Siro Badon: “Reintroduction of restrictive measures, compromised Christmas shopping and postponed recovery of demand will have serious repercussions for a sector that has seen a further drop in the number of active enterprises (-101 in the first 9 months of the year) and employees (down by about 2,600) in 2020. If component manufacturers are taken into account, the balance is even more negative: -231 enterprises and -3453 employees”.
In the third quarter the dynamics recorded in the Italian footwear industry were somewhat less unfavourable, but still far from positive. This is the picture that emerges from the figures processed by the Confindustria Moda Research Centre on behalf of Assocalzaturifici, revealing a double-digit drop in the turnover of the companies surveyed during the period under examination (-26.6%). Only 14% of interviewees declared that they had exceeded, or at least matched, their turnover in the third quarter of 2019, while more than half of the panel reported a drop of -20 to -50%. These figures were matched by Istat's industrial production index, which registered -17.4% in the months between July and September. The drop since the start of the year is considerable, in all forms.
"The cumulative figures for the first 9 months of the year,” explains Assocalzaturifici Chair Siro Badon, “reveal a sector that has been sorely tried by the Covid emergency. We are seeing shrinkage of around 20% in volume in domestic consumption (-17.8%) and international sales (-20.1%), with a major reduction in industrial production (-29.4%) and an average reduction of one third (-33.1%) in the sales of our member companies. There has been a drop in sales throughout the sector, almost always at double-digit rates, on the principal markets for our products, with a -18.1% drop in the trade balance. The first timid signals of a return to ‘normality’ in demand, on both the international and domestic markets (in September, both exports and household spending in Italy equalled volumes for the same month in 2019) could be immediately annihilated by the second wave of the pandemic, with severe repercussions for the industry’s ability to hold out, resulting in a further reduction in the number of active enterprises (-101 in the first 9 months ) and the number of employees (down by about 2,600) in 2020. If component manufacturers are taken into account, the balance is even more negative: -231 enterprises and -3453 employees. The year saw record-breaking resort to wage support (+930% in the first 10 months of the year in the leather industry, with +1267% in October). We are very concerned about the months to come”.
In detail, cumulative demand on the domestic market in the first 9 months of the year revealed a -17.8% drop in household spending in Italy in terms of quantity, -23% in terms of expenditure, with average prices down -6.3%, partly due to increased use of slippers and footwear for use in the home during the months of lockdown, which are lower in value (in addition to the lower number of ceremonies and occasions for wearing new shoes).
According to Sita Ricerca's Fashion Consumer Panel for Assocalzaturifici, the segments of the market most affected were “classic” shoes for men and women (with a drop of around -30%), while the drop in sales of children’s shoes and sports footwear/sneakers was between -15 and -20%. As mentioned above, the reduction was less severe in the slippers and lounge footwear segment, which fell by -7.4% in terms of the number of pairs sold, -6.8% in terms of expenditure.
Despite the boom in online sales, 2020 represents a low point for footwear purchases in Italy, partly due to the absence of international tourism and the resulting sales, especially in luxury footwear.
Exports, which have always been the leading outlet for the footwear sector, dropped -20.1% in terms of quantity in the first 9 months of the year, -17.2% in terms of value. On the whole, including pure product commercialization, 127.1 million pairs of shoes were sold abroad between January and September (almost 32 million less than in the same period in 2019), for a total value of 6.4 billion euro. Average prices increased by 3.6%.
Istat figures reveal that, after sales cut in half during the lockdown of March and April (-52% by volume) and continuation of this markedly unfavourable trend in May and June (-26.5%), between July and September, though the hoped-for “bounce-back” did not occur, the drop in sales was definitely less marked (with tendential figures of -6.5% by volume and -1.5% in terms of value), thanks largely to the month of September, when the number of pairs exported equalled exports in the same month in 2019 (+0.3%).
Exports within the EU (representing 65% of the total quantity) dropped -16.5% in terms of volume (-14.5% in value) in the first 9 months of 2020. The drop in exports to France exceeded 20%, in terms of both quantity and value, including products made on contract for designer labels; the drop in exports was less steep in the case of Germany (-14% less pairs, which however followed upon a -8.4% drop in 2019), the Netherlands (-12%, representing -2.6% by value) and Belgium (-13.4%).
Non-EU destinations (which dropped by about -26% on the whole in terms of quantity, almost ten percentage points more than the drop in sales within the EU, and -19.3% by value) saw a drop of 30% in exports to North America (with exports to the USA down -35% by volume and -29.6% in terms of value). In the Far East (which was on the whole down -23.3% in terms of quantity), the reduction was significant on all the principal markets (China -20%, Hong Kong -35%, and Japan -25% in terms of volume), the sole exception being South Korea (up 16% in terms of value, despite a -6.8% drop in the number of pairs sold), which ranked seventh in terms of value among destinations for Italian footwear exports (it ranked tenth in 2019). China displayed a certain dynamism in the third quarter (+16.8% by value), primarily attributable – considering the significant increase in average prices – to the high end of the range: volumes dropped -2.1% as compared to July-September 2019. The CIS countries also performed poorly (with Russia dropping -25% by volume), as did the Middle East (-20.5%). The reduction in exports to Switzerland (-16.4% by quantity and -9% by value), a traditional logistics and distribution hub for major luxury multinationals, was not as bad, thanks to recovery in the third quarter (+6% in terms of number of pairs, +10% in value).
Sales to the United Kingdom are in fact down -29% by quantity, -23% in terms of value.
In geographical terms, the Veneto – the top-ranking region, accounting for about 28% of Italy’s total footwear production – limited losses to -13.4% by value, while production was down -18% in Lombardy and about -22% in Puglia.
The drop was even more marked in Tuscany (-30.3%), the Marche (down -27.7%, with Macerata -26.4%, Fermo -27.2% and Ascoli Piceno -30.6%) and Campania (-42.4%).
Despite -27.5% shrinkage in the first 9 months of 2019, Florence still leads the ranking by province, at 984 million euro (15% of Italy’s total production).
Record-breaking claims of hours of wage support continued to be authorised by Italy’s national social security institute, INPS, for companies in the leather goods industry in October: 10.6 million, +1267% over October 2019. In the first 10 months of the year, 66.6 million hours of wage support were granted (+930% over the 6.5 million hours claimed in January-October 2019), reaching record-breaking levels in all the principal production districts. Tuscany (18.4 million hours, +3634%), Veneto (12.9 million hours, +954%) and the Marche (10.2 million hours, +430%) were the regions that made greatest use of the fund. The number of hours claimed is now two and a half times the number authorised in the first 10 months of 2010, in the midst of the world-wide economic crisis.
Milan, 29 December 2020