........................................................................................... 181 Do-Good Marketing............................................................................... 181

Do-Good Marketing Part of a Whole Brand’s Image ....................................... 182 Timberland Taps Double Benefit..................................................................... 182

Chapter 7: The Footwear Consumer.......................................183

Note on Experian Simmons Market Research Bureau Consumer Data .................................................................................................... 183 Note on BIGresearch Data.................................................................... 183 Men’s Athletic Footwear Penetration Levels Highest at 20%............ 184

Table 7-1: Total Consumer Penetration Levels for Men’s Footwear Bought in the Past 12 Months, 2004-2009 (%) ....................................................... 184 Figure 7–1: Total Consumer Penetration Levels for Men’s Footwear Bought in the Past 12 Months, 2004-2009 (%) ....................................................... 185

Women’s Non-Athletic Footwear Penetration Levels Highest at 23% ................................................................................................ 185

Table 7-2: Consumer Penetration Levels for Women’s Footwear Bought in the Past 12 Months, 2004-2009 (%) ....................................................... 186 Figure 7–2: Total Consumer Penetration Levels for Women’s Footwear Bought in the Past 12 Months, 2004-2009 (%)........................................... 186

Penetration When Purchasing for the Opposite Sex Typical ............ 187 Table 7-3: Consumer Penetration Levels for Men’s and Women’s Footwear Bought in the Past 12 Months by Member of the Opposite Sex, 2004-2009 (%).................................................................................... 187

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Chapter 7: The Footwear Consumer [cont.] Top Footwear Segment Consumer Demographics by Sex ................187

Male and Female Athletic Shoe Purchasers Characteristics Upwardly Mobile .........................................................................................................187 Table 7-4: Demographic Characteristics of Male Athletic Shoe Purchasers, 2009 (index)................................................................................................188 Table 7-5: Demographic Characteristics of Female Athletic Shoe Purchasers,

2009 (index)................................................................................................189 Male and Female Non-Athletic Shoe Purchasers Characteristics Also Upwardly Mobile .........................................................................................189 Table 7-6: Demographic Characteristics of Male Non-Athletic Shoe Purchasers, 2009 (index)............................................................................190 Table 7-7: Demographic Characteristics of Female Non-Athletic Shoe

Purchasers, 2009 (index)............................................................................190 Male and Female Boot Purchasers Showed Dramatically Different

Characteristics ............................................................................................191 Table 7-8: Demographic Characteristics of Male Boot Purchasers, 2009 (index).........................................................................................................192 Table 7-9: Demographic Characteristics of Female Boot Purchasers, 2009

(index).........................................................................................................193 Male and Female Boot Purchasers Showed Dramatically Different

Characteristics ............................................................................................193 Table 7-10: Demographic Characteristics of Male Slipper Purchasers, 2009

(index).........................................................................................................194 Table 7-11: Demographic Characteristics of Female Slipper Purchasers, 2009 (index)................................................................................................195

Consumer Agreement with Select Attitudinal Statements.................195 Surprise! Shoe Shopping a Favorite Pastime for Women...............................195 Table 7-12: Top Demographic Characteristics of Consumers who ‘Agree a Lot’ with the Statement: Shopping For Shoes is Favorite Pastime, 2009

(index).........................................................................................................196 Brand/Designer Important to Urbanites...........................................................196 Table 7-13: Top Demographic Characteristics of Consumers who Agree a Lot with the Statement: Shoe Brand or Designer is Important, 2009 (index).........................................................................................................197 Fewer Purchases and Less Expensive Purchases Among the More

Disenfranchised ..........................................................................................197 Table 7-14: Top Demographic Characteristics of Consumers who Agree a Lot with the Statement: I am Buying Fewer Shoes Because of the

Economy, 2009 (index)...............................................................................198 Table 7-15: Top Demographic Characteristics of Consumers who Agree a Lot with the Statement: I am Buying Less Expensive Shoes Because of the Economy, 2009 (index).....................................................................198 Function over Form Skewed Older..................................................................199 Table 7-16 Top Demographic Characteristics of Consumers who Agree a Lot with the Statement: In Buying Shoes, I Prioritize Function Over Style, 2009 (index)......................................................................................199

Footwear Consumer at Retail ................................................. 200

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Chapter 7: The Footwear Consumer [cont.] For Footwear, Consumers Shop Wal-Mart Most................................. 200

Table 7-17: Consumer Penetration Levels for Type of Retail Shopped Most Often for Shoes, by Adult Users, Men and Women, 2006-2008 (%) .......... 200

Specialty for Young, Department Store for Old ............................................... 200 Preference by HHI Plays Out Along Socio-Economic Lines ........................... 201 Blacks and Hispanics Prefer to Shop at Specialty Apparel ............................. 201 Table 7-18: Consumer Penetration Levels for Type of Retail Shopped Most

Often for Shoes, by Age, Household Income and Race, 2008 (%) ............ 201 For Footwear, Consumers Shop Wal-Mart Most................................. 202

Table 7-19: Consumer Penetration Levels for Stores Shopped Most Often for Shoes, by Women, Men and Total Population, 2006-2008 (%) .......................................................................................................203-204

Age, HHI and Race Affect Retail Preference ....................................... 204 Department Stores Should Address Aging Consumer .................................... 204 High Income Households Shop Value, but Branding Important ...................... 205 Racial Preference Decidedly Different ............................................................ 205 Table 7-20: Consumer Penetration Levels for Top 15 Stores Shopped Most

Often for Shoes, by Age, Household Income and Race, 2008 (%) ........... 206 Price, Selection, Quality and Location Top Shoe Retail Drivers....... 206

Table 7-21: Top Consumer Shoe Retail Drivers for Men and Women, 2008 (%) ..................................................................................................... 207

Average Monthly Spend on Shoes in 2008: $25 ................................. 207 Table 7-22: Average Monthly Spend on Shoes, by Adults, Men and Women,

2006-2008 (%)............................................................................................ 208 The Younger You are the More You Spend .................................................... 208 Wealthier More Likely to Spend on More Expensive Footwear....................... 208 Whites Show Lowest Average Spend Levels.................................................. 208 Table 7-23: Average Monthly Spend on Shoes, by Age, HHI and Race, 2008 (%) ..................................................................................................... 209

Consumers Likely to Spend Less........................................................ 209 Table 7- 24: Consumer Response to the Question, “Over the next 90 days (July, August and September), do you plan on spending more, the same or less on footwear than you would normally spend at this time of the year?” by Adults, Women and Men, 2006-2008 (%)................................... 209 Table 7- 25: Consumer Response to the Question, “Over the next 90 days (July, August and September), do you plan on spending more, the same or less on footwear than you would normally spend at this time of the year?” by Age, HHI and Race, 2008 (%) .................................................... 210

Chapter 8: The Athletic Footwear Consumer.........................211

Note on Simmons Market Research Bureau Consumer Data ........... 211 Sneaker, Athletic and Sport Shoes Penetration Higher for Women at 63% ................................................................................................ 211

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Chapter 8: The Athletic Footwear Consumer [cont.] Table 8-1: Total Consumer Penetration Levels for Sneakers, Athletic Shoes, or Sports Shoes Bought in the Past 12 Months, by Sex and Total Population, 2009 (%) .........................................................................212

Casual Sneakers Top Among Both Men and Women.........................212 Table 8-2: Total Consumer Penetration Levels for Sneakers, Athletic Shoes, or Sports Shoes Product Segments Bought in the Past 12 Months, by Sex and Total Population, 2009 (%) ...........................................................212

Top Demographic Characteristics by Sneakers, Athletic Shoes, or Sports Shoes Type ............................................................................213 Casual Sneaker Purchasers More Likely Than Average to Be Young Living on East or West Coast................................................................................213 Table 8-3: Demographic Characteristics of Casual Sneaker Purchasers, by Sex, 2009 (index)...................................................................................214 Exercise and Walking Purchasers Skew Much Older, Retired........................214 Table 8-4: Demographic Characteristics of Exercise and Walking Shoe

Purchasers, by Sex, 2009 (index)...............................................................215 Jogging or Running Purchasers More Likely Than Average to be Educated,

White-Collar, Family-oriented .....................................................................215 Table 8-5: Demographic Characteristics of Jogging and Running Shoe

Purchasers, by Sex, 2009 (index)...............................................................216 Cross Trainers Similar to Joggers ...................................................................217 Table 8-6: Demographic Characteristics of Cross Training Shoe Purchasers, by Sex, 2009 (index)...................................................................................218 Female Basketball Shoe Purchasers High Earners versus Male ....................218 Table 8-7: Demographic Characteristics of Basketball Shoe Purchasers, by Sex, 2009 (index)...................................................................................219 Tennis Shoe Purchasers Not Necessarily the Country Club Stereotype.........220 Table 8-8: Demographic Characteristics of Tennis Shoe Purchasers, by Sex, 2009 (index)...................................................................................220 Aerobic Sneaker Purchasers More Likely Than Average to be High-income

Women .......................................................................................................221 Table 8-9: Demographic Characteristics of Aerobic Shoe Purchasers, by Sex, 2009 (index)...................................................................................221 Hiking Purchasers More Likely Than Average to be Educated, West Coast...222 Table 8-10: Demographic Characteristics of Hiking Shoe Purchasers, by Sex, 2009 (index)...................................................................................222

Nike and New Balance Only Brands with Double Digit Penetration Levels .................................................................................................222 Table 8-11: Total Consumer Penetration Levels for Sneakers, Athletic Shoes, or Sports Shoes Brands Bought in the Past 12 Months, by Sex and Total Population, 2009 (%) ...........................................................223

Top Demographic and Psychographic Characteristics by Selected Sneakers, Athletic Shoes, or Sports Shoes Brand .........223

Nike Purchasers Demographics and Psychographics.....................................223 Table 8-12: Demographic Characteristics of Nike Shoe Purchasers, by Sex, 2009 (index)...................................................................................224

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Chapter 8: The Athletic Footwear Consumer [cont.] Table 8-13: Psychographic Characteristics of Nike Shoe Purchasers, 2009

(index)......................................................................................................... 225 New Balance Purchasers Demographics and Psychographics ...................... 225 Table 8-14: Demographic Characteristics of New Balance Shoe Purchasers, by Sex, 2009 (index)................................................................................... 226 Table 8-15: Psychographic Characteristics of New Balance Shoe Purchasers, 2009 (index) ........................................................................... 227 Adidas Purchasers Demographics and Psychographics................................. 227 Table 8-16: Demographic Characteristics of Adidas Shoe Purchasers, by Sex, 2009 (index)................................................................................... 228 Table 8-17: Psychographic Characteristics of Adidas Shoe Purchasers, 2009 (index)................................................................................................ 229 Reebok Purchasers Demographics and Psychographics ............................... 229 Table 8-18: Demographic Characteristics of Reebok Shoe Purchasers, by Sex, 2009 (index)................................................................................... 230 Table 8-19: Psychographic Characteristics of Reebok Shoe Purchasers, 2009 (index)................................................................................................ 231 Skechers Purchasers Demographics and Psychographics............................. 231 Table 8-20: Demographic Characteristics of Skechers Shoe Purchasers, by Sex, 2009 (index)................................................................................... 232 Table 8-21: Psychographic Characteristics of Skechers Shoe Purchasers, 2009 (index)................................................................................................ 233 Asics Purchasers Demographics and Psychographics ................................... 233 Table 8-22: Demographic Characteristics of Asics Shoe Purchasers, by Sex,

2009 (index)................................................................................................ 234 Table 8-23: Psychographic Characteristics of Asics Shoe Purchasers, 2009 (index)................................................................................................ 235 Converse Purchasers Demographics and Psychographics ............................ 235 Table 8-24: Demographic Characteristics of Converse Shoe Purchasers, by Sex, 2009 (index)................................................................................... 236 Table 8-25: Psychographic Characteristics of Converse Shoe Purchasers, 2009 (index)................................................................................................ 237 Puma Purchasers Demographics and Psychographics .................................. 237 Table 8-26: Demographic Characteristics of Puma Shoe Purchasers, by Sex, 2009 (index)................................................................................... 238 Table 8-27: Psychographic Characteristics of Puma Shoe Purchasers, 2009 (index)................................................................................................ 239

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August 2009 © Packaged Facts 1

Chapter 1 Executive Summary

Scope of Report

This Packaged Facts report analyzes the U.S. footwear market sold through retail channels and includes a look at the global market for comparison. The report covers the market in terms of value and unit volume consumption and details U.S. dollar retail sales estimates by major retail channel, major product type, and consumer segment. Also included is an overview of the competitive landscape and profiles of selected players within the space. The report discusses major trends affecting the market including economic factors, design and marketing, and provides detailed analysis of consumer preferences by major product category and retail preferences.

Product Categories

Footwear products covered in the scope of this report include essentially every type and style—from athletic to zories (flip-flops). In presenting the U.S. retail market, Packaged Facts has categorized footwear by two major types as follows:

• Athletic Footwear includes athletic, sport, and active lifestyle footwear for men women and children. Major athletic brands include Adidas, Asics, Fila, K-Swiss, New Balance, Nike, Puma, Reebok, and Saucony. Athletic footwear also includes footwear that is not specifically for a specific individual or team sport but may be performance inspired or intended for other activities. Products include “outdoor” footwear (hiking boots and sandals) by brands such as Merrell and Teva, and casual sneakers by brands such as Converse, Skechers, and Vans. Products such as ski and snowboard boots are included in the market numbers but are not the focus of discussion.

• Non-Athletic Footwear covers casual and dress footwear for men, women and children such as pumps, loafers, or Mary Janes. It also includes house slippers, various types of work shoes and boots.

Products not in the scope of this report include footwear accessories (i.e. shoe trees, bags, polishes, laces) gaiters, parts of shoes, socks, and foot care products.

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Methodology

The information presented in this report was obtained from primary and secondary research. Primary research entailed on-site examination of footwear products in retail stores and consultations with footwear industry observers and executives. Secondary research involved canvassing information from financial, marketing, and trade publications, company literature, and independent research reports, plus reviews of websites, industry groups such as the American Apparel and Footwear Association, blogs and readers’ comments posted on these sites.

Market figures in this report are predominantly estimates by Packaged Facts based on data

from the U.S Department of Commerce’s U.S. Census Bureau and major players in the industry. Data from the U.S. Census Bureau included the Economic Census (1997, 2002, and 2007), primarily for retail sales numbers, Annual Survey of Manufacturers (ASM) for product shipment statistics, Advanced Monthly Sales for Retail and Foodservice and the Annual Retail Trade Survey for additional retail figures. Other market data sources include the U.S. Bureau of Economic Analysis (BEA), the U.S. Bureau of Labor Statistics (BLS), and the U.S. International Trade Commission (USITC).

The analysis of consumer behavior and demographics is based on data from the Experian

Simmons Market Research Bureau (New York NY) Winter 2008 Study of Media and Markets, which is based on the responses of over 20,000 adults age 18 and over, and from BIGresearch Consumer Intentions & Actions Survey (CIA), a monthly online surveys of 8,000+ consumers.

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August 2009 © Packaged Facts 3

Global Footwear Market

Global Footwear Market Rises 2% Driven by Asia, Latin America

Packaged Facts estimates the global footwear market at retail grew two percent over the 2007 level of $189.3 billion to $192.3 billion in 2008. The 2008 gain was the lowest during the five-year period spanning 2004 through 2008 and was due largely to increased sales in the emerging economies of Latin America and Asia. For the 2004–2008 period, the global footwear market grew at a compound annual growth rate of six percent.

Figure 1–1 Global Footwear Retail Market, 2004–2008 (in billions $)

Source: Packaged Facts

166.2

189.3 192.3

153.2

181.4

0.0

25.0

50.0

75.0

100.0

125.0

150.0

175.0

200.0

2004 2005 2006 2007 2008

Global Footwear Retail Market

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Unit Volume Declines Globally

Packaged Facts estimates total volume declined two percent form the 2007 level 10.5 billion pairs to 10.3 billion pairs in 2008. The decline was driven largely by the slow down in the United States;

however, Packaged Facts estimates that all international markets in the aggregate still

showed a slight decline of one percent. For the 2004–2008 period, footwear volume grew at a CAGR of six percent.

Figure 1–2 Global Footwear Retail Market Unit Volume, 2004–2008 (in millions of pairs)

Source: Packaged Facts

9,141.5

10,486.5 10,275.410,056.3

8,288.7

0.0

2,000.0

4,000.0

6,000.0

8,000.0

10,000.0

12,000.0

2004 2005 2006 2007 2008

Global Footwear Retail Market Unit Volume

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August 2009 © Packaged Facts 5

U.S. Footwear Retail Market

U.S. Footwear Market Flat

Packaged Facts estimates the U.S. retail footwear market rose just 0.3% over the 2007 level of $46.6 billion to reach $46.8 billion in 2008 to account for 24% of the global market. The U.S. market had seen greater gains in earlier years—most notably 10% gains in the boom years for the U.S. economy 2005 and 2006 adding $4 billion in market value. For the 2004–2008 period, the U.S. retail footwear market grew at a CAGR of three percent.

Figure 1–3 U.S. Footwear Retail Market and Percent of Global Footwear Market, 2004–2008 (in billions $)

Source: Packaged Facts

44.246.6 46.8

41.8

46.6

24.6%25.7%

26.6%27.3%

24.3%

0.0

10.0

20.0

30.0

40.0

50.0

60.0

2004 2005 2006 2007 20080%

5%

10%

15%

20%

25%

30%

U.S. Footwear Retail Market % of Global Footwear Retail Market

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6 © Packaged Facts August 2009

U.S. Unit Volume Declines

Packaged Facts estimates footwear volume declined seven percent from the 2007 level of 2.5 billion pairs to less than 2.4 billion pairs in 2008. As a percent of global consumption, the United States accounted for 28% of total footwear volume, but fell to just 23% by 2008. For the 2004–2008 period, footwear volume grew at a CAGR of one percent.

Figure 1–4 U.S. Footwear Apparent Consumption by Volume and Percent of Global Footwear Market, 2004–2008 (in millions of pairs)

* Estimated by Packaged Facts. Source: U.S. Census Bureau; U.S. International Trade Commission (2004–2006)

Imports Dominate U.S. Market

Virtually all footwear (96%) sold in the United States is produced overseas by contract manufacturers. China accounted for 87% of total footwear import volume in 2008 while imports from Vietnam have replaced Brazil as the second largest supplier of U.S. footwear

2,382.62,515.4

2,352.92,491.8

2,278.5

24.0%22.9%

27.5%26.1%

24.8%

0.0

700.0

1,400.0

2,100.0

2,800.0

3,500.0

2004 2005 2006 *2007 *20080%

6%

12%

18%

24%

30%

U.S. Footwear Market % of Global Footwear Market

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The Global Footwear Market Chapter 1: Executive Summary

August 2009 © Packaged Facts 7

since 2006. Vietnam imports grew at a CAGR of 24% for the 2004–2008 period growing its share of the U.S. market from two percent in 2004 to five percent in 2008.

Figure 1–5 Share U.S. Footwear Import Volume by Top 10 Countries of Origin, 2008 (%)

Source: U.S. International Trade Commission (2004–2006); calculated by Packaged Facts

U.S. Footwear Sales by Consumer Group & Major Product Category

Packaged Facts estimates all women’s footwear accounted for 50% of total footwear sales through retail in 2008, up slightly from 49% in 2004, while men’s footwear accounted for 36% in 2008 down from 38% in 2004. Children’s footwear was unchanged at 13% of the market. Non-athletic footwear remained the dominant product type in 2008 accounting for 55% of the total U.S. market with athletic footwear capturing the remaining 45%.

Perhaps not surprisingly, women’s non-athletic footwear captured the largest share of the market at 35% while men’s athletic footwear made up 22%. Women’s athletic footwear

Indonesia1.7%

Brazil1.7%

Thailand0.8%

Italy0.9%

All others1.2%

Hong Kong0.3%

Mexico0.4%

India0.5%

Taiwan0.6%

Vietnam5.0%

China86.9%

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8 © Packaged Facts August 2009

accounted for 15% of the market while children’s athletic footwear made up eight percent. Men’s non-athletic footwear accounted for 15% while children’s non-athletic footwear made up six percent.

Figure 1–6 Share of U.S. Footwear Retail Sales by Consumer Group and Major Product Category, 2008 (%)

Source: Packaged Facts.

Men's footwear, including dress & casual footwear

14.6%

Women's athletic footwear, incl sneakers &

outdoor/hiking boots15.2%

Children's footwear, incl boys, girls, infants, & toddlers

5.5%

Children's athletic footwear,incl sneakers &

outdoor/hiking boots7.7%

Men's athletic footwear, incl sneakers &

outdoor/hiking boots21.8%

Women's footwear,

including dress & casual footwear

35.3%

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August 2009 © Packaged Facts 9

Global Footwear Market Forecast

Global Footwear Market to Reach $238 Billion by 2013

Packaged Facts forecasts the global market for footwear to grow much slower than in previous years at a compound annual growth rate (CAGR) of four percent to reach $238 billion by 2013. Sales in 2009 are expected fall six percent from the 2008 level of $192 billion to settle below the $182 billion mark. However, the market should rebound in 2010 with a seven percent gain to $194 billion. Expect gains around the seven percent mark thereafter through 2013.

Figure 1–7 Global Footwear Retail Market Forecast, 2008–2013 (in billions $)

Source: Packaged Facts

181.7

207.6

222.9

192.3 193.8

238.2

0.0

50.0

100.0

150.0

200.0

250.0

2008 2009 2010 2011 2012 2013

Global Footwear Retail Market Forecast

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Global Unit Volume Consumption to Reach 12.1 Billion Pairs

On a unit volume basis, Packaged Facts expects a six percent decline from the 2008 level of 10.3 billion to 9.7 billion in 2009. The drop will be led by slower consumption all around, but with more acute declines in the United States and Europe. Six percent growth is expected thereafter as the United States and Europe return to more modest growth rates and emerging economies see consumption rates rise. For the 2008–2013 period unit volume is expected to grow at a CAGR of three percent.

Figure 1–8 Global Footwear Retail Market Unit Volume Forecast, 2008–2013 (in millions of pairs)

Source: Packaged Facts

9,658.3

10,802.011,421.3

12,074.2

10,214.610,275.4

0.0

2,000.0

4,000.0

6,000.0

8,000.0

10,000.0

12,000.0

14,000.0

2008 2009 2010 2011 2012 2013

Global Footwear Retail Market Unit Volume Forecast

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August 2009 © Packaged Facts 11

U.S. Footwear Market

U.S. Footwear Market to Suffer from Thriftier Consumer Habits

In the United States, Packaged Facts estimates more timid overall growth as consumers work through a paradigm shift in the shopping mindset. Packaged Facts estimates sales of footwear in the United States will drop 14% from the 2008 level of $46.8 billion to just $40.1 billion in 2009. However, the sharp drop in 2009 will be greeted by a welcomed eight percent gain to $43.3 billion in 2010 as consumers return to stores. Expect growth rates to wane thereafter to about the three percent mark by 2013 reaching $$48.4 billion.

Figure 1–9 U.S. Footwear Retail Market Forecast, 2008–2013 (in billions $)

Source: Packaged Facts

40.1

45.647.246.8

43.3

48.4

22.0%22.4%22.1%24.3%21.2%

20.3%

0.0

12.0

24.0

36.0

48.0

60.0

2008 2009 2010 2011 2012 20130%

5%

10%

15%

20%

25%

U.S. Footwear Retail Market Forecast% of Global Footwear Retail Market Forecast

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12 © Packaged Facts August 2009

Unit Volume Declines Globally

It is estimated that footwear consumption in unit volume terms will decline 11% from the 2008 level of 2.4 billion pairs to settle at 2.1 billion pairs in 2009— a level not seen since 2003. Packaged Facts sees seven percent growth in 2010 to near the 2.3 billion pair mark. However, growth thereafter will slow, eventually to two percent by 2013 when consumption will near the 2.5 billion mark.

Figure 1–10 U.S. Footwear Retail Market Unit Volume Forecast, 2008–2013 (in millions of pairs)

Source: Packaged Facts

2,105.7

2,365.9 2,430.2 2,468.1

2,262.02,352.9

21.9%

20.4%

21.3%

22.9%21.8% 22.1%

0.0

700.0

1,400.0

2,100.0

2,800.0

3,500.0

2008 2009 2010 2011 2012 20130%

5%

10%

15%

20%

25%

U.S. Footwear Retail Market Unit Volume Forecast% of Global Footwear Retail Market Unit Volume Forecast

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Footwear Retail Sales by Major Channels

Packaged Facts estimates shoe stores accounted for 54% of total footwear retail sales in the United States in 2008. General merchandise stores, (i.e. superstores, department, discounters) saw their share dwindle in the 2004–2008 period from 23% of the footwear market to 19%. Footwear sales at apparel stores accounted for 12% while sporting goods stores made up seven percent of the total footwear retail market. Finally, non-store retailers (i.e. catalogs, etailers) captured six percent of footwear sales.

Figure 1–11 Share of U.S. Footwear Sales by Major Channel, 2008 (%)

Note: Non-store retailers includes catalog sales and ecommerce sales. * Also includes hobby, book, and music stores. Source: Packaged Facts.

Sporting goods stores6.9%

Clothing stores 12.0%

All other3.3%

Nonstore retailers 5.6%

General merchandise

stores18.6%

Shoe stores 53.6%

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Competitive Landscape

Footwear Market Highly Fragmented

The global footwear market is highly competitive and fragmented with a few major players and a seemingly endless array of smaller players, including designers, marketers, manufacturers and retailers, all vying for share. Globally, several companies crack the $1.0 billion dollar barrier in footwear sales but only Nike, Inc. and Adidas AG bring in more than $5.0 billion.

Table 1–1 Selected Footwear Marketers with Footwear Sales Greater Than $1 Billion, 2004–2008 (in millions $)

Company 2004 2005 2006 2007 2008 04–08 CAGR

Nike, Inc. $7,580.4 $8,387.1 $9,025.1 $10,472.9 $10,894.2 9.5% Adidas AG 5,689.2 5,956.9 5,945.7 6,512.4 7,237.5 6.2 Puma AG 1,258.0 1,463.3 1,783.8 1,902.5 2,110.3 13.8 Asics Corporation 824.3 1,023.8 1,162.6 1,419.1 1,728.6 20.3 Geox SpA 423.0 566.6 769.1 1,055.7 1,313.2 32.7 Skechers USA Inc. 738.7 797.8 956.6 1,098.9 1,139.6 11.4 Wolverine Worldwide Inc. 903.6 964.5 1,036.9 1,099.2 1,106.1 5.2 Ecco Sko A/S 523.6 589.6 707.6 911.3 1,012.2 17.9 The Timberland Company 1,153.2 1,200.1 1,126.9 1,004.8 974.3 -4.1 Jones Apparel Group 1,002.4 978.6 941.1 955.8 938.3 -1.6

Note: Nike footwear sales are for the 12-month period ending November 30, 2008 and include estimates for Cole Haan, Converse, Hurley, Nike Golf, and Umbro. Adidas AG sales include Reebok sales for the entire period on a pro forma basis. Some companies’ sales include retail sales in addition to wholesale. Jones Apparel Group figures include wholesale footwear and accessories, but do not include footwear sold through retail locations. Sales for Adidas AG, Puma AG, Asics Corporation, Geox SpA, Ecco Sko A/S have been translated to U.S. dollars using the average annual exchange rate for their respective home currencies. Source: Compiled by Packaged Facts from annual reports.

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Marketplace and Consumer Trends

Down Economy Means Thriftier Consumer

In a time of economic crisis, more consumers will conclude that conspicuous consumption is no longer acceptable. Instead of feeling good about expensive brands, many consumers will increasingly feel good about getting the best value or not spending at all in 2009.

Fashion and Footwear Industries Feeling the Pinch

In all, total retail sales (adjusted for seasonality, holidays, etc.) for clothing and clothing accessories stores, which includes footwear retail, for the fourth quarter of 2008 fell six percent from the third quarter and eight percent from the same period in 2007 to $51.5 billion. The first quarter of 2009 saw sales pick up three percent over the fourth quarter of 2008, but were still down five percent from the first quarter of 2008 to $52.9 billion.

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Figure 1–12 Quarterly Clothing and Clothing Accessory Store Sales, 1992–Q1, 2009 (in billions $)

Source: U.S. Census Bureau; calculated from monthly data by Packaged Facts.

Consumer Footwear Expenditures

According to the U.S. Bureau of Labor Statistics, average annual expenditures on footwear per consumer unit1 totaled $327 in 2007, up eight percent from the 2006 level of $304. Generally, average footwear spending has remained in the low $300 range, dipping lower during times of low economic growth and rising during better economic times.

Kids Footwear Has Three Protections

The trends affecting the adult footwear category—higher fuel and material costs, a weak U.S. dollar, rising labor costs in China, increased retail demand for discount shoes at mass, and a 1 The terms consumer unit, family, and household are often used interchangeably for convenience. However, according to the U.S. Bureau of Labor Statistics, the proper technical term for purposes of the Consumer Expenditure Survey is consumer unit.

0

10

20

30

40

50

60

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

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lessened consumer spending in reaction to the recession—are also pressuring the $6.2 billion kids’ footwear category, but kids’ footwear has built-in protections. One, the kids demographic is growing at a greater rate than the general population. Two, kids’ footwear needs constant replacing. Three, kids (and parents) are eternally susceptible to the attention-grabbing power of licensing.

Company Ethics and Added Values Important to Consumers

As consumers have gotten smarter, they have also gotten more curious. Not only do they want to know the specific functional benefits of products, they also want to know about the core brand and associated company values and beliefs. Some industry experts think this will take a back seat amid recession concerns, whereas others believe it is more important than ever to provide a positive emotional connection that is inherent in cause-related marketing that empowers consumers during times of distress and upheaval.

According to the second-annual, multi-country, Edelman Goodpurpose study conducted the

fall of 2008, more than half of the 6,000 global consumers surveyed said that even in the midst of a recession they would be prepared to spend more for a brand if it supported a good cause. Already, several footwear companies have made sustainable footwear forays, such as Deckers with the Simple Shoes brand. The company’s goal is to make the Simple brand 100% sustainable with materials including organic cotton, eco-certified leather, bamboo, and recycled car tires and inner tubes for its rubber soles. Simple Shoes are sold through a variety of retail channels including independent retailers, outdoor shops and department stores such as Dillard's and Nordstrom. The company even sells through alternative footwear channels such as Whole Foods Markets.

Counterfeiting, a Dangerous Business

In 2008, the domestic value of counterfeit and pirated goods seized for intellectual property rights violations was up 39% to $272.7 million, an increase of almost $76 million from 2007. U.S. Customs found that for 2007, 40% of all intellectual property rights seizures were footwear, up from $63.4 million in 2006 to $78 million with the vast majority being in athletic shoes and the main source being China.

Purchasing cheap, knock-off designer products from the trunk of a car or from a street

hawker is inconsequential to many consumers who do not care about the repercussions to the industry being scammed that go beyond the bottom line and effect employees across the

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board. Consumers also do not realize the potential dangers of a counterfeit product—knock-offs are likely made from sub-par materials that at best may be ill-fitting but may also cause injury.

Industry Hopes to See End Depression-Era Tax

Footwear industry members of The Affordable Footwear Initiative have been urging Congress to pass the Affordable Footwear Act and offer consumers some relief by ending a Depression-era shoe import tax meant to protect domestic manufacturers from cheaper imports. Packaged Facts estimates wholesale prices of footwear rose eight percent in 2008 and those price increases were passed on to consumers despite the slowing economy.

In the most recent effort to repeal the tax, Senators Maria Cantwell (D-WA) and John Ensign

(R-NV) formally reintroduced the bipartisan Affordable Footwear Act (S. 730) in April 2009. The legislation would eliminate the regressive and hidden tax paid on most, lower-cost and children's shoes, or about 60% of the shoes sold in the United States each year.

Style and Innovation Trends: Personalized Footwear

Through keeping a finely tuned ear to the whims of consumers, the industry is making strides in personalization and customization by offering an ever-widening variety of shoes that satisfy not only functional needs but ever important emotional ones, from design options to celebrity brands that echo and/or magnify an individual’s personality and beliefs.

Several brands in the Adidas stable offer personalized and customized platforms, such as

Adidas’ mi Adidas and mi Original. Mi Adidas, which allows consumers to custom-design running shoes was launched in Adidas’ performance stores in 2007, followed by the launch in 2008 of Mi Originals to Adidas concept stores.

Emotional benefits can also play a part in customization, where the consumers can fully

express themselves artistically! Enter Zazzle’s custom shoe offering (www.zazzle.com/shoes). Zazzle's custom shoe platform is the first fully customizable shoe with user-generated content, allowing users to design and select colors for the entire shoe. Consumers are able to create unique custom canvas shoes by uploading their own designs, patterns, illustrations, images and text, and then preview their shoes instantly. Users can also embellish their shoe designs with preset colors and patterns. The shoes are embellished and

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assembled from scratch within 24 to 48 hours, which enables consumers to receive their shoes in one to two weeks.

Comfort versus Style: Footwear No longer Easily Categorized

Over the past several years, there has been a step change in seeking solace from the shoes that hurt us. Footwear fashion trends are ephemeral and reliant on consumer trends, innovation and artistry, but in the past year, the most widespread buzz has been on casual comfort and health and wellness rather than on well-heeled stilettos! The marketplace has seen growing crossover. Shoes are no longer siloed into business wear, casual wear, sporting wear or dress wear. Casual Friday has evolved into Casual Everyday. Sports and lifestyle continue to merge. Consumers want to go from faxing, to flexing, to a festive night out seamlessly and in comfort.

Several brands such as Jones Apparel’s Easy Spirit have made it their core business to

promote this idea while other brands have adopted strategic partnerships that combine multiple brands into hybrid footwear products. For example, Nine West and New Balance struck such a deal in 2008 to create a line of footwear combining the style and comfort technology of each.

Technology Offers Good Shoes and Good Health

In response to continued consumer interest in health and wellness and the multi-tasking lifestyle, a slew of shoe manufacturers and brands are touting a wealth of health claims. Ailments from back pain to varicose veins and benefits such as improved posture, posterior toning, and burning calories, are all being met with high-technology and design innovations such as rounded soles and heels, extensive cushioning and contoured shapes to mimic walking barefoot.

The idea of a fitness shoe that offers inherent health and wellness benefits is not new. Earth

shoes, first made popular in the U.S. during the 1970s, were the precursor to the wide variety of wellness footwear available today. Now known as Earth Footwear, with an average retail price around $100 a pair, they are designed to create proper alignment of the spine and stretch the calf muscles.

Newer products have newer price points and more impressive claims! Products such as MBTs

by SwissMasai have sold more than a million pairs at $230 to $270. Chung Shi, a German

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fitness shoe with a rocker bottom, is priced at around $170. Other players in this arena include the FitFlop, NGR shoes (No Gym Required) and the Z-Coil Freedom.

Aggressive Designs Versus Staid Style

In women’s non-athletic designs, particularly those for fall 2009, the look is about strong straps, buckles, and chains. Booties, a mixture between a shoe and an ankle boot, have re-emerged on runways and on celebrities in a variety of styles, such as peep-toe, lace-up, oxford and fold-over. Also big are heels with big personality—thick straps, bling, tassels, buckles and six-inch plus heels in bold colors. But others view the more aggressive styles including everything from extreme platforms, high sculptural heels and thicker heels, as more architectural and exciting, rather than simply slutty!

While these more flamboyant and aggressive looks will continue to have traction and

possibly reflect a sense of escapism in difficult economic times, there is another more conservative trend at work driven more by fear and practicality that emerges in fall introductions and further penetrates into winter introductions. Many designers are also introducing more serious and classic shoes that are more practical with an emphasis on blacks and browns, with muted colors, simple lines and less embellishments (and more conservative pricing) in anticipation of less-adventurous consumers.

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Marketing Outreach

Recession Time to Engage Loyal Consumers

Given a recession, a footwear marketer’s first instinct may be to cut costs on outreach and innovation, but such cuts can do more harm than good. Rather, marketers should see it as a time of opportunity to re-evaluate their brand strategies and re-connect with core consumers. In a panel moderated by Footwear News Editorial Director Michael Atmore for the Council of Fashion Designers of America programs designer Vince Camuto commented on the difficulties posed by the current economy "I expect next year to be our best year. It's a wake-up call to the industry, but it's also a great opportunity to work on your product, reorganize and reinvent yourself." (Footwear News, December 15, 2008)

Research shows cost-cutting can undermine a marketer’s long-term business strategy. For example, data from the British study “Profit Impact of Market Strategy” revealed that over the past 30 years, companies that spent more on innovation during downturns saw returns on capital employed rise 23.8% during recovery times, while those that limited spending only saw gains of 0.6%. (Ad Age, February 25, 2008)

Integration Important as Media Preferences Shift

It will be increasingly important to integrate marketing activity with a unified idea that is expressed through multiple outreach formats—especially to build relationships with younger consumers who are more likely to play a video game than watch television, and read a blog than a magazine. Classic advertising methods are less and less effective as the advertising marketplace has become more fragmented and the consumer audience for each individual media information source has shrunk and dispersed due to the varied choices.

A mixture of TV, print and out of home, plus emerging media and guerilla tactics, should be

part of any large-scale plan. A study conducted by the National Retail Federation and BIGResearch found that emerging media forms of communication such as online video-game ads, blogs and text messages are gaining influence with consumers. "As new technology places itself on the market, [it] is diverting attention from the typical newspaper and magazine advertisements," said Pamela Goodfellow, Senior Analyst at BIGResearch. "It's up

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to retailers to be nimble in knowing what the latest and greatest is to reach their customers." (AdAge.com, November 20, 2008)

Jimmy Choo Out of The Shoe Box Thinking

Luxury shoemaker, Jimmy Choo isn’t standing idly by waiting for the recession to end. Instead, the brand has launched an aggressive youth-targeted, buzz-building initiative to fuel excitement in a difficult economy. In June 2009, Jimmy grabbed attention announcing a partnership with retailer H&M for a limited-edition collection of shoes (price points for most shoes at $55 to $138), accessories, and ready-to-wear items due in stores in November 2009. Jimmy Choo is also prepping to debut Choo 24/7 for spring 2010. Separate from the main spring collection, it will feature updated versions of favorite styles in a variety of colors, materials and heel heights.

In support of the launch, the company plans an extensive marketing push for January 2010.

With this endeavor, coupled with the H&M collaboration and its Project PEP charitable initiative, the company hopes to differentiate itself. “This is an integrated strategy,” said CEO, Josh Schulman. “It’s very important that we remain close to our customers and potential customers. Now is the time to take market share.” (Footwear News, June 22, 2009)

Virtual Marketing and Etail Make Most of Recession Dollars

Of course, not every player has the money for the big branding efforts. Virtual marketing and etailing has emerged as a simple way for smaller and emerging footwear players to make their products directly available to consumers and in a fiscally problematic time makes the most out of limited financial resources.

All the Simplicity of Email

With all the capabilities of new technologies, the power of a simple email campaign is oft forgotten. Online newsletters such as DailyCandy, insider’s guide to what’s hot, new and undiscovered—from fashion and style to gadgets and travel with a free daily email newsletter and website predominantly for women or similarly Thrillist for men are an easy and fun way to blast your market message or new product introduction. The voice of these emails is quirky, fun and attention-grabbing.

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Make Use of Alternative Advertising Media

While traditional mass-marketing vehicles still hold the most sway, a study conducted by the National Retail Federation and BIG Research found that alternative marketing outreach through online video-game ads, blogs and text messages are gaining influence overall with consumers. Retail ad inserts (traditional circulars and multi-advertiser coupon packages) are the most influential in clothing purchases, at 33% of consumers citing them, followed by magazines at 27%, newspapers at 23%, and broadcast TV at 21%. Text messages influence three percent of clothing purchases, but jumps to six percent among the key target market of 18- to 34-year-olds. Product placement is also particularly effective among the 18- to 34-year-old demographic—16% said it impacted a clothing purchase. (Ad Age, November 20, 2008)

The Puma Past Masher

In January 2009, Puma launched "Puma Past Masher", a Web application that lets visitors upload a personal photo and mash it up with fashion from previous eras to commemorate the brand's 60th birthday. Mash up options included 225 hairstyles, tops and accessories, which allow 45 million possible combinations. Notes and comments on each look can be added to the custom-designed image and those images can then be exported to Facebook and Flickr. The application, no longer up, generated tremendous popular response in the blogosphere.

Behavioral Targeting in Diverse Consumer Market

While alternative online tactics such as social networking are terrific at building buzz, utilizing an increasingly popular online advertising strategy—behavioral targeting—may be a better way to reach consumers and directly drive sales from key consumers.

Experts note that search-related ads sponsored by links, on Google or Yahoo! for example,

are the largest growth sector, but behavioral targeting is a much more pro-active approach. Behavioral targeting occurs when marketers analyze web users’ online activities to figure out who is most likely to be interested in its product, which enables them to place ads on whatever sites those consumers are visiting. For example, behavioral segments important to the footwear industry, such as “fashion-interested,” “outdoor sports enthusiast” or “soccer mom,” would be based on where the user has gone and/or what they have done on various web pages.

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Word-of-Mouth Increasingly Important

Before the emergence of user reviews and comparison sites such as epinions.com, a few unhappy customers couldn't do much damage. Now their unfiltered rants can be read by millions of prospects. Of course, consumer opinion can also tilt in a positive direction. For example, the Princess Poochie blog, shoedaydreams.com, is devoted primarily to shoes, including discussions on shoes Princess Poochie owns, shoes she wants, shoes she just bought or favorite online discoveries. Shoe offers alerts to consumers with champagne tastes on beer budgets. For those longing for white tailored Gucci pumps, Poochie's blog points to a similar style, available in four colors at Target. She also points out recent introductions (Christian Louboutin’s Estoteri, $995 at Barney’s!) and to sales (Finnish designer, Minna Parikka 20% - 50% off!)

Social Networking to Play Big Part in WOM

More and more marketers are using word-of-mouth (WOM) as a key part of their marketing and brand strategies, which may be particularly meaningful to footwear marketers. It’s easy and inexpensive, especially with the growth in web communications and communities, for marketers to offer ample opportunity to interact with real consumers. For example, Facebook already has in place pages and pages of special Footwear-interested groups, both corporate and consumer. One of the most popular is Nike, Inc.’s Facebook page with nearly 1.5 million fans. Toms Shoes, the company that gives a pair of shoes to a child for each pair it sells, had more than 96,000 fans.

Don’t Forget the Human Touch

Programs, such as Kigo’s Friends of Kigo influencer program, tap the human element to get the word out. According to Kigo co-founder Rachelle Kuramato, instead of throwing money at less targeted approaches, they have tapped active, gregarious women in certain markets (New York City, Chicago, San Francisco and Atlanta), including a PTA President, a lawyer, and an owner of a Pilates and Yoga studio to wear Kigos and share their positive experiences with the portable comfort shoe and build buzz for the July 2009 website launch.

Product Placement Opportunities Abound

Non-traditional strategies and tactics will begin playing larger roles in getting product messages out to consumers, as millions of TiVo/DVR users tune out commercials and ignore

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print media. Luckily, many footwear marketers are already skilled in alternative outreach programs, particularly product placement.

Marketers should explore more placement opportunities within their own cultures for

opportunities—notably fashion and health. The dominance of reality fashion and health television programming is astounding. No longer relegated to daytime on a couple of cable networks, the small screen offers options from The Doctors on CBS to Dr. Oz (of Oprah fame) on Discovery Health, or from The Fashion Show on Bravo to Project Runway on Lifetime. It is an ever-growing list of television product placement opportunity—including a soon-to-be seen competition-based shoe design reality television series featuring fledgling shoe designers, à la Project Runway, Sole Perspective. The program hopes to foster awareness and appreciation among consumers and benefit the footwear industry through the use of corporate driven marketing challenges.

Nike Active in Broadcast Placement

Neilsen Product Placement Service found that during the first quarter of 2008, apparel placements ranked number one on both broadcast and cable with 4,493 and 26,063 placements, respectively. Nike ranked number six in the period with 575 placements on prime-time broadcast network television with 575 placements (versus Coca-Cola with 2,990 placements), and the only footwear brand in the top ten for number of placements. (The Center for Media Research Brief, September 26, 2008)

Reliance on Sports Icons Shifting More to Celebrity

Not surprisingly, athletic footwear and sports stars are an easy marketing mix and companies are continually aligning themselves with top sporting professionals and events from edgier X-Game mavens to old standards like football and tennis icons to promote a performance message. It’s a no brainer.

But with the increasing number of athletic footwear marketers competing for share points, the

focus is on further differentiating brands with lifestyle benefits rather than solely on functional performance benefits. The main reason for the shift is the influx of non-sport specific, casual sneakers for everyday use.

While there will always be a place for the professional athlete in promoting a brand (where

would Nike be without it’s young Olympians?!), non-sporting celebrities can better speak to a

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broader emotional universe of benefits and dreams while sports stars live more in the technological and performance benefits of a shoe. This is leading to relationships and introductions from hitherto unknown regions. For example, 2008 saw talk show host Kelly Ripa team with Ryka to co-design a footwear and apparel collection and act as spokesperson for the brand in its print and online campaign. In 2009, Eddie Van Halen is launching a line of high and low-top sneakers, similar to the ones he sports onstage with the red, white and black stripes that mimic the design of his Frankenstein guitar.

Payless and Summer Rayne Oakes Go Green

Licensing, co-branding, and sponsorships with celebrities provide opportunities for meaningful brand impressions among consumers especially in the face of media and product clutter proliferation and dwindling advertising effectiveness.

For example, in November 2008, Payless ShoeSource launched the first-ever affordable green

footwear line with the help of Summer Rayne Oakes, Discovery Network's Planet Green fashion and beauty expert and author of Style, Naturally: The Savvy Shopping Guide to Sustainable Fashion & Beauty (Chronicle Books, February 2009). The new brand, Zoe and Zac, at $30 a pair, is a key part of Payless' strategy to bring well-recognized, fresh, and innovative new brands to every consumer at a good price. Oakes, as Payless’ “eco-consultant,” will be involved in seasonal line reviews focusing on materials use and aesthetics for the product, packaging, and in-store materials, as well as participate in other marketing activities for the brand.

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Footwear Consumer

Men’s Athletic Footwear Penetration Levels Highest at 20%

According to data compiled by Experian Simmons Market Research Bureau, the two major men’s footwear segments, athletic and non-athletic, both saw decreased levels of penetration in the past years in terms of footwear bought in the past twelve months. Athletic shoes dropped two points since 2007 to 20% of the population purchasing in 2009, while non-athletic shoes dropped three points since 2006 to 17% in 2009. 2004 and 2005 saw the highest levels in usage penetration for the six year period for both segments, at 23% for athletic and 20% for non-athletic, as consumers recovered from the faltering economy in the early years of the new millennium. (see Chapter 7: Athletic Footwear Consumer for a specific look at sneaker, athletic and sports shoes)

Boots and slippers also dropped from the highs of 2004—each dropping a point by 2009 and settling at six percent and eight percent, respectively. The 2004 levels could not be maintained as America rolled into another recessionary period—one likely to have greater staying power. Don’t expect penetration levels to bounce back quickly in the coming years as consumers may continue to put off new footwear purchases, in lieu of a visit to the local cobbler.

Table 1–2 Total Consumer Penetration Levels for Men’s Footwear Bought in the Past 12 Months, 2004-2009 (%)

Men’s Footwear Bought in the Last 12 Months

Fall 2004

Fall 2005

Fall 2006

Fall 2007

Fall 2008

Winter 2009

Athletic Shoes 23% 22% 22% 22% 21% 20% Non-Athletic Shoes 20 18 19 18 17 17 Slippers 9 8 8 8 8 8 Boots* 7 7 7 7 5 6

* Excluding work boots Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2009. This material is used with permission.

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Women’s Non-Athletic Footwear Penetration Levels Highest at 23%

Same story, different sex. Women’s footwear purchase penetration levels showed a similar trend to men’s. Again the two largest categories, athletic and non-athletic, saw decreased penetration with a steady decline since 2004. For women, the largest segment, non-athletic shoes, fell from 26% in 2004 to 23% in 2009. Athletic shoes fell from 20% in 2004 to 17% in 2009. Slippers followed the pattern with a three point drop by 2009. It is likely that come the fall 2009 edition of Simmons data will show a decline.

Women’s boot purchase did not follow the same pattern as men’s. However, the current

uptick to eight percent in winter 2009 from seven percent in fall 2008 for women’s boots is likely due to heavier purchasing during the snow and sleet months.

Table 1–3 Consumer Penetration Levels for Women’s Footwear Bought in the Past 12 Months, 2004-2009 (%)

Women’s Footwear Bought in the Last 12 Months

Fall 2004

Fall 2005

Fall 2006

Fall 2007

Fall 2008

Winter 2009

Non-athletic Shoes 26% 25% 25% 25% 24% 23% Athletic Shoes 20 18 18 18 18 17 Slippers 15 14 14 14 11 12 Boots 9 8 9 9 7 8

* Excluding work boots Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2009. This material is used with permission.

For Footwear, Consumers Shop Wal-Mart Most

According to data from BIGresearch, in the years 2006-2008 BIGresearch, nearly 18% of adult consumers have no preference for a particular branded outlet, 12% of consumers shop most often at Wal-Mart and Payless for footwear. Wal-Mart and Payless were the only stores reaching double-digit preference. However, when broken out by male and female shoppers, Payless sees a much higher level of loyalty from women at 16% than men at seven percent, while Wal-Mart sees little differentiation by sex. Since 2006, both Wal-Mart and Payless have suffered some loyalty erosion.

Both dropped two percentage points from 14% of the adult population in 2006, while

runners-up Kohls and DSW each gained points. In 2008, five percent of consumers shopped

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Kohl’s most often and four percent of consumers shopped DSW, up from four percent and two percent in 2006, respectively.

Rounding out the top ten retailers for shoe shopping were JC Penney, Foot Locker, Macy’s,

Sears, Kmart, and Target, garnering between two and three percent of adult for 2008. The rest of the retailers jockeyed for miniscule penetration levels, often at less than half a point with little in the way of preference changes over the period.

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Table 1–4 Consumer Penetration Levels for Stores Shopped Most Often for Shoes, by Women, Men and Total Population, 2006-2008 (%)

2008 2007 2006 Store

Adults Women Men Adults Women Men Adults Women Men WalMart 11.8% 12.5% 11.2% 11.6% 12.6% 10.5% 14.1% 15.5% 12.6%Payless 11.7 16.0 7.0 11.3 14.8 7.5 14.4 18.9 9.5 Kohls 4.9 4.8 4.9 4.7 4.2 5.2 3.6 3.6 3.5 DSW 3.7 4.5 2.9 2.9 3.4 2.4 2.4 2.9 2.0 JC Penney 2.9 2.9 2.9 3.1 3.5 2.8 2.5 2.8 2.1 Foot Locker 2.4 2.1 2.8 2.9 2.2 3.7 1.8 1.5 2.1 Macy's 2.3 2.6 1.9 2.4 2.8 1.9 1.2 1.1 1.3 Sears 2.0 1.6 2.4 2.0 1.6 2.5 1.8 1.2 2.5 Kmart 1.8 1.9 1.7 1.8 2.3 1.4 2.3 2.7 1.9 Target 1.8 2.3 1.3 1.7 2.2 1.2 1.8 2.1 1.5 Famous Footwear 1.6 2.1 1.0 1.5 1.9 1.1 1.8 1.8 1.8 Shoe Carnival 1.6 1.6 1.6 1.6 1.9 1.4 1.5 1.7 1.3 Nordstrom 1.4 1.3 1.4 1.4 1.6 1.2 1.4 1.4 1.4 Dillards 1.2 1.2 1.1 1.0 1.2 0.8 1.0 1.3 0.7 Finish Line 1.0 0.6 1.4 0.6 0.3 0.8 0.4 0.4 0.5 Online/Internet 0.9 0.7 1.1 0.7 0.7 0.8 0.4 0.4 0.3 Marshalls 0.8 1.1 0.5 0.5 0.6 0.3 0.4 0.5 0.3 Zappos 0.7 0.7 0.7 0.6 0.7 0.5 0.6 0.5 0.6 Dick's Sporting Goods 0.6 0.2 1.2 -- -- -- -- -- -- Ross 0.6 0.9 0.3 0.5 0.8 0.3 0.4 0.6 0.2 Shoes.com 0.6 0.6 0.5 0.5 0.5 0.5 -- -- -- Belk 0.5 0.6 0.5 0.4 0.5 0.2 0.3 0.4 0.2 Nike 0.5 0.3 0.7 0.5 0.4 0.6 0.3 0.2 0.3 Rack Room 0.5 0.6 0.3 0.6 0.7 0.4 0.7 0.9 0.5 SAS Shoes 0.5 0.7 0.4 0.5 0.6 0.3 0.7 0.7 0.7 Academy 0.4 0.2 0.6 0.4 0.1 0.6 0.3 0.3 0.2 Big 5 Sporting Goods 0.4 0.2 0.7 0.4 0.2 0.7 0.7 0.2 1.1 Ebay 0.4 0.5 0.3 0.3 0.4 0.2 0.3 0.3 0.3 Shoe Dept. 0.4 0.6 0.2 0.5 0.6 0.5 0.5 0.8 0.2 Skechers 0.4 0.5 0.4 -- -- -- -- -- -- Bass 0.3 0.2 0.5 -- -- -- -- -- -- Bealls 0.3 0.3 0.2 0.3 0.6 0.1 0.3 0.5 0.0 Easy Spirit 0.3 0.5 0.1 0.2 0.5 0.0 0.2 0.4 0.0

(continued)

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August 2009 © Packaged Facts 31

Table 1–4 [cont.] Consumer Penetration Levels for Stores Shopped Most Often for Shoes, by Women, Men and Total Population, 2006-2008 (%)

2008 2007 2006 Store

Adults Women Men Adults Women Men Adults Women Men LL Bean 0.3 0.2 0.3 -- -- -- -- -- -- Meijer 0.3 0.3 0.3 0.3 0.2 0.4 0.4 0.4 0.4 Mervyns 0.3 0.4 0.2 0.4 0.3 0.5 0.5 0.8 0.2 New Balance 0.3 0.3 0.3 0.3 0.1 0.5 -- -- -- Outlet Stores 0.3 0.1 0.4 0.3 0.3 0.4 0.3 0.3 0.3 Shoe Show 0.3 0.4 0.2 0.4 0.5 0.2 0.4 0.5 0.2 TJ Maxx 0.3 0.4 0.1 0.3 0.6 0.1 0.2 0.4 0.0 Florsheim 0.2 0.0 0.5 0.2 0.0 0.4 -- -- -- Haband 0.2 0.1 0.3 0.3 0.1 0.5 -- -- -- Journeys 0.2 0.4 0.1 0.4 0.4 0.4 -- -- -- Mason 0.2 0.1 0.3 -- -- -- 0.3 0.1 0.4 Redwing 0.2 0.0 0.5 -- -- -- -- -- -- Rockport 0.2 0.1 0.4 0.3 0.1 0.5 -- -- -- Value City 0.2 0.2 0.2 0.4 0.4 0.4 0.5 0.5 0.4 Nine West -- -- -- 0.2 0.4 0.1 0.2 0.4 0.0 No Preference 18.1 13.0 23.5 21.2 15.9 26.9 20.1 14.1 26.6 Other 17.3 16.8 17.9 17.3 16.2 18.5 19.0 16.8 21.4

Note: -- signifies not data available. Source: BIGresearch, Consumer Intentions and Actions Survey and Simultaneous Media Study, © 2008. BIGresearch, All Rights Reserved. Compiled by Packaged Facts.

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Chapter 2 The Market

Scope of Report

This Packaged Facts report analyzes the U.S. footwear market sold through retail channels and includes a look at the global market for comparison. The report covers the market in terms of value and unit volume consumption and details U.S. dollar retail sales estimates by major retail channel, major product type, and consumer segment. Also included is an overview of the competitive landscape and profiles of selected players within the space. The report discusses major trends affecting the market including economic factors, design and marketing, and provides detailed analysis of consumer preferences by major product category and retail preferences.

Product Categories

Footwear products covered in the scope of this report include essentially every type and style—from athletic to zories (flip-flops). In presenting the U.S. retail market, Packaged Facts has categorized footwear by two major types as follows:

• Athletic Footwear includes athletic, sport, and active lifestyle footwear for men, women and children. Major athletic brands include Adidas, Asics, Fila, K-Swiss, New Balance, Nike, Puma, Reebok, and Saucony. Athletic footwear also includes footwear that is not designed for a specific individual or team sport but may be performance inspired or intended for other activities. Products include “outdoor” footwear (hiking boots and sandals) by brands such as Merrell and Teva, and casual sneakers by brands such as Converse, Skechers, and Vans. Products such as ski and snowboard boots are included in the market numbers but are not the focus of discussion.

• Non-Athletic Footwear covers casual and dress footwear for men, women and children such as pumps, loafers, or Mary Janes. It also includes house slippers, various types of work shoes and boots.

Products not in the scope of this report include footwear accessories (i.e. shoe trees, bags, polishes, laces) gaiters, parts of shoes, socks, and foot care products.

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Methodology

The information presented in this report was obtained from primary and secondary research. Primary research entailed on-site examination of footwear products in retail stores and consultations with footwear industry observers and executives. Secondary research involved canvassing information from financial, marketing, and trade publications, company literature, and independent research reports, plus reviews of industry group websites, such as the American Apparel and Footwear Association, and blogs and readers’ comments posted on these sites.

Market figures in this report are predominantly estimates by Packaged Facts based on data

from the U.S Department of Commerce’s U.S. Census Bureau and major players in the industry. Data from the U.S. Census Bureau included the Economic Census (1997, 2002, and 2007), primarily for retail sales numbers, Annual Survey of Manufacturers (ASM) for product shipment statistics, Advanced Monthly Sales for Retail and Foodservice and the Annual Retail Trade Survey for additional retail figures. Other market data sources include the U.S. Bureau of Economic Analysis (BEA), the U.S. Bureau of Labor Statistics (BLS), and the U.S. International Trade Commission (USITC).

The analysis of consumer behavior and demographics is drawn from data produced by the

Simmons Market Research Bureau (New York, NY) Winter 2008/09 Study of Media and Markets, which is based on the responses of over 20,000 adults age 18 and older and from BIGresearch Consumer Intentions & Actions Survey (CIA), a monthly online survey of 8,000+ consumers.

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Global Footwear Market

Global Footwear Market Rises 2% Driven by Asia, Latin America

Packaged Facts estimates the global footwear market at retail grew two percent over the 2007 level of $189.3 billion to $192.3 billion in 2008. The 2008 gain was the lowest during the five-year period spanning 2004 through 2008 and was due largely to gains posted by emerging economies in Latin America and Asia. Some leading marketers reported gains in the range of 10% to 15% over 2007 levels for these regions while others showed much more muted results. In fact, Nike Inc., the largest footwear and athletic apparel marketer, had a 31% gain in its Asia Pacific region for the 12-month period ending November 20082.

European Growth Tempers

In Europe, results were mixed with some marketers reporting mid-single to low-double-digit gains while others saw declines into the double-digits. Adidas AG, the largest marketer in Europe saw overall footwear and apparel sales in its home region up 15% in 2008, while its global footwear sales were up four percent. Alternately, niche marketer Crocs saw its overall footwear sales decline 15% while sales in Europe decline a whopping 13% in 2008.

U.S. Drags the Global Market Down

In the United States, retailers found themselves with excess inventory, especially towards the end of the year, and were caught between lower demand and higher product costs leaving little wiggle room to cut prices and move product. Many U.S. retailers saw sales declines for the year, at least in terms of volume, but because of sharply higher prices, the market remained slightly positive.

From the product marketer perspective, the economic and corresponding retail environments

combined with higher average footwear prices due to a lower U.S. dollar meant fewer orders and lower volume. Still others noted remarkable success such as footwear newcomer Under Armour, which saw sales rocket up more than 100%. For most smaller mainstream marketers and marketers of products focusing on fads and recent trends, 2008 was the year of reckoning with sales down substantially.

2 Nike, Inc. reports its results on a fiscal year period ending May 31 of each year.

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Figure 2–1 Global Footwear Retail Market, 2004–2008 (in billions $)

Source: Packaged Facts

Global Five-Year Growth at 6%

Gains in the years leading up to 2008 had been more robust—including nine percent gains in 2005 and 2006 pushing the market to well more than $181 billion. The more modest gain of four percent in 2007 was due partly to slightly lower average prices, as well as slower volume growth. For the 2004–2008 period, the global footwear market grew at a compound annual growth rate of six percent.

166.2

189.3 192.3

153.2

181.4

0.0

25.0

50.0

75.0

100.0

125.0

150.0

175.0

200.0

2004 2005 2006 2007 2008

Global Footwear Retail Market

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Table 2–1 Global Footwear Retail Market and Year-over-Year Percentage Change, 2004–2008 (in millions $)

Year Total Net Sales YoY % Change 2004 $153,211.8 -- 2005 166,213.5 8.5% 2006 181,428.2 9.2 2007 189,294.7 4.3 2008 192,253.5 1.6 CAGR -- 5.8% Source: Packaged Facts

Unit Volume Declines Globally

While the global market was higher in U.S. dollar terms, volume sales told a different story. Packaged Facts estimates total volume declined two percent from the 2007 level 10.5 billion pairs to 10.3 billion pairs in 2008. The decline was driven largely by the economic downturn in the United States; however, Packaged Facts estimates that all international markets in the aggregate still showed a slight decline of one percent. Major competitors such as Nike and Adidas AG noted unit sales were up in slightly Europe and higher in other regions outside the United States, but for many other competitors the European market was less kind. For the 2004–2008 period, footwear volume grew at a CAGR of six percent.

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Figure 2–2 Global Footwear Retail Market Unit Volume, 2004–2008 (in millions of pairs)

Source: Packaged Facts

Table 2–2 Global Footwear Retail Market Unit Volume and Year-over-Year Percentage Change, 2004–2008 (in millions of pairs) Year Total Net Sales YoY % Change 2004 $8,288.7 -- 2005 9,141.5 10.3% 2006 10,056.3 10.0 2007 10,486.5 4.3 2008 10,275.4 -2.0 CAGR -- 5.5% Source: Packaged Facts

9,141.5

10,486.5 10,275.410,056.3

8,288.7

0.0

2,000.0

4,000.0

6,000.0

8,000.0

10,000.0

12,000.0

2004 2005 2006 2007 2008

Global Footwear Retail Market Unit Volume

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U.S. Footwear Retail Market

U.S. Footwear Market Flat

Packaged Facts estimates the U.S. retail footwear market rose just 0.3% over the 2007 level of $46.6 billion to reach $46.8 billion in 2008. The U.S. market had seen greater gains in earlier years—most notably 10% gains in the boom years for the U.S. economy 2005 and 2006, adding $4 billion in market value. For the 2004–2008 period, the U.S. retail footwear market grew at a CAGR of three percent.

Figure 2–3 U.S. Footwear Retail Market and Percent of Global Footwear Market, 2004–2008 (in billions $)

Source: Packaged Facts

44.246.6 46.8

41.8

46.6

24.6%25.7%

26.6%27.3%

24.3%

0.0

10.0

20.0

30.0

40.0

50.0

60.0

2004 2005 2006 2007 20080%

5%

10%

15%

20%

25%

30%

U.S. Footwear Retail Market % of Global Footwear Retail Market

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U.S. Market Losing Global Dominance

As a percent of the global market, the United States accounted for essentially 25%, but was down 0.2% from the level seen in 2007. Once the dominant market around the globe, the United States is no longer the big kid on the block, as the European Union consolidates more member states under its banner and emerging economies from Asia to Latin America gain greater consumer purchasing power. As a result, the U.S. market lost two percentage points in its global standing since 2004.

Table 2–3 U.S. Footwear Retail Market and Year-over-Year Percentage Change, 2004–2008 (in millions $)

Year Total Net Sales YoY % Change 2004 $41,830.0 -- 2005 44,200.8 5.7% 2006 46,556.1 5.3 2007 46,588.0 0.1 2008 46,749.3 0.3 CAGR -- 2.8% Source: Packaged Facts

U.S. Unit Volume Declines

While the U.S. market in terms of value barely squeaked out a gain, in volume terms the market as measured by apparent consumption3 suffered its first decline since 1998. Packaged Facts estimates footwear volume declined seven percent from the 2007 level of 2.5 billion pairs to less than 2.4 billion pairs in 2008. As a percent of global consumption, the United States accounted for 28% of total footwear volume, but fell to just 23% by 2008. Volume in earlier years had been rising at a rate between five and six percent, but as a possible harbinger of things to come growth slowed in 2007 to just one percent. For the 2004–2008 period, footwear volume grew at a CAGR of one percent.

3 Apparent consumption in volume terms is a measure determined by shipment quantities, plus import quantities, minus export quantities. It is a measure quantities supplied to the market and is not a direct measure of retail sales.

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Figure 2–4 U.S. Footwear Apparent Consumption by Volume and Percent of Global Footwear Market, 2004–2008 (in millions of pairs)

* Estimated by Packaged Facts. Source: U.S. Census Bureau; U.S. International Trade Commission (2004–2006)

Table 2–4 U.S. Footwear Apparent Consumption by Volume and Year-over-Year Percentage Change, 2004–2008 (in millions of pairs)

Year Total Net Sales YoY % Change 2004 2,278.5 -- 2005 2,382.6 4.6% 2006 2,491.8 4.6 *2007 2,515.4 0.9 *2008 2,352.9 -6.5 CAGR -- 0.8% * Estimated by Packaged Facts. Source: U.S. Census Bureau; U.S. International Trade Commission (2004–2006)

2,382.62,515.4

2,352.92,491.8

2,278.5

24.0%22.9%

27.5%26.1%

24.8%

0.0

700.0

1,400.0

2,100.0

2,800.0

3,500.0

2004 2005 2006 *2007 *20080%

6%

12%

18%

24%

30%

U.S. Footwear Market % of Global Footwear Market

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Imports Dominate U.S. Market

Virtually all footwear sold in the United States is produced overseas by contract manufacturers. In fact, imports have dominated the U.S. footwear market for some time, accounting for more than 90% since 1999. In 2006, imports hit their peak at 96% of the U.S. market with 2.4 billion pairs. Imports leveled off there after growing less than one percent in 2007 and declining six percent in 2008 to less than 2.3 billion pairs. The decline was due in part to the slowdown in the U.S. economy, but also due to the lower value of the U.S. dollar which effectively drove import prices higher. For the 2004–2008 period, footwear imports grew at CAGR of one percent.

Figure 2–5 U.S. Footwear Import Volume and Percent of Apparent Consumption, 2004–2008 (in millions of pairs)

Note: Percent of apparent consumption estimated by Packaged Facts (2007–2008) Source: U.S. International Trade Commission, U.S. Census Bureau (imports and percent of apparent consumption (2004–2006)

2,273.02,405.4

2,250.72,145.7

2,394.3

95.6%96.1%95.4%

94.2%

95.7%

0.0

700.0

1,400.0

2,100.0

2,800.0

3,500.0

2004 2005 2006 2007 200880%

82%

84%

86%

88%

90%

92%

94%

96%

98%

100%

U.S. Footwear Imports % of U.S. Apparent Consumption

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Table 2–5 U.S. Footwear Import Volume and Year-over-Year Percentage Change, 2004–2008 (in millions of pairs)

Year Total Net Sales YoY % Change 2004 2,145.7 -- 2005 2,273.0 5.9% 2006 2,394.3 5.3 *2007 2,405.4 0.5 *2008 2,250.7 -6.4 CAGR -- 1.2% * Estimated by Packaged Facts. Source: U.S. Census Bureau; U.S. International Trade Commission (2004–2006)

China Imports Declining

China accounted for 87% of total footwear import volume in 2008, essentially unchanged in share terms, but in volume terms was down six percent from the 2007 level of 2.1 billion pairs to less than 2.0 billion pairs. China had grown its share of U.S. imports from the 2004 level of 83%, but topped out by 2007. For the 2004–2008 period China footwear imports grew at a CAGR of two percent.

Is Vietnam the New China for U.S. Imports?

While import growth from China has topped out, imports from Vietnam have become the new star, replacing Brazil as the second largest supplier of U.S. footwear in 2006. Vietnam imports grew at a CAGR of 24% for the 2004–2008 period, growing its share of the U.S. market from two percent in 2004 to five percent in 2008 supplying 111 million pairs of footwear.

Vietnam’s import growth was primarily at the expense Brazilian manufacturers. Brazil saw supply to the United States dwindle at an annual rate of 21% and accounted for just two percent of all U.S. imports in 2008 at 38 million pairs.

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Table 2–6 U.S. Footwear Import Volume by Top 10 Countries of Origin, 2004–2008 (in millions of pairs)

Country 2004 2005 2006 2007 2008 2004–2008 CAGR China 1,791.2 1,941.7 2,062.6 2,099.3 1,955.7 2.2% Vietnam 47.1 67.4 90.1 97.5 111.5 24.0 Brazil 98.8 79.3 66.7 51.8 38.3 -21.1 Indonesia 46.7 46.3 42.1 34.7 37.3 -5.5 Italy 35.3 27.8 25.5 24.4 20.8 -12.4 Thailand 25.3 24.4 23.6 20.7 18.3 -7.9 Taiwan 13.1 9.1 9.0 12.0 13.6 0.8 India 8.0 9.5 10.4 10.2 10.6 7.3 Mexico 15.7 10.3 11.0 10.9 9.1 -12.6 Hong Kong 19.1 10.1 12.7 8.7 7.4 -21.2 All others 45.2 47.1 40.7 35.1 28.1 -11.2 Total 2,145.7 2,273.0 2,394.3 2,405.4 2,250.7 1.2% Source: U.S. International Trade Commission (2004–2006).

Figure 2–6 U.S. Footwear Import Volume Shares, by Top 10 Countries of Origin, 2008 (%)

Source: U.S. International Trade Commission (2004–2006); calculated by Packaged Facts

Indonesia1.7%

Brazil1.7%

Thailand0.8%

Italy0.9%

All others1.2%

Hong Kong0.3%

Mexico0.4%

India0.5%

Taiwan0.6%

Vietnam5.0%

China86.9%

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U.S. Footwear Sales by Consumer Group: Women, Men, Kids

Packaged Facts estimates women’s footwear accounted for 50% of total footwear sales through retail in 2008, up slightly from 49% in 2004, while men’s footwear accounted for 36% in 2008 down from 38% in 2004. Children’s footwear was unchanged at 13% of the market. All three categories saw modest gains in 2008 of less than one percent, however, women’s footwear showed the greatest growth over the 2004–2008 period at four percent.

Table 2–7 U.S. Footwear Retail Market by Consumer Group, Women, Men, Kids, 2004–2008 (in millions $)

Product by Consumer Type 2004 2005 2006 2007 2008 2004–2008

CAGR Women's footwear $20,367.95 $21,931.63 $23,451.94 $23,472.61 $23,576.03 3.7% Men's footwear 15,975.52 16,477.93 16,962.82 16,969.11 17,001.57 1.6 Children's footwear 5,481.34 5,791.23 6,141.33 6,146.24 6,171.74 3.0 Total $41,824.8 $44,200.8 $46,556.1 $46,588.0 $46,749.3 2.8%

Source: Packaged Facts.

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Figure 2–7 Share of U.S. Footwear Retail Market by Consumer Group, 2008 (%)

Source: Packaged Facts.

U.S. Footwear Sales by Major Product Category

Non-athletic footwear remained the dominant product type in 2008 accounting for 55% of the total U.S. market with athletic footwear capturing the remaining 45%. However, those shares have shifted since 2004 when non-athletic footwear accounted for 59% of the total market and athletic footwear made up 41%. Packaged Facts estimates non-athletic footwear grew at a CAGR of just one percent for the 2004–2008 period to $25.9 billion while athletic footwear grew at a CAGR of five percent to reach $20.9 billion.

Children's footwear

13.2%

Men's footwear36.4%

Women's footwear

50.4%

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Table 2–8 U.S. Footwear Retail Market by Major Product Category, 2004–2008 (in millions $)

Consumer & Category 2004 2005 2006 2007 2008 2004–2008

CAGR Non-athletic footwear $24,764.2 $25,310.1 $25,812.7 $25,819.1 $25,851.8 1.1% Athletic footwear 17,060.6 18,890.7 20,743.4 20,768.9 20,897.5 5.2 Total $41,824.8 $44,200.8 $46,556.1 $46,588.0 $46,749.3 2.8%

Source: Packaged Facts

Figure 2–8 Share of U.S. Footwear Retail Market by Major Product Category, 2008 (%)

Source: Packaged Facts.

Athletic footwear44.7%

Non-athletic footwear55.3%

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U.S. Footwear Sales by Consumer Group & Major Product Category

Women’s, Children’s Athletic Footwear Strong

A deeper look by consumer group and major product category shows both women’s and children’s athletic footwear saw the greatest growth in the 2004–2008 period posting annual rates of eight percent and seven percent, respectively. Both saw gains of one percent in 2008 to reach $16.5 billion for women’s athletic footwear and $3.6 billion for children’s athletic footwear. Women’s athletic footwear accounted for 15% of the market while children’s athletic footwear made up eight percent.

Men’s, Children’s Non-Athletic Decline

Showing negative growth, Packaged Facts estimates men’s non-athletic footwear declined at an annual rate of less than one percent to settle at $6.8 billion while children’s non-athletic footwear posted an annual rate of decline at two percent to below the $2.6 billion mark. Shares for 2008 were 15% and six percent, respectively.

Table 2–9 U.S. Footwear Retail Market by Consumer & Major Product Type, 2004–2008 (in millions $)

Consumer & Product Type 2004 2005 2006 2007 2008 2004–2008 CAGR

Women's footwear, including dress & casual footwear $15,074.5 $15,766.2 $16,437.1 $16,445.8 $16,490.8 2.3%

Men's athletic footwear, including sneakers & outdoor/hiking boots

9,028.1 9,587.8 10,148.6 10,156.0 10,194.2 3.1

Women's athletic footwear, including sneakers & outdoor/hiking boots

5,293.4 6,165.4 7,014.8 7,026.8 7,085.2 7.6

Men's footwear, including dress & casual footwear 6,947.4 6,890.1 6,814.2 6,813.1 6,807.3 -0.5

Children's athletic footwear, including sneakers & outdoor/hiking boots

2,739.2 3,137.5 3,580.0 3,586.1 3,618.0 7.2

Children's footwear, including boys, girls, infants, & toddlers 2,742.2 2,653.7 2,561.4 2,560.1 2,553.7 -1.8

Total $41,824.8 $44,200.8 $46,556.1 $46,588.0 $46,749.3 2.8% Source: Packaged Facts

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Women’s Non-Athletic, Men’s Athletic Growth Stable

Perhaps not surprisingly, women’s non-athletic footwear captured the largest share of the market at 35% while men’s athletic footwear made up 22%. Growth for both segments was only slight in 2008, however, for the 2004–2008 period, men’s athletic footwear showed annual growth at a CAGR of three percent to reach $10.2 billion while women’s non-athletic footwear grew at a CAGR of two percent to reach $16.5 billion.

Figure 2–9 Share of U.S. Footwear Retail Sales by Consumer Group and Major Product Category, 2008 (%)

Source: Packaged Facts.

Men's footwear, including dress & casual footwear

14.6%

Women's athletic footwear, incl sneakers &

outdoor/hiking boots15.2%

Children's footwear, incl boys, girls, infants, & toddlers

5.5%

Children's athletic footwear,incl sneakers &

outdoor/hiking boots7.7%

Men's athletic footwear, incl sneakers &

outdoor/hiking boots21.8%

Women's footwear,

including dress & casual footwear

35.3%

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50 © Packaged Facts August 2009

Global Footwear Market Forecast

Global Footwear Market to Reach $238 Billion by 2013

Packaged Facts expects the global footwear market to grow at a substantially slower clip between 2008 and 2013 compared to previous years. The global economic environment will likely put a damper on consumer spending putting pressure on all measures of the footwear including frequency of purchase, unit consumption and pricing. Regionally, markets will be affected to varying degrees and at various points in time as the global economic slump works its way through international markets. For instance, the Asia-Pacific region may take longer to slow down and may not be as severe as other regions.

Figure 2–10 Global Footwear Retail Market Forecast, 2008–2013 (in billions $)

Source: Packaged Facts

181.7

207.6

222.9

192.3 193.8

238.2

0.0

50.0

100.0

150.0

200.0

250.0

2008 2009 2010 2011 2012 2013

Global Footwear Retail Market Forecast

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Global Growth at Annual Rate of 4%

Packaged Facts forecasts the global market for footwear to grow much slower than in previous years at a compound annual growth rate (CAGR) of four percent to reach $238 billion by 2013. Sales in 2009 are expected fall six percent from the 2008 level of $192 billion to settle below the $182 billion mark. However, the market should rebound in 2010 with a seven percent gain to $194 billion. Expect gains around the seven percent mark thereafter through 2013.

Table 2–10 Global Footwear Retail Market and Year-over-Year Percentage Change, 2008–2013 (in millions $)

Year Total Global Sales YoY % Change 2008 $192,253.5 -- 2009 181,712.4 -5.5% 2010 193,827.0 6.7 2011 207,576.3 7.1 2012 222,936.8 7.4 2013 238,189.8 6.8 CAGR -- 4.4% Source: Packaged Facts

Global Unit Volume Consumption to Reach 12.1 Billion Pairs

On a unit volume basis, Packaged Facts expects a six percent decline from the 2008 level of 10.3 billion to 9.7 billion in 2009. The drop will be led by slower consumption all around, but with more acute declines in the United States and Europe. Packaged Facts expects countries in the Asia-Pacific region will see more modest declines with some showing some modest gains. Expect a modest rebound of six percent in 2010 to reach 10.2 billion pairs driven by a bounce in consumption by more developed regions such as the United States and Europe. Meanwhile it is expected that Latin and South America will show sluggishness as the economic cycle takes longer to work its way through various countries. Six percent growth is expected thereafter as the United States and Europe return to more modest growth rates and emerging economies see consumption rates rise. For the 2008–2013 period unit volume is expected to grow at a CAGR of three percent.

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Figure 2–11 Global Footwear Retail Market Unit Volume Forecast, 2008–2013 (in millions of pairs)

Source: Packaged Facts

Table 2–11 Global Footwear Retail Market Unit Volume Forecast and Year-over-Year Percentage Change, 2008–2013 (in millions of pairs)

Year Total Global Sales YoY % Change 2008 10,275.4 -- 2009 9,658.3 -6.0% 2010 10,214.6 5.8 2011 10,802.0 5.8 2012 11,421.3 5.7 2013 12,074.2 5.7 CAGR -- 3.3% Source: Packaged Facts

9,658.3

10,802.011,421.3

12,074.2

10,214.610,275.4

0.0

2,000.0

4,000.0

6,000.0

8,000.0

10,000.0

12,000.0

14,000.0

2008 2009 2010 2011 2012 2013

Global Footwear Retail Market Unit Volume Forecast

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U.S. Footwear Market

U.S. Footwear Market to Suffer from Thriftier Consumer Habits

In the United States, Packaged Facts estimates more timid overall growth as consumers work through a paradigm shift in the shopping mindset. The days of conspicuous consumption are being replaced by a higher level of frugality and conservative spending habits that will force many marketers to adjust product lineup to offer better values for staple footwear. Consumers who once spent $200 on a pair of shoes will be looking to drop that to $150 or lower. Others who bought multiple pairs of shoes per year will cut back by a few pairs. And, more consumers will likely take better care of older shoes, perhaps with visits to their local repair shop.

Figure 2–12 U.S. Footwear Retail Market Forecast, 2008–2013 (in billions $)

Source: Packaged Facts

40.1

45.6 47.246.843.3

48.4

22.0%22.4%22.1%24.3% 21.2%

20.3%

0.0

12.0

24.0

36.0

48.0

60.0

2008 2009 2010 2011 2012 20130%

5%

10%

15%

20%

25%

U.S. Footwear Retail Market Forecast % of Global Footwear Retail Market Forecast

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U.S. Global Market Share to Drop Two Points by 2013

It is expected that the United States will continue its decline as the leading footwear market as other regions continue to grow at faster rates. For 2009, Packaged Facts expects the United States to account for just 22% of the global footwear market in U.S. dollar terms. By 2013, that share is expected to drop to 20%.

Overall Growth Estimated at 1% Annually to Reach $48.4 Billion

Packaged Facts estimates sales of footwear in the United States will drop 14% from the 2008 level of $46.8 billion to just $40.1 billion in 2009. However, the sharp drop in 2009 will be greeted by a welcomed eight percent gain to $43.3 billion in 2010 as consumers return to stores. Expect growth rates to wane thereafter to about the three percent mark by 2013 reaching $48.4 billion.

Table 2–12 U.S. Footwear Retail Market Forecast and Year-over-Year Percentage Change, 2004–2008 (in millions $)

Year Total U.S. Sales YoY % Change 2008 $46,749.3 -- 2009 40,061.7 -14.3% 2010 43,344.1 8.2 2011 45,631.5 5.3 2012 47,169.4 3.4 2013 48,357.9 2.5 CAGR -- 0.7% Source: Packaged Facts.

Segments to Show Similar Growth

Packaged Facts expects all segments to show rather slow growth overall with men’s non-athletic footwear and children’s footwear leading the pack at slightly better than one percent annually through 2013. Slower growth is expected in children’s and women’s athletic footwear.

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Table 2–13 U.S. Footwear Retail Market Forecast by Consumer Group & Major Product Category, 2008–2013 (in millions $)

Consumer & Category 2008 2009 2010 2011 2012 2013 2004–2008 CAGR

Women's footwear, including dress & casual footwear $16,490.8 $14,229.4 $15,349.9 $16,136.6 $16,685.8 $17,113.3 0.7%

Men's athletic footwear, including sneakers & outdoor/hiking boots

10,194.2 8,707.9 9,434.5 9,939.2 10,272.6 10,529.3 0.6

Women's athletic footwear, including sneakers & outdoor/hiking boots

7,085.2 5,761.7 6,383.4 6,791.4 7,002.9 7,156.5 0.2

Men's footwear, including dress & casual footwear 6,807.3 6,091.1 6,468.2 6,748.8 6,990.7 7,185.9 1.1

Children's athletic footwear, including sneakers & outdoor/hiking boots

3,618.0 2,946.4 3,257.7 3,467.7 3,576.1 3,654.9 0.2

Children's footwear, including boys, girls, infants, & toddlers 2,553.7 2,325.2 2,450.4 2,547.8 2,641.4 2,718.0 1.3

Total $40,061.7 $40,061.7 $43,344.1 $45,631.5 $47,169.4 $48,357.9 4.2% Source: Packaged Facts.

Unit Volume Declines Globally

It is estimated that footwear consumption in unit volume terms will decline 11% from the 2008 level of 2.4 billion pairs to settle at 2.1 billion pairs in 2009— a level not seen since 2003. Packaged Facts sees seven percent growth in 2010 to near the 2.3 billion pair mark. However, growth thereafter will eventually slow to two percent by 2013 when consumption will near the 2.5 billion mark.

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Figure 2–13 U.S. Footwear Retail Market Unit Volume Forecast, 2008–2013 (in millions of pairs)

2,105.7

2,365.9 2,430.2 2,468.1

2,262.02,352.9

21.9%

20.4%

21.3%

22.9%21.8% 22.1%

0.0

700.0

1,400.0

2,100.0

2,800.0

3,500.0

2008 2009 2010 2011 2012 20130%

5%

10%

15%

20%

25%

U.S. Footwear Retail Market Unit Volume Forecast% of Global Footwear Retail Market Unit Volume Forecast

Source: Packaged Facts

Table 2–14 U.S. Footwear Retail Market Unit Volume Forecast and Year-over-Year Percentage Change, 2004–2008 (in millions of pairs) Year Total U.S. Sales YoY % Change 2008 2,352.9 -- 2009 2,105.7 -10.5% 2010 2,262.0 7.4 2011 2,365.9 4.6 2012 2,430.2 2.7 2013 2,468.1 1.6 CAGR -- 1.0% Source: Packaged Facts

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Chapter 3 Retail & Distribution

Overview

This chapter presents data and analysis on the retail aspects of the U.S. footwear market, along with descriptions on the method (wholesale or direct) and class (authorized or mass-market) of distribution and typical retail categories. Following that is an analysis of footwear sales as a percent of total sales for each major channel as well as U.S. footwear dollar sales by major retail channel and consumer preferences by retail channel as well as branded retailers.

Footwear Distribution Method and Class

Method: Wholesale or Direct

Most large marketers distribute their footwear directly to major retail outlets, including department stores, shoe stores, and athletic stores, along with factory outlets, their own branded concept stores, and leased departments in independent stores. A marketer may own or use a network of distribution centers, typically situated in central areas easily accessible by truck, rail, or other transport. These distribution centers serve as the supply source for retail outlets in the surrounding geographic area. Some regional and smaller-scale manufacturers also sell their shoes directly to retailers, usually to independently owned specialty stores or regional department stores.

However, the majority of small manufacturers use wholesalers or distributors to channel their shoes to retail outlets. Wholesalers often perform important functions, other than product transfer, such as helping retailers keep track of stocks, setting up merchandising displays, and providing information on industry trends. Smaller marketers do not exclusively use wholesalers and distributors, but often find them the best option for their scale. The larger marketers may supplement direct distribution through use of the wholesaler system, especially in international markets, but by and large, the larger marketers rely on their own distribution, selling direct to retailers. In addition, retailers often have their own distribution centers that receive shipments from major shoe manufacturers and then disseminate them to franchised or owned-and-operated stores.

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Class: Authorized or Mass

Footwear may be distributed on a mass (unlimited) or authorized (limited or franchise) basis. Mass-distributed footwear is supplied to a variety of retail outlets without limits or restriction; little or no attempt is made to protect retail accounts from competition or maintain product exclusivity. Mass-distributed products are generally lower-priced, often a benefit resulting from higher unit volume and faster turnover. As implied, mass-distributed products have a much wider range of distribution than authorized-distribution (limited) footwear. Common retailers consist of national retailers, local and regional discount shoe stores, and warehouse clubs.

Authorized distribution is restricted in part based on geography to reduce competition at the

retail level for each individual brand. The selected outlets may be the only selling agents of the manufacturer within a specific territory, and therefore have a protected franchise, but the degree of restriction on a limited distribution line can vary depending on market. For example, a particular product line may be distributed through only one outlet in a small town, whereas in a major metropolitan area, several outlets might carry that same brand.

Outlets for limited distribution can also be selected on the basis of clientele and image. The

prime outlets for limited distribution are usually “class A” department stores, shoe stores, and sporting goods stores. In some cases, marketers are able to reserve a predetermined amount of square footage to carve out exclusivity or even create the appearance of a store-within-a-store.

Footwear Retail Channels Overview

In the United States, footwear is sold through a variety of retail formats ranging from national chains to non-clothing and apparel stores (where footwear accounts for less than one percent of that retail sector’s total sales). Footwear sales through alternative retail formats such as catalogs and the Internet are playing increasingly important roles in the down economy but to a lesser degree than other products sold through these channels. Footwear can even be found for sale by street vendors although the likelihood of counterfeits is high, and if you look hard enough and have the cash, one will find an artisan cobbler such as E Vogel to craft a custom pair. But for most Americans, the local Wal-Mart, Payless or Foot Locker is the channel of choice.

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There are many ways to categorize retail establishment, but below outlines the general

landscape for footwear retail options.

Shoe Stores

Shoe stores can be grouped into one of two types of outlets. Family shoe stores provide footwear selections for the entire family in a variety of styles. Specialty shoe stores, often more up-market, are usually geared towards women or men, and often represent a branded shoe store concept like Nine West for women or Florsheim for men, which focus on a particular type of shoe such as dress or casual.

Shoe superstores, much larger than traditional shoe stores, are becoming increasingly

important in the athletic shoe category. Through recently built superstores, retailers are hoping to steal market shares by offering an extensive selection of athletic and rugged outdoor footwear, along with a wide variety of products for overall sporting needs.

Discount Shoe Stores

Discount shoe retailers such as Payless, DSW and Famous Footwear offer a variety of footwear types at reduced prices. These stores often specialize in closeouts, and are generally characterized by a no-frills, self-service atmosphere. For some footwear marketers, factory outlets are an important discount retail channel providing them the opportunity to distribute excess inventory or sub-par merchandise such as irregulars. Marketers often prefer distributing shoes to factory outlets rather than discount shoe stores or mass discounters, fearing that association with those channels may cheapen the brand name in the eyes of the consumer. Outlets are usually located in remote areas so they do not cut into the sales of retail channels found in indoor malls, shopping strips, and city centers.

Sporting Goods and Athletic Shoe Stores

Athletic stores provide the largest assortment of athletic and rugged footwear. Athletic specialty stores such as Foot Locker specialize in this type of footwear and provide a sales staff with extensive knowledge about the product offerings. Sporting goods stores such as Dick’s or Modell’s not only provide sporting equipment, but an athletic footwear department as well.

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General Merchandise: Mass Discounters

Wal-Mart, Kmart, and Target are the primary mass discounter retailers. These retail outlets provide consumers with an opportunity for one-stop shopping, along with a self-service selection of inexpensive shoes.

General Merchandise: Department Stores and National Chains

Among the most important outlets for footwear are department stores such as Nordstrom, and Macy’s, and national chains such as Sears and JC Penney. These stores typically encompass an average of 20,000 square feet and sell a variety of goods, including fashionable clothing, accessories, cosmetics, and housewares, in distinct departments spread out over several floors. They typically offer sales support, higher-quality merchandise, name-brand shoes, and wide selections.

Apparel: Specialty Apparel Stores

Stores that specialize in apparel may offer a few lines of current shoes along with the season’s clothing offerings. They account for a small but significant part of the retail pie and are often the choice for many fashion forward consumers. Examples of apparel specialty stores include Kenneth Cole and Banana Republic

Apparel: Off-Pricers

Off-pricers include retailers such as Marshalls, Loehman’s and Filene’s Basement through which brand names are sold at discount prices. Often, these shoes are manufactured as an off-price shoe, or a lower-end line, and are not available at other retail outlets.

Non-Store Retail: Catalog

Catalogs such as L.L. Bean offer higher-end footwear selections; other catalogs fill mid-tier and bargain niches. These companies specialize in mail order as their predominant outlet for the sale of products, although they may also have a few company outlet stores. While other retailers, such as department stores, may have mail-order catalogs (as do various footwear marketers), their primary business is not mail order, and they are traditionally classified within their respective channels. The growing role of the Internet, which is a particularly central issue to mail order marketers, will of course transform the retail/direct-sales boundaries.

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Non-Store Retail: The Internet

Just a few short years ago, all of the top-ranking footwear marketers had websites to promote their products, but the quality and style of the websites ranged as widely as the marketers themselves. Most used their websites primarily as consumer and business resources, providing information on the company, where to find stores, current product lines, and investment information or employment opportunities. However, few were using them as a direct-to-consumer retailing tool.

Today, many are now focusing their websites to provide a wide-ranging product selection to

sell directly to consumers. Brand loyalty plays a key role as consumers lose the benefit of trying on footwear directly before purchase. However, many marketers have lessened the fitting need by offering incentives such as free shipping and returns. In addition, independent online retailers such as Zappos.com have taken the Amazon.com model to the footwear market.

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Footwear Retail Sales by Major Channels

Shoe Stores Remain the Medium of Choice

Packaged Facts estimates shoe stores accounted for 54% of total footwear retail sales in the United States in 2008, up just one percent from the 2007 level of $24.8 billion to $25.1 billion. Growth was driven in part by an increase in the number shoe stores such as Skechers that capitalized on more youth-oriented footwear trends. This comes despite certain industry insider claims that over-capacity in shoe retailing has led to cutthroat competition forcing some companies to go out of business.

For example, Footstar, Inc., which operated leased footwear departments at K-Mart stores

and also supplied footwear to Rite Aid drug stores, was unable to renew its contracts for 2009 and decided to liquidate. Another factor contributing to the increase in the shoe store channel has been the push by several marketers to open and operate their own retail locations focused primarily and sometimes exclusively on their own brands. Companies from Nike, Inc. to Wolverine Worldwide, Inc. have continued to open stores under their own specific brands. The shoe store channel grew at an annual rate of five percent during the 2004–2008 period, increasing its share of the footwear market.

Table 3–1 U.S. Footwear Retail Market by Major Channel, 2004–2008 (in millions $)

Channel 2004 2005 2006 2007 2008 2004–2008 CAGR

Shoe stores $20,701.2 $22,876.8 $24,941.6 $24,810.0 $25,056.0 4.9% General merchandise stores 9,615.2 9,336.5 9,078.1 8,851.9 8,678.9 -2.5 Clothing stores 5,409.2 5,500.2 5,591.5 5,669.5 5,632.6 1.0 Sporting goods stores* 2,770.8 2,868.3 3,022.9 3,170.1 3,220.7 3.8 Non-store retailers 2,068.6 2,227.0 2,391.9 2,555.3 2,620.0 6.1 All other 1,265.0 1,392.0 1,530.0 1,531.2 1,541.2 5.1 Total $41,830.0 $44,200.8 $46,556.1 $46,588.0 $46,749.3 2.8%

* Also includes hobby, book, and music stores. Note: All major categories are employer firms only. All other includes non-employer firms. Source: Packaged Facts.

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General Merchandise Stores Still Second, but Struggling

General merchandise stores, which include superstores such as Wal-Mart (which from a consumer perspective, sees the highest levels of shopper penetration for footwear), department stores such as Macy’s, and discounters such as K-Mart, saw their share dwindle in the 2004–2008 period from 23% of the footwear market to 19%. Packaged Facts estimates sales declined at a CAGR of three percent to $8.7 billion. Footwear sales of specific retailers are not known; however, many retailers have had problems. While Wal-Mart continues to do well, especially in the down economy, other retailers such as Macy’s and K-Mart have suffered due to elements such as over-capacity and declining traffic.

Apparel Stores Less of a Force

Packaged Facts estimates footwear sales at clothing stores were down slightly in 2008, but still grew at an annual rate of one percent for the 2004–2008 period. Despite the modest growth, it is estimated that footwear sales as a percent of the total footwear market declined from 13% in 2004 to 12% in 2008.

Sporting Goods Stores on the Rise

Accounting for just seven percent of the footwear market, sporting goods stores saw better results, growing two percent in 2008 to reach $3.2 billion. For the 2004–2008 period sporting goods stores’ footwear sales grew at a CAGR of four percent.

Catalogs Tried and True, Internet Still on Trial

Non-store retailers, which include catalogs and etailers, saw sales increase at an annual rate of six percent to reach $2.6 billion to account for six percent of footwear sales. Many footwear marketers and retailers have used catalogs as a way to proactively entice consumers for some time. For instance Genesco, which operates the high-end Johnston & Murphy men’s footwear brand, has sold product via catalog since the 1980s. The catalog has been solid performer for the company mainly due to the loyal customer base the company has built over time.

Only in the last few years has the Internet become a force in the footwear market. Because of the inherent need for consumers to try on footwear, growth has been much slower than many other products that are sold over the Internet for many other marketers. As an example, Skechers, which had $1.4 billion in sales in 2008 stated that just one percent of its sales, or

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$18 million, came from the Internet despite having sold products via the Internet since 2002. Still the company did see annual growth of 39% for sales through the Internet during the 2004–2008 period.

Zappos.com Gets in Step

While marketers and brick-and-mortar retailers have seen their Internet sales grow slowly compared to other products more suited for online retailing, Zappos.com has been a bright spot finding robust growth. In 2008, sales grew an estimated 19% to reach the $1.0 billion mark. For the 2004–2008 period sales grew at an annul rate of 53%! However, the company has not been immune from the economic slump. While quarterly sales were unavailable, the fact that the company laid off eight percent of its workforce at the end of 2008 points to the likelihood of slowing, if not declining growth going into 2009.

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Figure 3–1 Share of U.S. Footwear Sales by Major Channel, 2008 (%)

* Also includes hobby, book, and music stores. Note: Non-store retailers includes catalog sales and ecommerce sales. Source: Packaged Facts.

Footwear as a Percent of Retailer Sales by Channel

Not surprisingly, shoe stores in the United States captured virtually all their total sales from the sales of footwear, while other major channels in which footwear is sold saw less than four percent of their sales come from footwear. Shoe stores saw 93% of their revenues come from footwear in 2008 versus 87% in 2004. Sporting goods stores clothing stores captured four percent of their sales from footwear in 2008. General merchandise stores, which include department store chains, super stores such as Wal-Mart, and discount stores such as K-Mart, saw two percent of their sales come from footwear while non-store retailers saw just one percent.

Sporting goods stores6.9%

Clothing stores 12.0%

All other3.3%

Nonstore retailers 5.6%

General merchandise

stores18.6%

Shoe stores 53.6%

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Table 3–2 U.S. Footwear Retail Sales as a Percent of Selected Retail Channel Sales, 2004–2008 (%)

Channel 2004 2005 2006 2007 2008 2004–2008 CAGR

Shoe stores 87.2% 90.3% 93.2% 93.0% 93.4% 1.7% Sporting goods 3.5 3.5 3.6 3.6 3.7 1.5 Clothing stores 3.9 3.8 3.6 3.5 3.6 -2.6 General merchandise stores 1.9 1.8 1.6 1.5 1.5 -6.8 Non-store retailers 0.9 0.9 0.9 0.9 0.9 -1.2 All Channels 4.2 4.2 4.1 3.9 3.9 -2.1

Note: Does not include all other retail channels and non employer firms. Sporting goods stores also includes book, music and hobby retailers. Source: Packaged Facts.

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Retail Channels and Stores by Consumer Preference

Footwear Consumers Prefer to Shop at Specialty Apparel Stores

According to data supplied by BIGresearch, when asked what type of retail location they prefer to shop at for footwear, specialty apparel (i.e. segmented clothing and shoe stores) ranked number one with consumers at 30%, followed by discount stores with 18% and department stores with 17%. The Internet and catalogs were far less popular with just three percent and one percent of respondents, respectively. Membership houses barely registered and 18% had no preference. For more information on consumer retail preferences, see Chapter 6: The Footwear Consumer.

Figure 3-2 Consumer Penetration Levels for Type of Retail Shopped Most Often for Shoes, by Adult Users, 2008 (%)

Source: BIGresearch, Consumer Intentions and Actions Survey and Simultaneous Media Study, © July 2008. BIGresearch, All Rights Reserved. Compiled by Packaged Facts.

Internet3.0%

Department Store16.7%

MembershipWarehouse

0.2%

Catalog1.2%

Other12.8%

No Preference18.1%

Discount Store18.1%

Specialty Apparel29.9%

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Wal-Mart, Payless Still Top Choice for Consumers

BIGresearch named Wal-Mart the retail leader for footwear purchases followed by Payless Shoe Source, both with 12% of consumers. However, preferences for these two are down from 14% in 2006. What’s more, both retailers saw their consumer preference numbers decline to 11% in BIGreasearch’s February 2009 survey. In spite of the downturn, Wal-Mart continues to trump competitors in the down economy with its commitment to everyday low prices and efforts to include higher profile name brands such as L.E.I. and Danskin. Payless current retail outreach strategy focuses more on celebrity launches such as the launch of the Christian Siriano for Payless collection created by the “Project Runway” winner, available in September 2009.

Kohl’s Hopes Celebrity Will Kick Sales Up a Notch

Picking up the slack was third-place Kohl’s, which saw its consumer preference rise from four percent in July 2006 to five percent in July 2008 to six percent in February 2009. Kohl's has long utilized a celebrity strategy. In April 2009, the company, in partnership with Iconix Brand Group's Candie's brand, signed a marketing deal with pop star Britney Spears, who will appear this year in the Candie's Only at Kohl's print, TV, in-store and online ad campaigns.

Economy Hard on Off-Pricers Too

After seeing small but steady growth since 2006, off-pricer DSW saw its preference decline back to three percent in February 2009 from four percent in July 2008 in spite of increasing its selection of designer footwear.

And from Behind Comes Famous Footwear

In July 2008, Famous Footwear accounted for 1.6% of consumer interest, but after adding exclusive fashion brands such as Fabulosity and Miss Bisou and launching a high-profile ad campaign during the 2009 Academy Awards, interest has improved. In February 2009, BIGresearch has the retailer at 2.3%.

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Table 3-3 Consumer Penetration Levels for Stores Shopped Most Often for Shoes, by Adult Users, 2006-2008 (%)

Store 2008 2007 2006 Wal-Mart 11.8% 11.6% 14.1% Payless ShoeSource 11.7 11.3 14.4 Kohl’s 4.9 4.7 3.6 DSW 3.7 2.9 2.4 JC Penney 2.9 3.1 2.5 Foot Locker 2.4 2.9 1.8 Macy's 2.3 2.4 1.2 Sears 2.0 2.0 1.8 Kmart 1.8 1.8 2.3 Target 1.8 1.7 1.8 Famous Footwear 1.6 1.5 1.8 Shoe Carnival 1.6 1.6 1.5 Nordstrom 1.4 1.4 1.4 Dillards 1.2 1.0 1.0 Finish Line 1.0 0.6 0.4 Online/Internet 0.9 0.7 0.4 Marshalls 0.8 0.5 0.4 Zappos 0.7 0.6 0.6 Dick's Sporting Goods 0.6 -- -- Ross 0.6 0.5 0.4 Shoes.com 0.6 0.5 -- Belk 0.5 0.4 0.3 Nike 0.5 0.5 0.3 Rack Room 0.5 0.6 0.7 SAS Shoes 0.5 0.5 0.7 Academy 0.4 0.4 0.3 Big 5 Sporting Goods 0.4 0.4 0.7 ebay 0.4 0.3 0.3 Shoe Dept. 0.4 0.5 0.5 Skechers 0.4 -- -- Bass 0.3 -- -- Bealls 0.3 0.3 0.3 Easy Spirit 0.3 0.2 0.2 LL Bean 0.3 -- --

(continued)

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Table 3-3 [cont.] Consumer Penetration Levels for Stores Shopped Most Often for Shoes, by Adult Users, 2006-2008 (%)

Store 2008 2007 2006 Meijer 0.3 0.3 0.4 Mervyns 0.3 0.4 0.5 New Balance 0.3 0.3 -- Outlet Stores 0.3 0.3 0.3 Shoe Show 0.3 0.4 0.4 TJ Maxx 0.3 0.3 0.2 Florsheim 0.2 0.2 -- Haband 0.2 0.3 -- Journeys 0.2 0.4 -- Mason 0.2 -- 0.3 Redwing 0.2 -- -- Rockport 0.2 0.3 -- Value City 0.2 0.4 0.5 Nine West -- 0.2 0.2 No Preference 18.1 21.2 20.1 Other 17.3 17.3 19.0

Note: -- signifies not data available. Source: BIGresearch, July Consumer Intentions and Actions Survey and Simultaneous Media Study, © July 2008. BIGresearch, All Rights Reserved. Compiled by Packaged Facts.

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Chapter 4 Competitive Landscape

Overview

This chapter presents a look at the competitive landscape for footwear with an examination of major players and the jockeying for position within the global and U.S. markets. The first section highlights the major events such as strategic partnerships, acquisitions and divestitures among selected competitors and puts these events into context of the overall market. The second section presents selected marketer profiles of both major and minor competitors to provide a sample of the dominant players juxtaposed to smaller players that have found niches or are attempting to crack into the major leagues.

Footwear Market Highly Fragmented

The global footwear market is highly competitive and fragmented with a few major players and a seemingly endless array of smaller players, including designers, marketers, manufacturers and retailers, all vying for share. Globally, several companies crack the $1.0 billion dollar barrier in footwear sales but only Nike, Inc. and Adidas AG bring in more than $5.0 billion.

Nike the Global Leader

At the top, Nike had sales of $10.3 billion from its Nike brand at the end of its 2009 fiscal year. Packaged Facts estimates total company footwear sales, which include Cole Haan, Converse, Hurley, Nike Golf, and Umbro brands, at $10.9 billion for the 12-month period ending November 30, 20084.

Adidas at Number 2

Adidas AG vaulted much higher in 2006 when it purchased Reebok, adding more than $2.0 billion in footwear sales globally. In an effort to further focus its holdings on athletic footwear and apparel, the company later sold its Salomon brand, which makes ski equipment

4 Nike, Inc.’s fiscal year ends May 31 of each year. Figures here have been adjusted to reflect approximate calendar year results more comparable to other firms.

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and hiking boots, to Finland-based Amer Sports. Including Reebok for the 2004–2008 period, total footwear sales for the company grew at an annual rate of six percent.

Other Top Competitors: Puma, Asics, New Balance, C&J Clark

Companies hovering nearer to the $2.0 billion global footwear sales mark include Germany-based Puma AG at $2.1 billion in 2008 and Japan-based Asics Corporation at $1.7 billion. U.S.-based New Balance Athletic Shoe, Inc.—probably the largest privately held athletic footwear marketer—had $1.6 billion in total sales in 2008, but the number also includes an unspecified amount in athletic apparel and accessories. Also unknown is privately held, United Kingdom-based C&J Clark, which markets mostly casual footwear for men, women, and children. Total sales are unknown, but are believed to somewhere between $1.5 and $2.0 billion.

Table 4–1 Selected Footwear Marketers with Footwear Sales Greater Than $1.0 Billion, 2004–2008 (in millions $)

Company 2004 2005 2006 2007 2008 04–08 CAGR Nike, Inc. $7,580.4 $8,387.1 $9,025.1 $10,472.9 $10,894.2 9.5% Adidas AG 5,689.2 5,956.9 5,945.7 6,512.4 7,237.5 6.2 Puma AG 1,258.0 1,463.3 1,783.8 1,902.5 2,110.3 13.8 Asics Corporation 824.3 1,023.8 1,162.6 1,419.1 1,728.6 20.3 Geox SpA 423.0 566.6 769.1 1,055.7 1,313.2 32.7 Skechers USA Inc. 738.7 797.8 956.6 1,098.9 1,139.6 11.4 Wolverine Worldwide Inc. 903.6 964.5 1,036.9 1,099.2 1,106.1 5.2 Ecco Sko A/S 523.6 589.6 707.6 911.3 1,012.2 17.9 The Timberland Company 1,153.2 1,200.1 1,126.9 1,004.8 974.3 -4.1 Jones Apparel Group 1,002.4 978.6 941.1 955.8 938.3 -1.6

Source: Compiled by Packaged Facts from annual reports. Note: Nike footwear sales are for the 12-month period ending November 30, 2008 and include estimates for Cole Haan, Converse, Hurley, Nike Golf, and Umbro. Adidas AG sales include Reebok sales for the entire period on a pro forma basis. Some companies’ sales include retail sales in addition to wholesale. Jones Apparel Group figures include wholesale footwear and accessories, but do not include footwear sold through retail locations. Sales for Adidas AG, Puma AG, Asics Corporation, Geox SpA, Ecco Sko A/S have been translated to U.S. dollars using the average annual exchange rate for their respective home currencies.

Athletic Footwear Market More Concentrated at Top

In athletic footwear, competition is much more concentrated at the top with U.S.-based Nike, and Germany-based Adidas AG, Puma AG, and Asics Corporation with $22 billion combined global footwear revenue. But beyond that, the competition dwindles below the $1.0 billion mark to a smattering of players focusing on niche markets.

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Niche Athletic Sales Lower but Offerings Diverse

New Balance Shoe Inc. is still one of the largest, most recognized brands and known for its special widths not available by other brands, but its footwear sales globally are likely under the $1.0 billion mark. Other minor athletic footwear competitors (2008 sales) include Fila (~$300-400 million), K-Swiss ($340 million), Columbia Sportswear ($217 million), Amer Sports ($210 million), and Under Armour ($85 million).

Other footwear marketers, such as Skechers, market what may be termed as performance-

inspired footwear—casual footwear with athletic shoe construction and styling—along side more traditionally styled casual footwear. Here the line gets a bit blurry making it difficult to distinguish athletic footwear from non-athletic footwear. It also becomes a matter of marketing perspective and consumer perception. Still others, such as Wolverine Worldwide, VF Corporation, Deckers Outdoor Corporation, and The Timberland Company, produce a wide range of athletic and outdoor footwear as well as every conceivable hybrid version in between.

Nike Leads U.S. Footwear Market with Double-Digit Share

Packaged Facts estimates Nike accounted for the largest share of the U.S. market in wholesale terms with 21% on $4.3 billion in revenue for the 12-month period ending November 30, 2008, growing from 18% in 2004.

Followed By Adidas, Jones Apparel in Single Digits

Adidas AG accounted for eight percent of the U.S. market in 2008 on footwear sales of $1.6 billion. The company had only three percent of the market in 2005, but after the acquisition of Reebok, the company’s share jumped to nine percent in 2006.

Jones Apparel Group accounted for five percent of the U.S. market through its Easy Spirit, Nine West and other brands’ wholesale revenues and is the largest marketer of women’s non-athletic footwear. The company’s share is likely a bit higher considering that footwear sold through its retail channels is not included in this figure.

Privately Held Companies Share Considerable

Other companies that likely have a considerable stake in the U.S. market include several companies for which data was not available. They include Berkshire Hathaway-owned Justin Brands, United Kingdom-based C&J Clark, Kenneth Cole, LA Gear, and Red Wing Shoe.

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Table 4–2 Selected Global Footwear Marketers with U.S. Sales, 2004–2008 (in millions $)

Company 2004 2005 2006 2007 2008 04–08 CAGR Nike, Inc. $3,225.4 $3,589.4 $3,958.1 $4,332.3 $4,316.5 7.6% Adidas AG 457.8 581.3 1,801.0 1,730.4 1,568.1 36.0 Jones Apparel Group 1,002.4 978.6 941.1 955.8 938.3 -1.6 Skechers USA, Inc. 582.2 634.3 772.9 831.2 807.0 8.5 Brown Shoe Company, Inc. 646.3 838.4 893.9 783.1 733.3 3.2 Collective Brands (Stride Rite) 531.2 545.5 627.3 651.8 671.3 6.0 Wolverine World Wide, Inc. 654.7 673.1 655.1 669.8 661.4 0.3 New Balance Shoe, Inc. 614.2 636.1 653.4 625.8 636.3 0.9 Deckers Outdoor Corporation 175.4 229.5 266.1 386.6 581.5 34.9 The Timberland Company 675.8 674.2 607.9 481.0 465.9 -8.9 Asics Corporation 132.0 192.6 258.1 315.1 383.8 30.6 Puma AG 203.5 312.3 371.7 328.1 305.8 10.7 Crocs, Inc. 10.9 94.8 233.8 395.9 294.1 127.9 Genesco, Inc. 226.6 229.2 266.1 285.6 274.6 4.9 Weyco Group, Inc. 223.0 209.5 221.0 232.6 221.4 -0.2 Ecco Sko A/S 133.6 147.9 180.0 199.9 185.9 8.6 K-Swiss, Inc. 397.4 380.5 318.7 202.4 141.8 -22.7 LaCrosse Footwear, Inc. -- 99.3 107.8 118.2 128.0 -- Columbia Sportswear Company 112.3 123.7 128.3 128.7 120.0 1.7 Under Armor, Inc. -- -- 26.9 40.9 84.8 -- Geox SpA 15.1 12.6 23.7 33.0 73.3 48.3 Amer Sports Corporation 37.5 35.5 39.3 48.3 58.9 11.9 Heelys, Inc. 13.8 36.6 161.3 153.0 37.1 28.0

Note: Nike footwear sales are for the 12-month period ending November 30, 2008 and include estimates for Cole Haan, Converse, Hurley, Nike Golf, and Umbro. Adidas AG sales include Reebok sales for the entire period on a pro forma basis. Some companies’ sales include retail sales in addition to wholesale. Some company sales have are for the fiscal year ending January 2009. Jones Apparel Group figures include wholesale footwear and accessories, but do not include footwear sold through retail locations. Sales for Adidas AG, Amer Sports Corporation, Puma AG, Asics Corporation, Geox SpA, Ecco Sko A/S have been translated to U.S. dollars using the average annual exchange rate for their respective home currencies. Source: Compiled by Packaged Facts from annual reports.

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Figure 4–1 Share of U.S. Footwear Wholesale Market by Selected Company, 2008 (%)

Note shares may not include all footwear products for some companies; figures may include other products. Source: Packaged Facts

Consolidation and Strategic Acquisitions All but Stopped

Consolidation continued into 2008 as companies made changes to their portfolios in hopes of finding strategic benefits and accelerated growth. However, activity slowed dramatically in 2009 as the economic landscape forced marketers to focus on conserving cash versus spending on big deals. The largest firms focused on strengthening their core businesses whether they are performance athletic and sports footwear or dress and casual footwear.

Many firms divested businesses up through 2008 that were no longer adding the level of value needed to continue stronger growth or that were no longer a focus of the overall company. Nike sold its Bauer Hockey business in 2008, but added Umbro to focus more on soccer. Adidas AG sold Salomon to Amer Sports in 2005 as it tried to digest Reebok.

Skechers3.9%

Jones Apparel4.6%

Stride Rite3.3%

Brown Shoe3.6%

Asics1.9%

Timberland2.3%

Deckers Outdoor2.8%

New Balance3.1%

Wolverine3.2%

All others37.6%

Weyco1.1%

Genesco1.3%Crocs, Inc.

1.4%

Puma1.5%

Adidas AG7.6%

Nike21.0%

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A few smaller, niche companies that reaped rewards from fads through 2008 tried to bolster

their business by adding additional products and brands. Skechers played around with kids’ player, Heelys, and Deckers Outdoor bought TSUBO, a fashionable comfort shoe company, in 2008. Crocs, Inc. bought several smaller firms in the years following its IPO, but so far has failed to add a mainstream footwear product—instead focusing on companies and products that compliment its existing business. Its Jibbitz charms business has so far turned out to be a smart deal, but its acquisition of Fury Hockey, a hockey gear maker, was a mess.

Nike on the Prowl?

In early 2009, speculation of further Nike acquisitions surfaced when Women’s Wear Daily reported that Nike was in talks to acquire Quiksilver Inc., maker of surfing and skateboard lifestyle-oriented apparel. The speculation turned out to be just that as no deal had been reached by the time of this writing. Though Nike has been sitting on a pile of cash and other current assets ($9.0 billion as of February 2009) with which it could make strategic acquisitions, Packaged Facts contends that adding Quiksilver, which has had problems growing revenue and staying afloat, would add little to Nike’s portfolio brands since its Hurley business already plays in much the same space as Quiksilver.

What’s more, the company is still digesting Umbro, which it acquired in March 2008. Umbro

is a much more strategic fit adding a strong global soccer business to Nike’s other sports focuses, but sales growth for the Umbro brand is not as strong as some other businesses.

Skechers Diggin’ in Its Heelys

In August 2008, Skechers announced it had proposed the acquisition of Heelys Inc. Heelys makes kids sneakers with wheels in the heels that allow kids to alternate between rolling and walking. Talks had been going on reportedly since December 2007, but Skechers decided to make its desires known in August 2008 when it announced its offer of $143 million, or $5.25 per share. Skechers dropped pursuit when Heelys rejected the offer, citing Heelys management was being unrealistic regarding its company’s value. Shortly thereafter the bottom fell out of the U.S. economy and took Heelys sales with it. Heelys 2008 sales declined 61% from the 2007 level of $184 million to just $71 million. As a result, Heelys share price was cut from just over $5.00 a share at the end of August 2008 to a low of $1.19 in March 2009. In November 2008, the company hired middle-market investment bank Houlihan Lokey to advise on strategic options. In a possible acknowledgment that Heelys management faltered over the proposed merger, CEO Donald Carroll resigned in February 2009.

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LaCrosse Footwear, Inc. Expands with Sustainable Acquisition

In May 2009, LaCrosse Footwear Inc., a marketer of branded work and outdoor footwear and apparel, announced its intention to acquire Environmentally Neutral Design Outdoor, Inc., or END, for about $500,000. END designs and markets outdoor and athletic footwear using sustainable practices such as recycled materials and began shipping product only in 2008. The company received the “Best Trail Running Shoe Debut” from Runner’s World magazine in their April 2009 issue and “Best Road Running Shoe Debut” in their June 2009 issue. The company will debut its Spring 2010 line at upcoming shows including the Outdoor Retailer Summer Show. The acquisition by LaCrosse closed in June 2009.

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Selected Company Profiles

Nike, Inc.

Company Details Descriptions Company Type Public Revenues (fiscal year ending May 31 2009) $19.2 billion Employees 32,500 President, CEO Mark Parker VP GM Global Footwear Jan Singer VP Footwear Sportswear Andrea Correani VP Global Footwear Converse John R. Hoke VP Footwear Sport Performance Chris Lindgren VP & Chief Executive Officer, Cole Haan James Seuss

Address Nike World Headquarters One Bowerman Drive Beaverton, OR 97005

Tel: 503-671-2500 Website: www.nikebiz.com, www.nike.com

Overview

Based in Beaverton, Oregon, Nike, Inc. is the world’s largest designer and marketer of athletic footwear and apparel. The company designs, markets and distributes footwear, apparel, equipment, and athletic and fashion accessories in more than 180 countries worldwide.

Products are sold through a variety of channels including more than 25,000 retail accounts in

the United States and more than 27,000 retail accounts internationally. Nike also operates company-owned retail locations such as Nike factory stores and brand specific stores such as Niketown, Cole Haan, and Converse. The company had 296 company-owned retail locations in 2008. Other distribution channels include Internet etail, as well as independent distributors and licensees.

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Virtually all of the company’s footwear and apparel products are manufactured outside the

United States, primarily in Asia by contract suppliers in China, Vietnam, Indonesia, and Thailand, though other countries such as Argentina, Brazil, India, Italy, and South Africa also produce products for sale in those countries and surrounding regions. In total, Nike contracts out to manufacturers in 34 countries.

In October 2007, Nike announced that it had reached agreement to acquire soccer footwear

and apparel brand Umbro for $565 million. The acquisition was complete in March 2008 for $576 million. The acquisition gives Nike a leading position in the soccer market and greater exposure to international customers.

In February 2008, Nike announced that it reached an agreement to sell its Bauer Hockey to an

investor group led by Kohlberg & Company and Canadian businessman W. Graeme Roustan for $200 million. The sale was completed in April of 2008.

Performance

For its fiscal year ending May 31, 2009, Nike reported total net sales increased three percent over the 2008 level of $18.6 billion to $19.2 billion. However, net sales were down seven percent in its fourth quarter as the global recession curtailed spending on athletic wear worldwide.

The company indicated that futures orders for its products for the first half of its 2010 fiscal

year were down 12% (five percent excluding changes in currency exchange rates). Nike’s futures orders program accounted for 86% of U.S. sales in 2008. For the 2005–2009 period, Nike’s net sales grew from $13.7 billion at a compound annual growth rate (CAGR) of nine percent.

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Figure 4–2 Nike, Inc. Total Net Sales, 2005–2009 (in millions $)

Source: Nike, Inc. annual reports and press releases. Figures are for the fiscal year ending May 31 of stated year.

Table 4–3 Nike, Inc. Total Net Sales and Year-over-Year Percentage Change, 2005–2009 (in millions $)

Year Total Net Sales YoY % Change 2005 $13,739.7 -- 2006 14,954.9 8.8% 2007 16,325.9 9.2 2008 18,627.0 14.1 2009 19,176.1 2.9 CAGR -- 8.7% Source: Nike, Inc. annual reports and press releases. Figures are for the fiscal year ending May 31 of stated year.

14,954.9

18,627.019,176.1

13,739.7

16,325.9

0.0

5,000.0

10,000.0

15,000.0

20,000.0

25,000.0

2005 2006 2007 2008 2009

Total Net Sales

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Sales by Product Category

Nike footwear accounted for 54% of the company’s total net sales in its 2009 fiscal year, up slightly from 52% in 2008, but down over the longer term. In 1999, footwear accounted for 60% of total net sales and was even higher in previous years. However, the company has worked to build its other businesses in an effort to become more diversified. Apparel accounted for 27% and equipment made up six percent of total net sales in 2009. Nike’s “Other” division, which includes the fashion footwear and apparel brand Cole Haan, Converse, Nike Golf, and newly acquired Umbro, made up the remaining 13%.

Figure 4–3 Share of Nike, Inc. Total Net Sales by Product Category, 2009 (%)

Figures are for the fiscal year ending May 31 of stated year. * Other includes footwear products sold through Cole Haan, Converse, Hurley, Nike Golf, and Umbro brands. Source: Nike, Inc. annual reports and press releases.

*Other13.1%

Equipment5.8%

Apparel27.4%

Footwear53.7%

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Sales by Geographic Region

Nike’s largest share of sales by region was in the United States in 2009 at 34%, but international markets have become the largest driver of growth for the company. Even including Nike’s “Other” business, which accounted for 13% in 2009, international is where it’s at for Nike. In fact, international sales have accounted for more than 50% of Nike’s total sales since 2002.

It’s not to say that the U.S. business hasn’t seen growth. Sales grew at a CAGR of six percent

between 2005 and 2009. But that pales in comparison to the Asia Pacific and Americas regions, which showed annualized growth of 15% and 17%, respectively. As a result, the Asia Pacific region accounted for 17% of total sales in 2009 compared to just 14% in 2005. The Americas region was just five percent of total net sales in 2005.

Figure 4–4 Share of Nike, Inc. Total Net Sales by Geographic Region, 2009 (%)

Figures are for the fiscal year ending May 31 of stated year. * Other includes footwear products sold through Cole Haan, Converse, Hurley, Nike Golf, and Umbro brands. Source: Nike, Inc. annual reports and press releases.

Americas6.7%

Asia Pacific17.3%

Other*13.1%

Europe, MiddleEast and Africa

28.7%

United States34.1%

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Footwear Sales Solid Despite Economy

Despite the slowing economy, Nike’s footwear business still fared well posting a six percent increase over the fiscal year 2008 level of $9.7 billion to $10.3 billion in 2009. Footwear sales were up in all regions including four percent in the United States, 15% in the Asia Pacific region, 13% in the Americas. Europe and the Middle East lagged with an increase of just one percent. For the 2005–2008 period, Nike footwear sales grew at a CAGR of nine percent.

Figure 4–5 Nike, Inc. Footwear Net Sales and Percent of Total Net Sales, 2005–2009 (in millions $)

Figures are for the fiscal year ending May 31 of stated year. Source: Nike, Inc. annual reports and press releases.

7,966

9,73210,307

7,300

8,514

52.2%52.2%53.3%53.1% 53.7%

0

2,000

4,000

6,000

8,000

10,000

12,000

2005 2006 2007 2008 20090.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

Footwear % of total Nike net sales

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Table 4–4 Nike, Inc. Total Net Sales and Year-over-Year Percentage Change, 2005–2009 (in millions $)

Year Total Net Sales YoY % Change 2005 $7,299.7 -- 2006 7,965.9 9.1% 2007 8,514.0 6.9 2008 9,731.6 14.3 2009 10,306.7 5.9 CAGR -- 9.0% Source: Nike, Inc. annual reports and press releases. Figures are for the fiscal year ending May 31 of stated year.

Cole Haan, Converse and Other Sales Did Suffer

It was Nike’s collection of other businesses that suffered in 2009, falling three percent from the 2008 level of $2.6 billion to $2.5 billion. In comparable terms, which excludes Bauer Hockey and the addition of Umbro, the company stated sales did increase five percent over all, but were down three percent in the fourth quarter. The company noted that both its Cole Haan and Nike Golf businesses suffered from the economic environment. For the 2005–2009 period, sales grew at a CAGR of 10%.

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Figure 4–6 Nike, Inc. Net Sales of Cole Haan, Converse & Other Products and Percent of Total Net Sales, 2005–2009 (in millions $)

Figures are for the fiscal year ending May 31 of stated year. Source: Nike, Inc. annual reports and press releases.

Table 4–5 Nike, Inc. Total Net Sales and Year-over-Year Percentage Change, 2005–2009 (in millions $)

Year Total Net Sales YoY % Change 2005 $1,735.7 -- 2006 1,947.1 12.2% 2007 2,259.6 16.0 2008 2,592.8 14.7 2009 2,514.3 -3.0 CAGR -- 9.7% Figures are for the fiscal year ending May 31 of stated year. Source: Nike, Inc. annual reports and press releases.

1,947

2,5932,514

1,736

2,260

13.9%13.8%

13.0%12.6%

13.1%

0

500

1,000

1,500

2,000

2,500

3,000

2005 2006 2007 2008 20090.0%

5.0%

10.0%

15.0%

Cole Haan, Converse and Other % of total Nike net sales

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Brand Portfolio

Nike’s pervasive swoosh can be seen on virtually every sport footwear and athletic product from aquatics to wrestling. The company also markets and operates other brands including fashion footwear marketer and retailer Cole Haan, athletic and casual footwear and apparel maker Converse, youth-oriented actions ports marketer Hurley International and United Kingdom-based soccer footwear and apparel maker Umbro.

Table 4–6 Nike Brand Portfolio

Division/Brand Description

Nike Designed primarily for specific athletic use, although products are worn for casual or leisure purposes. Subbrands include Nike Air Jordan, and Nike Golf

Cole Haan Casual footwear, apparel and accessories for men and women under the brand names Cole Haan and Bragano

Converse Athletic and casual footwear, apparel and accessories under the Converse®, Chuck Taylor, All Star, One Star, John Varvatos, and Jack Purcell trademarks and footwear under the Hurley

Hurley Action sports apparel for surfing, skateboarding, and snowboarding, youth lifestyle apparel, and accessories

Umbro Athletic and casual footwear, apparel and equipment, primarily for the sport of soccer

Source: Nike, Inc. 2008 annual report.

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Timeline of Significant Events

Table 4–7 Nike Timeline of Significant Events

Year Significant Event

1957 Athlete Phil Knight and Bill Bowerman, a track coach who tinkered with shoe designs, meet at the University of Oregon.

1962 The two men form Blue Ribbon Sports to make quality American running shoes.

1972

The company becomes Nike, after the Greek goddess of victory. The Nike "Swoosh" is designed by graduate student Carolyn Davidson, who is paid $35. The same year Nike splits with Onitsuka in a dispute over distribution rights. At the 1972 Olympic Trials, Knight and Bowerman persuade some marathoners to wear Nike, followed by advertising that Nike’s were worn by "four of the top seven finishers."

1974 Bowerman tests a new sole by stuffing a piece of rubber into a waffle iron. The result is the waffle sole, which is added to Nike’s running shoes.

1979 Nike captures 50% of the U.S. running shoe market. 1980 Nike goes public.

1985 Nike expands with shoes for other sports, introducing the Air Jordan basketball shoe named after basketball superstar Michael Jordan.

1988 Nike's famous "Just Do It" slogan is introduced. Company buys dress-shoe maker Cole Haan.

1992 Nike opens first NikeTown store.

1995 Nike acquires Canstar Sports, which includes hockey equipment maker Bauer. Company signs 20-yr-old golf phenomenon Tiger Woods for $40 million endorsement contract. Nike acquires the license to place its logo on NFL uniforms.

1997 Nike launches a Jordan-branded athletic footwear and apparel division.

1999 Nike opens Jordan store-within-a-store boutiques. Bowerman dies; Nike releases a line of running shoes in his honor.

2000 The company launches a line of athletic electronics, including MP3 players, heart monitors, and two-way radios.

2001 Nike opens its first Nikegoddess store in Newport Beach, California. 2002 Nike acquires Hurley International, a distributor of action sports apparel.

2003 Nike acquires Converse and leaves it as a separate operating. Company becomes the first company to be named "Advertiser of the Year" by the Cannes Advertising Festival, twice (also 1994).

2004 Nike creates the Exeter Brands Group, a wholly owned subsidiary, to build athletic footwear and apparel brands for the value retail channel. Company acquires Official Starter Properties LLC & Official Starter LLC.

2005 Nike launches Air Jordan XX, the 20th edition of the Air Jordan basketball shoe series. Company introduces the Nike Free shoe, designed to simulate barefoot training.

2006 Nike introduces Air Max 360 featuring a foamless midsole using a new method of creating air soles. Company teams with Apple Computer on Nike+ combining digital technology with footwear to provide music, biofeedback, and data collection.

2007 Nike opens flagship retail store in Beijing, China and sponsors 22 of the 28 Chinese teams competing in the 2008 Summer Olympics Company sells Starter to Iconix Brand Group

2008

Nike introduces Air Jordan XX3 Company acquires United Kingdom-based Umbro Ltd and sells Nike Bauer Hockey Nike introduces the lightest athletic shoes to date using Flywire and Lunarlite technology reducing weight up to 18% Company introduces new NikeID.com for custom consumer personalization of Nike products

2009 Nike introduces Lunarglide+ featuring Dynamic Support Company announces restructuring and that it may cut 1,400 jobs Nike fiscal year end (May 31) revenues reach $19.2 billion

Source: www.nikebiz.com.

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Under Armour, Inc.

Company Details Descriptions Company Type Public Revenues (2008) $725 million Employees 2,200 CEO Kevin Plank Senior Vice President of Footwear and Licensing Raphael Peck Senior Vice President of Consumer Insights Kevin Haley

Address 1020 Hull Street Baltimore, MD 21230-2080

Tel: (410) 454-6428 Website: www.uabiz.com, www.underarmour.com

Overview

Founded in 1996 as KP Sports by University of Maryland football player Kevin Plank, Under Armour is best known for its moisture-wicking undershirts and other apparel. Based in Baltimore, Maryland, the company's products are used by both youth and professional athletes and are sold worldwide. Though originally started as a specialty athletic apparel company, Under Armour has quickly grown to become the company to watch in the athletic apparel arena.

The company began offering footwear in 2006 with the introduction of football cleats followed by baseball, lacrosse and softball cleats and slides in 2007. In 2008, Under Armour introduced training footwear and in 2009 the company entered the running footwear market with plans to offer soccer cleats later in the year. Similar to the company’s apparel line, Under Armour uses its HEATGEAR brand of fabrics and offers footwear products at multiple price points.

Performance

Under Armour’s net sales grew 20% over the 2007 level of $607 million to top the $725 million mark in 2008. Sales growth was driven by all categories and regions, but it was footwear and international sales that drove growth in percentage terms. While 20% was quite respectable, especially given the deteriorating economic environment in 2008, the gain was

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the slowest during the five year period. In fact, sales growth was most robust in percentage terms in 2006, when net sales rocketed up 53% followed by another 40% gain in 2007. For the 2004–2008 period, net sales grew at a CAGR of 37%.

Figure 4–7 Under Armour, Inc. Total Net Sales, 2004–2008 (in millions $)

Source: Under Armour, Inc. annual reports and press releases.

281.1

606.6

725.2

205.2

430.7

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

800.0

2004 2005 2006 2007 2008

Total Net Sales

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Table 4–8 Under Armour, Inc. Total Net Sales and Year-over-Year Percentage Change, 2004–2008 (in millions $)

Year Total Net Sales YoY % Change 2004 $205.2 -- 2005 281.1 37.0% 2006 430.7 53.2 2007 606.6 40.8 2008 725.2 19.6 CAGR -- 37.1% Source: Under Armour, Inc. annual reports and press releases.

Sales by Product Category

In just a few short years, Under Armour managed to grow its footwear business to account for 12% of sales, surpassing its sales from licensing and accessories at four percent each. Still, the bulk of Under Armour’s business is apparel, accounting for 80%.

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Figure 4–8 Share of Under Armour, Inc. Total Net Sales by Product Category, 2008 (%)

Source: Under Armour, Inc. 2008 annual report.

License revenues4.1%

Accessories4.3%

Footwear11.7%

Apparel79.8%

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Sales by Geographic Region

The United States accounted 91% of total net sales in 2008 with Canada accounting for four percent and all other countries accounting for nearly five percent. Growth in the United States for the five-year period was at an annual rate of 18%, but at 46% for Canada and 58% for all other countries combined.

Figure 4–9 Share of Under Armour, Inc. Total Net Sales by Geographic Region, 2008 (%)

Source: Under Armour, Inc. annual reports and press releases.

Footwear Sales See Astounding Incremental Growth

Sales of Under Armour footwear grew from $27 million in 2006 to $41 million in 2007, up 52% eventually capturing seven percent of Under Armour’s total net sales. However, sales in 2008 more than doubled, up 108% to $85 million. But the big gains may be yet to come. In the first quarter of 2009, Under Armour footwear sales rose a whopping 243% over the same

Other international

4.5%

Canada4.4%

United States91.1%

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period in 2008 to reach $57 million suggesting that the company could very well do sales of more than $200 million by the end of 2009.

Figure 4–10 Under Armour, Inc. Footwear Net Sales and Percent of Total Net Sales, 2004–2008 (in millions $)

Source: Under Armour, Inc. annual reports and press releases.

Table 4–9 Under Armour, Inc. Total Net Sales and Year-over-Year Percentage Change, 2004–2008 (in millions $)

Year Total Net Sales YoY % Change 2004 0.0 -- 2005 0.0 -- 2006 26.9 -- 2007 40.9 52.1% 2008 84.8 107.6% CAGR -- -- Source: Under Armour, Inc. annual reports and press releases.

40.9

84.8

26.9

11.7%

0.0% 0.0%

6.2%6.7%

0

10

20

30

40

50

60

70

80

90

100

2004 2005 2006 2007 20080.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

Footwear % of total Under Armour net sales

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Product Portfolio

Under Armour’s footwear product line began with football cleats—a side of the footwear business known for thinner margins and slow sales growth. However, the company found success and quickly introduced other sport cleats. But it was the launch of its training footwear that gave the industry an inkling of the company’s goals. The introduction of running footwear confirm suspicions: Under Armour fully intends to be a major player in the athletic footwear business, going head-to-head with the likes of Nike and Adidas.

Table 4–10 Under Armour Footwear Product Portfolio

Footwear Type Description

Running Available in men's and women's sizes; models include Revenant, Illusion, Apparition, Spectre, Mirage, Chimera

Training Available in men's, women's, boys', and girls' sizes; models include Proto Power II, Proto Speed II, Proto Evade II

Football Available in men's and boys' sizes; models include Proto Combine, SoFlo Low, Fierce, Nitro, Triple Option, Pursuit, Crusher, Iso II, Combat, Demolish, Breakaway, Hammer II, Proto Blast

Baseball Available in men's and boys' sizes; models include Heater, Ignite, Raptor, Twin Bill, Streak, Leadoff II, Prowler

Soccer Available in men's sizes; models include Dominate, Create

Lacrosse Available in men's and women's sizes; models include Iso II, Crank, Iso, Contener, Proto Speed, Proto Blast, Hammer II, Twin Bill ATV, Combat, Demolish, Breakaway

Softball Available in women's sizes; models include laser II Glyde, Radar,

Slides Available in men's, women's, and boys' sizes; models include Playmaker Massage , Ignite, Chesapeake II, Compression, Locker, Updrit, Gyra

Source: www.underarmour.com

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Timeline of Significant Events

Table 4–11 Under Armour Timeline of Significant Events

Year Significant Event

1996 Under Armour is founded by former University of Maryland football player Kevin Plank.

2000 Under Armour posts more than $5.3 million in sales.

2005 Under Armour goes public selling 9.5 million shares of stock. Company posts $281.1 million in sales.

2006

Under Armour introduces cleated footwear line in attempt to enter footwear market. Company launches Click-Clack ad campaign with the tagline "I Think You Hear Us Coming". Company signs top NFL draft picks A.J. Hawk and Vernon Davis as spokespersons. Company becomes authorized supplier of footwear to NFL. Company posts $26.9 million in footwear sales.

2007

Under Armour opens first branded retail store in Annapolis, MD. Company introduces baseball, lacrosse and softball cleated footwear and slides. Footwear sales total $40.9 million.

2008

Under Armour introduces athletic training footwear in first push into mainstream athletic footwear market. Company opens second branded retail store in Aurora, IL. Company becomes exlusive official outfitter of University of Maryland Athletics. Footwear sales total $84.8 million.

2009

Under Armour introduces running footwear. Company launches “Athletes Run” ad campaign. Footwear sales for the first quarter of 2009 rise 243% over the 2008 level of $16.6 million to $56.9 million.

Source: Under Armour, Inc. press releases.

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Skechers, USA Inc.

Company Details Descriptions Company Type Public Revenues (2008) $1.1 billion Employees 4,130 CEO Robert Greenberg President Michael Greenberg Executive Vice President, Product Development Mark Nason

Address 228 Manhattan Beach Blvd., Manhattan Beach, CA

Tel: (310) 318-3100 Website: www.skx.com, www.skechers.com

Overview

Based in Manhattan Beach, California, Skechers was founded by Robert Greenberg, founder of L.A. Gear. Skechers is a more fully integrated footwear company in that it not only designs footwear for sale through wholesale channels but also receives much of its revenue from its Skechers footwear retail locations. At the end of 2008, the company operated 84 concept stores, 83 factory outlet stores and 37 warehouse outlet stores in the United States, and 16 concept stores and three factory outlets internationally. The company also sells Skechers footwear through various third-party retail channels including department and specialty stores. The company markets shoes in over 100 countries and territories using distributors and subsidiaries in Canada, Brazil, Chile, and across Europe, as well as through joint ventures in Asia.

The company offers a diverse range of footwear for men, women and children under the Skechers brand, as well as other licensed brands such as Ecko, Bebe Sport and Zoo York. Its core consumers are 12 to 24 year-old men and women attracted to its “youthful brand image and fashion forward designs.” Many of its best-selling and core styles are also developed for children with colors and materials that reflect a playful image.

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Performance

Total net sales for Skechers rose three percent over the 2007 level of $1.4 billion posting a gain of $47 million. Sales growth in previous years had been more robust, including a 20% gain in 2006 to $1.2 billion and 16% gain in 2007. For the 2004–2008 period net sales grew at a CAGR of 12%.

Figure 4–11 Skechers USA, Inc. Total Net Sales, 2004–2008 (in millions $)

Source: Skechers USA, Inc. annual reports and press releases.

The company’s domestic wholesale business declined three percent due to both price and volume declines and as a result of the weakened U.S. retail market. Meanwhile, international wholesale sales increased 13% due to stronger demand for its products in several European countries and Brazil. The company’s retail sales increased one percent in the United States and five percent internationally due to an increase in the number of locations; however, same store sales were off nine percent in the United States and three percent internationally.

1,006.5

1,394.21,440.7

920.3

1,205.4

0.0

200.0

400.0

600.0

800.0

1,000.0

1,200.0

1,400.0

1,600.0

2004 2005 2006 2007 2008

Total Net Sales

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Table 4–12 Skechers USA, Inc. Total Net Sales and Year-over-Year Percentage Change, 2004–2008 (in millions $)

Year Total Net Sales YoY % Change 2004 $920.3 -- 2005 1,006.5 9.4% 2006 1,205.4 19.8 2007 1,394.2 15.7 2008 1,440.7 3.3 CAGR -- 11.9% Source: Skechers USA, Inc. annual reports and press releases.

Sales by Channel

Domestic wholesale sales accounted for 56% of total net sales in 2009 with international wholesale sales capturing 23%. For the company’s direct-to-consumer business, brick-and-mortar retail accounted for 20%, while e-commerce sales made up just one percent.

Figure 4–12 Share of Skechers USA, Inc. Total Net Sales by Channel, 2008 (%)

Source: Skechers USA, Inc. 2008 annual report.

E-commerce1.3%

Retail19.7%

Internationalwholesale

23.1%

Domestic wholesale

56.0%

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Sales by Geographic Region

The company recorded sales from the United States accounting for 75% of total net sales, with Canada capturing just three percent. All other countries combined made up the remaining 22% of Skechers’ net sales

Figure 4–13 Share of Skechers USA, Inc. Total Net Sales by Geographic Region, 2008 (%)

Source: Skechers USA, Inc. annual reports and press releases.

Product Portfolio

The company’s Skechers brand is made up of five sub-brands targeted at specific demographics. Skechers USA is the company’s main imprint targeted at its core consumers. The company also offers athletic-styled footwear under its Skechers Active brand, casual outdoor footwear under the Skechers Cali brand, rugged outdoor footwear under the Skechers Work brand and children’s shoes under Skechers Kids. Licensors include: Ultd. By Marc

Other international

21.8%

Canada3.0%

United States75.2%

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Ecko, Red by Marc Ecko, Zoo York, 310 Premium Footwear, Mark Nason, Bebe Sport, and Punkrose.

Table 4–13 Skechers USA Footwear Product Portfolio

Skechers Lines Description

Skechers USA

Men's and women's footwear generally sold through mid-tier retailers, department stores and some footwear specialty shops. Line includes: Casuals, Dress Casuals, Relaxed Fit (for men only), Seriously Lightweight (for men only), Sandals and Casual Fusion.

Skechers Active

Footwear for men and women with "technical performance-inspired looks" sold through specialty shoe stores, department stores and athletic footwear retailers. Line includes: Joggers, Trail Runners, Sport Hikers, Terrainers, Performance (for men only), Skechers D’Lites (for women only), and Sport Sandals.

Skechers Cali

Sneakers, skimmers, wedges and sandals for young women designed with canvas, fabrics and leather with unique prints to typify the California lifestyle. The sandals range from dress casual looks to casual to beach thongs. Line is sold through specialty casual shoe stores and department stores.

Skechers Work

Men’s and women’s casuals, field boots, hikers and athletic shoes. Typically sold through department stores, athletic footwear retailers and specialty shoe stores, as well as marketed directly to consumers through business-to-business channels.

Skechers Kids

Line includes: Skechers Kids, which is a range of infants, toddlers, boys and girls boots, shoes and sneakers; S-Lights and Hot Lights by Skechers; Skechers Cali for Girls, which is trend-inspired boots, shoes, sandals and dress sneakers; Airators by Skechers; Skechers Super Z-Strap; Skechers Bungees; HyDee HyTop from Skechers; and Babiez by Skechers

Source: Skechers USA, Inc. 2008 annual report.

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Table 4–14 Skechers USA Licensed Footwear Product Portfolio

Fashion & Street Brands Description

Unltd. by Marc Ecko & Red by Marc Ecko

Marc Ecko is a line of men’s street-inspired traditional sneakers, fusion sneakers and urban-focused casuals. Red by Marc Ecko is a line of women’s classic and fashion-forward fusion sneakers, sandals and Mary Janes for young women.

Zoo York

Line of action sports and lifestyle footwear for men, women and boys. Follows the color palette and trends of Zoo York apparel and targets skateboarders and those that embrace skate fashion. Available in skate and specialty shops as well as select athletic and department stores.

310 Premium Footwear

Footwear collection for men with top-quality leathers, a fashion-forward approach to design and comfort, and materials that are derived from 310 Motoring’s customized cars, including wood burl and carbon fiber. The line consists of high-design boots, shoes, and stylized athletics. Available in select department stores, specialty retailers and urban independents.

Mark Nason & Siren by Mark Nason

Sophisticated and fashion forward footwear collection, marketed to style-conscious men, designed to complement designer denim and dress casual wear. Available in better department stores and boutiques.

Bebe Sport

Embracing the style and design of the Bebe Sport apparel, the sneaker and sandal line features such details as rhinestones, satin laces, and patent leather targeted at women 18 to 34. Available at department stores and specialty boutiques.

Punkrose & Public Royalty

Punkrose for women and Public Royalty for men are cutting-edge street ready footwear inspired by music, art, fashion, and action sports. Line consists of boots, sandals, high-top and low-top sneakers, skimmers, slip-ons. Available at department stores, sneaker shops and specialty boutiques.

Source: Skechers USA, Inc. 2008 annual report.

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Timeline of Significant Events

Table 4–15 Skechers USA Timeline of Significant Events

Year Significant Event

1992 Robert Greenberg, founder of LA Gear, is ousted from LA Gear. Greenberg and his son, Michael, start Skechers to distribute $40 million of Doc Martens shoes and boots capitalizing on the grunge fashion trend.

1993 The Greenbergs have a fall out with R. Griggs Group and lose the distributorship of Doc Martens.

1996 Greenbergs launch women’s sneakers line. 1998 Net sales top $370 million. 1999 Skechers goes public. 2000 Skechers opens stores in London, Paris and Germany.

2001 Skechers is endorsed by Britney Spears in overseas markets to appeal to teenage girls while in the U.S. the men’s line is endorsed by Rob Lowe and Matt Dillon to retain the adult market.

2004 New Christina Aguilera Skechers Campaign Launches Internationally; Global Superstar Looks ``Naughty and Nice'' in Fall 2004 Footwear Ads.

2005

Skechers Creates Kitson-Branded Footwear Line; Leading Lifestyle Footwear Company. Partners with L.A.'s Hottest Boutique. Net sales top $1.0 billon for the first time.

2006

Skechers announces licensing agreement to design, develop and market men's footwear worldwide for the premier action sport lifestyle brand Zoo York. Company announces licensing agreement to design, develop and market footwear in the United States and key international markets for the aviation-inspired apparel brand AVIREX Net sales top $1.2 billion.

2007

SKECHERS Sues Asics for Trade Libel, Unfair Competition and Tortious Interference with Business Relationships. Company introduces Shrek by Skechers. Company posts net sales of nearly $1.4 billion.

2008

Skechers announces licensing agreement with bebe stores, inc. (NASDAQ:BEBE) to design, develop and market BEBE SPORT women's footwear. Company Signs Idol Winner David Cook to Global Deal. Company announced acquisition proposal to acquire Heelys, Inc. for $5.25 per share in cash, or $142.8 million—Heelys rejects bid outright and Skechers drops pursuit of deal. Company establishes joint venture in Hong Kong and Macau, China. Company opens flagship store in San Francisco. Net sales rise three percent to over $1.4 billion.

2009 Skechers expands in South America and establishes Skechers Chile Ltda. First quarter net sales decline 11% from the 2008 level of $385 million to $344 million.

Source: Skechers USA press releases.

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Jones Apparel Group

Company Details Descriptions Company Type Public Revenues (2008) $3.6 billion Employees 7,925 President & CEO Wesley R. Card CEO, Footwear, Accessories and Retail Andrew Cohen President, Wholesale Better Footwear Brands Richard Paterno

Address 1411 Broadway New York, New York 10018

Tel: (212) 642-3860 Website: www.jonesapparel.com

Overview

Based in New York, Jones Apparel Group, Inc. is one of the leading women’s-focused footwear, apparel and accessory designers and marketers. The company markets such venerable brands as Gloria Vanderbilt, Givenchy, and Jones New York and footwear brands Nine West, Bandolino, and Easy Spirit as well as the Dockers Women brand under license from Levi Strauss & Co. The company’s operations are comprised of five segments: wholesale better apparel, wholesale jeanswear, wholesale footwear and accessories, retail and licensing.

At the end of 2008, the company operated 373 specialty retail stores and 644 outlet stores primarily comprising either footwear and accessories or apparel. Though the company sells many products in its own stores as well as through third-party retailers, its Nine West, Easy Spirit, Bandolino and AK Anne Klein retail stores also offer products that are not marketed to its wholesale customers. The company also opened its first multi-branded specialty store under the ShoeWoo name in 2008.

In 2008, department stores, accounted for 58% of gross revenues with Macy's, Inc., being its largest customer accounting for 21% of 2008 gross revenues.

Jones Apparel has the exclusive license to produce and sell women's footwear under the Dockers Women trademark in the United States and Canada through 2011. In early 2009, the

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company signed a similar agreement with Levi Strauss & Co. to produce and sell boys' footwear under the Dockers trademark in the United States through 2011. The men’s license for the Dockers brand is held by footwear marketer and retailer Genesco, Inc.

In July 2008, Jones Apparel announced that it had an exclusive license through the end of

2009 with New Balance Athletic Shoe, Inc. to create and distribute a fashion-lifestyle footwear collection that brings together New Balance's performance and materials technology with Nine West's styles.

Performance

Net sales for Jones Apparel declined six percent from the 2007 level of $3.8 billion to $3.6 billion in 2008. The sales declines were led by the jeanswear business; however, the footwear and accessories business as well as its retail division also suffered. The one bright spot was an increase in revenues from foreign sales, up a modest four percent to $337 million for its continuing businesses. The company has fully divested of its Mexico-based operations. For the 2004–2008 period, net sales for Jones Apparel declined at a CAGR of six percent.

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Figure 4–14 Jones Apparel Group Total Net Sales, 2004–2008 (in millions $)

Source: Jones Apparel Group annual reports and press releases.

Table 4–16 Jones Apparel Group Total Net Sales and Year-over-Year Percentage Change, 2004–2008 (in millions $)

Year Total Net Sales YoY % Change 2004 $4,592.6 -- 2005 5,014.6 9.2% 2006 4,669.9 -6.9 2007 3,793.3 -18.8 2008 3,562.6 -6.1 CAGR -- -6.2% Source: Jones Apparel Group annual reports and press releases.

5,014.6

3,793.33,562.6

4,592.6 4,669.9

0.0

1,000.0

2,000.0

3,000.0

4,000.0

5,000.0

6,000.0

2004 2005 2006 2007 2008

Total Net Sales

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Sales by Channel

Jones apparel saw 30% of its net sales come from its wholesale better apparel business followed by footwear and accessories with 26%. Wholesale jeanswear and retail accounted for 22% and 20%, respectively. Licensing accounted for less than two percent.

Figure 4–15 Share of Jones Apparel Group Total Net Sales by Channel, 2008 (%)

Source: Jones Apparel Group 2008 annual report.

Retail � �20.2%

Wholesale footwear and accessories

25.9%

Licensing1.5%

Wholesale jeanswear

22.0%

Wholesale better apparel30.4%

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Sales by Geographic Region

By region, Jones Apparel saw 91% of its sales come from the United States with foreign sales accounting for less than 10%.

Figure 4–16 Share of Jones Apparel Group Total Net Sales by Geographic Region, 2008 (%)

Source: Jones Apparel Group annual reports and press releases.

Footwear Sales

Sales of footwear and accessories declined two percent from the 2007 level of $956 million to settle at $938 million in 2008. The company has struggled to find traction in this arena for several years and has fluctuated between meager growth and modest declines. In all, the group saw sales decline at an annual rate of two percent during the 2004–2008 period.

Other international

9.5%

United States90.5%

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Figure 4–17 Jones Apparel Group Footwear & Accessories Net Sales and Percent of Total Net Sales, 2004–2008 (in millions $))

Source: Jones Apparel Group annual.

Table 4–17 Jones Apparel Group Total Net Sales and Year-over-Year Percentage Change, 2004–2008 (in millions $)

Year Total Net Sales YoY % Change 2004 $1,002.4 -- 2005 978.6 -2.4% 2006 941.1 -3.8 2007 955.8 1.6 2008 938.3 -1.8 CAGR -- -1.6% Source: Jones Apparel Group annual reports.

979 956 9381,002

941

25.2%

20.2%19.5%

21.8%

26.3%

0

300

600

900

1,200

1,500

2004 2005 2006 2007 20080.0%

3.0%

6.0%

9.0%

12.0%

15.0%

18.0%

21.0%

24.0%

27.0%

30.0%

Footwear & accessories % of total Jones Apparel net sales

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Brand & Product Portfolio

Jones Apparel’s footwear brand portfolio ranges from higher priced Joan & David to more budget oriented Dockers Women. However, the company is perhaps best known as a mid-priced favorite among women with its Nine West and Anne Klein brands.

Table 4–18 Jones Apparel Group Footwear Product Portfolio

Category Brand Bridge Joan & David

Nine West Nine West Kids Enzo Angiolini AK Anne Klein

Circa Joan & David

Better

Boutique 9 Bandolino

Upper Moderate Easy Spirit

Nine & Company Mootsies Tootsies

Mootsies Tootsies Kids Sam & Libby

Sam & Libby Kids

Moderate

Dockers Women Source: Jones Apparel Group 2008 Annual Report

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Timeline of Significant Events

Table 4–19 Jones Apparel Group Timeline of Significant Events

Year Significant Events

1977 Nine West Group founders Jerome Fisher and Vincent Camuto establish a wholesale shoe business, Fisher Camuto Corporation, taking advantage of business ties with Brazilian manufacturers and the cheaper labor and abundant raw materials found in that country.

1978 The company makes sales of $9 million.

1988 Fisher Camuto forms Jervin (the name comes from the first three letters of each of their first names) to sell unbranded women's shoes made in Brazil, to retailers and wholesalers. The company tries to buy out the footwear division of U.S. Shoe but is spurned.

1991 Company prepares to go public in 1991 and 1992, merging its wholesale and retail divisions (Fisher Camuto, Fisher Camuto Retail, Espressioni, and Jervin) into the Nine West Group. The name came from its first address, Nine W. 57th Street, in Manhattan.

1993 Nine West goes public.

1994 U.S. Shoe again rejects a Nine West buyout offer for its shoe business—The proposal kicks up some dust, however, as U.S. Shoe shareholders make it clear they want a sale.

1995 Nine West Group Acquires U.S. Shoe Corporation, which includes the Easy Spirit brand, Amalfi, Evan-Picone, and Bandolino for $600 million.

1996 Nine West begins to pare down operations, closing U.S. Shoe's Cincinnati headquarters and domestic factories, shifting manufacturing to Brazil, and discontinuing or selling unprofitable brands.

1997 Restructuring continues as the company lays off some 1,000 workers in Ohio.

1998 Facing too much inventory and too little demand, Nine West lays off about 6% of its workforce, curtails expansion plans, and says it would cut production by about 40%.

1999 Clothing designer and distributor Jones Apparel Group buys out Nine West for $1.4 billion.

2000 Jones buys Nine West's accessories maker Victoria + Co. Nine West also settles claims of price-fixing that year, paying a $34 million nationwide settlement.

2004 Jones Apparel acquires Maxwell Shoe Company in July and Barneys New York in December.

2005 Dilliard's Department Stores eliminates Nine West brands in effort to offer more upscale footwear.

2006 Rumors circulate that Jones Apparel is looking to sell Nine West.

2007 Jones Apparel sells its Barneys retail stores Dubai-based private equity firm Istithimar PJSC for $945 million.

2008

Nine West Group and New Balance partner to create fashion-lifestyle footwear collection that brings together New Balance's innovative performance and materials technology with Nine West's renowned fashion styling. Jones Apparel Group and Steven Madden Sign License Agreement to design collection of junior and girls footwear under the l.e.i. brand and distributed exclusively to Wal-Mart stores.

2009

Jones Apparel footwear and accessory sales decline 2% with overall sales declining 6% due to economic downturn. Nine West Footwear Corporation Signs License and Distribution Agreement With Kurt Geiger Ltd. for Nine West and Easy Spirit. Company announces the closing of 225 stores in effort to cut costs.

Source: Jones Apparel Group press releases; www.jonesapparel.com.

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Deckers Outdoor Corporation

Company Details Descriptions Company Type Public Revenues (2008) $689.4 million Employees 640 President & CEO Angel R. Martinez President of the Simple and UGG Australia Divisions Constance X. Rishwain

President, Teva Brand Peter Worley

Address 495-A South Fairview Avenue Goleta, California 93117

Tel: (805) 967-7611 Website: www.deckers.com

Overview

Located in Goleta, California, Deckers Outdoor Corporation was started by University of California, Santa Barbara student, Doug Otto in 1973. The company’s first products were its Deckers brand sandals that became popular among the surfing and beach crowd. In 1985 the company entered into a licensing agreement to produce and distribute Teva sandals. The company manufactured its original brand of Deckers sandals for over 20 years, but retired the brand after its purchase of the Simple brand to focus on Teva and Simple products. Since then, Deckers has grown into an international company with footwear brands—Teva (acquired in 2002), Simple, Ugg (acquired in 1995), and TSUBO (acquired in 2008). For 2009, the company has resurrected its original Deckers brand selling the products exclusively online.

Performance

Total sales for Deckers grew 54% over the 2007 level of $449 million to top the $689 million mark in 2008. Sales were led by wholesale sales of its Ugg boots, which totaled $484 million, up 66% over the 2007 level of $292 million. Simple brand footwear grew 25% over the 2007 level of $11 million to reach $14 million in 2008, but Teva sales decline one percent to $81 million. The company’s consumer direct business, which includes company-owned stores and

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sales through the Internet rose 68% to $107 million. For the 2004–2008 period, total sales of Deckers footwear grew at a CAGR of 34%.

Figure 4–18 Deckers Outdoor Total Net Sales, 2004–2008 (in millions $)

Source: Jones Apparel Group annual reports and press releases.

Table 4–20 Deckers Outdoor Total Net Sales and Year-over-Year Percentage Change, 2004–2008 (in millions $)

Year Total Net Sales YoY % Change 2004 $214.8 -- 2005 264.8 23.3% 2006 304.4 15.0 2007 448.9 47.5 2008 689.4 53.6 CAGR -- 33.9% Source: Deckers Outdoor annual reports and press releases.

264.8

448.9

689.4

214.8

304.4

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

800.0

2004 2005 2006 2007 2008

Total Net Sales

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Sales by Channel

Wholesale sales of Ugg accounted for the vast share of Deckers total sales at 70% with Teva accounting for 12%. Simple and TSUBO wholesale sales accounted for two percent and one percent, respectively. Direct-to-consumer sales totaled 16% of total sales with ecommerce sales capturing 10% and sales through retail locations making up six percent.

Figure 4–19 Share of Deckers Outdoor Total Net Sales by Channel, 2008 (%)

Source: Deckers Outdoor 2008 annual report.

TSUBO wholesale0.5%

Simple wholesale 2.0%

Retail stores5.6%

eCommerce 10.0%

Teva wholesale 11.7%

UGG wholesale70.2%

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Sales by Geographic Region

The company took in 84% of sales from customers in the United States with the remaining 16% coming from international customers.

Figure 4–20 Share of Deckers Outdoor Total Net Sales by Geographic Region, 2008 (%)

Source: Deckers Outdoor annual reports.

Other international15.7%

United States84.3%

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Brand Portfolio

Deckers received a substantial boost to its Ugg brand in 2007 when Oprah Winfrey released her list of favorite things. The result was a spike in sales for Deckers fourth quarter 2007 and the 66% increase in sales for 2008 mentioned above. In June 2008, the company reintroduced a limited quantity of the Deckers brand flip flop, but by the following year the company had sold out of inventory. The company states that it has “exciting things in the pipeline”, but no indication of when the brand will be available again.

Table 4–21 Deckers Outdoor Footwear Product Portfolio

Brand Description Deckers The original Deckers brand flip flops.

UGG

Luxury comfort brand and the category creator for luxury sheepskin footwear. Originally adopted as a favored brand by the California surf community, the UGG brand was acquired by Deckers in 1995 and has since been repositioned as a luxury comfort collection sold through high-end retailers.

Teva

Outdoor performance and lifestyle brand and pioneer of the sport sandal market. Originally founded in the 1980s to serve the professional river guides, the product line has since expanded to include casual open-toe and closed-toe footwear, including adventure travel shoes, outdoor multi-sport shoes, trail running shoes, amphibious footwear, light hikers and other rugged outdoor footwear styles and accessories.

Simple

Began in 1991 as an alternative to all the over-built, over-priced, and over-hyped products in the marketplace, he brand's legacy was built on its original sneaker design, the Old School Sneaker, and grew to include successful sandal and casual products

TSUBO

Acquired in 2008, TSUBO (meaning pressure point in Japanese) was founded by a British designer in 1998 and marketed as a high-end casual footwear constructed to provide consumers with contemporary footwear that incorporates style, function and maximum comfort. TSUBO products are sold throughout the United States primarily at department stores and independent shoe stores, as well as several countries worldwide, including Canada, France, Australia, and Japan.

Source: www.deckers.com

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Timeline of Significant Events

Table 4–22 Deckers Outdoor Timeline of Significant Events

Year Significant Events

1973 University of California, Santa Barbara student, Doug Otto, begins producing sandals.

1984 Grand Canyon river guide, Mark Thatcher, begins producing the Teva sandal for niche market.

1985 Deckers enters into licensing agreement to produce and distribute Teva sandals.

1991 Simple Shoes established by Eric Meyer as a link between athletic and outdoor shoes.

1993 Deckers acquires Simple Shoes. Deckers completes initial public offering.

1994 Deckers brand retired to focus on other brands.

1979 Ugg Holdings founded by Brian Smith for the purpose of importing sheepskin boots from Australia.

1995 Deckers acquires Ugg Holdings. 2002 Deckers acquires Teva.

2004 Net sales in the U.S. climb 78% vaulting over the $100 million mark for the first time to reach $175 million; total net sales reach $215 million.

2006 Deckers expands Ugg brand to include footwear for spring and summer.

2008 Deckers brand reintroduced with a purely online sales model. Deckers sales climb 54% over the 2007 level of $449 million to $689 million.

2008 Deckers brand flip flops reintroduced with a purely online sales model. Deckers sales climb 54% over the 2007 level of $449 million to $689 million. Company creates joint venture for Ugg in China.

2009 First quarter net sales continue to climb despite economic recession rising 38% to $134 million.

Source: www.deckers.com

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Adidas AG

Company Details Descriptions Company Type Public Revenues (2008) $15.8 billion Employees 38,982 CEO & Chairman, Adidas Group Herbert Hainer President, Adidas Brand Erich Stamminger President and CEO, Reebok Uli Becker President of North America, Reebok Jim Gabel Chief Marketing Officer, Reebok Matt O’Toole President & CEO, Rockport Michael Rupp

Address Adidas Americas 5055 N. Greeley Avenue Portland, OR 97217

Tel: (971) 234-2300 Website: www.adidas-group.com, www.adidas.com

Overview

Based in Herzogenaurach, Germany, Adidas AG has more than 150 subsidiaries and is the second largest global footwear marketer by total dollar sales. In addition to the Adidas brand of products, the company operates the Reebok business (which includes Rockport and Reebok-CCM Hockey) and the Taylor-Made golf business. The company also operates Adidas America Inc. based in Portland, Oregon, where it focuses on its basketball, adventure and alternative sports product lines. Reebok’s headquarters remain in Canton, Massachusetts while TaylorMade-Adidas Golf is based in California. The company had nearly 39,000 employees at year-end 2008, up from 31,000 in 2007.

The company has relationships with 300 manufacturing partners and sourced 97% of its footwear from countries in Asia in 2008, up from 96% in 2007. Unlike many other companies, sourcing from China represented just 44% of total footwear volume, down from 49% in 2007. Other major countries for sourcing included Vietnam (31%) and Indonesia (18%).

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Performance

Total sales for Adidas AG rose 13% over the 2007 level of $14.0 billion to top the $15.8 billion mark in 2008. Sales growth was driven primarily by the Adidas business, which grew 18% in 2008 to reach $11.5 billion. TaylorMade-Adidas Golf rose eight percent to reach $1.2 billion. It was Reebok that struggled as sales declined one percent to under $3.2 billion. For the 2004–2009 period, total sales grew at an annual rate of nine percent.

Figure 4–21 Adidas AG Total Net Sales, 2004–2008 (in millions $)

Note: U.S. dollar sales figures are converted from Euros using the average annual exchange rate for each year. Source: Adidas AG annual reports.

11,566.2

13,993.9

15,802.2

11,019.6

12,455.4

0.0

2,000.0

4,000.0

6,000.0

8,000.0

10,000.0

12,000.0

14,000.0

16,000.0

18,000.0

2004 2005 2006 2007 2008

Total Net Sales

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Table 4–23 Adidas AG Total Net Sales and Year-over-Year Percentage Change, 2004–2008 (in millions $)

Year Total Net Sales YoY % Change 2004 $11,019.6 -- 2005 11,566.2 5.0% 2006 12,455.4 7.7 2007 13,993.9 12.4 2008 15,802.2 12.9 CAGR -- 9.4% Note: U.S. dollar sales figures are converted from Euros using the average annual exchange rate for each year. Source: Adidas AG annual reports.

Sales by Product

Sales of footwear accounted for 46% of total net sales in 2008, little changed from 2007 with apparel making up 44%. Hardware captured the remaining 10% of total sales.

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Figure 4–22 Share of Adidas AG Total Net Sales by Channel, 2008 (%)

Source: Adidas AG 2008 annual report.

Sales by Geographic Region

Europe accounted for 43% of total sales for Adidas AG followed by the Asia region with 25%. Sales in Europe grew seven percent in Euro terms in 2008 and 15% in dollar terms due to currency fluctuations. Sales in the Asia region were up 18% in Euro terms and 27% in U.S. dollar terms. North America captured 24% leaving the Latin America region with just eight percent of sales. North America sales decreased 14% in euro terms, down eight percent in U.S. dollar terms, while Latin America sales grew a whopping 36% in Euro terms and 46% in U.S. dollar terms.

Hardware10.2%

Apparel44.2%

Footwear45.5%

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Figure 4–23 Share of Adidas AG Total Net Sales by Geographic Region, 2008 (%)

Source: Adidas AG annual reports and press releases.

Latin America8.3%

Asia24.8%

North America23.5%

Europe43.4%

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Sales by Division

The company’s Adidas brand accounted for 73% of total net sales, 80% of which came from what the company termed “sports performance” products and the remaining 20% from “sport style.” The Reebok division, which the company acquired in 2006, accounted for 20% of total net sales, 80% of which was made up of the Reebok brand with 11% accounted for by the casual footwear brand Rockport and nine percent by Reebok-CCM Hockey products. TaylorMade-Adidas Golf captured the remaining seven percent of total company net sales.

Figure 4–24 Share of Adidas AG Total Net Sales by Geographic Region, 2008 (%)

Source: Adidas AG annual reports and press releases.

TaylorMade-adidas Golf7.5%

Reebok19.9%Adidas

72.5%

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Footwear Sales Grew 11% in 2008

Total net sales of footwear for Adidas AG grew 11% over the 2007 level of $6.5 billion to top the $7.2 billion mark. Growth was due primarily to increased unit sales, which rose 10% from the 2007 level of 201 million pairs to 221 million pairs. For the 2004–2008 period, total net sales of footwear for Adidas AG and Reebok footwear grew at a CAGR of six percent.

Figure 4–25 Adidas AG Total Footwear Net Sales and Percent of Total Net Sales, 2004–2008 (in millions $)

Figures for 2004 and 2005 are pro forma and reflect total footwear sales for Adidas and Reebok for the entire period. Source: Adidas AG annual reports.

5,957

6,512

7,238

5,6895,946

46.5%47.7%

39.8%38.4%

45.8%

0

800

1,600

2,400

3,200

4,000

4,800

5,600

6,400

7,200

8,000

2004 2005 2006 2007 20080.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

Footwear % of total Adidas AG net sales

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Table 4–24 Adidas AG Total Footwear Net Sales and Year-over-Year Percentage Change, 2004–2008 (in millions $)

Year Total Net Sales YoY % Change 2004 5,689.2 -- 2005 5,956.9 4.7% 2006 5,945.7 -0.2 2007 6,512.4 9.5 2008 7,237.5 11.1 CAGR -- 6.2% Figures for 2004 and 2005 are pro forma and reflect total footwear sales for Adidas and Reebok for the entire period. Source: Adidas AG annual reports.

Brand Portfolio

While the Adidas brand has done well in recent years, the company has had some difficulty integrating Reebok into the company and finding growth for the brand since its 2006 acquisition. Indications are that it may take several more years before the company fully realizes the synergies and gets Reebok back on a positive growth path.

Table 4–25 Adidas AG Footwear Brand Portfolio

Division/Brand Description Adidas Sport Performance

Performance footwear, apparel and hardware focusing on four key categories globally: football, running, training and basketball.

Adidas Sport Style Consisting of Originals (defined as authentic sportswear) and the Fashion Group, which includes Y-3 and SLVR

Reebok Traditionally focused on women's fitness footwear, the brand also offers men's fitness footwear and has been charged with reviving its style and appeal from years past

CCM Hockey Ice hockey skates and other gear Reebok Hockey Ice hockey skates and in-line roller skates Rockport Casual and outdoor footwear for men, women and children Adidas Golf Golf footwear and apparel Source: Adidas AG 2008 annual report.

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Timeline of Significant Events

Table 4–26 Adidas AG Timeline of Significant Events

Year Significant Events

1914 – 1918 Adidas grew out of an infamous rift between German brothers Adi and Rudi Dassler. As WWI winds down, Adi scavenges for tires and rucksacks to create slippers, gymnastics shoes, and soccer cleats made by his sister.

1926 The shoes' success allows the Dasslers to build a factory. 1928 1928 Amsterdam Olympics, German athletes showcase Dassler shoes to the world.

1936 American Jesse Owens sprints to an Olympic gold in Dassler's double-striped shoes and Nazis commandeered the Dassler factory to make boots for German soldiers.

1946

Adi makes friends with American soldiers — even creating shoes for a soldier who wears them at the 1946 Olympics. Rudi returns from an American prison camp and a dispute between the brothers splits the business, eventually forming Puma, and Adi's becomes Adidas, beginning one of the most intense rivalries in Europe.

1950s With innovations such as the replaceable-cleat soccer shoe, Adidas dominates the world athletic shoe market. Adidas overtakes the canvas sneakers made by P.F. Flyers and Keds.

1960s Adidas continues to expand globally to maintain its dominant position.

1978 A flood of new competitors following the 1972 Munich Olympics and the death of Adi in 1978 signals the end of an era.

1980s Nike and Reebok capture the North American market. 1984 Adidas’ big mistake - turns down endorsement offer from young Michael Jordan.

1993 Robert Louis-Dreyfus becomes CEO, shifts production to Asia, pumps up advertising budget, and brings in former Nike marketers to re-establish the company's identity.

1997 Adidas becomes Adidas-Salomon with its $1.4 billion purchase of Salomon, a French maker of skis and other sporting goods. The company opens its first high-profile store in Portland, Oregon.

2000 Amid a 10% revenue slide, several executives leave the company. The company announces that it would consolidate its apparel under the Heritage label to reinforce its position in the burgeoning casual wear market.

2001 Adidas-Salomon opens Adidas Originals retail stores in Tokyo and Berlin. 2002 Adidas-Salomon opens a store in New York City.

2003 Despite slumping sales in the U.S. amid deep discounting by competitors, Adidas announces that it would not offer discounts and still intends to capture 20% of the country's shoe market.

2004 Adidas' U.S. headquarters introduces the first computerized footwear: a running shoe with a chip that allows the shoe to change its support level according to the impact. The company opens its newest concept store: Performance.

2005 Company selected as official sportswear partner for the Beijing 2008 Summer Olympics. Adidas sells its Salomon division to Finland-based Amer Sports Corp. for €485 million.

2006 Adidas’ acquires of Reebok for $3.8 billion. Adidas-Salomon changes name to Adidas AG.

2007 Adidas consolidates Reebok and Adidas distribution centers

2008 Reebok and Vulcabras form joint venture in Argentina and Brazil. Company announces world's largest Adidas store to open in Beijing.

2009 Adidas AG sales rise 13% over 2007 level of $14.0 billion to $15.8 billion. Company accelerates restructuring initiative aimed at reducing management levels and costs by €100 million.

Source: www.adidas-group.com

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Genesco, Inc.

Company Details Descriptions Company Type Public Revenues (2008) $1.6 billion Employees 14,125 President & CEO Robert J. Dennis Senior Vice President; Chief Executive Officer, Genesco Branded Group, President, Johnston & Murphy

Jonathan D. Caplan

Address Genesco Park 1415 Murfreesboro Road Nashville, Tennessee 37217-2895

Tel: (615) 367-7000 Website: www.genesco.com

Overview

Founded in 1924, Nashville, Tennessee-based Genesco Inc. is primarily a retailer of branded footwear and licensed and branded headwear, with more than 2,200 footwear and headwear retail stores in the United States, Puerto Rico and Canada. Footwear retail brands include Journeys, Journeys Kidz, Shi by Journeys, Underground Station, and Johnston & Murphy. The company also operates headwear retailers such as Hatworld and Lids among others. Genesco also designs, sources, markets and distributes footwear under its own Johnston & Murphy brand and the Dockers brand licensed from Levi Straus & Co. to over 950 retail accounts. (Dockers Women’s and children’s footwear is licensed to Jones Apparel Group). Most of its Johnston & Murphy and Dockers branded footwear is manufactured by third parties primarily in Asia.

Retail prices for Johnston & Murphy footwear generally range from $100–$250 while Dockers footwear ranges from $50–$90. Casual and dress casual footwear accounted for 39% of total Johnston & Murphy retail sales in Fiscal 2009, with the balance consisting of dress shoes and accessories.

As of the company’s fiscal year end (January 2009), Johnston & Murphy operated 157 retail shops and factory stores throughout the United States. Johnston & Murphy retail shops are located primarily in better malls nationwide and in airports and sell a broad range of men’s

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dress and casual footwear and accessories. The Company also sells Johnston & Murphy products directly to consumers through a direct mail catalog and an e-commerce website. The company added three net new shops and factory stores in Fiscal 2009 and plans to open up to four net new shops and factory stores in Fiscal 2010.

Performance

Total sales for the company grew three percent over the fiscal-year 2008 level of $1.5 billion to near the $1.6 billion mark. Sales of Johnston & Murphy retail and wholesale operations declined eight percent to $178 million with comparable store sales for Johnston & Murphy retail locations down 10%. By contrast, sales of Dockers brand footwear rose four percent to $97 million. For the 2004–2008 period (ending January 2009), Genesco’s total net sales grew at a CAGR of nine percent.

Figure 4–26 Genesco Inc. Total Net Sales, 2004–2008 (in millions $)

Note: Figures reflect fiscal year net sales ending January 31 2009 Source: Genesco Inc. annual reports.

1,284.3

1,502.51,551.7

1,113.2

1,461.2

0.0

200.0

400.0

600.0

800.0

1,000.0

1,200.0

1,400.0

1,600.0

1,800.0

2004 2005 2006 2007 2008

Total Genesco Net Sales

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Table 4–27 Adidas AG Total Net Sales and Year-over-Year Percentage Change, 2004–2008 (in millions $)

Year Total Net Sales YoY % Change 2004 $1,113.2 -- 2005 1,284.3 15.4% 2006 1,461.2 13.8 2007 1,502.5 2.8 2008 1,551.7 3.3 CAGR -- 8.7% Note: Figures reflect fiscal year net sales ending January 31 2009 Source: Genesco Inc. annual reports.

Sales by Division

The company’s Journeys retail group accounted for 49% of total net sales in 2009 with its Hat World Group capturing 26%. Station Group accounted for seven percent. Its proprietary and licensed footwear brands, Johnston & Murphy and Dockers, captured the remaining 12% and six percent, respectively.

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Figure 4–27 Share of Genesco Inc. Total Net Sales by Division, 2008 (%)

Source: Genesco Inc. 2009 annual report.

Brand Portfolio

The company’s Journey’s Group and Underground Station Group focus on mainstream footwear for kids, teens and youthful adults selling both brand names and private label footwear. Traditionally a men’s footwear brand, Johnston & Murphy introduced a line of women’s footwear and accessories in select Johnston & Murphy retail shops in the fall of 2008.

Johnston & Murphy 11.5%

Hat World Group 26.1%

Licensed Brands 6.2%

Station Group 7.2%

Journeys Group 49.0%

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Table 4–28 Genesco Inc. Footwear Brand Portfolio

Division/Brand Description

Journeys Group Includes Journeys, Journeys Kidz, and Shi by Journeys retail footwear chains selling brand name and private label footwear

Underground Station Group Located primarily in urban markets selling branded and private label footwear targeted at the 20-35 age group

Johnston & Murphy Group Includes both J&M retail and wholesale operations focused on dress and casual dress men's footwear

Licensed Brands Primarily men's footwear sold under the Dockers brand licensed from Levi Strauss & Co.

Source: Genesco Inc. 2009 annual report.

Timeline of Significant Events

Table 4–29 Genesco Inc. Timeline of Significant Events

Year Significant Event 1924 James Jarman starts the Jarman Shoe Company.

1933 Jarman's son Maxey becomes company president, changes company's name to General Shoe.

1939 General Shoe goes public. 1951 General Shoe buys hundred-year-old shoemaker Johnston & Murphy. 1959 Renames itself Genesco to reflect the change. 1968 Company posts more than $1 billion in sales.

1995 Genesco divests its apparel, soccer, and children's shoe businesses to focus on men's footwear.

1998

Genesco starts new chain, Underground Station, offering shoes and clothes to young urban men. Company also sells its slumping western boot business, including the Laredo Boot division and 26 Boot Factory stores, to Texas Boot.

2000 Genesco sells Volunteer Leather to Minnesota-based S.B. Foot Tanning. Company closes its discount General Shoe Warehouse units.

2001 Genesco ends its license to sell Nautica branded footwear. 2002 Company closes Nashville Johnston & Murphy manufacturing plant.

2004 Genesco begins closing about 35 Jarman shoe stores and starts to convert the rest to Underground Station stores.

2007

Genesco recieves bid to be acquired by Foot Locker. Rival The Finish Line, Inc. steps in with higher offer and Genesco rejects Foot Locker, Inc. proposal. The Finish Line, Inc. backls away from acquisition bid and Genesco subsequently files lawsuit aginst Finish Line Inc. and UBS to complete merger.

2008 Genesco annouces merger with Finish Line, Inc. terminated and settles lawsuit.

2009 Genesco revenues 3% over the 2007 level of $1.5 billion nearing the $1.6 billion mark.

Source: www.genesco.com

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Crocs

Company Details Descriptions Company Type Public Revenues (2008) $721.6 million Employees 3,700 President & CEO John Duerden

Address 6328 Monarch Park Place Niwot, Colorado 80503

Tel: (303) 848-7000 Website: www.crocs.com

Overview

Based in Niwot, Colorado, Crocs, Inc. is a designer, manufacturer and retailer of molded and casual footwear for men, women and children under the Crocs brand. All Crocs brand shoes feature a proprietary closed-cell resin called Croslite, which enables the company to produce soft, comfortable, lightweight, superior-gripping, non-marking and odor-resistant shoes. The company boasts the footwear as being ideal for casual wear, as well as for professional and recreational uses such as boating, hiking, hospitality and gardening. Crocs shoes are sold in 129 countries and come in more than 270 styles and colors. The company also sells apparel and accessories; however, footwear remains its most significant source of sales.

The company has licensing agreements with several sports teams as well as major media companies including Disney, Nickelodeon, Marvel, DC Comics and Warner Bros. primarily for its Jibbitz shoe charms business where it offers characters ranging from Mickey Mouse to Spiderman.

Performance

After booming between 2005 and 2007, sales of the superior gripping Crocs began to slip, declining 15% from the 2007 level of $874 million to $722 million in 2008. Sales of footwear were down 13% to $661 million while apparel and accessories fell 28% to $61 million. There were a couple of bright spots, though, as sales in Mexico were up four percent to $7 million and sales in the Asia-Pacific region boomed 26% to $205 million. It was the 28% drop in

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North America that caused much of the decline. For the 2004–2008 period, total net sales still grew at a phenomenal rate of 170%.

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Figure 4–28 Crocs, Inc. Total Net Sales, 2004–2008 (in millions $)

Source: Crocs, Inc. annual reports.

Table 4–30 Crocs, Inc. Total Net Sales and Year-over-Year Percentage Change, 2004–2008 (in millions $) Year Total Net Sales YoY % Change 2004 $13.5 -- 2005 108.6 703.1% 2006 354.7 226.7 2007 847.4 138.9 2008 721.6 -14.8 CAGR 170.3% -- Source: Crocs, Inc. annual reports.

Sales by Product

In 2008, Crocs footwear accounted for 92% of company sales with the remaining eight percent going to apparel and accessories. The company has been trying to diversify and find

108.6

847.4

721.6

13.5

354.7

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

800.0

900.0

2004 2005 2006 2007 2008

Total Net Sales

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new revenues streams for its Croslite material and has had some success with its Jibbitz footwear charms business, but has faltered as well—most notably with its Fury Hockey business, which it liquidated in 2008.

Figure 4–29 Share of Crocs, Inc. Total Net Sales by Channel, 2008 (%)

Source: Crocs, Inc. 2008 annual report.

Sales by Geographic Region

The United States remained the largest sales region accounting for 45% of total Crocs sales with the Asia-Pacific region in a distant second at 28%. Europe accounted for 21% with Canada and Mexico at three percent and one percent, respectively. Sales from all other countries accounted for just one percent.

Apparel & acessories

8.4%

Footwear91.6%

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Figure 4–30 Share of Crocs, Inc. Total Net Sales by Geographic Region, 2008 (%)

Source: Crocs, Inc. annual reports and press releases.

Footwear Sales

Total footwear sales grew at a CAGR of 179% for the 2004–2008 period. Sales in 2008 fell 13% from the 2007 level of $763 million to $661 million, but still remained well above the 2006 level of $342 million. At its peak, footwear accounted for 97% of the company’s sales, but dropped to 92% by 2008.

Asia-Pacific28.4%

Mexico1.0%

All other2.0%

Europe20.9%

Canada3.2%

United States44.5%

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Figure 4–31 Crocs, Inc. Total Footwear Net Sales and Percent of Total Net Sales, 2004–2008 (in millions $)

Source: Crocs, Inc. annual reports.

Table 4–31 Crocs, Inc. Total Footwear Net Sales and Year-over-Year Percentage Change, 2004–2008 (in millions $)

Year Total Net Sales YoY % Change 2004 $10.9 -- 2005 102.5 839.5% 2006 342.4 234.1 2007 763.3 122.9 2008 660.7 -13.4 CAGR -- 179.0% Source: Crocs, Inc. annual reports.

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Brand Portfolio

The company’s some odd 270 models include various styles of sandals and clogs, but the company has also expanded into virtually every type of footwear conceivable. Among the most notable is the Crox Rx brand designed for customers with special needs such as problems stemming from complications due to diabetes to hammer toes. The company’s Ocean Minded brand are not Crocs at all, but was a bolt on acquisition to give the company a more diversified customer base. Ocean Minded footwear primarily consists of very casual footwear for ocean lifestyle activities such as boating or beach and include slip-ons and flip flops.

Table 4–32 Crocs, Inc. Footwear Brand Portfolio

Products Description

Type/Brand mammoth, clogs, sandals, flats, heels/wedges, boots, slip-ons, flip flops, medical, sport, work, prepair, YOU by Crocs, laces, Ocean Minded, Crox Rx

Lifestyle casual, active, trendy, fun, sports teams, entertainment, high fashion, dressy Source: www.crocs.com

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Timeline of Significant Events

Table 4–33 Crocs, Inc. Timeline of Significant Events

Year Significant Event 1999 George Boedecker forms footwear marketing and distribution company.

2002 Boedecker's company begins marketing of Crocs brand footwear produced by Foam Creations.

2004 Crocs, Inc. acquires Foam Creations. Sales reach $11 million.

2005 Company reorganizes from a limited liability company and incorporates in Delaware in anticipation of going public. Sales reach $265 million.

2006

Company raises $97 million selling nearly 5 million shares to the public. Sales top $354 million. Company creates the Jibbitz brand of accessories to its product portfolio and acquires Fury Hockey Inc to produce hockey, soccer and lacrosse equipment. Product portfolio includes 25 models of Crocs.

2007

Company acquires Ocean Minded brand of sandals, Bite, LLC producing performance footwear and sport sandals, and introdiuced women's fashion line YOU by Crocs. Product portfolio expands from 25 models to 250 models. Sales peak at$847 million.

2008

Company adds Tagger International B.V., a manufacturer of messenger bags. Company liquidates Fury Hockey after it fails to find a buyer. Company expands to 270 product models. Sales decline 15% $722 million.

2009

Crocs launches its Prepair collection designed to help athletes recover following fitness activity. First quarter sales decline 32% from the 2008 level of $198 million to $135 million in 2009.

Source: www.crocs.com

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Chapter 5 Marketplace and Consumer Trends

Thriftiness Hot in a Down Economy

The economic crisis, coupled with a different leadership in the White House, is leading to a genuine value shift in the country. Whereas the beginning of the decade will be remembered as an era of greed, its end will be marked by a return to a culture of responsibility—in government, in industry, and at home. More consumers will conclude that conspicuous consumption is no longer acceptable. Thriftier behaviors, perhaps even bordering on downright frugality, will achieve more widespread acceptance.

Instead of feeling good about expensive or ostentatious brands as they have in the past, many

consumers will increasingly feel good about getting the best value, making the smartest choice, or not spending at all in 2009. Thriftiness and value shopping may become competitive, with consumers boasting about the many and unique ways in which they are able to avoid spending or get the best value rather than the best brand name—or for those consumers with the most cunning and expertise, getting the best brand name for the best value. The surge in frugality has brought back a variety of money-saving behaviors from days of yore, such as layaway and home-cooked meals. Even cobblers are making a comeback.

The Return of the Cobbler

Many consumers are turning their backs on the throwaway mentality so pervasive in American culture. People are using glass instead of plastic, the library instead of Amazon, and repairing rather than replacing their shoes. The latter is a notable change within the footwear industry. Increasingly, consumers are seeking solace in the resole. A good men's shoe can be resoled 7 to 10 times and women's shoes between three and five times. While only 7,200 shoe repair shops remain in the U.S. (down from 100,000 during the 1930s), repair shops are seeing increases of 20% to 45%, with Chicago and New York shops the busiest, according to the Shoe Service Institute of America (SSIA). "It's the economy. People are having their shoes repaired instead of paying $150 and more for everyday shoes," says John McLoughlin, President of the Shoe Service Institute of America. (Milwaukee Journal Sentinel, October 25, 2008)

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According to the U.S. Census Bureau’s annual services survey for 2007, total sales for

footwear and leather goods repair establishments grew at an annual rate of five percent to reach $220 million after growing six percent in 2006. The 2008 survey was not yet available; however, if the SSIA estimates of 20% to 45% increases are any indication, then total sales for 2008 could be well above the $250 million mark.

Figure 5–1 Total Sales for Footwear and Leather Goods Repair Establishments, 2003–2007 (in millions $)

Source: U.S. Census Bureau

Consumers Cut Back

The renewed interest in shoe repair is just one example of how consumer behavior is evolving and adapting to the new economic realities in spending and in attitude.

Consumer confidence further highlights shifting attitudes and behaviors. Though still not

great, consumer confidence in June 2009 of 49.3 is an improvement over 26.9 in March 2009.

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(1985=100). (The Conference Board Consumer Confidence Survey press release, April 8, 2009)

The effects clearly indicate the pullback in consumer spending. According to data from the

U.S. Census Bureau, the first quarter of 2009 saw retail sales (seasonally adjusted) decline nine percent from the first quarter of 2008 and more than one percent from the fourth quarter of 2008. In fact retail sales fell to a level not seen since 2005.

Figure 5–2 Quarterly Retail & Foodservice Sales, 1992–Q1, 2009 (in billions $)

Source: U.S. Census Bureau; calculated from monthly data by Packaged Facts.

Final figures from the U.S. Bureau of Economic Analysis showed that first quarter personal consumption expenditures (PCE) rose a meager 0.4% (current dollar, annualized basis). However, that was after the fourth quarter’s steep decline—the biggest drop in personal consumption (-9.0%) since 1980. (In real terms PCE grew at an annualized rate of 1.4% versus -4.3% in Q4 2008.) Consumers are scrutinizing every purchase, including the daily

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latte at Starbucks, weekly trips to the carwash, Friday dinner date nights, routine visits to the salon, designer accessories and shoes, yearly fitness club memberships and buying smaller, fuel-efficient cars to replace gas guzzling SUVs.

Figure 5–3 Quarterly Personal Consumption Expenditures (PCE), 1992–Q1, 2009 (in trillions $)

Source: U.S. Bureau of Economic Analysis.

Fashion and Footwear Industries Feeling the Pinch

The fashion industry, in which footwear plays a role, is getting squeezed on many fronts—including shifting consumer spending behavior and business issues such as retail store closings and credit squeezes on design houses. While growth had slowed considerably beginning in 2007 and began to decline in 2008, it was the first quarter of 2009 when the fashion industry really came apart at the seams. Jones Apparel Group, marketer and retailer of brands such as Nine West and Easy Spirit reported total net sales for the first quarter of 2009 were down nine percent from the same period in 2008. Even worse, its footwear and

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accessories wholesale business fell 13% while it’s retail segment fell 11%. Even discounters such as Collective Brands with its Payless Shoe Source and Stride Rite operations saw a seven percent decline in its first fiscal quarter ending May 31, 2009.

In all, total retail sales (adjusted for seasonality, holidays, etc.) for clothing and clothing

accessories stores, which includes footwear retail, for the fourth quarter of 2008 fell six percent from the third quarter and eight percent from the same period in 2007 to $51.5 billion. The first quarter of 2009 saw sales pick up three percent over the fourth quarter of 2008, but were still down five percent from the first quarter of 2008 to $52.9 billion.

Figure 5–4 Quarterly Clothing and Clothing Accessory Store Sales, 1992–Q1, 2009 (in billions $)

Source: U.S. Census Bureau; calculated from monthly data by Packaged Facts.

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High-End Branded Footwear Toughing it Out

Brands such as Christian Louboutin (ranked by a June 2008 survey from the Luxury Institute as the most prestigious women's luxury shoe brand among U.S. women), with an average income of $348,000 and average net worth of $3.6 million (followed by Manolo Blahnik and Hermes), will be making touch choices as the economy continues to falter. Already plagued by low-cost imports from the likes of China and soft export markets in the United States and other countries, high-end footwear makers are reprioritizing, cutting costs, revamping their operations and courting new business.

For example, luxury footwear designer Giuseppe Zanotti (producer for Proenza Schouler,

Blumarine and Roberto Cavalli), told Footwear News in March 2009 that his company is analyzing costs to eliminate waste and lowering wholesale prices in a bid to help struggling high-end department partners, such as Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman, protect their margins.

Consumer Footwear Expenditures

According to the U.S. Bureau of Labor Statistics, average annual expenditures on footwear per consumer unit5 totaled $327 in 2007, up eight percent from the 2006 level of $304. Generally, average footwear spending has remained in the low $300 range, dipping lower during times of low economic growth and rising during better economic times. However, a look at certain demographic measures show some stark differences among consumers.

5 The terms consumer unit, family, and household are often used interchangeably for convenience. However, according to the U.S. Bureau of Labor Statistics, the proper technical term for purposes of the Consumer Expenditure Survey is consumer unit.

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Figure 5–5 Average Annual Footwear Expenditure Per Consumer Unit: All Consumers Units, 2003–2007 ($)

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Most notable is the amount of spending by household income. Households making more than $70,000 per year spent at least 66% more than those with a lesser household income. What’s more, spending among this group grew at an annualized rate of five percent between 2003 and 2007—faster than any other income group. Equally as interesting is that households in the lowest income brackets—less than $30,000—were one of the lowest spenders on footwear and spending declined at an annual rate of six- to 15% over the same period.

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Table 5–1 Average Annual Footwear Expenditure Per Consumer Unit by Household Income Before Tax, 2003–2007 ($)

Before Tax Income 2003 2004 2005 2006 2007 03–07 CAGR $15,000 to $19,999 264 197 163 153 141 -14.5% $20,000 to $29,999 245 209 228 227 194 -5.7 $30,000 to $39,999 268 323 325 199 277 0.8 $40,000 to $49,999 263 300 269 265 297 3.1 $50,000 to $69,999 396 325 352 343 317 -5.4 $70,000 and over 434 513 450 446 525 4.9

Source: U.S. Bureau of Labor Statistics Consumer Expenditure Surveys; compiled by Packaged Facts

The 55–64 age group saw their average annual spending on footwear increase the fastest during the 2003–2007 period at an annualized rate of 10%. However, those age 45–54 had the highest average annual spending near the $400 mark.

Table 5–2 Average Annual Footwear Expenditure Per Consumer Unit by Age of Reference Person, 2003–2007 ($)

Age of Reference Person 2003 2004 2005 2006 2007 03–07 CAGR under age 25 $206 $258 $297 $251 $237 3.6% between age 25 and 34 331 398 384 371 383 3.7 between age 35 and 44 413 416 397 404 399 -0.9 between age 45 and 54 334 385 369 343 383 3.5 between age 55 and 64 237 351 298 288 351 10.3 over age 65 167 123 159 133 160 -1.1 Source: U.S. Bureau of Labor Statistics Consumer Expenditure Surveys; compiled by Packaged Facts

Hispanic consumers had the highest average annual spending on footwear ($408), growing at an annual rate of three percent. By contrast, African America consumers saw spending decline at an annual rate of three percent, but remained near the high of those that were not African American or Hispanic. White and all other races and ethnic origins saw the greatest increase in spending, but remained the lowest at just $319.

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Table 5–3 Average Annual Footwear Expenditure Per Consumer Unit by Race or Ethnic Origin of Reference Person, 2003–2007 ($)

Race/Origin of Reference Person 2003 2004 2005 2006 2007 03–07 CAGR White, Asian, and All Others 274 304 298 292 319 3.9% Black or African American 440 508 493 391 387 -3.2 Hispanic or Latino 368 424 442 427 408 2.6 Source: U.S. Bureau of Labor Statistics Consumer Expenditure Surveys; compiled by Packaged Facts

Consumers in the Midwest region of the United States saw spending grow at an annual rate of eight percent, far out-pacing any other region in terms of spending growth. Consumers in the South had slow positive growth and remained under the $300 mark. Consumers in the Northeast and West both spent the same ($350) in 2007.

Table 5–4 Average Annual Footwear Expenditure Per Consumer Unit by Region, 2003–2007 ($)

Region 2003 2004 2005 2006 2007 03–07 CAGR Northeast 357 427 354 358 350 -0.5% Midwest 249 271 280 256 334 7.6 South 283 312 322 279 297 1.2 West 305 332 330 349 350 3.5 Source: U.S. Bureau of Labor Statistics Consumer Expenditure Surveys; compiled by Packaged Facts

Perhaps in correlation with household income, consumers at the high end of the spectrum in terms of education level spent the most on footwear in 2007 at a whopping $546, an annual gain of 15% during the 2003–2007 period. Consumers with a bachelor degree spent less at $399, but still grew at an annual rate of four percent. Consumers with less than a bachelor degree spent essentially the same, though those with some college education saw spending decline at an annual rate of five percent.

Table 5–5 Average Annual Footwear Expenditure Per Consumer Unit by Education Level, 2003–2007 ($)

Education 2003 2004 2005 2006 2007 03–07 CAGR Less than high school graduate 250 248 282 242 276 2.5% High school graduate 250 301 268 266 269 1.8 High school graduate with some college 341 283 296 286 276 -5.1 Associate degree 285 377 372 332 275 -0.9 Bachelor's degree 336 419 357 382 399 4.4 Master's, professional, doctorate 315 407 459 356 546 14.7 Source: U.S. Bureau of Labor Statistics Consumer Expenditure Surveys; compiled by Packaged Facts

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Kids Footwear Has Built-In Protections

The trends affecting the adult footwear category—higher fuel and material costs, a weak U.S. dollar, rising labor costs in China, increased retail demand for discount shoes at mass, and a lessened consumer spending in reaction to the recession—are also pressuring the $6.2 billion kids’ footwear category, but kids’ footwear has built-in protections. One, the kids demographic is growing at a greater rate than the generally population. Two, kids footwear needs constant replacing. Three, kids (and parents) are eternally susceptible to the attention-grabbing power of licensing.

38 Million Kids by 1212

According to the latest available estimates from the U.S. Census Bureau, there are 36 million kids in the 3 to 11-year-old age group. Census data also show that these kids make up around 12% of the U.S. population. Distribution by age within the 3–11 population is remarkably even, with each single year of age accounting for 11% of that age bracket.

Based on the most recent Census Bureau data, Packaged Facts estimates that the population

of 3 to 11-year-olds will increase at an annual rate of about one percent to top the 37 million mark in 2011 and near the 38 million mark by 2012. That factors out to a lot of replacement shoes.

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Figure 5–6 Population Forecast of U.S. Kids Age 3–11, 2008–2012 (in millions)

Note: Estimates for May of each year. Source: U.S. Census Bureau, Packaged Facts.

An Influential Force with Buying Power

Kids are also a financial force. Packaged Facts estimates that the buying power of 3 to 11-year-olds totaled $20.1 billion in 2008, with 9 to 11-year-olds responsible for the greater share of kids’ purchasing power. Packaged Facts estimates that the kids’ buying power will grow at a compound annual growth rate of three percent to $22.8 billion by 2012.

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Figure 5–7 Spending Power Forecast of U.S. Kids Age 3–11, 2008–2012 (in billions $)

Source: Packaged Facts.

Cool Licenses Trump All

This powerful persuasive and growing population does not mean that footwear marketers should feel excessively confident about long-term sales growth; rather, they should step it up as kids are increasingly marketing savvy and parents are increasingly value-conscious. With shoe prices rising and clothing budgets getting tighter, parents are going to be looking for product value as kids continue to push for the coolest shoes.

Out-of-the-box innovations such as the Inchworm shoe, which are able to grow along with

children's feet, will see more favor in the marketplace from parents. The shoes’ iFit technology allows the shoes to expand up to a full size with the press a button. The company estimates they last about three to six months longer than conventional shoes.

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Figure 5-8 The Inchworm Shoe

But since kids have such tremendous input on the footwear their parents buy for them and are well aware of hot licensing properties, for kid-driven purchases, creative licensing will be more important in the current climate in driving current and future sales. As any good marketer knows, the way to a long-term customer is to hook them early in life.

Collective Brands, through Payless ShoeSource, added several kid-friendly characters (and

all the free marketing their ubiquitous entertainment outlets include) to enhance it offerings including Blues Clues, SpongeBob SquarePants, and Hannah Montana—the latter of which are especially on target for tykes. According to an annual preschool survey conducted in spring 2009 by strategic marketing firm, Funosophy Inc. the top two characters kids age three to five are "just getting interested in" are Nickelodeon's SpongeBob SquarePants and Dora the Explorer, followed by the Disney Princesses, Hannah Montana and Barbie. Also seeing interest in the tyke sector: Go, Diego, Go!, Spider-Man, Minnie & Mickey Mouse, Scooby-Doo and Transformers. (Playthings, June 1, 2009)

Character licensing allows a child to express herself. It is important for kids, who are just

beginning to explore personal preferences and asserting their individuality, to be able to make choices among a safe array of footwear options. Parents are keenly aware of the power of childhood individuality often expressed through pester power—an inexpensive, homegrown tactic marketers hope for.

"These are the brands they ask their parents to buy, and we know kids influence the footwear

purchasing decision from as young as age 2," said Todd Murray, Director of Children's Brands and Licenses for Brown Shoe Co., which holds the "Barbie," and "Power Rangers" among other licenses. (Footwear News, May 12, 2008)

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Kids Express Themselves with Crocs’s Jibbitz Charms

As if licensing characters for kids’ footwear were not enough, Crocs, Inc. has taken the trick one step further. In 2006, the company acquired Jibbitz LLC, a maker of charms for kids’ footwear that allow kids to personalize their Crocs shoes with a variety of fun options. Jibbitz have buttons on the back that pop into the holes on the toe of Crocs shoes allowing kids to swap out charms for a new look. The charms are available in every conceivable object of kids’ desire from bugs to butterflies to numbers to the space shuttle. With a retail cost of $2.49 per charm, it is easy for parents to say yes. Much easier than purchasing a new pair of shoes.

The company’s portfolio of licensed characters is a venerable list of the who’s who among

children’s entertainment. Disney characters play a leading role in the portfolio from perennial favorite Mickey Mouse to Pixar creation WALL-E. Nickelodeon figures prominently, too, with Spongebob Squarepants and Dora the Explorer. Other character licenses include Peanuts, Harry Potter and various super heroes.

Company Ethics and Added Values Important to Consumers

As consumers have gotten smarter, they have also gotten more curious. Not only do they want to know the specific functional benefits of products, they also want to know about the core brand and associated company values and beliefs. Some industry experts think this will take a back seat amid recession concerns, whereas others believe it is more important than ever to provide a positive emotional connection that is inherent in cause-related marketing that empowers consumers during times of distress and upheaval.

Global Consumers: Will Spend More on Ethical Brands

According to the second annual multi-country Edelman Goodpurpose study conducted the fall of 2008, more than half of the 6,000 global consumers surveyed said that even in the midst of a recession they would be prepared to spend more for a brand if it supported a good cause. The most popular cause among consumers globally was protecting the environment, and more than two-thirds of respondents said that they would be willing to pay more for eco-friendly products during a recession. Sustainable and eco-friendly products and corporate attitudes are no longer part of a niche group of altruistic consumers, but rather an important “feel good” factor for a wide range of consumers who believe in making purchases that do more than just contribute to a company’s top line growth. Sustainability and green initiatives

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are clearly front and center when it comes to economic considerations for footwear retailers, manufacturers and marketers.

Green Particularly Important to Youth to a (Price) Point

According to an April 2009 survey from Generate Insight, reported by MarketingCharts, Millennials (consumers age 13-29) are extremely educated about green issues, with 76% believing that it is very important or important for brands to get involved in the green movement. The majority of older Millennials (18-29) would choose the more expensive brand that gave back in a green way, but 71% of teens (age 13-17) would choose the less expensive product over the green.

Sustainable Initiatives are Financially Viable

Increasingly, manufacturers and retailers will recognize that altruistic and sustainability initiatives can be both financially viable, and help the bottom line. The Edelman survey also found that 80% of consumers said it is important even during a recession for brands and companies to allocate funds for social purposes. 68% said they would remain loyal to a brand in a recession if it supported a good cause. 55% said they would buy brands that support a good cause even if they aren’t the cheapest. When choosing between two products of similar quality and price, consumers are more likely to have their purchase decision influenced by a brand’s social purpose (42%) than innovation (30%) or brand loyalty (27%). (AdAge.com, November 17, 2008)

Despite the economic downturn, Packaged Facts expects that many American consumers will

continue to prioritize and justify potential extra expenses associated with socially responsible product purchases on ethical grounds. Footwear players have shown tremendous leadership in ethical outreach for many years.

Deckers Finds a Simple Way to Sustainability

A pioneer in sustainable footwear manufacturing, Simple Shoes, originally began in 1991 as an “old school” sneaker, but was bought by Deckers Outdoor Corporation a couple of years later and expanded to include sandals and casual footwear. The shoes are sold through a variety of retail channels including independent retailers, outdoor shops and department stores such as Dillard's and Nordstrom. The company even sells through alternative footwear channels such as Whole Foods Markets.

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Deckers has taken the Simple brand in an entirely sustainable direction, with the 2005 launch

of Green Toe, an effort to reduce waste and use more sustainable techniques in manufacturing footwear. Their goal is to make the Simple brand 100% sustainable with materials including organic cotton, eco-certified leather, bamboo, and recycled car tires and inner tubes for its rubber soles. In spring 2009, the company introduced silk as a natural upper for its ecoSNEAKS. The company has also started using water-based glue and employing more stitching to reduce the use of glue altogether. Another way the company is pushing towards its goal is through packaging with the company’s shoes packed in 100% post-consumer recycled boxes.

All these initiatives seem to be paying off. While first quarter 2009 sales are down slightly,

Simple's sales increased 25% in 2008 to reach $14 million.

Naturalizer and Dress for Success

In May 2008, Brown Shoe Company’s Naturalizer division teamed up with international non-profit organization, Dress for Success, on “Give Shoes, Give Hope.” Founded in New York City in 1997, Dress for Success is an international not-for-profit organization offering services designed to help clients find a job and remain employed and promotes the economic independence of disadvantaged women. Women who brought their gently worn, work-appropriate shoes to Dress for Success donation drop-offs at Naturalizer stores received a 20% off coupon toward her next in-store purchase. Naturalizer also contributed 4,300 new pairs of career shoes to Dress for Success affiliates.

TOMS Shoes One for One

TOMS Shoes founder, Blake Mycoskie, was spurred to action after seeing barefoot children with bruised and cut feet on a trip to Argentina. Now, TOMS Shoes’ One for One program donates a pair of shoes to children in need for every pair sold. Since 2006, more than 140,000 shoes have been given to children in Ethiopia, Argentina, South Africa and the United States, with a goal to donate 300,000 in 2009.

Danner and the Fallen Officers Drive

Danner, Inc., a provider of branded work and outdoor footwear, sponsored the second annual Drive to Remember for Fallen Officers. "We are honored to support the Drive to Remember and those who make the ultimate sacrifice for their communities," said Joseph P. Schneider, President and CEO of LaCrosse Footwear, Inc. "For more than 75 years, Danner has

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developed quality and high performance footwear for these men and women in the field, whether at work or enjoying the outdoors. We are truly honored to support this wonderful organization." (Business Wire, May 1, 2008)

The Drive to Remember encompassed a 14-day, 5,000-mile tour from Vancouver, British

Columbia to Washington, DC. Danner hosted a commemorative event at the Danner Factory Store, including a barbeque lunch to honor the Drive to Remember on their first stop in Portland, Ore. Proceeds from the sales of Danner socks during the event were donated to the organization to support the families of fallen officers.

Counterfeiting, a Dangerous Business

According to the World Customs Organization, approximately seven percent of the products sold around the globe are fakes. The United States is a top destination for counterfeits, with about $250 billion worth of scammed products crossing the border every year. In 2007, the U.S. Immigration and Customs Enforcement projected that total American job losses due to product counterfeiting was 1.4 million. According to U.S. Customs Bureau and other regulatory agencies, many counterfeit dollars are traced back to greater criminal threats such as organized crime, child labor, drug trafficking and terrorism.

Staggering Consequences

In 2008, the domestic value of counterfeit and pirated goods seized for intellectual property rights violations was up 39% to $272.7 million, an increase of almost $76 million from 2007. U.S. Customs found that for 2007, 40% of all intellectual property rights seizures were footwear, up from $63.4 million in 2006 to $78 million with the vast majority being in athletic shoes and the main source being China.

Purchasing cheap, knock-off designer products from the trunk of a car or from a street

hawker is inconsequential to many consumers who do not care about the repercussions to the industry being scammed that go beyond the bottom line and effect employees across the board. Consumers also do not realize the potential dangers of a counterfeit product—knock-offs are likely made from sub-par materials that at best may be ill-fitting but may also cause injury.

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Counterfeit Counter-Intelligence

In an interview with Footwear News, David Brener, the chief intellectual property rights operations branch officer in Washington, D.C., explained what is being done to combat the problem. “We are trying to use a layered approach. We can't inspect our way out of the problem. We are using targeted techniques, risk-management techniques. We're going out on a post-transaction basis after the product arrives to go to companies and work with them to find weaknesses and correct them. When they have seminars and annual meetings, we have trade specialists there.”

He also noted that two of the most popular counterfeiting method is transshipping—

channeled through different locations to hide the final destination—or purposely mislabeling such as shoes with a counterfeit logo that is covered and peeled off later. (Footwear News, October 20, 2008)

Although most experts believe that nothing will stop counterfeiting, this type of proactive

activity on behalf of law enforcement and industry players, coupled with high-tech innovation in anti-counterfeiting tracking tactics, such as RFID, holograms, permanent labels and invisible inks, helps stave the flood of fakes, particularly at the distribution level. However, once fakes make it to the consumer level, copies easily fool consumers’ less-discerning eyes.

Industry Hopes to See End Depression-Era Tax

Footwear industry members of The Affordable Footwear Initiative have been urging Congress to pass the Affordable Footwear Act and offer consumers some relief by ending a Depression-era shoe import tax meant to protect domestic manufacturers from cheaper imports. Packaged Facts estimates wholesale prices of footwear rose eight percent in 2008 and those price increases were passed on to consumers despite the slowing economy.

Despite the best efforts of the footwear industry lobby over the past several years, the tax still

remains, even though 96% of all shoes sold in the United States are imported and wholesale prices are rising. The tariff runs as high as 67.5% on some items and averages 10%. Repealing the shoe tax could help pass as much as $2 billion in savings to U.S. consumers. Proponents also assert that the Affordable Footwear Act would stave off further industry downsizing and protect domestic footwear manufacturing jobs.

In the most recent effort to repeal the tax, Senators Maria Cantwell (D-WA) and John Ensign

(R-NV) formally reintroduced the bipartisan Affordable Footwear Act (S. 730) in April 2009.

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The legislation would eliminate the regressive and hidden tax paid on most lower-cost and children's shoes, or about 60% of the shoes sold in the United States each year.

Coalition members include the American Apparel & Footwear Association (AAFA),

Footwear Distributors and Retailers of America (FDRA), Retail Industry Leaders Association (RILA), Outdoor Industry Association (OIA), National Retail Federation (NRF) and many of the individual member companies represented by these associations. Visit the AAFA-sponsored coalition website, www.EndTheShoeTax.org for more information.

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Style and Innovation Trends

Free to Re-Invent Me

Footwear is a huge and increasingly diversified business, driven by a host of demographic, lifestyle and fashion trends. As a result, the category is being segmented ever more finely to meet the manifold functional and emotional needs and desires of shoe shoppers. This is seen in the diversity of mainstream footwear trends—from casual comfort to sexy stilletto, and the fact that, in recent years, a far greater range of styles has become acceptable in the U.S. workplace. There is no urge to conform in terms of style. In fact, the urge now is to constantly evolve and change, as Americans continue to define, and re-define, themselves as individuals.

The diverse nature of personal styles and the belief that one can re-invent oneself with, for example, a fashion makeover, driven by the wealth of makeover media, means there is a place in the average consumer’s closet for a wide variety of shoe styles to reflect one’s mood.

Make Me Unique: Personalized Footwear

In an ego-centric American culture where the individual is lauded—exemplified by the popularity of reality-based TV programming, consumer-generated content and a plethora of products that are “made just for me”—footwear innovations that engage and express the power of personal ego through design and functional options will begin to see more consumer interest. Although growth in this arena may be slow to build as word-of-mouth from loyal and satisfied customers is often the main source of advertising.

Through keeping a finely tuned ear to the whims of consumers, the industry is making strides

in personalization and customization by offering an ever-widening variety of shoes that satisfy not only functional needs but ever important emotional ones, from design options to celebrity brands that echo and/or magnify an individual’s personality and beliefs.

Several brands in the Adidas stable offer personalized and customized platforms, such as

Adidas’ mi Adidas and mi Original. Mi Adidas, which allows consumers to custom-design running shoes, was launched in Adidas’ performance stores in 2007, followed by the launch

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in 2008 of Mi Originals to Adidas concept stores. See below the image of this author’s customized at Mi Originals online with company name, city and born on date.

Figure 5-9 Adidas’ Customizable Mi Originals

Work Shoes Get the Custom Treatment

Taking customization and function even further, LaCrosse Footwear, Inc.’s Danner created the "myDanner" custom footwear program for building a one-of-a-kind, personalized Danner work boots.

The process starts online with customers choosing materials (Vibram, GORE-TEX,

Thinsulate, etc.), as well as leathers, fabrics, laces, and hardware. The program currently launches with three top Danner styles, the Super Rain Forest, Fort Lewis and the Santiam, with more styles to come. Production of the custom myDanner boots will take approximately two weeks. Danner even offers a more personalized premium package that includes a two-night stay in Portland, a private factory tour, and a private custom boot fit. In 2008, LaCrosse Footwear, saw its sales rise eight percent to reach $128 billion.

Emotional Pulls the Shoes Strings Too

Emotional benefits can also play a part in customization, where the consumers can fully express themselves artistically! Enter Zazzle’s custom shoe offering (www.zazzle.com/shoes). Zazzle's custom shoe platform is the first fully customizable shoe with user-generated content, allowing users to design and select colors for the entire shoe. Consumers are able to create unique custom canvas shoes by uploading their own designs, patterns, illustrations, images and text, and then preview their shoes instantly. Users can also embellish their shoe designs with preset colors and patterns. The shoes are embellished and assembled from scratch within 24 to 48 hours, which enables consumers to receive their shoes in one to two weeks.

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High End Activity

While there are a few mass players, such as At Nikeid.com and SteveMadden.com, making customization more affordable for the masses, the excitement is in high-end customization with boutiques popping up across the country. For example, at Morgan Miller, a boutique in southern Florida since 2006, shoe addicts can design their own custom-fit sandals, then cruise the mall or sip champagne as cobblers build their creation. About an hour later, the shoes are served on a silver platter. An array of soles, straps and embellishments are available and the cost ranges between $100 and $400. The store also hosts shoe parties.

Many of the smaller shops have been around for decades, such as E Vogel in New York City

specializing in custom shoes for men and riding boots for men, women and children since 1879. E Vogel's upscale clientele veer toward classic looks. The store is also popular with customers who can't buy shoes off the shelf, either because of orthotics or conditions such as bunions or hammertoes. Customers here pay $1,300 to start, with subsequent pairs costing $850 each. Although this shop employs 18 shoemakers, the average wait time for the first pair of shoes is about four months.

Interchangeable Shoes

Several start-up shoe companies touting interchangeable sandals and shoes have appeared on the scene, including Lexees, One Sole by Quick Change Artist, Bandals and Zip Shoes, for consumers who want unique personalized footwear options at lower price points. Lexees, One Sole and Bandals, are simple sandals with an interchangeable upper or band.

Figure 5-10 Sandals with Interchangeable Upper or Band

Soon to launch in the United States, the ZIPZ Shoes system’s shoe tops and bottoms ("covers" and "souls" in ZIPZ language) are interchangeable to create different combinations with a variety of patterns, styles and colors in toddler, youth and adult sizes. ZIPZ, currently sold abroad, will appear in multiple U.S. retail locations in the fall of 2009.

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Finding Comfort in a Pair of Shoes

There is a stereotype that women seek solace in shoes, and stereotypes are often based in fact. An October 2007 poll from Consumer Reports National Research Center found that the average American woman has 19 pairs of shoes, however only four pairs are worn regularly and 43% have been at least moderately injured by their shoes. So it is unclear how much comfort women are actually getting out of their shoes.

Comfort versus Style: Footwear No Longer Easily Categorized

Over the past several years, there has been a steep change in seeking solace from the shoes that hurt us. Footwear fashion trends are ephemeral and reliant on consumer trends, innovation and artistry, but in the past year, the most widespread buzz has been on casual comfort and health and wellness rather than on well-heeled stilletos! The marketplace has seen growing crossover. Shoes are no longer siloed into business wear, casual wear, sporting wear or dress wear. Casual Friday has evolved into Casual Everyday. Sports and lifestyle continue to merge. Consumers want to go from faxing, to flexing, to a festive night out seamlessly and in comfort.

Shoe Comfort Gets More Accessible

Comfort shoes, once wore the stigma of hippie shoes, grandma shoes or nurse shoes, while high-fashion footwear fell within the parameters of “suffer for beauty.” Now women (and men to a lesser degree) have wide range of choices and price points that are both comfortable and fashionable—less because high-fashion shoes are getting more comfortable and more because comfort shoes are getting more fashionable. Several brands such as Jones Apparel’s Easy Spirit have made it their core business to promote this idea while other brands have adopted strategic partnerships that combine multiple brands into hybrid footwear products. For example, Nine West and New Balance struck such a deal in 2008 to create a line of footwear combining the style and comfort technology of each.

Comfort Shoe Brands Break the Mold

Several classic comfort shoe brands have introduced updated designs to meet consumer needs for a more attractive shoe. C&J Clark has introduced the Indigo, Privo and Unstructured lines under its Clarks brand.

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Figure 5-11 Privo’s Acacia Slip-on with Flex-Fit

Figure 5-12 Indigo’s Sweetie Pump with ABS Heel

Figure 5-13 Unstructured’s Un.radke Ankle Boot

Innovative shoe maker Geox has put its waterproof, breathable technology into great-looking,

dressier loafers, boots and pumps. Naot, a comfort sandals maker, has branched into boots and shoes.

In January 2009, Kigo footwear launched a line of portable, recycled, eco-friendly, comfort

footwear. The shoes made of compressible materials feature a fold-close design, so they can stow as easily as a glove. Quality materials carefully selected to meet varying conditions and environments mean that Kigo shoes are as comfortable as a slipper yet as sturdy as an athletic shoe.

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Figure 5-14 Kigo Footwear

Fashion Finds Comfort

Fashion brands like Cole Haan, Kenneth Cole and Anne Klein, better known for fashion footwear, have also stepped into the world of comfort. For example, Cole Haan, owned by Nike, introduced a line of pumps with Nike Air technology in the soles and Anne Klein introduced a line of pumps and loafers with iflex-sole that are bendable like slippers.

In August 2008, RSVP, a women’s designer shoe brand, and Foot Petals, Inc., a maker of shoe inserts that relieve foot pain, launched RSVP Cushioned by Foot Petals, sold only on retail shoe site Zappos.com. The Foot Petals Tip Toe and Haute Heel inserts are sewn into each of the shoes' sock liners to add a feel-good element to each shoe.

Figure 5-15 RSVP Lyndsey Cushioned by Foot Petals

Similarly, Paris Hilton Footwear improved the comfort on the brands’ line of platform stilettos, with a "comfort heart", a cushion inside the inner sole of every shoe.

The Science of Footwear

While some footwear is inspired by science fiction, such as the 160 individually numbered Star Trek-inspired Enterprise Edition Airwalk sneakers, designed by street style designer Jeff Ng for CBS Consumer Products to celebrate the latest Star Trek voyage into theaters, or the

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Nike Air Trainer "Transformers" inspired by the Autobots' leader, Optimus Prime, there is even more spectacular innovation based in real science, particularly in the athletic shoe arena.

Figure 5-16 Optimus Prime inspired Nike Air Trainer "Transformers"

Under Armour Gets Sophisticated

The sports apparel maker, Under Armour, has jumped into athletic footwear with the help of technology, such as rapid prototyping, where a special machine can "print" a polymer version of the shoe's sole. Under Armour can make sure the treads are in the right place, even give the sole a workout, without investing $20,000 and up for a costly steel mold. Under Armour is also utilizing 3-D software to build virtual versions of its shoes to save time on the development side by six months. Using software from sports-training company Dartfish, Under Armour tests that the "cartilage" of the shoe will properly absorb shocks and provide independent suspension when the foot hits the ground.

Of course, challenging the major athletic footwear players such as Nike and New Balance will still be a major undertaking as these competitors have the same kinds of protocols and technologies. But if their sales in 2008 and the first quarter of 2009 are any indication, Under Armour is well on its way to becoming the next major designer and marketer.

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Technology Offers Good Shoes and Good Health

In response to continued consumer interest in health and wellness and the multi-tasking lifestyle, a slew of shoe manufacturers and brands are touting a wealth of health claims. Ailments from back pain to varicose veins and benefits such as improved posture, posterior toning, and burning calories, are all being met with high-technology and design innovations such as rounded soles and heels, extensive cushioning and contoured shapes to mimic walking barefoot.

Better Health Through Earthly Footwear at Sky-High prices

The idea of a fitness shoe that offers inherent health and wellness benefits is not new. Earth shoes, first made popular in the U.S. during the 1970s, were the precursor to the wide variety of wellness footwear available today. Now known as Earth Footwear, with an average retail price around $100 a pair, they are designed to create proper alignment of the spine and stretch the calf muscles.

Newer products have newer price points and more impressive claims! Products such as MBTs

by SwissMasai have sold more than a million pairs at $230 to $270 for the "anti shoe" with a rocker bottom and a soft wedge heel your foot sinks—playing on consumer vanity and health needs. Chung Shi, a German fitness shoe with a rocker bottom, is priced at around $170.

Spas, Fitness Experts Saw Opportunity

Bliss spa owner Marcia Kilgore, developed the FitFlop, which promises to help you walk faster and keep the hamstring and calf muscles active longer during steps, reduce joint strain and tone thighs. Taryn Rose shoes are made by artisans in Italy, but are built on an asymmetrical form, which gives full arch support, helps to reduce fatigue and improves comfort. The Z-Coil line, with its funky heel design, bills itself as pain-relief footwear.

In 2009, fitness expert, Jennifer Cohen’s introduced NGR shoes (No Gym Required) which offer similar promises, along with her first fitness, motivation and health guidebook, No Gym Required: Unleash Your Inner Rockstar.

Cohen noted in an interview with MacLean’s magazine in October 2008, "Though everyone's lifestyle is so different, it all comes down to the same thing. That is, how to maximize what you do in a minimum amount of time."

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Figure 5-17 Masai Barefoot Technology Kaya

Figure 5-18 Fit Flops Sandal

Figure 5-19 Z-Coil Freedom

Experts Conflicted on Fitness Shoe Promises

Those in the health field are generally skeptical about wellness and fitness shoes. "It's a lot of hype and often not a lot of supported substance," according to Bruce Williams, President of the American Academy of Podiatric Sports Medicine. "While there may be some truth to the claims ... most people can do a lot better with a decent pair of running shoes or getting more active." (Cox News Service, July 22, 2008)

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But Katy Santiago, a California bio-mechanist conducted a study for Earth footwear to

determine the shoes' impact on physical health and found positive results. After four weeks, the 31 women studied who walked 10,000 steps a day in Earth shoes lost body fat, increased their walking speed and saw an increase in lean body mass.

One of the few measures of how healthy a particular shoe may be comes from the American

Podiatric Medical Association. The organization issues seals of acceptance to shoes that meet the standards of a committee of experts. While FitFlops are recognized, the likes of Z-Coil, MBT or Earth shoes are not. This does not necessarily mean there is a serious problem with the unlisted shoes though.

Fall Footwear Stylings: 1980s Revisited, Strong Embellishments and Colors, Aggressive Heels and Boots,

The 80s aesthetic has been re-infiltrating fashion for the past few years. In footwear, sneakers reminiscent of styles worn in a Kajagoogoo or The Cure video are being re-introduced by old-school makers such as LA Gear, which re-introduced a limited-edition Stardust line in five colors (light grey, white/blue, white/grey/green, white/lilac/green, and light pink), or re-invigorated by newer players such as designer John Varvatos’ take on the classic Converse.

Women’s Footwear Goes Retro, Aggressive

In women’s non-athletic designs, particularly those for fall 2009, the look back is much more stylized. Footwear designer Lawrence “XL” Gay’s new footwear line, Xllent Shoes, to launched in the fall of 2009, is inspired by 1980s rock 'n' roll and hip-hop track suits, The line highlights two other top 80s-inspired trends for fall: strong embellishments and booties.

There is nothing dainty about the strong straps, buckles, and chains appearing in footwear

designs. Booties, a mixture between a shoe and an ankle boot, have re-emerged on runways and on celebrities in a variety of styles, such as peep-toe, lace-up, oxford and fold-over.

Also big are heels with big personality. Some may refer to them as “hooker pumps” complete

with thick straps, bling, tassles, buckles and six-inch plus heels in bold colors. But others view the more aggressive styles including everything from extreme platforms, high sculptural heels and thicker heels, as more architectural and exciting, rather than simply slutty!

Jeffrey Kalinsky, Founder of high-end retail shop Jeffrey in New York & Atlanta; and current

Director of Designer Merchandising at Nordstrom told Footwear News in February 2009 that

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the fall footwear showcase in New York featured "Very aggressive footwear. There was a combat feeling, a motorcycle feeling, even bondage. A tough-chic approach to footwear." He went on to note that "Proenza Schouler's footwear gets better season after season, Alexander Wang is really getting into it. I am sure he will have a successful shoe business." (Footwear News, February 23, 2009)

Retro Designs Not New

A look farther back in history shows that this outré footwear trend relates to far greater economic trends. In the recessionary 1930s, shoes became very experimental, according to Elizabeth Semmelhack, Curator of the Bata Shoe Museum and the author of Heights of Fashion: A History of the Elevated Shoe.

"The 1930s was the era of Andre Perugia, whom I consider to be the first great modern shoe

designer. Fashion was linked to Surrealism and to intellectual concepts. Perugia and Ferragamo made shoes so far removed from the stereotyped sexualized shoe." She sees something similar happening today. "High heels today are incredibly architectural. Heels are higher—designers are pushing the envelope of engineering, of what can be built, and the materials it can be built out of. Yet the shoes are still sexy. It's as though today's designers are making shoes that can be sexy and significant." (National Post, May 16, 2009)

A No-Frills Backlash in the Offing?

While these more flamboyant and aggressive looks will continue to have traction and possibly reflect a sense of escapism in difficult economic times, there is another more conservative trend at work driven more by fear and practicality that emerges in fall introductions and further penetrates into winter introductions. Many designers are also introducing more serious and classic shoes that are more practical with an emphasis on blacks and browns, with muted colors, simple lines and less embellishments (and more conservative pricing) in anticipation of less-adventurous consumers.

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Chapter 6 Marketing Outreach

Recession Time to Engage Loyal Consumers

Given a recession, a footwear marketer’s first instinct may be to cut costs on outreach and innovation, but such cuts can do more harm than good. Rather, marketers should see it as a time of opportunity to re-evaluate their brand strategies and re-connect with core consumers. In a panel moderated by Footwear News Editorial Director Michael Atmore for the Council of Fashion Designers of America programs designer Vince Camuto commented on the difficulties posed by the current economy "I expect next year to be our best year. It's a wake-up call to the industry, but it's also a great opportunity to work on your product, reorganize and reinvent yourself." (Footwear News, December 15, 2008)

Research shows cost-cutting can undermine a marketer’s long-term business strategy. For

example, data from the British study “Profit Impact of Market Strategy” revealed that over the past 30 years, companies that spent more on innovation during downturns saw returns on capital employed rise 23.8% during recovery times, while those that limited spending only saw gains of 0.6%. (Ad Age, February 25, 2008)

By not communicating with consumers (and employees and investors, for that matter), brands

and products risk alienating losing them. It is key to remain visible. Speed is also of the essence and the faster marketers can roll out new marketing during a recession, the better. In order to do this, marketers need to be organized, focused and driven.

Integration Important as Media Preferences Shift

It will be increasingly important to integrate marketing activity with a unified idea that is expressed through multiple outreach formats—especially to build relationships with younger consumers who are more likely to play a video game than watch television, and read a blog rather than a magazine. Classic advertising methods are less and less effective as the advertising marketplace has become more fragmented and the consumer audience for each individual media information source has shrunk and dispersed due to the varied choices.

A mixture of TV, print and out of home, plus emerging media and guerilla tactics, should be part of any large-scale plan. A study conducted by the National Retail Federation and

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BIGResearch found that emerging media forms of communication such as online video-game ads, blogs and text messages are gaining influence with consumers. "As new technology places itself on the market, [it] is diverting attention from the typical newspaper and magazine advertisements," said Pamela Goodfellow, Senior Analyst at BIGResearch. "It's up to retailers to be nimble in knowing what the latest and greatest is to reach their customers." (AdAge.com, November 20, 2008)

Jimmy Choo Takes It Down a Notch

Luxury shoemaker Jimmy Choo isn’t standing idly by waiting for the recession to end. Instead, the brand has launched an aggressive youth-targeted, buzz-building initiative to fuel excitement in a difficult economy. In June 2009, Jimmy grabbed attention announcing a partnership with retailer H&M for a limited-edition collection of shoes (price points for most shoes at $55 to $138), accessories, and ready-to-wear items due in stores in November 2009.

Although it is a one-time event separate from main Jimmy Choo line, the experimentation

with new categories for H&M is an interesting tactic in youth outreach, building long-term brand association. Jimmy Choo is also prepping to debut Choo 24/7 for spring 2010. Separate from the main spring collection, it will feature updated versions of favorite styles in a variety of colors, materials and heel heights. ��“Our strategy has always been about balancing icons and innovation,” CEO, Josh Schulman said. “We see Choo 24/7 as a great way to hero the iconic products along cutting-edge fashion.” In support of the launch, the company plans an extensive marketing push for January 2010. With this endeavor, coupled with the H&M collaboration and its Project PEP charitable initiative, the company hopes to differentiate itself. “This is an integrated strategy,” said Schulman. “It’s very important that we remain close to our customers and potential customers. Now is the time to take market share.” (Footwear News, June 22 2009)

More Strategies to Reach Price Conscious Consumers

According to the 17th semi-annual Piper Jaffray "Taking Stock With Teens" survey, teen (median age of 16.7 years) spending on clothes was down 19%. However, they were spending more on shoes with a nine percent increase!

"Footwear posted the strongest year-over-year and sequential results at a four percent and 21

percent gain respectively," the Minneapolis-based brokerage firm said in the report. "An indication that the strong footwear cycle, particularly relative to the weakness in apparel,

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continues for the youth demographic." The company added, "Teens and their parents are still buying new clothes, footwear and accessories, but are more selective and increasingly price-conscious. This will force retailers to discount prices and offer unique promotions to keep a steady flow of spending until the economy improves."

Virtual Marketing and Etail Make Most of Recession Dollars

Of course, not every player has the money for the big branding efforts. Virtual marketing and etailing have emerged as a simple way for smaller and emerging footwear players to make their products directly available to consumers and in a fiscally problematic time makes the most out of limited financial resources.

More People Cocooning and Online in Recession

Online outreach is also an interesting option in a recession as it may be the most opportune way to reach out to cocooning consumers. The instinct to cocoon during difficult times makes it more difficult for marketers to drive consumers to brick and mortar retail. To drive traffic, footwear players are rolling out more Internet-only exclusives.

A survey released in 2008 by Prospectiv, a provider of online customer acquisition solutions,

suggests that the Internet is the place to be, or to shop rather, and do all things pertaining to shopping during the economic downturn. According to the survey, 84% of respondents said they had changed their shopping habits due to concerns about the recession, and for the majority (64%), this change meant logging on to conduct more research to compare products and brands online.

In a panel moderated by Footwear News Editorial Director Michael Atmore, part two in a

series of Council of Fashion Designers of America programs to benefit the organization's Business Service Network, designer Tory Burch was optimistic about the potential of e-commerce for her brand. "Many people don't want to be seen shopping, and the Web is an alternative to that," she said. (Footwear News, December 15, 2008)

All the Simplicity of Email

With all the capabilities of new technologies, the power of a simple email campaign is oft forgotten. Online newsletters such as DailyCandy, an insider’s guide to what’s hot, new and undiscovered—from fashion and style to gadgets and travel, with a sister website, both predominantly for women, or similarly Thrillist for men, are an easy and fun way to blast

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your market message or new product introduction. The voice of these emails are quirky and fun attention-grabbers.

An email blast from Thrillist in June 2009 for Del Toro shoes read:

“Too often, enjoying leisure activities means enduring terribly un-

leisurely acts, like taking three flights to chill on a European beach, or hacking off your toe with pill cutters just to get the finest pain pills to cut with them. For shoes from guys whose respect for their leisure facilitates yours, Del Toro.

DTs are the brainchild of two Palm Beach prep school buddies who

dreamt of celebrating graduation by kickin' back, smoking cigars, and wearing velvet shoes with their school emblem on them, until realizing they take nine months to make, and they'd actually have to get jobs to pay for them, and said screw that, let's do it ourselves; they now make velvet Prince Albert slippers normally worn with tuxes, interpret them as more casual loafers, and trick 'em out with emblems and custom monograms/images.

All shoes are made in Spain with leather soles and heels, and come

in either black, navy, or forest green velvet with black trim; you can go clean or choose from an array of emblems like skull & crossbones, palm trees, soccer players, an old-timey bike with a huge front wheel, or the U of M "U" logo or its pissed-off Ibis -- though it’s unclear whether he's upset because the 'Canes stink, or your feet do. To go full custom, either input a monogram (after choosing velvet color, thread color, and font you desire), or upload any image (i.e., family crest, martini olive, your frat's initials); once digitized, DT will email you a shot of what the embroidered version will look like to make sure everything's good, then proceed with production, and in 1/3 the time of other custom loafer-makers, you'll be the only kid on the block with John Larroquette-face shoes.

As DT just launched the custom site, it'll soon be adding further

customization options like trim color in addition to new velvet colors, more schools, (e.g., Ivies and ACC heavyweights), and the

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option to have shoes made in whatever fabric you want -- pick one that can stand up to the Aegean Sea as you lay heavily sedated in the surf.

Customize your velvet loafers at BuyDelToro.com”

Make Use of Alternative Advertising Media

While traditional mass-marketing vehicles still hold the most sway, a study conducted by the National Retail Federation and BIG Research found that alternative marketing outreach through online video-game ads, blogs and text messages are gaining influence overall with consumers. Retail ad inserts (traditional circulars and multi-advertiser coupon packages) are the most influential in clothing purchases, at 33% of consumers citing them, followed by magazines at 27%, newspapers at 23%, and broadcast TV at 21%. Text messages influence three percent of clothing purchases, but jumps to six percent among the key target market of 18- to 34-year-olds. Product placement is also particularly effective among the 18- to 34-year-old demographic—16% said it impacted a clothing purchase. (Ad Age, November 20, 2008)

A May 2009 survey by the Association of National Advertisers found that two-thirds of

marketers surveyed plan to hike media budgets when the recession ends, with hikes in social media and experimental budgets a priority.

Alternative Media Increasingly Important, Especially Among the Young

For many footwear marketers, old-school television, print, or radio advertising may not be viable or even necessary, as consumers receive information in a totally different manner than they did 20 or even 10 years ago. And there are many exciting, alternative options in an age of evolving media consumption where new consumer tools are being constantly developed. Alternative media interaction is increasingly the best way to target people, particularly young people, directly. The outreach programs that have long-term impact will recognize and adapt to the changing information, entertainment and media consumption habits of young consumers.

For example, marketers can spread the brand love by allowing consumers to embed brands on their profiles with widgets, and they can also build their own social networks. Social interaction websites and blogs, in particular, seem to provide tailor-made forums for

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conversations, particularly around fashion, which can involve personal connections, and word-of-mouth brand building.

The Puma Past Masher

In January 2009, Puma launched "Puma Past Masher", a Web application that lets visitors upload a personal photo and mash it up with fashion from previous eras to commemorate the brand's 60th birthday. Mash up options included 225 hairstyles, tops and accessories, which allow 45 million possible combinations. Notes and comments on each look can be added to the custom-designed image and those images can then be exported to Facebook and Flickr. The application, no longer up, generated tremendous popular response in the blogosphere.

Behavioral Targeting in Diverse Consumer Market

While alternative online tactics such as social networking are terrific at building buzz, utilizing an increasingly popular online advertising strategy—behavioral targeting—may be a better way to reach consumers and directly drive sales from key consumers.

Experts note that search-related ads sponsored by links, on Google or Yahoo! for example,

are the largest growth sector, but behavioral targeting is a much more pro-active approach. Behavioral targeting occurs when marketers analyze web users’ online activities to figure out who is most likely to be interested in its product, which enables them to place ads on whatever sites those consumers are visiting. For example, behavioral segments important to the footwear industry, such as “fashion-interested,” “outdoor sports enthusiast” or “soccer mom,” would be based on where the user has gone and/or what they have done on various web pages.

Of course, there is a privacy issue with behavioral targeting, but young consumers—or more

specifically Gen Y—who have been raised in an information culture, are exceedingly comfortable with everyone knowing their business! These consumers are expected will likely have no problem with this type of consumer profiling. In fact, they will expect marketers to know their preferences and market accordingly by creating evocative high-end brand widgets to customize social networking pages, sending appropriate coupons to their cell phones when they pass a Payless or a Skechers, and basically inserting their brands into daily life and communication.

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Word-of-Mouth: Added-Value for Marketers and Consumers

Before the emergence of user reviews and comparison sites such as epinions.com, a few unhappy customers couldn't do much damage. Now their unfiltered rants can be read by millions of prospects. And they could have a bigger effect on consumers who may already be tilting risk-averse. Those consumers might say, "Why take a chance on an expensive pair of shoes when those two people had a bad experience?"

Of course consumer opinion can also tilt in a positive direction. For example, the Princess Poochie blog, shoedaydreams.com, is devoted primarily to shoes, including discussions on shoes Princess Poochie owns, shoes she wants, shoes she just bought or favorite online discoveries. Shoe offers alerts to consumers with champagne tastes on beer budgets. For those longing for white tailored Gucci pumps, Poochie's blog points to a similar style, available in four colors at Target. She also points out recent introductions (Christian Louboutin’s Estoteri, $995 at Barney’s!) and to sales (Finnish designer, Minna Parikka 20% - 50% off!)

Footwear Clubs Breed WOM

Footwear communities abound—online and offline. ShoeTube.tv, an online shoe community for shoe lovers, offers video features such as "The Daily Shoe" and "Shop Til You Drop," along with features on shoe fashions with user-generated videos is already attracting advertisers or the The Hello Stiletto Shoe Club, a group with 16 chapters nationwide and a website at www.shoeclub.us, offers online social networking and outings every two months such as an exclusive shopping trips to the likes of DSW or to high-end stores like Neiman Marcus. The club also sponsors "Best in Shoe" competitions, where women strut their best shoes along a pink carpet at local events.

Social Networking to Play Big Part in WOM

More and more marketers are using word-of-mouth (WOM) as a key part of their marketing and brand strategies, which may be particularly meaningful to footwear marketers. It’s easy and inexpensive, especially with the growth in web communications and communities, for marketers to offer ample opportunity to interact with real consumers. For example, Facebook already has in place pages and pages of special Footwear-interested groups, both corporate and consumer. One of the most popular is Nike, Inc.’s Facebook page with nearly 1.5 million fans. Toms Shoes, the company that gives a pair of shoes to a child for each pair it sells, had more than 96,000 fans.

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Proof That WOM Works

More importantly, WOM is accepted and trusted by consumers. A 2007 survey by ACNielsen found that 78% of respondents viewed recommendations from other consumers as trustworthy. That compares with 63% for newspaper ads, the second most-trusted medium, and just 18% for text ads on mobile phones. (Seattle Post-Intelligencer, December 24, 2007)

Another study showed that family and friend recommendations may supercede other types of

consumer marketing when it comes to influencing purchases, according to data released in April 2008 from ZenithOptimedia's Touchpoints ROI Tracker, a comprehensive project comprising over 300,000 interviews across 34 countries and covering more than 4,000 brands in 126 product and service categories. Consumer outreach tools, such as magazine ads, Internet banner ads and WOM, were each given a "contact clout factor," a number on a scale of 1 to 100 that indicates the relative influence of the tool on purchasing. WOM recommendations from family and friends led the pack with an average score of 84. TV ads and Internet search were next, with an average score of 69 and 67, followed by magazine ads at 60, newspaper ads at 55, outdoor ads at 45, radio ads at 42, and Internet banner ads at 41. In terms of branding, however, TV is still the leading medium with the average brand advertising on TV recalled by 22% of category consumers. (Ad Age, April 9, 2008)

Don’t Forget the Human Touch

It is important to note that actual human contact may be a crucial part in making the most of WOM initiatives. A spring 2008 study by The Keller Fay Group, a market research consultancy specializing in word of mouth, and media agency OMD found that WOM expressed face-to-face and by phone is viewed as highly "credible" more often than online talk (59% vs. 49%), and face-to-face WOM is more likely than online to lead to strong purchase intent (50% vs. 43%). This may be particularly relevant to a product that is especially personal and needs fitting.

Programs, such as Kigo’s Friends of Kigo influencer program, tap the human element to get

the word out. According to Kigo co-founder Rachelle Kuramato, instead of throwing money at less targeted approaches, they have tapped active, gregarious women in certain markets (New York City, Chicago, San Francisco and Atlanta), including a PTA President, a lawyer, and an owner of a Pilates and Yoga studio, to wear Kigos and share their positive experiences with the portable comfort shoe and build buzz for the July 2009 website launch.

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Product Placement Opportunities Abound

Non-traditional strategies and tactics will begin playing larger roles in getting product messages out to consumers, as millions of TiVo/DVR users tune out commercials and ignore print media. Luckily, many footwear marketers are already skilled in alternative outreach programs, particularly product placement.

Marketers should explore more placement opportunities within their own cultures for

opportunities—notably fashion and health. The dominance of reality fashion and health television programming is astounding. No longer relegated to daytime on a couple of cable networks, the small screen offers options from The Doctors on CBS to Dr. Oz (of Oprah fame) on Discovery Health, or from The Fashion Show on Bravo to Project Runway on Lifetime. It is an ever-growing list of television product placement opportunity—including a soon-to-be seen competition-based shoe design reality television series featuring fledgling shoe designers, à la Project Runway, Sole Perspective. The program hopes to foster awareness and appreciation among consumers and benefit the footwear industry through the use of corporate driven marketing challenges.

Nike Active in Broadcast Placement

Neilsen Product Placement Service found that during the first quarter of 2008, apparel placements ranked number one on both broadcast and cable with 4,493 and 26,063 placements, respectively. Nike ranked number six in the period with 575 placements on prime-time broadcast network television with 575 placements (versus Coca-Cola with 2,990 placements), and the only footwear brand in the top ten for number of placements. (The Center for Media Research Brief, September 26, 2008)

Reliance on Sports Icons Shifting More to Celebrity

Not surprisingly, athletic footwear and sports stars are an easy marketing mix and companies are continually aligning themselves with top sporting professionals and events from edgier X-Game mavens to old standards like football and tennis icons to promote a performance message. It’s a no brainer.

But with the increasing number of athletic footwear marketers competing for share points, the

focus is on further differentiating brands with lifestyle benefits rather than solely on functional performance benefits. The main reason for the shift is the influx of non-sport specific, casual sneakers for everyday use. With the shift toward trendy everyday athletic

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footwear, marketers are now more likely to sign endorsement or licensing contract with a high-profile music or television star or a health and wellness guru.

What Do Kelly Ripa and Eddie Van Halen Have in Common?

While there will always be a place for the professional athlete in promoting a brand (where would Nike be without it’s young Olympians?!), non-sporting celebrities can better speak to a broader emotional universe of benefits and dreams while sports stars live more in the technological and performance benefits of a shoe. This is leading to relationships and introductions from hitherto unknown regions. For example, 2008 saw talk show host Kelly Ripa team with Ryka to co-design a footwear and apparel collection and act as spokesperson for the brand in its print and online campaign.

In 2009, Eddie Van Halen is launching a line of high and low-top sneakers, similar to the

ones he sports onstage with the red, white and black stripes that mimic the design of his Frankenstein guitar. The shoes, priced at $54 and $59, will be sold at EVHgear.com and select department and specialty stores. In a side note, ELVH Inc., Van Halen’s company, has filed a cause of action for copyright infringement in Los Angeles Federal District Court against Nike. ELVH alleges that a certain Nike Dunk Low design style infringes the copyright held since 2001 on the red-white-and-black pattern popularized on his guitar.

Of course, if the sports star can also offer more than just performance, all the better. Nike

tapped sports star and environmentalist Steve Nash of the Phoenix Suns to launch the new Nike Zoom MVP Trash Talk in on Earth Day 2009. The classic hoop shoe is still designed for athletic performance but is made using scrap materials generated in the footwear manufacturing process and packaged in a recycled fiber shoebox.

Appropriate and Authentic Celebrity Relationships

Non-athletic footwear brands are no stranger to the power of celebrity. Who can forget the boost Oprah gave Uggs in 2007 when she included the boots on her list of favorite things? Celebrity endorsement can go a long way in building buzz. Even a side comment, from a TV or movie star on a red carpet interview can generate intense interest in a shoe.

Developing long-term marketing relationships with celebrities is a fun and functional way of

reaching consumers through a variety of media, whether through a licensing deal, programming sponsorship, product placement or a major advertising push comprised of a multi-layered plan. These cannot be a simple paid endorsement to be successful as savvy

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consumers can easily sniff out falsity in marketing. To be successful, the celebrities, whether they are high-end designers, fitness experts, musicians, or actors, must share qualities with the footwear product itself.

The benefits of authentic arrangements include: growth potential, brand recognition, research

and innovation opportunities, and new or emerging market opportunities. Luckily, many celebrities have immediate synergies as part of the greater fashion and trend juggernaut and are already perceived as authentic.

Payless and Summer Rayne Oakes Go Green

Licensing, co-branding, and sponsorships with celebrities provide opportunities for meaningful brand impressions among consumers especially in the face of media and product clutter proliferation and dwindling advertising effectiveness.

For example, in November 2008, Payless ShoeSource launched the first-ever affordable green

footwear line with the help of Summer Rayne Oakes, Discovery Network's Planet Green fashion and beauty expert and author of Style, Naturally: The Savvy Shopping Guide to Sustainable Fashion & Beauty (Chronicle Books, February 2009). The new brand, Zoe and Zac, at $30 a pair, is a key part of Payless' strategy to bring well-recognized, fresh, and innovative new brands to every consumer at a good price. Oakes, as Payless’ “eco-consultant,” will be involved in seasonal line reviews focusing on materials use and aesthetics for the product, packaging, and in-store materials, as well as participate in other marketing activities for the brand.

Candie’s Taps Britney to Connect with Young Consumers

In an effort to connect with young consumers, in May 2009, Kohl's and Candie's announced an exclusive marketing partnership with pop tart Britney Spears. They made a splash, running a one-off full-size poster in the April 15 edition of Us Weekly to launch the campaign. The hard-to-ignore poster features Spears in a pink bathing suit and black patent leather heels, against a wall of pink cotton candy.

Collage-style print ads followed, featuring footwear to accessories tout "Britney Spears for

Candie's Only at Kohl's" spelled out in diamonds. TV spot with Spears are scheduled for summer 2009, promoting the back-to-school line.

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If the License Fits, Wear It

The benefits of well-crafted licensed or co-branded footwear line are tremendous, including growth potential, brand recognition, research and innovation opportunities, and new or emerging market opportunities. A well-crafted licensing arrangement can turn a mundane product into a much more meaningful consumer lifestyle statement.

Footwear manufacturers are well-entrenched in the licensing business. Companies such as

Brown Shoes and Nike (both named among the top global licensees in the footwear category for 2008 by License! Global magazine) work with several licensed brands. Nike licenses include CLC, MLB, NCAA, USA Basketball, Bowl Championship Series, Haddad Brands, Manchester United, LRG, U.S.A. Olympics and Brown’s licenses include Via Spiga, Franco Sarto, Barbie, Winnie the Pooh, Naturalizer, Fergie, Reba McEntire, and Carlos by Carlos Santana. (See Table 6-1 for other footwear companies lauded by License! Global for 2008)

Both the licensor and licensee must consider multi-layered marketing questions when

evaluating a potential relationship. The most important question to ask first is whether the product or license fits with and benefits business goals, image and attributes. Other key questions include:

• Can the product or property expand my business?

• Who is the target audience?

• What is the shelf life of this partnership?

• Will the partner be able to uphold the agreement?

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Table 6-1 License! Global Selected Top Global Licensees in the Footwear Category, 2008

Company License Examples Primary Business

ACI International Dreamworks, Perry Ellis, Hang Ten, Margaritaville, Mattel, Nickelodeon, Ocean Pacific, Original Penguins, Shaq, Warner Bros.

Men's, women's and children's footwear

Adidas

David Beckham, L.A.Galaxy, National Basketball Association, Mexico Football Federation, Y-3 Yojo Yamamoto, Stella MacCartney and Diesel Denim

Athletic footwear, apparel and accessories

B Brands Full Circle, Morgan Footwear design & sourcing

Brown Shoe Company

Via Spiga, Franco Sarto, Barbie, Winnie the Pooh, Fergie, Reba McEntire Footwear

Leomil Group

Spider-Man, Strawberry Shortcake, Dora the Explorer, SpongeBob SquarePants, The Smurfs, Pucca, The Dog, The Cat, Hannah Montana, Camp Rock, Disney Princesses, Cars, Roary the Racing Car, Bob the Builder, Thomas & Friends, Handy Manny, Go, Diego, Go!, Pokemon, Sheepworld, Sugar & Babe, Disney Cuties, Le Petit Prince, Jaja, Marvel Extreme, Smiley, The Simpsons, Miffy, Iron Man, all Marvel properties

Footwear and apparel

Nike USA CLC, MLB, NCAA, USA Basketball, Bowl Championship Series, Haddad Brands, Manchester United, LRG, U.S.A. Olympics

Footwear, apparel, sports equipment

Pentland Brands Lacoste, worldwide license for footwear; Ted Baker, worldwide license for footwear; Kickers, U.K. license for footwear and clothing

Footwear and clothing in the sports, outdoor and fashion sectors

SGCompanies (SG Footwear, SG Messer and SGI Apparel)

Dockers, Gold Toe, Izod, Panama Jack, Sealy Posturepedic, The Beatles, Ben 10, Gecko, Madagascar, Mongoose, Monster Jam, Planet Earth, Sesame Street, The Simpsons, Wow! Wow! Wubbzy!

Footwear and apparel

Source: License! Global November 2008. Compiled by Packaged Facts.

Do-Good Marketing

Research suggests that most successful product strategies will offer consumers not just a single functional benefit, but also higher-level emotional benefits which can be delivered effectively through cause marketing. According to the 2008 Cone Cause Evolution Survey, 26% of consumers expect companies to give more support to causes and nonprofits in an economic downturn, while 52% expect companies to maintain existing programs. The survey also found that 79% of U.S. consumers would switch from one brand to another if the other

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brand were associated with a good cause. Although this is down from 87% in 2007—probably due to economic concerns—it is still a significantly high percentage. "Consumers are absolutely looking for value, meaning that it's a quality product and fairly priced," said Carol Cone, Founder and Chairman. "If they can also have an easy and inexpensive way to help with a cause that's relevant to them, it adds value to the shopping experience." (Ad Age, October 13, 2008)

Do-Good Marketing Part of a Whole Brand’s Image

According to Deidre Sullivan, President of SnapDragon Consultants, a brand insights firm based in New York City, a holistic marketing approach has even more profound significance and opportunity for marketers. She said in an interview, “The brand relationship in the future will become more and more dimensional and not just center on the act of buying. Consumers want to know who they are dealing with and what their values are. Is this a responsible brand? Is this a brand I can trust? They will look to their brand for education and leadership on environmental issues. They don’t expect brands to be perfect. But they do expect brands to try hard and make some sacrifices themselves.”

Timberland Taps Double Benefit

Companies and brands that support good causes are able to tap a double benefit (functional and emotional) which may be more motivating to consumers—especially if the cause ties in well and is meaningful to the core consumer market; for example, in the spring of 2009, Timberland called for gently used shoe donations in exchange for a 10% discount off its products. The promotion, in partnership with footwear charity Soles4Souls, starts on Earth Day, and shoppers can bring old shoes into 68 Timberland stores throughout the U.S. Timberland will promote the program with online banners, in-store merchandising and public relations efforts.

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Chapter 7 The Footwear Consumer

Note on Experian Simmons Market Research Bureau Consumer Data

The following discussion of consumer demographics relies largely on data compiled by Experian Simmons Market Research Bureau, based in New York City. Each year, Experian Simmons surveys a large sample of consumers about their buying habits. The following discussion derives from the winter 2008/09 consumer survey, which is based on more than 20,000 households. By surveying a large sample of households, selected to represent a statistically accurate cross-section of the U.S. population, Experian Simmons is able to construct detailed demographic profiles across markets and categories.

In addition, Experian Simmons has developed an index system to calibrate the usage of a

product by a given segment of the population, compared with usage by the population as a whole. If 10% of all survey respondents report use of a product, for example, the baseline index of 100 is set to that 10% rate. If 20% of respondents age 18–24 report use, this group would have an index of 200, being twice as likely to use the product. Generally speaking, Packaged Facts considers an index of 110 or higher to be significant, or an “indicator,” while classifying demographic segments with an index of 80 or lower as “resisters.” This discussion treats as “not significant” any indices falling between these two levels, or any findings that Simmons has classified as statistically unreliable.

Using Experian Simmons’ database, Packaged Facts also conducted its own online poll of

2,600 adults in February 2009 to address selected consumer attitudinal statements.

Note on BIGresearch Data

This Packaged Facts discussion also utilizes data from BIGresearch. BIGresearch conducts monthly online surveys of 8,000+ consumers and publishes its findings in the Consumer Intentions & Actions Survey (CIA). These are online (opt-in email) surveys; however, BIGresearch does weight samples so they are representative of the overall population by gender, age (adults age 18+), income, and geography. Despite the limitations of online

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surveys, BIGresearch’s large sample of 8,000+ puts these data in a different class than quick online surveys of 500 or 1,000 respondents.

The CIA survey focuses on what consumers are currently buying and where they are buying

it, and also on their shopping/retail intentions for the short-term future—the next 4 weeks, the next 3 months. Thus, according to BIG, “Unlike indicators based on past performance, this data brings intelligence on where the retail consumer is going, their intentions and actions.” However, by stringing together 12 or 36 or 60 months’ worth of BIG data, Packaged Facts can provide a very nuanced picture of consumer trends and shifts—including consumer responses to sudden or short-term dynamics.

Men’s Athletic Footwear Penetration Levels Highest at 20%

According to Experian Simmons, the two major men’s footwear segments, athletic and non-athletic, both saw decreased levels of penetration in the past years in terms of footwear bought in the past twelve months. Athletic shoes dropped two points since 2007 to 20% of the population purchasing in 2009, while non-athletic shoes dropped three points since 2006 to 17% in 2009. 2004 and 2005 saw the highest levels in usage penetration for the six year period for both segments, at 23% for athletic and 20% for non-athletic, as consumers recovered from the faltering economy in the early years of the new millennium.

Boots and slippers also dropped from the highs of 2004—each dropping a point by 2009 and settling at six percent and eight percent, respectively. The 2004 levels could not be maintained as America rolled into another recessionary period—one likely to have greater staying power. Don’t expect penetration levels to bounce back quickly in the coming years as consumers may continue to put off new footwear purchases, in lieu of a visit to the local cobbler.

Table 7-1 Total Consumer Penetration Levels for Men’s Footwear Bought in the Past 12 Months, 2004-2009 (%)

Men’s Footwear Bought in the Last 12 Months

Fall 2004

Fall 2005

Fall 2006

Fall 2007

Fall 2008

Winter 2009

Athletic Shoes 23% 22% 22% 22% 21% 20% Non-Athletic Shoes 20 18 19 18 17 17 Slippers 9 8 8 8 8 8 Boots (Excluding Work Boots) 7 7 7 7 5 6

Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2008/09. This material is used with permission.

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Figure 7–1 Total Consumer Penetration Levels for Men’s Footwear Bought in the Past 12 Months, 2004-2009 (%)

Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2008/09. This material is used with permission.

Women’s Non-Athletic Footwear Penetration Levels Highest at 23%

Same story, different sex. Women’s footwear purchase penetration levels showed a similar trend to men’s. Again the two largest categories, athletic and non-athletic, saw decreased penetration with a steady decline since 2004. For women, the largest segment, non-athletic shoes, fell from 26% in 2004 to 23% in 2009. Athletic shoes fell from 20% in 2004 to 17% in 2009. Slippers followed the pattern with a three point drop by 2009. It is likely that come the fall 2009 edition of Simmons data will show a decline.

0%

5%

10%

15%

20%

25%

Athletic Shoes Non-Athletic Shoes Slippers Boots (ExcludingWork Boots)

2004 2005 2006 2007 2008 2009

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Women’s boot purchases did not follow the same pattern as men’s. However, the current

uptick to eight percent in winter 2009 from seven percent in fall 2008 for women’s boots is likely due to heavier purchasing during the snow and sleet months.

Table 7-2 Consumer Penetration Levels for Women’s Footwear Bought in the Past 12 Months, 2004-2009 (%)

Women’s Footwear Bought in the Last 12 Months

Fall 2004

Fall 2005

Fall 2006

Fall 2007

Fall 2008

Winter 2009

Non-athletic Shoes 26% 25% 25% 25% 24% 23% Athletic Shoes 20 18 18 18 18 17 Slippers 15 14 14 14 11 12 Boots (Excluding Work Boots) 9 8 9 9 7 8

Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2008/09. This material is used with permission.

Figure 7–2 Total Consumer Penetration Levels for Women’s Footwear Bought in the Past 12 Months, 2004-2009 (%)

Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2008/09. This material is used with permission.

0%

5%

10%

15%

20%

25%

30%

Non-athletic Shoes Athletic Shoes Slippers Boots (Excluding WorkBoots)

2004 2005 2006 2007 2008 2009

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Penetration When Purchasing for the Opposite Sex Typical

When purchasing footwear for the opposite sex, women showed a greater propensity to shop for men, while men showed single-digit inclination to shop for women. For example, 14% of women have shopped for men’s athletic shoes and 11% have shopped for men’s non-athletic shoes, while only three percent on men have shopped for women’s athletic shoes and four percent for women’s non-athletic shoes.

Table 7-3 Consumer Penetration Levels for Men’s and Women’s Footwear Bought in the Past 12 Months by Member of the Opposite Sex, 2004-2009 (%)

Men’s Footwear Women’s Footwear Athletic

Shoes Non-Athletic Boots Slippers Athletic Shoes Non-Athletic Boots Slippers

Men’s Purchase 28% 23% 8% 8% 3% 4% 1% 2%

Women’s Purchase

14 11 4 8 32 42 14 22

Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2008/09. This material is used with permission.

Top Footwear Segment Consumer Demographics by Sex

Male and Female Athletic Shoe Purchasers Characteristics Upwardly Mobile

According to Experian Simmons data, men and women who purchased athletic footwear in the past twelve months were more likely than average to pop for demographics characteristic of the upwardly mobile and the family-oriented. Men and women age 25-44 showed above average interest and both popped for higher education, full-time employment, a variety of white-collar jobs (particularly professional/technical at M139 and W134), incomes upward of $75,000, and two-income households. These purchasers were more likely than average to have children and to live in mid-value homes.

Certain characteristics popped for men that indicated another consumer profile—youth, such as those age 18-24 (116) and those living rent-free (129). Another indicator toward youth is in a comparison with women, who pop for marriage (111), while men do not show an above average likelihood. Women, while popping largely among white-collar work, also popped for labor (111).

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Table 7-4 Demographic Characteristics of Male Athletic Shoe Purchasers, 2009 (index)

Male Characteristics Index Age 18-24 116 Age 25-34 127 Age 35-44 122 Undergraduate College Degree 121 Graduate Degree 116 Employed Full-Time (30+ Hours) 111 Occupation: Management/Financial Operations 113 Occupation: Professional/Technical 139 Occupation: Sales 129 Occupation: Office & Administrative Support 127 Employed Adults in HH: Two 117 Employed Adults in HH: Three or More 110 Household Income: $75K-$99K 113 Household Income: $100K-$149K 130 Household Income: $150K+ 129 # of People in HH: Three-Four 114 # of Children in HH: One or More 111 # of Children in HH: Two 115 Age of Children in HH: 6-11 114 Age of Children in HH: 12-17 118 Kind of Residence: Owned Condo or Co-Op 122 Kind of Residence: Live Rent Free 129 Value of Residence: $200K-$299K 112 Value of Residence: $300K-$499K 120 Value of Residence: $500K-$750K 118 Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2008/09. This material is used with permission.

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Table 7-5 Demographic Characteristics of Female Athletic Shoe Purchasers, 2009 (index)

Female Characteristics Index Age 25-34 117 Age 35-44 126 Some College 114 Undergraduate College Degree (Only) 122 Graduate Degree 132 Employed Full-Time (30+ Hours) 120 Occupation: Management/Financial Operations 126 Occupation: Professional/Technical 134 Occupation: Labor 111 Employed Adults in HH: Two 121 Household Income: $75K-$99K 122 Household Income: $100K-$149K 135 Household Income: $150K+ 135 Presently Married 111 # of People in HH: Three-Four 113 # of Children in HH: One 116 # of Children in HH: Two 119 Age of Children in HH: 6-11 113 Age of Children in HH: 12-17 127 Kind of Residence: Rented House 112 Value of Residence: $200K-$299K 115 Value of Residence: $300K-$499K 123 Value of Residence: $750K-$999K 112 (Alternate) Value of Residence: $750K+ 116 Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2008/09. This material is used with permission.

Male and Female Non-Athletic Shoe Purchasers Characteristics Also Upwardly Mobile

Non-athletic shoe purchasers were similar in spirit to athletic shoe purchasers: educated, white-collar, two-income households, households with children, and home ownership. But with the non-athletic shoe purchasers, home values and income levels skewed higher, upwards of $500,000 and $100,000, respectively. There was also less indication of age as an above average indicator.

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Table 7-6 Demographic Characteristics of Male Non-Athletic Shoe Purchasers, 2009 (index)

Male Characteristics Index Age 25-34 117 Undergraduate College Degree 132 Graduate Degree 117 Employed Full-Time (30+ Hours) 113 Employed Part-Time (<30 Hours) 112 Occupation: Management/Financial Operations 126 Occupation: Professional/Technical 145 Occupation: Sales 132 Occupation: Office & Administrative Support 133 Employed Adults in HH: Two 115 Household Income: $100K-$149K 111 Household Income: $150K+ 126 # of Children in HH: Two 112 Age of Children in HH: 6-11 110 Kind of Residence: Owned Condo or Co-Op 119 Value of Residence: $500K-$750K 123 Value of Residence: $750K+ 131 Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2008/09. This material is used with permission.

Table 7-7 Demographic Characteristics of Female Non-Athletic Shoe Purchasers, 2009 (index)

Female Characteristics Index Undergraduate College Degree 121 Graduate Degree 128 Employed Full-Time (30+ Hours) 115 Occupation: Management/Financial Operations 126 Occupation: Professional/Technical 125 Employed Adults in HH: Two 114 Household Income: $75K-$99K 113 Household Income: $100K-$149K 119 Household Income: $150K+ 127 Kind of Residence: Owned Condo or Co-Op 127 Value of Residence: $200K-$299K 115 Value of Residence: $300K-$499K 114 Value of Residence: $500K-$750K 126 Value of Residence: $750K+ 113 Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2008/09. This material is used with permission.

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Male and Female Boot Purchasers Showed Dramatically Different Characteristics

For men, data suggested the profile of a young, blue-collar worker. Men who purchased boots in the past year were more likely than average to be young, age between 18-44, with 18-24 popping the highest at 126. Hispanics, those living in the central United States, those without a high school diploma, laborers, those sharing a household with other working adults, larger households, household with children, low-income earners, singles, and those living in rentals or low-value homes all popped as above average indicators. Purchasers of boots more useful in a blue-collar work environment clearly edge out any other male boot purchaser.

Women skew to the other end of the spectrum—those more likely than average to purchase a

fashion boot more suitable for a white-collar work environment and perhaps a snow boot (women living in the Northeast popped at 139!). Similar to earlier profiles, women were more likely than average to pop for demographics characteristic of the upwardly mobile and the family-oriented. Women age 18-44 showed above average interest. Women also popped for higher education, full-time employment, a variety of white-collar jobs, personal incomes upward of $40,000 (with $100,000 earners popping at 177), and two-income households. These purchasers were more likely than average to have children and to live in mid- and upper-value homes.

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Table 7-8 Demographic Characteristics of Male Boot Purchasers, 2009 (index)

Male Characteristics Index Age 18-24 126 Age 25-34 116 Age 35-44 113 Hispanic 123 Central 110 Non High School Grad 118 Employed Full-Time (30+ Hours) 110 Occupation: Labor 133 Employed Adults in HH: Three or More 130 Individual Employment Income: Under $20K 116 Individual Employment Income: $20K-$39K 127 Not Married 117 # of People in HH: Three-Four 110 # of People in HH: Five Or More 131 # of Adults in HH: Three or More 126 # of Children in HH: Three or More 155 Age of Children in HH: 6-11 127 Age of Children in HH: 12-17 135 Kind of Residence: Rented Apartment 115 Value of Residence: $100K-$199K 122 Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2008/09. This material is used with permission.

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Table 7-9 Demographic Characteristics of Female Boot Purchasers, 2009 (index)

Female Characteristics Index Age 18-24 145 Age 25-34 110 Age 35-44 136 Black (Non-Hispanic) 143 Northeast 139 Some College 121 Undergraduate College Degree 125 Graduate Degree 136 Employed Full-Time (30+ Hours) 125 Occupation: Management/Financial Operations 155 Occupation: Professional/Technical 121 Occupation: Sales 120 Occupation: Office & Administrative Support 128 Employed Adults in HH: Two 113 Employed Adults in HH: Three or More 117 Individual Employment Income: $40K-$59K 137 Individual Employment Income: $60K-$74K 114 Individual Employment Income: $75K-$99K 169 Individual Employment Income: $100K+ 177 # of People in HH: Three-Four 119 # of Adults in HH: Three or More 118 # of Children in HH: One 113 # of Children in HH: Two 118 Age of Children in HH: 6-11 124 Age of Children in HH: 12-17 119 Kind of Residence: Owned Condo or Co-Op 124 Value of Residence: $300K-$499K 132 Value of Residence: $500K-$750K 142 Value of Residence: $750K+ 139 Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2009. This material is used with permission.

Male and Female Boot Purchasers Showed Dramatically Different Characteristics

Slippers may be just the thing for those men working in boots all day, at least according to Experian Simmons data. There were striking similarities in men who purchase slippers to

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men who purchase boots, including above average indexes for Hispanics, those without a high school diploma, laborers, those sharing a household with other working adults, larger households, household with children, low-income earners, and those living in rentals. Age was less of a directive, although men age 25-34 popped at 120. Blacks also popped for above average use, as did men living in the Pacific and the Northeast. Apparently, slippers are hipper on the coasts!

Although slippers were also more popular than average for women on the coasts and for

Black women and among laborers, the women’s profile did diverge from men. For example, age, race and household income showed the shifts, with women age 65-74 popping at 111, Asian women at 114 and households earning $100,000 to $149,000 at 110.

Table 7-10 Demographic Characteristics of Male Slipper Purchasers, 2009 (index)

Male Characteristics Index Age 25-34 120 Hispanic 156 Black (Non-Hispanic) 153 Northeast 138 Pacific 118 Non High School Grad 125 Employed Part-Time (<30 Hours) 115 Occupation: Labor 118 Employed Adults in HH: Three or More 113 Household Income: Under $25K 117 Household Income: $25K-$49K 119 # of People in HH: Five Or More 125 # of Children in HH: Three or More 118 Age of Children in HH: 6-11 114 Age of Children in HH: 12-17 128 Kind of Residence: Rented House 123 Kind of Residence: Rented Apartment 149 Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2009. This material is used with permission.

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Table 7-11 Demographic Characteristics of Female Slipper Purchasers, 2009 (index)

Female Characteristics Index Age 65-74 111 Black (Non-Hispanic) 138 Asian (Non-Hispanic) 114 Northeast 118 Pacific 112 Occupation: Labor 116 Household Income: $100K-$149K 110 # of People in HH: Five Or More 114 # of Children in HH: Three or More 113 Age of Children in HH: 12-17 115 Kind of Residence: Owned Condo or Co-Op 113 Kind of Residence: Rented Apartment 112 Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2009. This material is used with permission.

Consumer Agreement with Select Attitudinal Statements

Packaged Facts conducted its own online research of 2,600 adults in February 2009 asking consumers what level of agreement they felt with five attitudinal statements related to footwear.

Surprise! Shoe Shopping a Favorite Pastime for Women

Consumers who “agreed a lot” with the statement “Shopping for shoes is a favorite pastime,” may not be surprising. Notable demographic groups more likely than average to agree with the statement included women from age 18-24, college students, those with incomes of $250,000 or more and those living on the Pacific coast.

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Table 7-12 Top Demographic Characteristics of Consumers who ‘Agree a Lot’ with the Statement: Shopping For Shoes is Favorite Pastime, 2009 (index)

Characteristics Index

Female 171

18 To 24 174

25 To 29 111

Not Married/Partnered 112

Current College Student 139

Undergraduate College Degree 111

Area In Which You Live: Urban 111

HH Income: $100,000 To $149,999 113

HHI: $150+ 132

HH Income: $250,000 Or More 187

Pacific Coast 124 Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2008/09. This material is used with permission.

Brand/Designer Important to Urbanites

Consumers who “agreed a lot” with the statement “Shoe Brand or Designer is Important,” were somewhat more directional. Again the data skewed to women age 18-24 (212), but also to women age 65 or older to a lesser degree (122). Other interesting dichotomies: current college students popped, but so did those with a doctoral degree; low household incomes popped, but so did high household incomes. This may reflect two-pronged interest: the young, broke and fabulous alongside the mature, rich and fabulous! Agreement with this statement also popped among renters, urbanites and those on the Pacific coast, all indicators of a more citified consumer.

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Table 7-13 Top Demographic Characteristics of Consumers who Agree a Lot with the Statement: Shoe Brand or Designer is Important, 2009 (index)

Characteristics Index

18 To 24 212

65+ 122

Not Married/Partnered 119

Employed Part-Time 113

Current College Student 144

Doctoral Degree 160

Residence: Rent The Residence 116

Area In Which You Live: Urban 133

HHI: $150+ 139

HH Income: $250,000 Or More 190

HHI: Under $20K 140

Pacific Coast 127 Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2009. This material is used with permission.

Fewer Purchases and Less Expensive Purchases Among the More Disenfranchised

Consumers who “agreed a lot” with the statements “I am Buying Fewer Shoes Because of the Economy,” and “I am Buying Less Expensive Shoes Because of the Economy,” see above average agreement among women, particularly among those age 30-34, and those who may not bring in large incomes such as students, homemakers, retirees, and the unemployed. These consumers popped for less education and lower incomes, and for living in rural areas and in the South.

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Table 7-14 Top Demographic Characteristics of Consumers who Agree a Lot with the Statement: I am Buying Fewer Shoes Because of the Economy, 2009 (index)

Characteristics Index

Female 119

18 To 24 111

30 To 34 121

35 To 39 113

Student/Homemaker/Retired/Not Employed 119

High School Diploma 125

Some College (Did Not Graduate) 118

Residence: Rent The Residence 110

Area In Which You Live: Rural 133

HHI: Under $20K 151

South 121 Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2008/09. This material is used with permission.

Table 7-15 Top Demographic Characteristics of Consumers who Agree a Lot with the Statement: I am Buying Less Expensive Shoes Because of the Economy, 2009 (index)

Characteristics Index

Female 115

30 To 34 121

40 To 44 111

Children Under 18 In HH 119

Employed Part-Time 127

Student/Homemaker/Retired/Not Employed 113

High School Diploma 126

Some College (Did Not Graduate) 121

Residence: Rent The Residence 111

Area In Which You Live: Rural 142

HHI: Under $20K 167

HHI: $20K-$39k 119

South 124 Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2008/09. This material is used with permission.

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Function over Form Skewed Older

Consumers who “agreed a lot” with the statement “In Buying Shoes, I Prioritize Function over Style,” created a much different profile. This was the only statement that showed above average agreement for older consumers, notably those age 60-64 indexing at 149 and for home ownership.

Table 7-16 Top Demographic Characteristics of Consumers who Agree a Lot with the Statement: In Buying Shoes, I Prioritize Function Over Style, 2009 (index)

Characteristics Index

45 To 49 121

50 To 54 130

55 To 59 140

60 To 64 149

65+ 138

Student/Homemaker/Retired/Not Employed 110

Some College (Did Not Graduate) 113

Doctoral Degree 110

Residence: Own The Residence 110

Area In Which You Live: Rural 111

HHI: Under $20K 118

Central 120

South 114 Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2009. This material is used with permission.

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Footwear Consumer at Retail

For Footwear, Consumers Shop Wal-Mart Most

According to data from BIGresearch, in the years 2006-2008, adult consumers at 30% in 2008, particularly women at 35% in 2008, shopped most often at specialty apparel establishments, which can include a wide range of shops from local mom and pop to high end boutiques. Discount stores and department stores follow with 18% and 17% in 2008. Since 2006 specialty apparel and department stores saw a slight increase in preference while discount stores saw a slight decrease.

While footwear still struggles to make inroads in etail, as most consumers want to sample the

wares first, there has been an uptick in preference since 2006, from one percent to three percent in 2008. Catalog penetration remained fairly stagnant however. Membership warehouse barely moved the needle.

Table 7-17 Consumer Penetration Levels for Type of Retail Shopped Most Often for Shoes, by Adult Users, Men and Women, 2006-2008 (%)

2008 2007 2006 Type of Retail

Adults Women Men Adults Women Men Adults Women Men Specialty Apparel 29.9% 35.3% 24.2% 27.8% 31.7% 23.7% 28.5% 34.1% 22.5%Discount Store 18.1 20.2 15.9 17.6 20.1 15.1 20.1 22.6 17.5 Department Store 16.7 17.4 16.0 16.7 17.7 15.7 14.7 15.5 13.7 Internet 3.0 3.0 3.1 2.6 2.7 2.5 0.7 0.8 0.6 Catalog 1.2 0.9 1.5 1.1 1.0 1.2 1.0 0.8 1.2 Membership Warehouse 0.2 0.0 0.3 0.1 0.0 0.2 0.1 0.0 0.2 No Preference 18.1 13.0 23.5 21.2 15.9 26.9 20.1 14.1 26.6 Other 12.8 10.2 15.5 12.7 11.0 14.6 14.8 12.1 17.7

Source: BIGresearch, Consumer Intentions and Actions Survey and Simultaneous Media Study, © 2008. BIGresearch, All Rights Reserved. Compiled by Packaged Facts.

Specialty for Young, Department Store for Old

In terms of age, specialty apparel again held the highest levels of preference, peaking among consumers younger than 30 at 40% in 2008. Interest in specialty apparel retail dwindled as age increased. The opposite was true for department stores and catalogs, where interest

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increased as age increased, topping off at 24% and three percent, respectively, for those age 65 or more. Internet preference held fairly steady across all age groups at three to four percent. Discount stores core consumer was those age 45-64 with 22%.

Preference by HHI Plays Out Along Socio-Economic Lines

The preference trend by household income was easily traced: those with more money prefer pricier, more elite retail. Those household incomes upwards of $75,000, showed a stronger preference for specialty apparel, department stores and the Internet, at 32%, 22% and four percent, respectively. The difference was especially marked for department stores with a ten-point difference from those with household incomes less than $35,000 (at 12%). For Discount stores the converse was true—the lower the income, the greater the preference.

Blacks and Hispanics Prefer to Shop at Specialty Apparel

In terms of race, Blacks and Hispanics, at 40%, preferred specialty apparel approximately ten points more than Whites or Asians. Whites showed a slight preference for department stores versus Hispanics and Asians, while Whites and Hispanics showed a preference for discount store versus Blacks and Asians.

Table 7-18 Consumer Penetration Levels for Type of Retail Shopped Most Often for Shoes, by Age, Household Income and Race, 2008 (%)

Age Household Income Race Type of Retail

2008 Adults Under

30 30-44 45-64 65+ <$35K $35K-$74K $75K+ Whites Blacks Hispanics Asians

Specialty Apparel 29.9% 39.1% 33.6% 26.9% 21.1% 29.4% 30.6% 32.0% 27.9% 40.3% 40.2% 30.6%

Discount Store 18.1 14.5 17.0 21.7 17.0 26.8 17.4 10.1 19.3 11.0 18.3 8.0

Department Store 16.7 10.4 16.2 17.7 24.0 11.7 18.3 22.3 17.8 14.9 11.9 10.6

Internet 3.0 3.5 3.2 3.0 2.9 2.1 3.4 4.1 3.2 3.2 2.0 4.9 Catalog 1.2 0.5 0.5 1.2 3.3 1.4 1.2 1.3 1.4 1.4 0.7 0.8 Membership Warehouse 0.2 0.4 0.1 0.1 0.1 0.2 0.3 0.0 0.2 0.0 0.0 0.0

No Preference 18.1 19.4 18.7 17.1 14.2 16.2 16.2 16.7 17.6 16.9 14.9 31.1

Other 12.8 12.2 10.7 12.4 17.4 12.1 12.6 13.5 12.6 12.4 12.0 14.1 Source: BIGresearch, Consumer Intentions and Actions Survey and Simultaneous Media Study, © 2008. BIGresearch, All Rights Reserved. Compiled by Packaged Facts

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For Footwear, Consumers Shop Wal-Mart Most

BIGresearch also shows that while nearly 18% of adult consumers have no preference for a particular branded outlet, 12% of consumers shop most often at Wal-Mart and Payless for footwear. Wal-Mart and Payless were the only stores reaching double-digit preference. However, when broken out by male and female shoppers, Payless sees a much higher level of loyalty from women at 16% than men at seven percent, while Wal-Mart sees little differentiation by sex. Since 2006, both Wal-Mart and Payless have suffered some loyalty erosion.

Both dropped two percentage points from 14% of the adult population in 2006, while

runners-up Kohls and DSW each gained points. In 2008, five percent of consumers shopped Kohl’s most often and four percent of consumers shopped DSW, up from four percent and two percent in 2006, respectively.

Rounding out the top ten retailers for shoe shopping were JC Penney, Foot Locker, Macy’s,

Sears, Kmart, and Target, garnering between two and three percent of adult for 2008. The rest of the retailers jockeyed for miniscule penetration levels, often at less than half a point with little in the way of preference changes over the period.

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Table 7-19 Consumer Penetration Levels for Stores Shopped Most Often for Shoes, by Women, Men and Total Population, 2006-2008 (%)

2008 2007 2006 Store

Adults Women Men Adults Women Men Adults Women Men WalMart 11.8% 12.5% 11.2% 11.6% 12.6% 10.5% 14.1% 15.5% 12.6%Payless 11.7 16.0 7.0 11.3 14.8 7.5 14.4 18.9 9.5 Kohls 4.9 4.8 4.9 4.7 4.2 5.2 3.6 3.6 3.5 DSW 3.7 4.5 2.9 2.9 3.4 2.4 2.4 2.9 2.0 JC Penney 2.9 2.9 2.9 3.1 3.5 2.8 2.5 2.8 2.1 Foot Locker 2.4 2.1 2.8 2.9 2.2 3.7 1.8 1.5 2.1 Macy's 2.3 2.6 1.9 2.4 2.8 1.9 1.2 1.1 1.3 Sears 2.0 1.6 2.4 2.0 1.6 2.5 1.8 1.2 2.5 Kmart 1.8 1.9 1.7 1.8 2.3 1.4 2.3 2.7 1.9 Target 1.8 2.3 1.3 1.7 2.2 1.2 1.8 2.1 1.5 Famous Footwear 1.6 2.1 1.0 1.5 1.9 1.1 1.8 1.8 1.8 Shoe Carnival 1.6 1.6 1.6 1.6 1.9 1.4 1.5 1.7 1.3 Nordstrom 1.4 1.3 1.4 1.4 1.6 1.2 1.4 1.4 1.4 Dillards 1.2 1.2 1.1 1.0 1.2 0.8 1.0 1.3 0.7 Finish Line 1.0 0.6 1.4 0.6 0.3 0.8 0.4 0.4 0.5 Online/Internet 0.9 0.7 1.1 0.7 0.7 0.8 0.4 0.4 0.3 Marshalls 0.8 1.1 0.5 0.5 0.6 0.3 0.4 0.5 0.3 Zappos 0.7 0.7 0.7 0.6 0.7 0.5 0.6 0.5 0.6 Dick's Sporting Goods 0.6 0.2 1.2 -- -- -- -- -- -- Ross 0.6 0.9 0.3 0.5 0.8 0.3 0.4 0.6 0.2 Shoes.com 0.6 0.6 0.5 0.5 0.5 0.5 -- -- -- Belk 0.5 0.6 0.5 0.4 0.5 0.2 0.3 0.4 0.2 Nike 0.5 0.3 0.7 0.5 0.4 0.6 0.3 0.2 0.3 Rack Room 0.5 0.6 0.3 0.6 0.7 0.4 0.7 0.9 0.5 SAS Shoes 0.5 0.7 0.4 0.5 0.6 0.3 0.7 0.7 0.7 Academy 0.4 0.2 0.6 0.4 0.1 0.6 0.3 0.3 0.2 Big 5 Sporting Goods 0.4 0.2 0.7 0.4 0.2 0.7 0.7 0.2 1.1 Ebay 0.4 0.5 0.3 0.3 0.4 0.2 0.3 0.3 0.3 Shoe Dept. 0.4 0.6 0.2 0.5 0.6 0.5 0.5 0.8 0.2 Skechers 0.4 0.5 0.4 -- -- -- -- -- -- Bass 0.3 0.2 0.5 -- -- -- -- -- -- Bealls 0.3 0.3 0.2 0.3 0.6 0.1 0.3 0.5 0.0 Easy Spirit 0.3 0.5 0.1 0.2 0.5 0.0 0.2 0.4 0.0

(continued)

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Table 7-19 [cont.] Consumer Penetration Levels for Stores Shopped Most Often for Shoes, by Women, Men and Total Population, 2006-2008 (%)

2008 2007 2006 Store

Adults Women Men Adults Women Men Adults Women Men LL Bean 0.3 0.2 0.3 -- -- -- -- -- -- Meijer 0.3 0.3 0.3 0.3 0.2 0.4 0.4 0.4 0.4 Mervyns 0.3 0.4 0.2 0.4 0.3 0.5 0.5 0.8 0.2 New Balance 0.3 0.3 0.3 0.3 0.1 0.5 -- -- -- Outlet Stores 0.3 0.1 0.4 0.3 0.3 0.4 0.3 0.3 0.3 Shoe Show 0.3 0.4 0.2 0.4 0.5 0.2 0.4 0.5 0.2 TJ Maxx 0.3 0.4 0.1 0.3 0.6 0.1 0.2 0.4 0.0 Florsheim 0.2 0.0 0.5 0.2 0.0 0.4 -- -- -- Haband 0.2 0.1 0.3 0.3 0.1 0.5 -- -- -- Journeys 0.2 0.4 0.1 0.4 0.4 0.4 -- -- -- Mason 0.2 0.1 0.3 -- -- -- 0.3 0.1 0.4 Redwing 0.2 0.0 0.5 -- -- -- -- -- -- Rockport 0.2 0.1 0.4 0.3 0.1 0.5 -- -- -- Value City 0.2 0.2 0.2 0.4 0.4 0.4 0.5 0.5 0.4 Nine West -- -- -- 0.2 0.4 0.1 0.2 0.4 0.0 No Preference 18.1 13.0 23.5 21.2 15.9 26.9 20.1 14.1 26.6 Other 17.3 16.8 17.9 17.3 16.2 18.5 19.0 16.8 21.4

Note: -- signifies data not available. Source: BIGresearch, Consumer Intentions and Actions Survey and Simultaneous Media Study, © 2008. BIGresearch, All Rights Reserved. Compiled by Packaged Facts.

Age, HHI and Race Affect Retail Preference

Department Stores Should Address Aging Consumer

While Wal-Mart generally garnered the highest levels of preference, those levels peaked among consumers age 45-64 at 15% in 2008 versus only ten percent for those under age thirty. Alternately, Payless appeared to have a steady hold on consumers up through age 64, garnering between 12% and 13%, but dropped significantly among those age 65 or older.

Kohl’s, DSW and JC Penney all peaked among consumers age 30-44 with six percent, five percent, and three percent respectively. Foot Locker saw the third highest levels after Wal-Mart and Payless for the under thirty crowd at seven percent.

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Although the percentages are much smaller and therefore less directional, it appeared that

larger and older department stores, whether high-end or value, such as Macy’s, Kmart, Sears, Nordstrom, and Dillards, barely have a toe-hold on the younger consumers that keep a brand going, who have given their loyalty to shoe-focused shops such as Finish Line, Shoe Carnival, and Famous Footwear.

High Income Households Shop Value, but Branding Important

In 2008, Wal-Mart and Payless, both value retailers, topped out among consumers with household incomes less than $35,000 at 19% and 14% respectively. Conversely, among high earning households ($75,000 or more) levels dropped to five percent and nine percent.

Kohls and DSW, both also value retailers, showed a different pattern. For both levels of

preference increased as household income increased. For example, only two percent of $35,000 households preferred DSW, while seven percent of $75,000 or more households preferred it. High earning households also showed a preference for higher end retailers such as Macy’s and Nordstrom, but not for value department stores such as Sears and Kmart. These specific value-shopping preferences suggest that high-income households will shoe shop at certain value retailers, but the retailers’ brand image may be a key deciding factor.

Racial Preference Decidedly Different

Among racial lines, Wal-Mart led only among Whites at 13%, with Blacks at six percent, Hispanics at ten percent and Asians at six percent. Kohl’s, Sears and Kmart saw a similar trend, albeit at lower penetration levels all around.

DSW saw a steady preference that cut across race between three and four percent. Payless led

among Hispanics at a whopping 18%, but with solid numbers for Whites, Blacks and Asians also, at 11%, 14% and 15%, respectively. Foot Locker saw a high among Blacks at ten percent and a low for Whites at two percent.

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Table 7-20 Consumer Penetration Levels for Top 15 Stores Shopped Most Often for Shoes, by Age, Household Income and Race, 2008 (%)

Age Household Income Race

Store Adults Under

30 30-44 45-64 65+ <$35K $35K-$74K $75K+ Whites Blacks Hispanics Asians

Wal-Mart 11.8% 9.7% 10.9% 14.5% 10.8% 18.5% 11.5% 5.1% 12.9% 6.4% 9.9% 5.7% Payless 11.7 12.0 13.2 12.5 7.8 14.2 12.9 8.6 10.7 13.5 18.0 14.5 Kohls 4.9 3.9 6.4 4.6 4.1 3.1 5.5 6.8 5.8 0.7 1.5 1.8 DSW 3.7 3.4 5.2 3.4 2.3 1.8 3.5 7.2 3.7 4.3 2.9 3.7 JC Penney 2.9 1.5 2.6 3.5 3.9 2.9 3.7 2.7 3.0 5.1 1.8 1.8 Foot Locker 2.4 6.8 2.9 1.0 0.2 3.1 1.9 1.6 1.5 9.4 5.6 2.9 Macy's 2.3 2.1 2.2 2.2 3.0 1.3 2.0 3.9 2.1 4.0 2.6 2.5 Sears 2.0 0.9 1.7 2.3 3.1 1.8 2.5 1.5 2.1 1.2 1.0 1.9 Kmart 1.8 0.5 0.9 2.7 2.8 3.2 1.5 1.0 2.1 0.2 0.7 0.0 Target 1.8 2.2 2.6 1.5 0.9 1.7 2.0 1.6 1.9 0.5 2.2 0.4 Famous Footwear 1.6 2.1 1.1 1.7 1.1 1.3 1.8 2.3 1.7 0.6 0.7 1.2

Shoe Carnival 1.6 2.3 2.0 1.5 0.3 1.9 1.5 1.5 1.6 1.8 0.6 2.2

Nordstrom 1.4 0.9 1.4 1.4 1.8 0.5 1.2 2.9 1.4 1.6 1.6 0.5 Dillards 1.2 0.3 0.9 1.4 2.2 0.6 1.2 1.7 1.1 1.2 1.3 0.5 Finish Line 1.0 2.9 1.2 0.3 0.0 0.8 0.8 1.2 0.8 2.6 1.3 0.8

Source: BIGresearch, Consumer Intentions and Actions Survey and Simultaneous Media Study, © 2008. BIGresearch, All Rights Reserved. Compiled by Packaged Facts.

Price, Selection, Quality and Location Top Shoe Retail Drivers

For both men and women, price at 68% for men and 72% for women, followed by selection, quality, and location were the top cited reasons for shopping a particular retail establishment for shoes. More women than men placed emphasis on price, selection and location—approximately seven percent more across the board—but the sexes leveled out on quality both at 40%.

More interesting is where the sexes diverge. Men are slightly keener on service while women

are intensely more interested in inspiration. Fourteen percent of men cited service versus 12% of women. Women indicated that new styles and ideas are important with 18% and ten percent respectively—men didn’t even hit double digits for these.

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Table 7-21 Top Consumer Shoe Retail Drivers for Men and Women, 2008 (%)

Reason Men Overall Women Overall Price 68.3% 75.0% Selection 52.2 59.4 Quality 40.5 40.1 Location 31.4 38.2 Service 14.0 12.2 In-Store Experience 10.9 11.6 Newest Styles 9.3 18.1 Knowledgeable sales people 7.1 7.8 Store Appearance 6.5 7.3 Store Layout 6.0 6.4 Fashion Ideas 5.8 10.4 Advertising 4.0 4.9 Newest Fabrics 2.5 3.0 Source: BIGresearch, Consumer Intentions and Actions Survey and Simultaneous Media Study, © 2008. BIGresearch, All Rights Reserved. Compiled by Packaged Facts.

Average Monthly Spend on Shoes in 2008: $25

The majority of consumers do not have a monthly stipend to spend on footwear—especially in this economy. However, spend levels fluctuated little over the 2006-2008 period. For the largest spend cohort, $11-$25, the drop from 20% in 2006 to 18% 2008 was only two percentage points. Some spending cohorts even increased a bit—those spending $76-$100 were at four percent of adults in 2006 and at five percent in 2008.

The average monthly spend for adults on shoes for 2008 stood at $25 for adults up from $23 in 2006, but down from $26 in 2007. Women’s average spend dropped a fair amount since 2007 from $29 to $26 while men’s increased to $25 from $24.

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Table 7-22 Average Monthly Spend on Shoes, by Adults, Men and Women, 2006-2008 (%)

2008 2007 2006 Amount

Adults Women Men Adults Women Men Adults Women Men $0 35.7% 31.9% 39.7% 31.6% 24.9% 38.7% 35.0% 27.4% 43.1% $1 - $10 15.6 15.5 15.8 15.7 16.0 15.4 17.1 17.4 16.7 $11 -$25 17.7 20.3 15.0 19.4 22.9 15.7 19.5 24.3 14.3 $26 - $50 15.8 17.4 14.1 17.5 19.7 15.3 15.7 18.4 12.7 $51 - $75 6.6 6.7 6.4 7.1 7.6 6.7 6.1 6.5 5.7 $76 - $100 5.3 5.1 5.6 5.4 5.4 5.5 3.9 3.4 4.5 $101 - $200 2.1 2.0 2.2 2.2 2.5 1.9 1.7 1.6 1.7 $201 - $300 0.8 0.8 0.7 0.7 0.7 0.6 0.7 0.5 0.9 $301+ 0.4 0.2 0.6 0.3 0.3 0.3 0.4 0.4 0.5 Average $25.39 $25.62 $25.14 $26.32 $28.52 $23.99 $23.41 $24.43 $22.31

Source: BIGresearch, Consumer Intentions and Actions Survey and Simultaneous Media Study, © 2008. BIGresearch, All Rights Reserved. Compiled by Packaged Facts.

The Younger You are the More You Spend

Those under age 30 showed a greater inclination to spend across amount cohorts—the highest level in the $11-$25 range at 17% for 2008. After age 30, levels dropped as age increased but not significantly. Those under age 30 also have the highest average monthly spend among age groups at $36 versus $16 for those age 65 or more.

Wealthier More Likely to Spend on More Expensive Footwear

It’s logical. Those with household incomes below $35,000 showed a greater inclination to spend at the lowest level versus those earning more than $75,000—17% versus 14% respectively. Alternately, those with more money showed higher percentages for spend categories upward of $25 versus those with less money. The average monthly spend shows the disparity: lowest household income average spend stood at $20 while highest income stood at $31.

Whites Show Lowest Average Spend Levels

Compared to Blacks, Hispanics and Asians, Whites showed high percentage for spending little to no money on a monthly basis, reaching 40% for $0 spend versus fellow shoppers at 19%. Black shoppers on average spend the most monthly at $52 followed by Hispanics at $44, Asians at $43 and bringing up the rear, Whites at $20.

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Table 7-23 Average Monthly Spend on Shoes, by Age, HHI and Race, 2008 (%)

Source: BIGresearch, Consumer Intentions and Actions Survey and Simultaneous Media Study, © 2008. BIGresearch, All Rights Reserved. Compiled by Packaged Facts.

Consumers Likely to Spend Less

In the summer of 2008, BIGresearch asked consumers what the near future of their footwear spending habits looked like. While 50% said their footwear spending habits would not change, a large segment, 43% said they would spend less—a trend seen at every demographic level. [Tables 6-25 and 6-26]

As the economy has shown no marked improvement at the time of this report, it is likely that

more consumers are further restricted their shoe shopping budgets across demographic lines.

Table 7- 24 Consumer Response to the Question, “Over the next 90 days (July, August and September), do you plan on spending more, the same or less on footwear than you would normally spend at this time of the year?” by Adults, Women and Men, 2006-2008 (%)

2008 2007 2006 Response

Adult Women Men Adult Women Men Adult Women Men More 7.1% 7.4% 6.8% 12.0% 13.3% 10.6% 10.2% 11.7% 8.6% Same 50.4 45.2 55.8 58.9 55.4 62.5 56.9 51.2 63.1 Less 42.6 47.4 37.5 29.2 31.3 26.9 32.9 37.1 28.3 Source: BIGresearch, Consumer Intentions and Actions Survey and Simultaneous Media Study, © 2008. BIGresearch, All Rights Reserved. Compiled by Packaged Facts.

Age Household Income Race Amount Adults

Under 30 30-44 45-64 65+ <$35K $35K-$74K $75K+ Whites Blacks Hispanics Asians

$0 35.7% 27.0% 31.6% 37.9% 46.7% 40.8% 35.0% 32.2% 39.8% 18.6% 18.8% 19.8% $1 - $10 15.6 15.5 15.9 16.0 15.3 17.2 16.1 13.9 16.8 5.8 10.3 24.2 $11 -$25 17.7 17.3 18.7 18.1 15.9 16.9 18.3 17.5 17.9 13.0 18.3 8.1 $26 - $50 15.8 16.9 17.3 15.6 13.0 14.3 15.5 17.6 14.3 25.9 24.9 18.9 $51 - $75 6.6 8.5 7.3 5.1 5.7 5.5 6.8 7.0 5.4 13.5 10.1 13.2 $76 - $100 5.3 8.5 5.7 4.6 2.3 3.1 5.4 7.0 3.9 13.5 8.5 6.6 $101 - $200 2.1 3.6 2.6 1.7 0.6 1.6 1.6 3.0 1.2 6.4 6.5 6.1 $201 - $300 0.8 1.9 0.6 0.6 0.2 0.3 0.9 1.0 0.5 2.4 1.8 1.6 $301+ 0.4 0.8 0.3 0.4 0.2 0.3 0.2 0.8 0.3 1.0 0.7 1.5 Average $25.39 $36.19 $26.85 $22.58 $16.29 $19.81 $24.56 $31.15 $20.47 $52.01 $44.09 $42.55

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Table 7- 25 Consumer Response to the Question, “Over the next 90 days (July, August and September), do you plan on spending more, the same or less on footwear than you would normally spend at this time of the year?” by Age, HHI and Race, 2008 (%)

Age Household Income Race Response Adult

Under 30 30-44 45-64 65+ <$35K $35K-$74K $75K+ Whites Blacks Hispanics Asians

More 7.1% 10.6% 10.5% 4.6% 2.7% 7.3% 6.2% 7.8% 5.7% 16.3% 13.6% 9.7% Same 50.4 53.0 54.6 48.0 44.7 44.6 49.8 57.2 51.4 44.2 44.6 44.2 Less 42.6 36.4 34.9 47.4 52.5 48.1 44.0 35.0 42.9 39.5 41.9 46.1

Source: BIGresearch, Consumer Intentions and Actions Survey and Simultaneous Media Study, © 2008. BIGresearch, All Rights Reserved. Compiled by Packaged Facts.

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Chapter 8 The Athletic Footwear Consumer

Note on Simmons Market Research Bureau Consumer Data

As noted in Chapter 7: The Footwear Consumer, consumer demographics discussions rely on data compiled by Experian Simmons Market Research Bureau, based in New York City. Each year, Experian Simmons surveys a large sample of consumers about their buying habits. The following discussion derives from the winter 2008/09 consumer survey, which is based on more than 20,000 households. By surveying a large sample of households, selected to represent a statistically accurate cross-section of the U.S. population, Experian Simmons is able to construct detailed demographic profiles across markets and categories.

In addition, Experian Simmons has developed an index system to calibrate the usage of a

product by a given segment of the population, compared with usage by the population as a whole. If 10% of all survey respondents report use of a product, for example, the baseline index of 100 is set to that 10% rate. If 20% of respondents age 18–24 report use, this group would have an index of 200, being twice as likely to use the product. Generally speaking, Packaged Facts considers an index of 110 or higher to be significant, or an “indicator,” while classifying demographic segments with an index of 80 or lower as “resisters.” This discussion treats as “not significant” any indices falling between these two levels, or any findings that Experian Simmons has classified as statistically unreliable.

Sneaker, Athletic and Sport Shoes Penetration Higher for Women at 63%

According to Experian Simmons data, women’s sneaker, athletic and sports shoes penetration was 63% in the winter of 2009—three percentage points higher than men’s, at 60%. Although in terms of athletic shoe data only, men had a greater penetration than women, at 20% versus 17%. [See Chapter 7: The Footwear Consumer for data on broader categories of consumer footwear penetration]

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Table 8-1 Total Consumer Penetration Levels for Sneakers, Athletic Shoes, or Sports Shoes Bought in the Past 12 Months, by Sex and Total Population, 2009 (%)

Population % Purchase Penetration

Men 60% Women 63 Total Sample 61% Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2008/09. This material is used with permission.

Casual Sneakers Top Among Both Men and Women

There are many different varieties of sneakers, from casual wear to cross training to hiking. Three stand out though: casual, exercise walking and jogging/running sneakers. Casual sneakers had the greatest penetration with women at 25% and men at 22%. Exercise walking sneakers were much preferred by women at 21% with men only reaching 12%.

Jogging/running and tennis sneakers were both on an equal footing, preferred by both men and women at 12% and five percent, respectively.

Preferences diverged between the sexes with men showing higher penetration for basketball (for example, men at eight percent and women at only four percent), cross training, and hiking sneakers, while women showed higher levels for aerobic sneakers (women at four percent and men at only two percent).

Table 8-2 Total Consumer Penetration Levels for Sneakers, Athletic Shoes, or Sports Shoes Product Segments Bought in the Past 12 Months, by Sex and Total Population, 2009 (%)

Segment Men Women Total Sample Casual Sneakers 22% 25% 23% Exercise Walking 12 21 17 Jogging Or Running 12 12 12 Cross Training 9 7 8 Basketball 8 4 6 Tennis 5 5 5 Aerobic 2 4 3 Hiking 4 2 3 Other 11 11 11 Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2008/09. This material is used with permission.

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Top Demographic Characteristics by Sneakers, Athletic Shoes, or Sports Shoes Type

Casual Sneaker Purchasers More Likely Than Average to Be Young Living on East or West Coast

For casual sneaker-wearing men, the data suggested a profile of a young, possibly blue-collar worker. These men were more likely than average to be young, age between18-34. Hispanic or Black, living on the east or west coasts, to have low levels of education, to work in labor, to share a household with other working adults, to live in larger households, to live in households with children, to be single, and to live in rentals. Purchasers of boots more useful in a blue-collar work environment clearly edge out any other male boot purchaser.

Women shared many similar characteristics, but also popped for Asians and for six-figure

household income.

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Table 8-3 Demographic Characteristics of Casual Sneaker Purchasers, by Sex, 2009 (index)

Men Index Women Index Age 18-24 129 Age 25-34 134 Age 25-34 132 Age 35-44 131 Hispanic 140 Hispanic 127

Black (Non-Hispanic) 128 Black (Non-Hispanic) 112 -- -- Asian (Non-Hispanic) 123

Northeast 117 Northeast 112 Pacific 114 -- --

Non High School Grad 113 -- -- High School Grad Only 114 -- --

Occupation: Sales 111 Occupation: Sales 110 Occupation: Office & Administrative 130 Occupation: Labor 110

Occupation: Labor 123 -- -- Employed Adults in HH: Three + 123 Employed Adults in HH: Two 111

Not Married 115 -- -- -- -- Household Income: $100K-$149K 110

# of People in HH: Five Or More 134 # of People in HH: Three-Four 118 -- -- # of People in HH: Five Or More 137

# of Children in HH: One 121 # of Children in HH: One 115 # of Children in HH: Two 113 # of Children in HH: Two 150

# of Children in HH: Three + 138 # of Children in HH: Three + 145 Age of Children in HH: Under 6 125 Age of Children in HH: Under 6 146

Age of Children in HH: 6-11 136 Age of Children in HH: 6-11 155 Age of Children in HH: 12-17 128 Age of Children in HH: 12-17 132

Kind of Residence: Rented House 124 Kind of Residence: Rented House 113 Kind of Residence: Rented Apartment 122 Kind of Residence: Rented Apartment 113

-- -- Kind of Residence: Live Rent Free 121 -- -- -- --

Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2008/09. This material is used with permission.

Exercise and Walking Purchasers Skew Much Older, Retired

A very different profile emerged for exercise and walking sneaker wearers. These both men and women showed above average likelihood to be older, retired, with incomes in the six digits, living in two-person households, living in condos, and owning a residence.

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Men also spike for Hispanic, part-time employment, self-employment, while women spiked

for mobile home residence and lower income at $25,000-$49,000.

Table 8-4 Demographic Characteristics of Exercise and Walking Shoe Purchasers, by Sex, 2009 (index)

Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2008/09. This material is used with permission.

Jogging or Running Purchasers More Likely Than Average to be Educated, White-Collar, Family-oriented

According to Simmons data, men and women who purchased jogging and running footwear in the past twelve months were more likely than average to pop for demographics characteristic of the upwardly mobile and the family-oriented. Men and women age 18-44 showed above average interest and both popped for higher education, full-time employment, a variety of white-collar jobs (particularly professional/technical at M158 and W156), incomes upward of $100,000, and two-income households. These purchasers were more likely than average to have children and to live in mid-value homes.

Men Index Women IndexAge 55-64 130 Age 45-54 117 Age 65+ 151 Age 55-64 128 Hispanic 110 -- --

Employed Part-Time (<30 Hours) 131 -- -- Self-Employed 130 -- --

Retired 144 Retired 114 Occupation: Sales 127 -- --

Employed Adults in HH: None 123 -- -- Employed Adults in HH: One 111 -- --

Household Income: $75K-$99K 110 Household Income: $25K-$49K 110 Household Income: $100K-$149K 112 Household Income: $100K-$149K 113

Presently Married 110 -- -- # of People in HH: Two 122 # of People in HH: Two 117

# of Children in HH: None 111 -- -- Kind of Residence: Owned House 110 Kind of Residence: Owned Condo/Co-Op 110

Kind of Residence: Owned Cond/Co-Op 111 Kind of Residence: Mobile Home 118 Value of Residence: $200K-$299K 110 Value of Residence: $100K-$199K 112 Value of Residence: $300K-$499K 123 Value of Residence: $200K-$299K 111 Value of Residence: $500K-$750K 115 Value of Residence: $500K-$750K 114

Value of Residence: $750K+ 120 -- --

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Men popped for Hispanic and Pacific, while women popped for Asian and Southwest. Men

also showed a greater likelihood to rent an apartment while women showed a likelihood to live in a household with three or more working adults—both suggest a younger consumer limiting or possibly sharing expenses.

Table 8-5 Demographic Characteristics of Jogging and Running Shoe Purchasers, by Sex, 2009 (index)

Men Index Women IndexAge 18-24 134 Age 18-24 138 Age 25-34 177 Age 25-34 162 Age 35-44 130 Age 35-44 147 Hispanic 112 Asian (Non-Hispanic) 156 Pacific 128 Southwest 117

Undergraduate College Degree 129 Undergraduate College Degree 158 Graduate Degree 156 Graduate Degree 145

Employed Full-Time (30+ Hours) 116 Employed Full-Time (30+ Hours) 124 Occupation: Management/Financial 122 Occupation: Management/Financial 126 Occupation: Professional/Technical 158 Occupation: Professional/Technical 156

-- -- Occupation: Office/Administrative Support 121 Employed Adults in HH: Two 117 Employed Adults in HH: Two 134

-- -- Employed Adults in HH: Three + 131 Household Income: $100K-$149K 141 Household Income: $100K-$149K 148

Household Income: $150K+ 146 Household Income: $150K+ 170 # of People in HH: Three-Four 115 # of People in HH: Three-Four 126

# of People in HH: Five Or More 120 # of People in HH: Five Or More 127 # of Children in HH: Two 129 # of Children in HH: Two 127

# of Children in HH: Three + 131 # of Children in HH: Three + 142 Age of Children in HH: Under 6 134 Age of Children in HH: Under 6 127

Age of Children in HH: 6-11 129 Age of Children in HH: 6-11 142 Age of Children in HH: 12-17 115 Age of Children in HH: 12-17 141

Kind of Residence: Rented Apartment 116 -- -- Value of Residence: $300K-$499K 124 Value of Residence: $200K-$299K 132 Value of Residence: $500K-$750K 126 Value of Residence: $300K-$499K 126

Value of Residence: $750K+ 110 Value of Residence: $500K-$750K 118 Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2009. This material is used with permission.

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Cross Trainers Similar to Joggers

Men and women who purchased cross-trainers in the past twelve months skewed slightly older (age 25-54) than those who purchased jogging and running sneakers but otherwise shared many characteristics. Again, both men and women were more likely than average to pop for higher education, full-time employment, a variety of white-collar jobs, incomes upward of $75,000 (with $150,000 popping at M154 and W183), and two-income households. These purchasers were more likely than average to have children and own homes.

Men popped for White consumers, while women popped for consumers living in the

Northeast, for women working in labor, for marriage and for renting a house.

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Table 8-6 Demographic Characteristics of Cross Training Shoe Purchasers, by Sex, 2009 (index)

Men Index Women IndexAge 25-34 111 Age 25-34 123 Age 35-44 156 Age 35-44 151 Age 45-54 105 Age 45-54 122

White Non-Hispanic 113 -- -- -- -- Northeast 118

Some College 115 Some College 116 Undergraduate College Degree 158 Undergraduate College Degree 162

Graduate Degree 140 Graduate Degree 144 Employed Full-Time (30+ Hours) 122 Employed Full-Time (30+ Hours) 139

Occupation: Management/Financial 119 Occupation: Management/Financial 183 Occupation: Professional/Technical 171 Occupation: Professional/Technical 176

-- -- Occupation: Labor 114 Employed Adults in HH: Two 123 Employed Adults in HH: One 116

Employed Adults in HH: Three + 117 Employed Adults in HH: Two 133 Household Income: $75K-$99K 132 Household Income: $75K-$99K 124

Household Income: $100K-$149K 135 Household Income: $100K-$149K 116 Household Income: $150K+ 154 Household Income: $150K+ 183

-- -- Presently Married 115 -- -- # of People in HH: Three-Four 118

# of People in HH: Three-Four 134 # of Adults in HH: Two 117 -- -- # of Children in HH: Two 140

# of Children in HH: Two 133 Age of Children in HH: 6-11 129 Age of Children in HH: 6-11 126 Age of Children in HH: 12-17 129 Age of Children in HH: 12-17 124 Kind of Residence: Rented House 120

Kind of Residence: Owned House 111 Value of Residence: $100K-$199K 111 Value of Residence: $200K-$299K 126 Value of Residence: $300K-$499K 131 Value of Residence: $300K-$499K 138 Value of Residence: $500K-$750K 127 Value of Residence: $500K-$750K 118 Value of Residence: $750K+ 127

-- -- -- -- Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2009. This material is used with permission.

Female Basketball Shoe Purchasers High Earners versus Male

Male and female basketball sneaker purchasers shared many demographic traits, such as age (25-44), race (Hispanic and Black), occupation (labor), household makeup (large and/or with children), and rental dwellings. However, when it comes to education, employment, and household income, there is a disruption. Men showed above average likelihood to have little education (no high school diploma at 131) while women showed some likelihood for higher

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education (some college at 115). Men were more likely to work part-time while women popped for both part-time and full-time. Lastly, men showed above average likelihood for incomes between $25,000 to $99,000, while women only popped for high household incomes of $150,000 or more (123). One explanation for the disparity is in the other age categories that popped. Men also popped for a much younger age cohort with less work and life experience, 18-24, while women popped for an older one, 45-54.

Table 8-7 Demographic Characteristics of Basketball Shoe Purchasers, by Sex, 2009 (index)

Men Index Women IndexAge 18-24 215 Age 25-34 183 Age 25-34 157 Age 35-44 155 Age 35-44 114 Age 45-54 110 Hispanic 135 Hispanic 119

Black (Non-Hispanic) 348 Black (Non-Hispanic) 273 Pacific 122 -- --

Non High School Grad 131 Some College 115 High School Grad Only 118 -- --

Employed Part-Time (<30 Hours) 140 Employed Full-Time (30+ Hours) 114 -- -- Employed Part-Time (<30 Hours) 134

Occupation: Labor 130 Occupation: Professional/Technical 128 -- -- Occupation: Labor 148

Employed Adults in HH: Two 115 Employed Adults in HH: Two 126 Employed Adults in HH: Three + 138 -- -- Household Income: Under $25K 117 Household Income: $150K+ 123 Household Income: $25K-$49K 117 -- -- Household Income: $75K-$99K 111 -- --

Not Married 138 -- -- # of People in HH: Three-Four 120 # of People in HH: Three-Four 143

# of People in HH: Five Or More 185 # of People in HH: Five Or More 210 # of Adults in HH: Three + 158 # of Adults in HH: Three + 121 # of Children in HH: One 136 # of Children in HH: One 143 # of Children in HH: Two 142 # of Children in HH: Two 167

# of Children in HH: Three + 177 # of Children in HH: Three + 270 Age of Children in HH: Under 6 145 Age of Children in HH: Under 6 164

Age of Children in HH: 6-11 162 Age of Children in HH: 6-11 253 Age of Children in HH: 12-17 169 Age of Children in HH: 12-17 232

Kind of Residence: Rented House 157 Kind of Residence: Rented House 219 Kind of Residence: Rented Apartment 174 -- --

Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2009. This material is used with permission.

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Tennis Shoe Purchasers Not Necessarily the Country Club Stereotype

Interestingly, most of the demographic characteristics that pop for tennis sneakers usage don’t track with popular cultures image of the tennis player. Aside from men working in management/finance at 129 and women with household incomes of $100,000-149,000 at 114, the data also drifted toward a working-class image with labor popping for men and women and the lowest household income popping for women.

Table 8-8 Demographic Characteristics of Tennis Shoe Purchasers, by Sex, 2009 (index)

Men Index Women IndexAge 35-44 164 Age 25-34 124

-- -- Age 35-44 124 -- -- Black (Non-Hispanic) 175

Southeast 126 Southeast 128 Pacific 117 Central 112

Undergraduate College Degree 131 -- -- -- -- Employed Full-Time (30+ Hours) 114 -- -- Employed Part-Time (<30 Hours) 128

Occupation: Management/Financial 129 Occupation: Labor 154 Occupation: Labor 119 -- --

Employed Adults in HH: One 122 Employed Adults in HH: Two 123 Not Married 112 Household Income: Under $25K 121

# of People in HH: Five Or More 143 Household Income: $100K-$149K 114 # of Adults in HH: Three + 127 # of People in HH: Three-Four 133 # of Children in HH: Two 114 # of People in HH: Five Or More 111

Age of Children in HH: 12-17 125 # of Adults in HH: Three + 110 -- -- # of Children in HH: One 133 -- -- # of Children in HH: Two 149 -- -- # of Children in HH: Three + 113 -- -- Age of Children in HH: Under 6 114 -- -- Age of Children in HH: 6-11 148 -- -- Age of Children in HH: 12-17 140 -- -- Kind of Residence: Rented House 167

Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2008/09. This material is used with permission.

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Aerobic Sneaker Purchasers More Likely Than Average to be High-income Women

Male and female aerobic sneaker purchasers shared few demographic traits except for age 35-44, Hispanic, labor industry, large households and households with children. These male characteristics along with non-high school graduate (144), not married (137) and three or more adults in household (175) went on to suggest a lower socio-economic status.

However for women, a higher socio-economic status was indicated with higher education

(graduate degree at 123), professional/technical employment (139), and six-digit household incomes ($100,000-$149,000 at 158) popping as above average characteristics.

Table 8-9 Demographic Characteristics of Aerobic Shoe Purchasers, by Sex, 2009 (index)

Men Aerobic Women AerobicAge 35-44 142 Age 25-34 138

-- -- Age 35-44 128 -- -- Age 45-54 119

Hispanic 210 Hispanic 145 -- -- Black (Non-Hispanic) 138

Northeast 127 Pacific 130 Pacific 118 -- --

Non High School Grad 144 Graduate Degree 123 Some College 121 -- --

-- -- Employed Full-Time (30+ Hours) 127 Occupation: Labor 144 Occupation: Professional/Technical 139

-- -- Occupation: Labor 128 Not Married 137 Employed Adults in HH: One 113

# of People in HH: Three-Four 138 Employed Adults in HH: Two 110 # of People in HH: Five Or More 195 Household Income: $100K-$149K 158

# of Adults in HH: Three + 175 Household Income: $150K+ 144 # of Children in HH: One or More 161 # of People in HH: Five Or More 160

-- -- # of Adults in HH: Three + 122 -- -- # of Children in HH: One or More 123 -- -- # of Children in HH: Two 127 -- -- # of Children in HH: Three + 137 -- -- Age of Children in HH: Under 6 127 -- -- Age of Children in HH: 12-17 143 -- -- Kind of Residence: Rented House 154 -- -- Value of Residence: $200K-$299K 110

Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2008/09. This material is used with permission.

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Hiking Purchasers More Likely Than Average to be Educated, West Coast

Men and women who purchased hiking shoes shared two common characteristics. Both were more likely than average to be from the west coast and to be college graduates. Otherwise men popped for management/financial employment and six-digit household incomes, while women popped for age 35-54, full-time employment, two-income households, marriage, large household, and households with one or more children.

Table 8-10 Demographic Characteristics of Hiking Shoe Purchasers, by Sex, 2009 (index)

Men Index Women Index-- -- Age 35-44 142 -- -- Age 45-54 137

Northeast 110 Pacific 156 Pacific 147 -- --

Undergraduate College Degree 153 Undergraduate College Degree 156 Occupation: Management/Financial 111 Employed Full-Time (30+ Hours) 119

Household Income: $150K+ 118 Employed Adults in HH: Two 121 # of People in HH: Three-Four 113 Presently Married 115

-- -- # of People in HH: Five Or More 123 -- -- # of Children in HH: One Or More 110

Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2008/09. This material is used with permission.

Nike and New Balance Only Brands with Double Digit Penetration Levels

Nike and New Balance saw the greatest levels of brand penetration among consumers, with Nike at 19% for men and 20% for women, followed by New Balance at 13% for men and 14% for women. While no other tracked brands reached double-digit levels, Adidas and Reebok each garnered eight percent of the total sample and Skechers captured seven percent.

There was not much gender disparity in brand preferences for sneakers. Men showed a slight

one-point preference for Adidas, Airwalk and Rockport brands. Only Skechers showed more than a one-point difference with nine percent for women versus four percent for men. Reebok, Asics, Converse, Vans, Keds, Avia, and K-Swiss only saw a one-percentage point disparity. Women also bought more other, probably lesser-known, brands suggesting that women were more open to new or unknown brands and were perhaps less brand loyal than men when it came to sneakers.

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Table 8-11 Total Consumer Penetration Levels for Sneakers, Athletic Shoes, or Sports Shoes Brands Bought in the Past 12 Months, by Sex and Total Population, 2009 (%)

Brands Men Women Total Sample Nike 19% 20% 19% New Balance 13 14 14 Adidas 9 8 8 Reebok 8 9 8 Skechers 4 9 7 Asics 2 3 3 Converse 3 4 3 K-Swiss 2 3 3 Puma 3 3 3 Vans 2 3 3 Avia 1 2 2 Airwalk 2 1 1 Brooks 1 1 1 Fila 1 1 1 Keds -- 2 1 L.A. Gear 1 1 1 Rockport 2 1 1 Saucony 1 1 1 Other Brands 17 19 18 Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2008/09. This material is used with permission.

Top Demographic and Psychographic Characteristics by Selected Sneakers, Athletic Shoes, or Sports Shoes Brand

Nike Purchasers Demographics and Psychographics

Top indexes for male and female Nike purchasers included those age between18-44. Hispanic or Black consumers, those employed full-time, those working in professional and technical industries, those earning six-digit incomes, those living in households with children and those living in rented houses. Because of the significant penetration of the Nike brand, these shared characteristics were not particularly edifying.

Women popped for a few extra characteristics such as Asian consumers, those living in the

Southwest, those with college degrees, and those employed in labor industries.

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Table 8-12 Demographic Characteristics of Nike Shoe Purchasers, by Sex, 2009 (index)

Men Index Women Index Age 18-24 145 Age 18-24 123 Age 25-34 157 Age 25-34 163 Age 35-44 129 Age 35-44 153 Hispanic 141 Hispanic 140

Black (Non-Hispanic) 187 Black (Non-Hispanic) 148 -- -- Asian (Non-Hispanic) 112

Northeast 110 Southwest 121 Non High School Grad 121 Undergraduate College Degree 120

Employed Full-Time (30+ Hours) 113 Employed Full-Time (30+ Hours) 118 -- -- Employed Part-Time (<30 Hours) 125

Occupation: Professional/Technical 133 Occupation: Professional/Technical 132 Occupation: Sales 117 Occupation: Labor 137

Employed Adults in HH: Two 110 Employed Adults in HH: Two 126 Employed Adults in HH: Three + 127 -- --

Household Income: $100K-$149K 117 Household Income: $75K-$99K 119 -- -- Household Income: $100K-$149K 135 -- -- Household Income: $150K+ 111

Not Married 115 -- -- # of People in HH: Three-Four 122 # of People in HH: Three-Four 133

# of People in HH: Five Or More 146 # of People in HH: Five Or More 151 # of Adults in HH: Three + 127 # of Adults in HH: Three + 117 # of Children in HH: One 122 # of Children in HH: One 131 # of Children in HH: Two 140 # of Children in HH: Two 160

# of Children in HH: Three + 154 # of Children in HH: Three + 178 Age of Children in HH: Under 6 143 Age of Children in HH: Under 6 149

Age of Children in HH: 6-11 143 Age of Children in HH: 6-11 176 Age of Children in HH: 12-17 149 Age of Children in HH: 12-17 173

Kind of Residence: Rented House 118 Kind of Residence: Rented House 131 Kind of Residence: Rented Apartment 126 Kind of Residence: Live Rent Free 111

Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2008/09. This material is used with permission.

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Nike shoe purchasers proved to be an optimistic bunch, popping 61% higher than average in thinking their financial situation would get significantly better in the next 12 months. Only Converse and Puma showed higher indexes above the 200 mark. Nike purchasers showed a higher propensity to want to succeed or please other people with certain characteristics such as approval seeking (138), child influenced (135), and centered on work (133) all popping.

Table 8-13 Psychographic Characteristics of Nike Shoe Purchasers, 2009 (index)

Psychographic Characteristics Index

Approval Seeking: Far Above Average 138

Smart Greens: Far Below Average 110

Early Adopter: Above Average 124

Health and Image Leader: Far Above Average 126

Active Health Management: Far Below Average 117

Child Influenced Shopper: Far Above Average 135

Work Centered: Far Above Average 133

Advertising Receptivity: Far Above Average 123

Internet Activity: Far Above Average 123

Economic Outlook: Next 12 Months Finances Better/Worse?: Significantly Better Off 161 Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2008/09. This material is used with permission.

New Balance Purchasers Demographics and Psychographics

New Balance purchasers were more likely than average to be White, white-collar professionals, aged 55-64, and living in the Northeast. Among men, ages skewed higher with those 45-55 at 117, while women popped for those age 25-34 at 112. New Balance purchasers were also more likely to be married and own their own home or condo.

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Table 8-14 Demographic Characteristics of New Balance Shoe Purchasers, by Sex, 2009 (index)

Men Index Women Index Age 45-54 117 Age 25-34 112 Age 55-64 120 Age 55-64 120

White Non-Hispanic 114 White Non-Hispanic 114 Northeast 119 Northeast 114

Undergraduate College Degree 117 Southeast 116 Employed Full-Time (30+ Hours) 112 Undergraduate College Degree 117

Occupation: Management/Financial Operations 115 Graduate Degree 131 Occupation: Professional/Technical 122 Employed Full-Time (30+ Hours) 113

Occupation: Sales 147 Occupation: Management/Financial 114 Employed Adults in HH: Two 117 Occupation: Professional/Technical 139

Household Income: $75K-$99K 143 Employed Adults in HH: Two 116 Household Income: $100K-$149K 131 Household Income: $75K-$99K 118

Presently Married 114 Household Income: $100K-$149K 122 # of People in HH: Three-Four 110 Household Income: $150K+ 127

# of Adults in HH: Two 113 Presently Married 115 Age of Children in HH: 6-11 111 # of People in HH: Three-Four 112 Age of Children in HH: 12-17 113 # of Children in HH: Two 111

Kind of Residence: Owned House 116 Kind of Residence: Owned House 111 Kind of Residence: Owned Condo or Co-Op 121 Value of Residence: $100K-$199K 112

Value of Residence: $100K-$199K 112 Value of Residence: $200K-$299K 113 Value of Residence: $200K-$299K 130 Value of Residence: $300K-$499K 116 Value of Residence: $300K-$499K 131 Value of Residence: $500K-$750K 124 Value of Residence: $500K-$750K 116 -- --

Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2008/09. This material is used with permission.

Psychographic characteristics for New Balance purchasers showed a higher likelihood to do above average research and information gathering (122) and had above average Internet activity (125). They were also more likely to engage in above average active health management (126). They showed higher than average propensity to see their next 12 months finances as somewhat worse off (116), but expected to spend a little more on household essentials.

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Table 8-15 Psychographic Characteristics of New Balance Shoe Purchasers, 2009 (index)

Psychographic Characteristics Index

Impulse Shopper: Far Above Average 110

Brand Loyals: Far Above Average 113

Approval Seeking: Below Average 114

Informed Consumer: Far Above Average 118

Active Health Management: Above Average 126

Family Centered: Above Average 114

Child Influenced Shopper: Below Average 112

Research/Info Gathering: Above Average 122

Internet Activity: Above Average 125

Economic Outlook: Next 12 Months Finances Better/Worse?: Somewhat Worse Off 116

Economic Outlook: Household Essentials Expect to Spend: A Little More 118 Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2008/09. This material is used with permission.

Adidas Purchasers Demographics and Psychographics

Adidas purchasers skewed slightly young, aged 18-44 and were more popular among Hispanics and Blacks. The Northeast and Pacific regions also popped for above average Adidas preference as did renters rather than home-owners. They showed above average tendencies for households with children.

Men were more likely than average to unmarried (122); for women that characteristic did not

pop. Overall the profile suggests lower household incomes derived from labor for men (122) and clerical for women (111), but a closer look shows some above average tendencies for higher incomes with women popping significantly higher for $100K-$149K (127) and $150+ (124).

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Table 8-16 Demographic Characteristics of Adidas Shoe Purchasers, by Sex, 2009 (index)

Men Index Women IndexAge 18-24 162 Age 18-24 147 Age 25-34 143 Age 25-34 155 Age 35-44 123 Age 35-44 125 Hispanic 177 Hispanic 171

Black (Non-Hispanic) 160 Black (Non-Hispanic) 174 Northeast 121 Northeast 115

Pacific 129 Pacific 134 Non High School Grad 114 Some College 119

Employed Full-Time (30+ Hours) 113 Employed Part-Time (<30 Hours) 149 Employed Part-Time (<30 Hours) 125 Occupation: Professional/Technical 144

Occupation: Management/Financial 113 Occupation: Office & Administrative Support 111 Occupation: Professional/Technical 122 Occupation: Labor 138

Occupation: Labor 122 Employed Adults in HH: Two 111 Employed Adults in HH: Two 112 Employed Adults in HH: Three + 146

Employed Adults in HH: Three + 140 Household Income: $100K-$149K 127 Household Income: $75K-$99K 119 Household Income: $150K+ 124

Household Income: $100K-$149K 110 # of People in HH: Three-Four 114 Household Income: $150K+ 118 # of People in HH: Five Or More 174

Not Married 122 # of Adults in HH: Three + 135 # of People in HH: Three-Four 113 # of Children in HH: One or More 137

# of People in HH: Five Or More 168 # of Children in HH: One 119 # of Adults in HH: Three + 139 # of Children in HH: Two 135 # of Children in HH: One 123 # of Children in HH: Three + 163 # of Children in HH: Two 140 Age of Children in HH: Under 6 138

# of Children in HH: Three + 169 Age of Children in HH: 6-11 149 Age of Children in HH: Under 6 140 Age of Children in HH: 12-17 149

Age of Children in HH: 6-11 149 Kind of Residence: Rented House 153 Age of Children in HH: 12-17 157 Value of Residence: $500K-$750K 136

Kind of Residence: Rented House 145 -- -- Kind of Residence: Rented Apartment 139 -- --

Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2008/09. This material is used with permission.

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Adidas purchasers were 41% more likely than the average to believe their finances will be improved in the next 12 months. They were far more likely to engage in Internet activity (156). They were also more likely to rate far above average as impulse shoppers (111) and early adopters (141). Other psychographic characteristics that popped include approval seeking (143), health and image leader (148), and work centered (143).

Table 8-17 Psychographic Characteristics of Adidas Shoe Purchasers, 2009 (index)

Psychographic Characteristics Index

Impulse Shopper: 1 Far Below Average 111

Approval Seeking: Far Above Average 143

Smart Greens: Far Above Average 118

Early Adopter: Far Above Average 141

Health and Image Leader: Far Above Average 148

Child Influenced Shopper: Far Above Average 149

Work Centered: Far Above Average 143

Advertising Receptivity: Far Above Average 126

Internet Activity: Far Above Average 156

Internet Involvement: Far Above Average 142

Economic Outlook: Next 12 Months Finances Better/Worse?: Significantly Better Off 141 Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2008/09. This material is used with permission.

Reebok Purchasers Demographics and Psychographics

Far fewer demographic characteristics popped for Reebok than for other major athletic footwear brands, suggesting that the brand’s demographic profile skews much more toward the average consumer than Nike, New Balance, or Adidas. The above average profile that did emerge, though, suggests characteristics including Hispanic (117) and Black (173) women living in the Southeast (118) on lower incomes derived from labor (128) and office & administrative (113) work. Single men, those living in the Northeast and those in management/financial (138) positions also showed a slightly higher than average tendency.

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Table 8-18 Demographic Characteristics of Reebok Shoe Purchasers, by Sex, 2009 (index)

Men Index Women IndexAge 35-44 118 Age 35-44 112 Age 45-54 128 Age 45-54 111 Northeast 134 Age 55-64 115

Employed Part-Time (<30 Hours) 111 Hispanic 117 Occupation: Management/Financial 138 Black (Non-Hispanic) 173

Household Income: $25K-$49K 116 Southeast 118 Not Married 111 Non High School Grad 127

# of People in HH: Three-Four 112 Occupation: Office & Administrative Support 113 # of Children in HH: One 113 Occupation: Labor 128 # of Children in HH: Two 116 Household Income: Under $25K 114

# of Children in HH: Three + 125 Household Income: $25K-$49K 112 Age of Children in HH: 6-11 127 # of People in HH: Five Or More 116 Age of Children in HH: 12-17 111 # of Children in HH: One 132

Kind of Residence: Rented House 120 # of Children in HH: Three + 123 Kind of Residence: Rented Apartment 112 Age of Children in HH: 6-11 123

-- -- Age of Children in HH: 12-17 133 -- -- Kind of Residence: Rented House 135 -- -- Value of Residence: Under $100K 120

Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2008/09. This material is used with permission.

Reebok purchasers showed tendencies that indicate a busy, go-getting type of personality. For example, they were more likely than average to be intensely work-centered (124), approval-seeking (118), informed (114) and into health management (110).

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Table 8-19 Psychographic Characteristics of Reebok Shoe Purchasers, 2009 (index)

Psychographic Characteristics Index

Impulse Shopper: Far Below Average 110

Brand Loyals: Above Average 114

Approval Seeking: Far Above Average 118

Informed Consumer: Far Above Average 114

Early Adopter: Above Average 110

Active Health Management: Above Average 110

Work Centered: Far Above Average 124

Internet Activity: Far Below Average 112 Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2008/09. This material is used with permission.

Skechers Purchasers Demographics and Psychographics

Skechers purchasers popped for those age 25-44, Hispanics, dual incomes, marriage, family households, households with children, above average household incomes, and for those living in the Pacific region. Women, a core consumer for the brand, popped for higher education, and part-time employment—in total it evokes an image of a soccer mom.

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Table 8-20 Demographic Characteristics of Skechers Shoe Purchasers, by Sex, 2009 (index)

Men Index Women Index Age 25-34 122 Age 25-34 150 Age 35-44 148 Age 35-44 135 Hispanic 168 Hispanic 115 Pacific 163 Pacific 115

High School Grad Only 119 Some College 113 Employed Full-Time (30+ Hours) 123 Undergraduate College Degree 112

Occupation: Labor 141 Employed Part-Time (<30 Hours) 118 Employed Adults in HH: Two 133 Homemaker 110

Household Income: $25K-$49K 115 Occupation: Office & Administrative Support 117 Household Income: $75K-$99K 124 Employed Adults in HH: Two 129

Household Income: $100K-$149K 125 Household Income $50K-$74K 110 Presently Married 112 Household Income: $75K-$99K 111

# of People in HH: Three-Four 110 Household Income: $100K-$149K 114 # of People in HH: Five Or More 133 Presently Married 114

# of Adults in HH: Two 121 # of People in HH: Three-Four 118 # of Children in HH: One 123 # of People in HH: Five Or More 124 # of Children in HH: Two 147 # of Adults in HH: Two 110

# of Children in HH: Three + 145 # of Children in HH: One 122 Age of Children in HH: Under 6 152 # of Children in HH: Two 144

Age of Children in HH: 6-11 165 # of Children in HH: Three + 145 Age of Children in HH: 12-17 111 Age of Children in HH: Under 6 154

Value of Residence: $200K-$299K 144 Age of Children in HH: 6-11 180 -- -- Value of Residence: $300K-$499K 112

Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2008/09. This material is used with permission.

Psychographically, Skechers purchasers were 39% more likely to be serious researchers and info gatherers and 41% more likely to be serious about Internet activity. They were also more likely than average to be a super-informed consumer and child-influenced shopper. Also of note and in comparison with other brands, they were more likely (111) to not be brand loyal.

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Table 8-21 Psychographic Characteristics of Skechers Shoe Purchasers, 2009 (index)

Psychographic Characteristics Index

Brand Loyals: 1 Far Below Average 111

Approval Seeking: Far Above Average 111

Informed Consumer: Far Above Average 129

Early Adopter: 3 Average 116

Health and Image Leader: Above Average 125

Active Health Management: Above Average 116

Family Centered: Far Above Average 119

Child Influenced Shopper: Far Above Average 131

Work Centered: 1 Far Below Average 112

Advertising Receptivity: Far Above Average 129

Research/Info Gathering: Far Above Average 139

Internet Activity: Far Above Average 141

Economic Outlook-Next 12 Months Finances Better/Worse?: Significantly Better Off 127

Economic Outlook-Household Essentials Expect to Spend: A Little More 115 Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2008/09. This material is used with permission.

Asics Purchasers Demographics and Psychographics

Asics may be dubbed the affluent sneaker. The brand skewed significantly higher in key demographic indices suggesting highly educated, high net worth, and dual high-income families. Men were 105% more likely to have household incomes above $150,000 and 95% more likely to have homes valued between $300k and $500k. Women showed above average likelihood for household incomes above $150,000 at a whooping 149% and for homes valued between $500k and $750k at 103%!

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Table 8-22 Demographic Characteristics of Asics Shoe Purchasers, by Sex, 2009 (index)

Men Index Women Index Age 35-44 160 Age 35-44 127

White Non-Hispanic 110 Age 45-54 153 Northeast 128 White Non-Hispanic 117

Some College 131 Northeast 113 Undergraduate College Degree 147 Pacific 111

Graduate Degree 158 Undergraduate College Degree 176 Employed Full-Time (30+ Hours) 128 Graduate Degree 179

Employed Adults in HH: Two 145 Employed Full-Time (30+ Hours) 125 Household Income: $100K-$149K 123 Employed Part-Time (<30 Hours) 121

Household Income: $150K+ 205 Occupation: Professional/Technical 201 Presently Married 110 Employed Adults in HH: Two 131

# of People in HH: Five Or More 144 Employed Adults in HH: Three + 147 # of Adults in HH: Two 115 Household Income: $100K-$149K 186

Age of Children in HH: 6-11 123 Household Income: $150K+ 249 Age of Children in HH: 12-17 158 Presently Married 120

Kind of Residence: Owned House 103 # of People in HH: Three-Four 116 Value of Residence: $300K-$499K 195 # of People in HH: Five Or More 117

-- -- # of Adults in HH: Two 111 -- -- # of Adults in HH: Three + 120 -- -- # of Children in HH: One or More 114 -- -- # of Children in HH: Two 146 -- -- Age of Children in HH: Under 6 118 -- -- Age of Children in HH: 12-17 172 -- -- Kind of Residence: Owned House 127 -- -- Value of Residence: $100K-$199K 134 -- -- Value of Residence: $200K-$299K 130 -- -- Value of Residence: $300K-$499K 134 -- -- Value of Residence: $500K-$750K 203

Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2008/09. This material is used with permission.

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Asics purchasers spiked for avid Internet use and for research showing an index of 190 and 195, respectively. Their propensity for Internet use and research jibes with there less than likelihood to impulse shop and there greater likelihood to be brand loyal. Asics purchasers are also heavily invested in health and image (146) and active health management (137).

Table 8-23 Psychographic Characteristics of Asics Shoe Purchasers, 2009 (index)

Psychographic Characteristics Index

Impulse Shopper: Below Average 120

Brand Loyals: Above Average 112

Smart Greens: Far Below Average 119

Informed Consumer: Far Above Average 121

Early Adopter: Above Average 118

Health and Image Leader: Above Average 146

Active Health Management: Far Above Average 137

Research/Info Gathering: Far Above Average 195

Internet Activity: Far Above Average 190

Economic Outlook-Next 12 Months Finances Better/Worse?: Somewhat Better Off 113

Economic Outlook-Household Essentials Expect to Spend: A Little Less 122 Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2008/09. This material is used with permission.

Converse Purchasers Demographics and Psychographics

Converse purchasers popped for youth, Hispanics, residents in the Northeast or Pacific regions, larger households and renters. The Converse brand seems to have a firmer grip on women as they age. Men only popped for 18-24, but women popped for 18-44.

Household incomes showed a great disparity between men and women. Men popped for household income between $25,000 and $49,000 at 127, while women popped for $100,000 and $149,000 at 155.

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Table 8-24 Demographic Characteristics of Converse Shoe Purchasers, by Sex, 2009 (index)

Men Index Women Index Age 18-24 191 Age 18-24 188 Hispanic 196 Age 25-34 169 Northeast 121 Age 35-44 120

Pacific 166 Hispanic 201 Non High School Grad 140 Northeast 111 High School Grad Only 114 Southwest 156

Employed Part-Time (<30 Hours) 144 Pacific 138 Employed Adults in HH: Three + 154 Non High School Grad 126 Household Income: $25K-$49K 127 Some College 132

Not Married 143 Employed Part-Time (<30 Hours) 110 # of People in HH: Five Or More 168 Homemaker 148

# of Adults in HH: Three + 147 Occupation: Labor 127 # of Children in HH: Three + 177 Employed Adults in HH: Two 116

Age of Children in HH: Under 6 119 Employed Adults in HH: Three + 120 Age of Children in HH: 6-11 123 Household Income: $100K-$149K 155 Age of Children in HH: 12-17 127 # of People in HH: Three-Four 146

Kind of Residence: Rented House 135 # of People in HH: Five Or More 188 Kind of Residence: Rented Apartment 173 # of Adults in HH: Three + 158

Value of Residence: $300K-$499K 137 # of Children in HH: One 193 -- -- # of Children in HH: Two 189 -- -- # of Children in HH: Three + 158 -- -- Age of Children in HH: Under 6 187 -- -- Age of Children in HH: 6-11 188 -- -- Age of Children in HH: 12-17 212 -- -- Kind of Residence: Rented House 217 -- -- Kind of Residence: Rented Apartment 122

Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2008/09. This material is used with permission.

Converse purchasers showed above average tendencies early adopters (149), but below average impulse shoppers (133). Equally interesting is that they were 21% more likely to be far below average on being family centered, but showed an index of 174 for being far above average as a child influence shopper.

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Table 8-25 Psychographic Characteristics of Converse Shoe Purchasers , 2009 (index)

Psychographic Characteristics Index

Impulse Shopper: Far Below Average 133

Brand Loyals: Above Average 128

Approval Seeking: Far Above Average 136

Smart Greens: Far Above Average 128

Early Adopter: Above Average 149

Health and Image Leader: Above Average 136

Active Health Management: Far Below Average 116

Family Centered: Far Below Average 121

Child Influenced Shopper: Far Above Average 174

Work Centered: Far Above Average 124

Advertising Receptivity: Far Above Average 128

Research/Info Gathering: Average 114

Internet Activity: Far Above Average 125

Economic Outlook-Next 12 Months Finances Better/Worse?: Significantly Better Off 205 Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2008/09. This material is used with permission.

Puma Purchasers Demographics and Psychographics

The Puma profile pointed to those who were younger, Hispanic, without high school diplomas, and living in large households. Also showing significant pops in preferences were men with rental apartments (231) and households with children under six (166), and women from households with children 6-11 (185) and three or more children (227).

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Table 8-26 Demographic Characteristics of Puma Shoe Purchasers, by Sex, 2009 (index)

Men Index Women IndexAge 18-24 199 Age 18-24 239 Age 25-34 160 Age 25-34 131 Hispanic 263 Age 35-44 185 Northeast 144 Hispanic 288

Pacific 135 Northeast 155 Non High School Grad 221 Southwest 118

Employed Full-Time (30+ Hours) 110 Non High School Grad 164 Occupation: Labor 120 Employed Part-Time (<30 Hours) 140

Employed Adults in HH: Two 126 Homemaker 134 Employed Adults in HH: Three + 137 Occupation: Labor 163 Household Income: $25K-$49K 123 Employed Adults in HH: Three + 142

Not Married 143 Household Income $50K-$74K 117 # of People in HH: Five Or More 185 Household Income: $100K-$149K 137

# of Adults in HH: Three + 152 Household Income: $150K+ 135 # of Children in HH: Two 115 Not Married 119

# of Children in HH: Three + 225 # of People in HH: Three-Four 147 Age of Children in HH: Under 6 166 # of People in HH: Five Or More 203

Age of Children in HH: 6-11 145 # of Adults in HH: Three + 170 Age of Children in HH: 12-17 148 # of Children in HH: One 154

Kind of Residence: Rented House 120 # of Children in HH: Two 172 Kind of Residence: Rented Apartment 231 # of Children in HH: Three + 227

-- -- Age of Children in HH: Under 6 147 -- -- Age of Children in HH: 6-11 185 -- -- Age of Children in HH: 12-17 155 -- -- Kind of Residence: Rented House 155 -- -- Kind of Residence: Rented Apartment 132

Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2008/09. This material is used with permission.

Page 261: The Global Footwear Market: Athletic and non-Athletic Shoes

The Global Footwear Market Chapter 8: The Athletic Footwear Consumer

August 2009 © Packaged Facts 239

Puma purchasers were more likely approval seekers (176), early adopters (177), and health and image leaders (195). They also scored high for Internet activity (182) and work centeredness (163).

Table 8-27 Psychographic Characteristics of Puma Shoe Purchasers, 2009 (index)

Psychographic Characteristics Index

Impulse Shopper: 3 Average 111

Brand Loyals: Far Above Average 129

Approval Seeking: Far Above Average 176

Smart Greens: Far Above Average 133

Informed Consumer: 2 Below Average 114

Early Adopter: Far Above Average 177

Health and Image Leader: Far Above Average 195

Active Health Management: 2 Below Average 123

Family Centered: 1 Far Below Average 145

Child Influenced Shopper: Far Above Average 159

Work Centered: Far Above Average 163

Internet Activity: Far Above Average 182

Economic Outlook-Next 12 Months Finances Better/Worse?: Significantly Better Off 207

Economic Outlook-Household Essentials Expect to Spend: A Lot Less 163 Source: Compiled by Packaged Facts based on data from Experian Simmons National Consumer Study, Winter 2008/09. This material is used with permission.


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