Factors affecting the Footwear Industry during COVID-19 Pandemic

During the COVID-19 pandemic, many businesses struggled to make a profit, especially if they were high street stores.

Political factors are very important for any business. Political factors may include the pandemic and Brexit. The pandemic halted almost all companies across the world, meaning they had to adapt to the changes that the government were putting in place during the lockdowns. Many companies had to operate solely online, and some had to close completely. Companies such as Nike and Adidas had to close their stores on the High Street but were still able to operate online.

Brexit however is different to this. Brexit meant that some retail stores would have shortages and/or delays in obtaining some of their items. Many footwear companies source their products from the EU and would have to pay more to have those goods transported over.

A solution to this would be manufacturing products from the home country. This will decrease transportation costs.

There are also some economic factors that can impact a business, especially during a pandemic. One factor is Employment levels. During the covid 19 pandemic, many employers had to dismiss many of their staff. This was due to the businesses being forced to close as there were nationwide lockdowns. Businesses having to close were not making enough profits to keep their employees on at the business. Some businesses who operated online as well as high street did not suffer as badly as those businesses that only operated via the high street. The bank of England helped businesses and banks. They did this by saving jobs and supporting the economy. “We put in place a package of measures to help keep firms in business and people in jobs and help minimise the longer-term damage to the economy.” (Our response to coronavirus (Covid), 2021)

Another economic factor is that during the covid-19 pandemic, many people were ‘panic-buying’. They were buying items such as toilet paper, disinfectant, pasta, and antibacterial hand gel. “Panic buying is a common consumer reaction to disasters and often occurs when consumers in anticipation of, or after, a disaster or perceived disaster.” (Islam et al., 2021). This is a positive factor. However, like what was discussed earlier, many items such as trainers, gym wear etc were not purchased as much as they would of. This will affect the footwear industry as people were not buying new shoes for the gym and their hobbies. Due to the lockdowns throughout the country, not many people were going to the gym as they were closed in line with government guidance.

Brexit and its impact on the Footwear Industry

A solution to the economic factor of stores closing on the high street due to the lockdown is that they could have moved to online temporary during the pandemic or permanently if it works better for the business. This would benefit businesses who did not have an online presence because they could keep their customers and charge for delivery to those customers.

A solution to the economic factor of gyms closing and the lack of purchases of trainers and gym wear is that gyms that were closed can offer their members gym classes online, for instance meditation classes and yoga classes that are acceptable to perform from home.

Within the footwear industry, there are many social factors that can affect the industry. Social factors can include education level, culture, leisure interests and demographics.

Relating to the footwear industry the social factors that effects this industry is education level. Working in retail requires some education and skill in that sector, for instance customer service skills. This requires staff members to be able to communicate with customers in a friendly and professional matter.

During the covid-19 pandemic, staff were being furloughed from their jobs and had to stay at home for many months. This effected the footwear industry a lot because stores were having to close due to social distancing. However, businesses that operate online as well as in person, they were able to continue sales online.

Covid-19 also affected UK’s biggest footwear store, JD Sports. “In such a crowded market, JD Sports stands out for still managing to bring in ever-increasing sales.

However, as well as suffering due to the closure of its stores during COVID-19, JD Sports suffered another blow when its Footasylum acquisition was blocked in May 2020.” (Baram, 2020). This shows that JD Sports was heavily impacted during the covid-19 pandemic, as they missed out on a huge opportunity with another competitor that is also successful in this industry.

A solution to the high street stores closing during the lockdown, companies such as JD sports could have sales on their online website, so customers can still shop there and as they have less money to spend on leisure items, a sale would help them and would encourage more sales.

There are some technological factors within the footwear industry. one technological factor is social media. During the covid 19 pandemic, social media has become increasable popular. The influence of covid 19 was that many people were working from home and were on their phones more often than they would be.

Economic Factors

Another technological factor could be that during covid 19, digital sales increased a lot. The pandemic pushed U.S. consumers online, contributing an additional $105 billion in U.S. online revenue in 2020 and accelerating ecommerce by two years, Digital Commerce 360 estimates.

A solution to this, in our company’s case, could be to educate our staff on using social media. As the covid-19 pandemic has proven to most businesses and industries, a lot of customers use social media, and this can help generate sales even if people are at home and not in the stores.

Within our daily lives, shoes are a huge part of it. There are more than 20 billion pairs of shoes manufactured every year. However, this brings a huge threat to the climate of our planet. The manufacturing of shoes involves a lot of machinery and a lot of chemicals to produce those shoes. According to statistics, 38% of students at a secondary school throw out their old shoes and 42% of them were donated to other students who needed them.

It is very easy to prevent this from happening, as Nike has already proven. Nike has developed a program called ‘Reuse a Shoe’. This is a program where customers who own a pair of shoes, for instance trainers, can take them to their local Nike store and can get them transformed into new material for athletes. Nike have said that they will turn them into Nike Grind, which is a material that is powering the next generation of athletes.

As our company is a sustainable company, there are many things we can do to improve the environment. Currently, we are using sustainable suppliers which reduces carbon footprint, and we are also using sustainable materials to produce the shoes.

Relating to covid-19, many people were clearing out their wardrobes, as they were stuck at home for a long period of time. This means that they were throwing away clothes and shoes they no longer wear, and as donation places and charity shops were closed due to the lockdown, many people were just throwing away their old clothes and shoes which has a big impact on the environment.

Within the footwear industry, it is important for businesses to meet the laws required by their industry. These may include improving employment law in developing countries and expanding health and safety regulations. Improving employment law in developing countries means that companies in the footwear industry can be more ethical, which is good for their reputation and expanding their health and safety will improve staff morale and encourage other people to work for the company.

Employment levels during COVID-19 Pandemic

A solution to this would be ensuring staff members can access welfare programs within the company, also allowing them to seek advice from unions.

Scope: Trainer Industry will have to adapt to customers being more used to shopping online after the pandemic.

A key drive for this is the pandemic. As covid still hasn’t fully disappeared, companies still must be updating their online websites, apps etc. as a new lockdown may come into force. Companies that sell footwear should have a big presence on social media so they can reach their target audience. Nike is very good in doing this, as they have social media accounts on almost every social media platform.

The threat of entry in the footwear industry is very low. This is because there are big brands such as Nike, Adidas and Reebok who are successful and are already attracting customers. Bigger companies can discount their prices as they can afford it whereas smaller, newer companies can’t do this as they are new and don’t have many customers and can’t afford to discount their products. Another threat is brand image as new companies do not have the branding image to advertise their products whereas Nike has tv advertisements. Customers not familiar with new company, customers don’t want to risk going to a new company.

Power of customers is moderate as customers would rather go for a lower priced pair of shoes. Footwear is essential for customers, as people wear shoes everywhere they go. There are also many stores that sell shoes now, not only Nike and Adidas but also places like Primark and Matalan sell shoes for a cheap price. Customers are now becoming more knowledgeable about prices and the quality of shoes, so they will be shopping around looking for a price within their budget.

Power of suppliers is low. This is because many big and well-known companies negotiate with suppliers in developing countries to decrease the price of materials and labour costs. For instance, companies such as Nike has outsourcing contracts with suppliers in countries such as China, India, and Mexico.

The threat of substitute products in the footwear industry is moderate. This is because there are many substitutes out there already such as Primark and Matalan who make shoes for a cheap price. However, the threat could also be low as companies such as Nike and adidas make a lot of the products that are the same.

Within the footwear industry, there are a lot of competitors. These brands invest a lot of money into their marketing campaigns so they can keep up with each other. The number of direct competitors is low, which makes the competition stronger. Overall, the level of competition in the footwear industry is low.

It is believed that the footwear industry has an oligopoly industry type. This is because the footwear industry is controlled by the two most well-known footwear brands, Nike and Adidas. The other companies in the footwear industry seem to follow these two companies because they are so successful. Nike and Adidas achieved this control in the market by sponsoring athletes at the Olympics, at football and other sports events.

The attractiveness of entering the footwear market is low. This is because there are many companies in this industry, some are very well known, and some are not. Furthermore, there are a lot of successful companies such as Primark that sell quality, low-cost shoes that is well known. After analysing the industry with Porter’s 5 Forces, it had become clear that the threats of entering this market with the other factors involved that entering this market would be difficult. To keep up with the bigger and more successful brands, you would need a lot of investments to pay for advertisements and to pay for the quality materials for the shoes to keep up with competitors such as Nike and adidas. As for our company, I believe it would be possible to enter this industry and succeed.