Industry Profile:

The Shoe Industry consists of a multitude of footwear

manufacturers, wholesalers, and retailers. The major
wholesalers in the U.S. market are owners of a brand name
and typically source their shoes from independent
manufacturers. The retail segment of the industry ranges from
owners of large multinational chains to small local businesses.
Many shoe companies operate in both the retail and wholesale
arenas. Shoe companies covered by Value Line generally
adhere to the standard industrial page format.
Competitive Landscape
Taken as a whole, the Shoe Industry could be described as
mature. However, barriers to entry are far from insurmountable.
Since demand is largely driven by fashion and demographics,
newcomers with a hot product may thrive at the expense of a
fading rival. Indeed, the profitability of individual companies
depends on their ability to design attractive footwear lines and
remain at the forefront of consumers' consciousness.
There are three major product categories within the Shoe
Industry and the dynamics of each may differ. The athletic shoe
segment, which makes up about 30% of footwear sales, is
highly concentrated, as the largest companies comprise a vast
majority of the market share. Two players (Nike and Adidas)
dominate this category, with the giants slugging it out over
sponsorship contracts with star athletes and snuffing out the
competition using their economies of scale in distribution and
marketing. The companies within these categories tend to be
smaller than their athletic counterparts and compete on the
basis of superior design. Thus, the market for men's and
women's shoes is much more fragmented, consisting of a
myriad of bit players. Women's shoemakers, in particular, must
be lean and flexible to meet the changing tastes of their
consumers. Demand here can be fairly cyclical, but the ebb and
flow of performance can be attributed more to the individual
product portfolio rather than macroeconomic factors. The
economy does play a role in demand, though, particularly for
products that are more up-market. The remaining 30% is
comprised of various niche product categories and boom-or-
bust novelty designs.
Product Innovation
Due to rapidly changing tastes of shoe buyers, it is important
for shoemakers to continually offer better and bolder product
lines to catch the consumer's eye. For the athletic shoe
companies, this largely means improving comfort and
performance. In the dress and casual markets, it means
offering smart, fashion-forward designs. Superior products also
command higher price points, improving profitability. That said,
the worst thing a company in the shoe industry can do is expect
to coast by on the back of a few successful product offerings as
the rest of the market passes it by. Even though this can lead to
great short-term growth, it is not a recipe for long-term
sustainability. The success of a company's product offerings
can generally be gauged by the following performance metrics.
Important Metrics
For shoe retailers, comparable-store sales is a key measure of
revenue performance. Although this statistic is not displayed as
part of our numerical presentation on the Value Line page, it is
often referenced by analysts within the stock commentary. This
metric measures top-line growth at the existing store base over
a set period of time, usually on a quarterly or yearly basis,
rather than including newly opened locations. Healthy same-
store sales gains indicate that the retailer is successfully
stocking desirable products and provides meaningful insight
into future earnings performance. Although retailers face high
fixed costs related to rents and inventory, strong comparable-
store sales growth will dilute the impact of these expenses and
improve operating leverage.
Inventory levels are also of particular concern. Inventory growth
is positive, if it is paired with an increased market presence.
However, it may mean a sharp decline in profitability is at hand,
absent a corresponding rise in the store count/distribution
footprint. Retailers that misread market dynamics and order
excess product often face the prospect of deep discounts,
depleting profits. The same can be said of wholesalers that
overproduce footwear without a corresponding retail market.
Investors in these stocks should focus on companies with
healthy growth and a lean cost structure. Efficient inventory
management is of the utmost importance, as fashion trends
may change seemingly overnight. For retailers, this means
maintaining a pulse on consumer demand and achieving
economies of scale in procurement and marketing functions.
Within the wholesaling segment, this means strong supply
chain management coupled with an increasing distribution
footprint. This type of flexible structure enables a shoemaker to
adapt to changing trends and come out a relative winner no
matter what the economic environment.
Concluding Considerations
Companies within the Shoe Industry are impacted by a variety
of factors, from the macroeconomic environment to fashion
trends within particular footwear categories. That said,
investors should pay close attention to same-store sales and
margin trends, as well as inventory management. The
companies that succeed in these areas tend to be the best run
and, thus, are more likely to stay ahead of fashion trends and
remain competitive in the marketplace. Strong brand
recognition is another factor to take into consideration, as these
names are more likely to resonate with consumers when faced
with similar product offerings.
Types:
VKC
VKC Group is a footwear manufacturing and marketing company, based in
the Kozhikode district of Kerala state, in India.
It is considered to be one of the biggest in the organised footwear sectors.
It is also the largest branded PU footwear manufacturer in India.
V.K.C Mammed Koya is the founder of VKC Group.[1]

History[edit]
The Group was established on 17 August 1984 with venturing into a Hawai Sheet
manufacturing unit. Later on Hawai straps were also inducted to the production
line and in 1986, VKC group launched the first product with its own brand name
VKC Hawai in the market with an initial production of 600 pairs per day. By 1989
the production increased to 5000 pairs a day and by 1996 it was increased to
17000 pairs.
In 1987, the group initiated the floating of the first RPVC (Rigid Polyvinyl
Chloride) footwear manufacturing unit in the Kozhikode, Kerala. This product also
got very good acceptance in the market. This has paved the way for a rapid
change in the footwear industry itself. Within a few years the number of Rubber
and RPVC units grew to more than 80 numbers in this region.
In 1994 the group ventured the first unit in Kerala to manufacture footwear from
virgin PVC. This resulted in a drastic change and the multinational brands
confronted competitions from the local brands. In 1998 the group ventured into
the first Micro Cellular PVC footwear in Kerala with the help of imported plant and
machinery. "Quality at affordable price" made the VKC groups products popular
in the market day by day.
In 2001 the group introduced the first Air Injected PVC DIP footwear
manufacturing unit in the South India. In 2003 the group missioned the first
Injected EVA manufacturing unit in South –Central India. In 2006 the group
started backward integration to produce EVA compound for Injection and initiated
the first EVA compounding plant in the South –Central India.
In 2007, the group initiated the Manufacturing of PU DIP footwear at affordable
price for common man. The production capacity also shoot up to two lakhs of PU
footwear per day.
The company had achieved a prominent position in the footwear market of India.
The main markets which are being focused by the company are South & South-
Central part of India & Expanding to the rest part of India. Apart from India, the
Group have its market in more than 15 countries including GCC Countries,
Singapore & Malaysia.
Bata (company)
Bata Limited[5] (also known as the Bata Shoe Organization) is
a multinational footwear and fashion accessory manufacturer and
retailer based in Lausanne, Switzerland .[6] A family-owned business,
the company is organized into three business units: Bata, Bata
Industrials and AW Lab. The company has a retail presence of over
5,300 shops in more than 70 countries and production facilities in 18
countries.

The T. & A. Baťa Shoe Company was founded on 24 August 1894 in

the Moravian town of Zlín, Austria-Hungary (today the Czech
Republic) by Tomáš Baťa (Czech: [ˈtomaːʃ ˈbaca]), his brother Antonín
and his sister Anna, whose family had been cobblers for generations.
The company employed 10 full-time employees with a fixed work
schedule and a regular weekly wage, a rare find in its time.

In the summer of 1895, Tomáš was facing financial difficulties. To

overcome these setbacks, he decided to sew shoes from canvas
instead of leather. This type of shoe became very popular and helped
the company grow to 50 employees. Four years later, Bata installed
its first steam-driven machines, beginning a period of rapid
modernisation. In 1904, Tomáš read a newspaper article about some
machines being made in America. Therefore, he took three workers
and journeyed to Lynn, a shoemaking city outside Boston, in order to
study and understand the American system of mass production. After
six months he returned to Zlin and he introduced mechanized
production techniques that allowed the Bata Shoe Company to
become one of the first mass producers of shoes in Europe. Its first
mass product, the “Batovky,” was a leather and textile shoe for
working people that was notable for its simplicity, style, light weight
and affordable price. Its success helped fuel the company’s growth.
After Antonin's death in 1908, Tomáš brought two of his younger
brothers, Jan and Bohuš, into the business. Initial export sales and
the first ever sales agencies began in Germany in 1909, followed by
the Balkans and the Middle East. Bata shoes were considered to be
excellent quality, and were available in more styles than had ever
been offered before. By 1912, Bata was employing 600+ full-time
workers, plus another several hundred who worked out of their homes
in neighbouring villages.
Footwear Introduction
Footwear refers to garments worn on the feet, which originally serves
to purpose of protection against adversities of the environment,
usually regarding ground textures and temperature. Footwear in the
manner of shoes therefore primarily serves the purpose to ease the
locomotion and prevent injuries. Secondly footwear can also be used
for fashion and adornment as well as to indicate the status or rank of
the person within a social structure. Socks and other hosiery are
typically worn additionally between the feet and other footwear for
further comfort and relief.
Cultures have different customs regarding footwear. These include
not using any in some situations, usually bearing a symbolic meaning.
This can however also be imposed on specific individuals to place
them at a practical disadvantage against shod people, if they are
excluded from having footwear available or are prohibited from using
any. This usually takes place in situations of captivity, such
as imprisonment or slavery, where the groups are among other things
distinctly divided by whether or whether not footwear is being worn. In
these cases the use of footwear categorically indicates the exercise of
power as against being devoid of footwear, evidently indicating
inferiority.
Chalcolithic leather shoe; ca. 5.000 BCE

Footwear has been in use since the earliest human history,

archeological finds of complete shoes date back to the copper
age (ca. 5.000 BCE). Some ancient civilizations, such
as Egypt and Greece however saw no practical need for footwear due
to convenient climatic and landscape situations and used shoes
primarily as ornaments and insignia of power.
The Romans saw clothing and footwear as unmistakable signs of
power and status in society, and most Romans wore footwear, while
slaves and peasants remained barefoot.[1] The Middle Ages saw the
rise of high-heeled shoes, also associated with power, and the desire
to look larger than life, and artwork from that period often depicts bare
feet as a symbol of poverty. Depictions of captives such as prisoners
or slaves from the same period well into the 18th century show the
individuals barefooted almost exclusively, at this contrasting the
prevailing partakers of the scene. Officials like prosecutors, judges but
also slave owners or passive bystanders were usually portrayed
wearing shoes.
In some cultures, people remove their shoes before entering a home.
Bare feet are also seen as a sign of humility and respect, and
adherents of many religions worship or mourn while barefoot. Some
religious communities explicitly require people to remove shoes
before they enter holy buildings, such as temples.
In several cultures people remove their shoes as a sign of respect
towards someone of higher standing. In a similar context deliberately
forcing other people to go barefoot while being shod oneself has been
used to clearly showcase and convey one's superiority within a setting
of power disparity.
Practitioners of the craft of shoemaking are called shoemakers,
cobblers, or cordwainers.