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IADS press release: Logos and locals for shoes and accessories

press July 2022 Press release

While Shoes are recovering faster than Leather Goods from Covid, two trends are being observed: logos for locals, and the need to balance niche and blockbuster brands.

The IADS and NellyRodi regularly take stock of retail trends through a series of product category workshops. Their last one was dedicated to Leather Goods & Shoes categories, a key category for retailers. It is all about attracting local customers via a renewed brand mix, special services or partnerships, and the ability to react quickly.

Greatly suffering from lockdowns, the Leather Goods category saw its share of the total business slump from 10% in 2019 to 8% in 2021. Even though e-commerce sales tripled in the same period from 2% to 6% of the category business, it did not help compensate for the business lost due to the lack of touristic clientele in department stores. However, the luxury segment (including the affordable luxury offer) remained the biggest segment in 2021, with 36% of the sales, followed by the mid-range price point products (33%).

On the contrary, the Shoe category resisted better during the pandemic and remained at the same level in 2019 and 2021 (6% of the total business), even noting a slight increase in 2020. Similar to the Leather Goods category, e-commerce sales increased, doubling from 5% in 2019 to 10% of the category business in 2021. Luxury products were less important in terms of share of the business for this category, since the majority of the business was done with the mid-range segment (55%), the luxury segment being second with 23% of the total category business.

The challenges department stores are facing are mainly related to the business and traffic decrease. In such circumstances, their strategic priorities revolve around attracting more local customers, especially the younger generations. To that end, finding the right brand mix and matching new consumer trends is key, which, in the case of Leather Goods, is not easy given the weight of the global and well-established brands.

Leather goods: looking for the right balance between volume-driving and niche brands

Since there is not much brand renewal in the Leather Goods department, especially for Mid-Range and Premium brands able to generate large volumes (such as Michael Kors once did), local brands offer an interesting option to draw local customers’ attention, especially in terms of price point and at a time when tourism hasn’t fully resumed. 

But introducing new or niche brands is a challenge for department stores as they are usually hardly profitable. Still, they are necessary to enhance the overall store offer, balanced with the usual players known by everyone and help the store differentiate from competitors. To be more efficient, department stores tend to gather niche brands in multi-brand areas, mixing them with other product categories (shoes, ready-to-wear and other accessories), such as the Le Labo space at Galeries Lafayette.

Another option to differentiate is to team up directly with brands to present exclusive products, such as the collaboration between El Palacio de Hierro and Versace, presented in dedicated popup spaces.

NellyRodi presented its exclusive selection of up-and-coming brands in the category: Yuzefi, Destree, My Style Bag, Medea, RSVP, Bonastre, Audette, Camille Vost, Michino, Ozias, Talel Paris, Studio Reco, Aswad, Aesther Ekme, Verwicht.

Shoes: sneakers and show-off are the new normal

In terms of trends, casual is still key in the Shoe department, with the sneakers category driving the business. But this trend also brings issues with Nike and Adidas withdrawing from department stores to fulfil their Direct to Customer strategies. Besides, department stores usually do not have access to the most attractive styles. In such circumstances, they have to find replacements: Asics, New Balance, Veja and On Running are listed as successful or promising brands. An interesting option could also be to partner with third-party vendors selling top-tier and collectible sneakers: this is what Manor is currently doing with local partner HideOut. In addition, such an initiative also represents a great opportunity to attract Gen Z consumers.

In parallel, as people are going out again, they are more prone to show off by wearing styles bearing logos. NellyRodi witnessed that the demand for such products is supported by local consumption and growing +8% compared to 2019. In the logical continuity, it is expected that occasion pieces will also rise as customers are eager to dress up again.

NellyRodi presented its exclusive selection of up-and-coming brands in the category: Miista, Hereu, Reike Nen, Rombaut, Claris Virot, Vibi Venezia, Viron, Jacques Soloviere, Yume Yume, Ilio Smeraldo, O.T.A, Moea, Tabitah Ringwood, Umoja, MLLN.

New customer’s needs, adapted answers

With Covid, consumers got used to shopping distantly with the help of personal shoppers. Such a new habit is still flourishing now and the turnover generated by personal shopping continues to grow: for instance, El Palacio de Hierro more than doubled this business, while also making the store more appealing thanks to this service. It is also a way to compensate for the increased competition from both lower price point pure players (such as Farfetch) and the growing direct-to-customers online activity from larger luxury brands.

Interestingly, for these categories, sustainability is not a marketing argument to GenZ customers: for bags and shoes, the demand for sustainable products is still small, and not coming from the younger generation, but from the 25-to-35 year-old customers. 

When it comes to the price point, leading in most cases to the private label business, most department stores are greatly suffering from supply chain disruptions. On top of the costs increase in raw materials and transportation, and the longer delivery delays, they are now facing additional woes due to the recent lockdowns in China. As a result, they are looking for alternatives to China for the production of private label products. 

For both categories, the light at the end of the tunnel is close, but stores are not there yet

To increase the Leather Goods and Shoe business and draw more traffic in-store, finding the right brand mix able to generate high volumes and balance niche and big brands remains a head-scratcher for buyers. Department stores are also dealing with new trends induced by Covid: the sneakers trend is still very strong and more brands are needed to answer consumers’ appetite.
While Covid is not over and is still a source of concern, its consequences are still very much impacting the business: the supply chain disruptions represent a threat to the business, whether it’s about the costs increase, the delivery delays and the stock availability. The war in Ukraine only adds uncertainties and concerns.

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