2022 was supposed to be the year of ‘lift off’ after the 2021 partial bounce back from covid and a general reaching of pre-covid levels of production and consumption.

In fact, covid-19 and its variants continued to linger and were added to by a new series of global problems. The Russian invasion of Ukraine was the headline maker, particularly in Europe. Other obstacles to growth included inflation being higher than for decades, energy supply shortages and its weaponising, coupled with delayed deliveries. Indeed, the slowdown was broader-based and sharper than predicted. Growth was heading to be the weakest since 2001 except for the 2008 global financial crisis and the most severe covid period in 2020.

Figure 1 shows 2021 growth compared to forecasts for 2022 and 2023. Of course, single years should not be taken in isolation as some results in 2021, such as the UK, were the result of one of the sharpest falls the previous first covid year. Inflation was 4.7% globally in 2021 and was predicted to reach 8.8% in 2022, 6.5% in 2023 and 4.1% in 2024. So, a difficult couple of years is forecast by the IMF and others. The global economy is therefore hugely impacting the footwear sector.

Footwear sector in 2022

The early signs were that the shoe industry would be able to continue its progress onwards from 2021. This may be seen, for example, in the performance of shoe imports into the important US market as it is the most lucrative and extensive. The period January to September saw imports rise by 357 million pairs or 21%. This was largely due to China which sent 179 million pairs more than in the same period in 2021, an increase of 18.6%. As expected, however, since then growth in both is slowing down and that year-end figures are likely to be more modest but still possibly over 15% higher than 2021 for the US and over 12% for China.

Nevertheless, this does indicate both that the US market was recovering and that China, despite its zero covid lockdown policy, was also managing to increase its exports. It is a pity that full 2022 figures were not available at the time of writing but even with escalating problems such as rising inflation, energy supplies, delivery problems, the Russia’s invasion of Ukraine, lingering covid, worries about winter fuel, plus local difficulties such as the fiercely fought Brazilian election, it is highly likely that 2022 will be seen to have pulled itself back to pre-covid levels and exceeded them in some countries and some sectors. 

There was also evidence that some American and European buyers in particular were starting to diversify their sources of supply or increase diversity where such action had already been taken. This was exacerbated by China’s zero covid policy with further lockdowns and consequent lack of supplies to western buyers. In any case, some buyers were taking the view that Chinese costs were becoming too high and that they needed to seek lower cost suppliers in order to remain competitive. 

The invasion of Ukraine also showed the danger of being over reliant on one supplier. In this instance energy, and particularly Germany’s reliance on Russian gas. China, however, continued to dominate the global market. As seen, the expanding USA market once again saw China as its main supplier with a rise of over 20%. In November, stock markets were reacting to news that China would soon start to lift its strict zero covid rules, probably in early 2023. Besides the effects the initial ruling had on export deliveries, there have been other factors such as the huge Chinese market for raw materials being closed; exporters of luxury goods to the country have also suffered through lack of access.

Fashion and sustainability

Another topic of interest in 2022 was the fast fashion industry and how it is fitting in with concepts such as sustainability and working conditions. Sustainability is a word that is increasingly being seen in mission statements and other forms of promotion, and aims to be seen as offering a long term panacea. To some observers, sustainability should in fact cover not only environmental matters, but also economic, social and other elements as well.

The fashion industry is said to be responsible for 92 million tonnes of waste each year. In the USA alone, this includes 300 million pairs of shoes. Vivobarefoot estimates 22 billion pairs are dumped globally and that in the UK and USA, 90% of footwear will end in landfill, many within a year. 77% of consumers claim to want brands to reduce waste and 60% say they would pay more for sustainable footwear. Vivobarefoot itself has introduced ReVivo with an ‘end of life solution’. Environmental sustainability consultancy Quantis claims that footwear is responsible for 1.4% of greenhouse gas emissions. Eram in France has 10 apparel and footwear brands and has run its own sustainability programme Change For Good since 2018. Its goal is to demonstrate that mass market fashion can be both socially acceptable and profitable. The company’s sustainable development director, Isabelle Desfontaines says, “If fashion is not circular it will not exist.”

The results of Asos.com, a leading UK on-line fashion business, for 2021/2022 (to 31.8.22) saw sales grow by only 1% to £3.94 billion with pre-tax profits falling 89% to £22 million and a need to write off £130 million of stock. Whilst the UK remained a strong market, overseas sales were sluggish. The question is therefore whether a fast fashion model is appropriate where sustainability and the aspects of sourcing cheap materials and labour are becoming ever more important. As a result of this, the company has indicated that it needs to revolutionise its business model.

Lasting effects

The changes caused by covid are worthy of further study to see if they have become permanent or whether there has been a return to ‘normal’. For instance, working at home has continued to some extent. With higher winter heating costs will this mean that employees will be encouraged to work at home or will they find it too expensive in fuel costs? Will indoor footwear, comfort footwear and sports footwear still reap dividends rather than fashion footwear? A related theme from the Russian/Ukraine war could be that armies and ministries of defence demand more funding for military and safety footwear.

Interim 2022 results from leading sports brands, for example, were showing restricted growth until September. Adidas, in the first nine months was showing a 1% increase over the previous 2021 period in currency neutral terms or plus 8%  in euro terms. By September, markets were slowing in Europe and America, China was still suffering from the zero covid shutdown, loss of the Russian market had an impact, while overstocked inventories called for more promotion. However, there are signs from many leading brands in the US predicting their 2022 results will be positive. For example, Wolverine foresees a rise of between 10% to 11.6%, Skechers were up 19% in the first nine months and is expecting an annual result of around $7.3 billion. Caleres is looking at plus 4% to 6% and Columbia  plus 10% to 12%.

Summary

The year progressively became more difficult for many countries for the reasons given above. It would seem that, at this stage, results could go either way. US imports during the year suggest a rise on 2021 especially with Chinese exports being strong. After a fall of 15.1% in the first covid year 2020, 2021 had been more positive with a bounce back of plus 11%, although for many countries not yet to pre-covid levels. Shoe production and consumption are likely to be in advance of 2021 largely due to the first nine months of the year but lower single digit growths are likely. We do live in uncertain times where it seems that anything could happen and it would be a brave person who would be prepared to forecast with any degree of certainty what the next two or three years might bring. 

Stuart Cleaver, World Shoe Review

 Photo: SHUTTERSTOCK / ANI_RAW_SHOTS 

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