2023 was chock full of wins for the footwear industry, but the year was not without its challenges.
The supply chain and pandemic-related issues of the last two years were replaced with a slew of other headaches — inflation, foreign exchange headwinds, an oversaturated North American athletic footwear market and cost-conscious consumers with little discretionary income to spend on shoes.
For many retailers, 2023 represented a reset year to cut costs and realign businesses for success in 2024 and beyond.
As the year comes to a close, here were some of the biggest business issues that defined the footwear industry this year.
Inflation
Retailers and brands said that a generally inflationary environment in the U.S. this year made for a more cautious consumer that was wary about spending on discretionary categories, like footwear.
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According to data from the Footwear Distributors and Retailers of America (FDRA), shoe prices in November rose 0.7 percent from a year earlier. Higher prices for men’s footwear, up 0.8 percent, and women’s shoes, up 1.6 percent, offset a 0.5 percent decline in children’s footwear prices in November.
Overall consumer prices increased 0.1 percent in November from October and 3.1 percent from the same month last year.
Retail crime
Throughout 2023, retailers including Dick’s Sporting Goods and Walmart have been quick to decry shoplifting and organized crime rings as a hindrance to profit growth. Target even said this year it would close nine stores in four major cities as it faces waves of organized crime and theft.
According to recent data from the National Retail Federation (NRF), shrink — or when stores have fewer products than recorded in inventory books largely driven by retail crime — accounted for $112.1 billion in losses in 2022, up from $93.9 billion in 2021, when taken as a percentage of total retail sales in 2022. NRF found that internal and external theft together accounted for nearly two-thirds (or 65 percent) of retailers’ shrink in 2022.
North American wholesale troubles
Throughout much of 2023, shoe retailers and brands reported challenges in North America. In general, inventory excesses in the region led to more conservative orders from wholesale retail partners, which took a toll on shoe brands’ businesses. At the same time, North America has grappled with a series of broader economic challenges, such as inflation, soaring interest rates and recession concerns.
Throughout the summer, Adidas, Steve Madden, Skechers, Deckers, Puma and Columbia Sportswear all lamented the challenges in the U.S. market. In some cases, these brands have only recently begun to see these issues ameliorate.
The decline of the metaverse
Several brands made their entry into the metaverse in 2022, but the hype of the new virtual realm didn’t translate well into 2023.
Companies that were once bullish on the Web3-powered platform pulled back on their spending in the space throughout 2023. Disney eliminated its entire 50-person metaverse team in late March as part of larger cuts. Walmart shuttered its “Universe of Play” on Roblox in late March after only six months. Even Meta — which rebranded from Facebook Inc. in 2021 in anticipation of the metaverse taking off — has hit some speed bumps and announced it would lay off 10,000 more employees in March on top of the 11,000 cuts it revealed in November 2022.
Cult & Rain, the Web3-based luxury fashion and sneaker company that launched in January 2022 with hopes of changing how consumers interact with the metaverse, shut down operations in early December.
Despite the decline of the metaverse, artificial intelligence was a hot topic this year, as more brands determine how this technology might find a place in their organizations.
Leadership shifts
Throughout 2023, VF Corp., Academy Sports & Outdoors, Under Armour, Adidas, Designer Brands, Converse, Pacsun, Kohl’s, Belk, Red Wing, Wolverine and more major footwear brands and retailers ushered in a new top executive to their ranks. Many of these leaders outlined transformation plans to get their businesses back on track.
These leaders entered their roles during an unprecedented time for a footwear industry. To succeed, they will need to possess a clear vision, a strong sense for what the consumer wants and the ability to pivot quickly when the environment demands it.
In tandem with new CEO appointments, Wolverine, VF, Under Armour, Foot Locker and Adidas all outlined different business transformation plans this year. These new leaders described 2023 as a “reset” year, to set up their respective brands for long-term success with a focus on streamlining operations, cutting costs and elevating products.
