eBIZ-TCF

In 2003, the EU-25 footwear industry had a turnover of 26.7 billion euro, representing about 0.5% of total turnover of manufacturing. In 2004, the sector comprised nearly 12,500 predominately small and medium sized enterprises directly employing nearly 300,000 people.

In the same year footwear production was 705 million pairs (down 9.9% relative to the previous year): there has been a massive substitution of imports, mostly from low cost labour countries. The abrupt decline in employment in the footwear industry in the European Union has not been accompanied by corresponding productivity gains. The average productivity of the footwear industry is about 40% below the average of manufacturing: production processes in this industry are still largely labour intensive and can only be partially automated.

Among the ten sectors studied by e-Business W@tch in 2006, the footwear industry is the one with the lowest overall use of ICT and e-business. The study found that there was a relatively low level of e-business activity among the larger footwear companies and that the installed base of ERP (enterprise resource planning) systems is low in the sector. Consequently, online procurement activity is much less developed than in other nine sectors examined in this context.

The high prevalence of small companies creates a lack of confidence that they can do eBusiness and that they can afford the required technologies. In such companies, the usage of ICT equipment and access to Internet are often limited to the entrepreneur and to a few other key employees.

Another factor is the lack of “pull”-potential from distribution chains and business partners as, in this industry, neither large firms nor distribution appear to be a driving force for the adoption of eBusiness in the same manner as in other industries.

To survive, footwear companies need to pursue innovation strategies to take advantage of their creativity, quality and differentiation of products in a very competitive environment. A key objective in any innovative use of e-business is to respond better to market trends and to reduce the time to market.

In the view of consumers and, increasingly with large retailers, the footwear sector can be considered as part of the lifestyle or fashion sector along with textiles/clothing and many sports goods. Many of the larger retailers are common to all of these sectors and all of them face the same challenges presented in the supply chain by products with short life spans and fast changing market trends.