The footwear retailing industry has lost its footing in the past five years, with revenue expected to contract by 0.7 per cent in the five years through 2013-14, according to an IbisWorld report.
Despite this, as the global economy stabilises and consumer sentiment and expenditure improves, industry revenue is expected to grow by 0.8 per cent in 2013-14 to reach $3.3 billion.
IbisWorld industry analyst, Lauren Magner, says weak consumer sentiment, subdued discretionary spending, fierce competition and a difficult retail environment are expected to contribute to a decline in industry performance.
The industry has faced increasing competition, both internally and externally.
Internally, it is beset by an abundance of homogeneous products easily substituted with other industry products that many retailers have resorted to hefty price cuts. The industry is facing strong external competition from other retailing industries such as apparel and department stores, which also offer footwear products.
It is also facing intensifying competition from online retailers. Many industry players have started their own online stores to launch themselves into the growing internet market. Despite this, the strength of the Australian dollar over the past five years has meant that well informed customers could easily turn to overseas retailers that provide cheaper alternatives.
Over the next five years, IbisWorld expects some improvement in conditions as Australians loosen their purse strings and consumer sentiment recovers. Nonetheless, pressures from online and other retailers are expected to intensify.
“Many players are clarifying their market positions and improving the retail experiences they offer to lure consumers back into bricks and mortar stores,” says Magner.
Growth opportunities lie in niche markets that offer differentiated products. The niche market gap will be best filled by smaller players able to provide individualised products and services, rather than big corporations that tend to provide mechanical and impersonal services.
Footwear retail is Australia is characterised by a low level of market share concentration. The industry is made up of a large number of small retail outlets and most businesses are of small to medium size, but in the past five years, merger and acquisition activity has been stronger than usual, and competition has intensified.
Players are expected to further consolidate their operations over the next five years, however, competition from department stores and e-commerce, as well as slow global economic recovery, will limit their ability to grow above the industry average.
Major players include Fusion Retail Brands, RCG Corporation, Super Retail Group, and Betts.
For more information, visit IbisWorld’s Footwear Retailing report.
