Key Issues in the Footwear Sub Sector in UK

This report discusses the major issues faced by the footwear sub sector in the UK, including the rise in cost and increase in demand. It also explores the impact of these issues on businesses and provides a reflection on the challenges faced while preparing the report.

Key issues

Table of Contents
INTRODUCTION...........................................................................................................................3
Key issues....................................................................................................................................3
Categorizing key issues by using PESTLE analysis....................................................................4
Impact of issues on the business..................................................................................................5
Reflection.....................................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................7

INTRODUCTION
Footwear sub sector is one of the major part of footwear industry of the country. The
companies that are operating in this sector offers wide range of products such as sandals, shoes,
boots, slippers etc. There are various factors like economic and other factors that have
transformed the footwear sector in recent times (Schamp, 2016). The Report will outline the
major issues that are faced by footwear sub sector such as rise in the cost , increase in demand
etc. It will also describe the categorization of the issues with the help of PESTLE analysis,
positive and negative impact of the issues on different companies and reflection of the challenges
faced while preparing the Report etc.
MAIN BODY
Key issues.
There are various issues that are influencing the footwear sub sector in UK. These are
described below -
Rising cost -
The term cost of raw material can be defined as the cost of elements that are involved in
the process of manufacturing goods for offering to the customers. Manufacturing cost involves
cost of direct material, direct labour and overheads. One of the major issue that footwear sector is
facing is the increase in cost to manufacture different types of footwear. The major challenge for
companies involved in shoe business in UK is the increasing cost of being on the high street and
customers are more focussing on online shopping (Johnston and Huggins, 2018). In year 2018,
the manufacturing sector of UK has shown slow growth due to increase in the prices of raw
material and other commodities. The real cost to manufacture a shoe is $15. The figures of
January have shown fall in growth of manufacturing sector as compared to the figures in the
month of December of 56,.2 to 55.3 on a scale in which above 50 shows the expansion (How
much does it cost to make a sneaker ?, 2019).
Major challenge for footwear sector is economic uncertainty, increasing cost of inputs
and increasing competitive market. The increasing cost includes rising cost of energy,
unexpected changes in the prices of raw materials, unexpected barriers are destabilizing the
supply chains and making difficult for manufacturing firms to remain in the black (Econometrics
and Garden, 2015). Therefore, it is the duty of footwear manufacturers to determine new

methods of mitigating the expenses, absorbing additional cost or pass on increase in price to
customers who are already reluctant to spend money etc.
Increase in demand -
Another issue faced by companies operating in footwear sector is increase in demand of
customers for footwear as compared with previous year. The market of footwear sector in UK is
expected to grow by 13.7% in coming next 5 years. Total revenue of footwear sector in year
2018 was US $15903 million. The sub sector for women's wear remains the largest and
forecasted at £4.1 billion in year 2017. However, the segment of men's footwear is driven by
greatest interest of males in style and fashion (Safonovs and Upadhyay, 2017). Another reason is
more investment from retailers to satisfy the shift in need and demand of people for more trend
led product ranges. Quality of the products is the major motivator and approximately 90.3% of
the shoppers of footwear citing that quality is an important factor that helps to increase the
demand of products. The online channels account for 22.2% footwear spends in year 2017 (The
UK Footwear Market, 2017.).
Further, the method of home delivery remains dominant fulfilment approach for online
orders with only 16.7% of online shoppers of footwear uses click and collect as compared to
27.4% of online clothing shoppers. The sector of footwear in UK has shown growth in the year
2018-19 as compared to last five years. The interest of people are more in footwear with better
quality like sneakers, boots etc. manufactured by footwear companies which is the main reason
behind expansion of footwear industry as firms are now targeting market to increase their
presence in foreign countries as well.
Further, the value of exports of footwear from UK has increased up to 508 million GBP
in second quarter of year 2019 as compared with 488 million GBP In quarter first of year 2019.
Categorizing key issues by using PESTLE analysis.
PESTLE analysis -
It can be defined as the tool or framework that is used to monitor and analyse the factors
that are existing in macro environment of the country. The above described issue that are
increase in demand and rise in cost can be categorized into the category of economic factor.
Economical factor :
Economical environment of the country involves the factors that impact the economy in
different ways. It includes factors such as rate of inflation, governmental activities, policies, rate

of interest etc. All these factors affect cost of raw materials as well as demand of the goods
manufactured by different companies. One of the major factor that affects the price of raw
material and commodities is the rate of inflation in the country (Macchion and et.al, 2017). In
year 2018, the average rate of inflation in UK was nearly 2.48 %. This has lead to rise in the cost
of raw materials due to which cost of manufacturing footwear has increased. The high rate of
inflation also affects the purchasing power of buyers as a result, it also negatively influence the
spending of people on products that are offered by footwear companies that are involved in
manufacturing and delivering products like boots, shoes, sneakers and other products to ultimate
buyers. Another major economic factor that affects the demand of customers for footwear is
purchasing power. The term purchasing power means the ability of individuals or a specific
segment to purchase the products or services in a specific quantity. If, purchasing power of
customers is high it means that, they are having high income relative to the prices and supply of
the available goods in the market. From year 2017 to year 2018, the purchasing power of the
people in UK has increased by 0.7 %. The adjusted disposable income per capita of people living
in UK is 21820 pounds which is lower the average for OECD countries. This has resulted in
increase in expenditure by people. UK wages forecasted to purchase 6 % more overseas in year
2018 as compared to August 2017 (Schmidt and et.al, 2017).
Another factor that leads to increase in the demand of output of companies involved in
footwear sector is the growth in the population of the country. In year 2017, the population of
UK was 66 million. Whereas, the population of the country in year 2019 is approximately 67
million. This has resulted in increase in the demand of different types of footwear such as boots,
sandals, slippers, sneakers etc (Taleizadeh and Noori-daryan, 2016). Another important factor
that affects the demand of products is the average household disposable income of people in UK.
In year 2018, the average disposable income of people living in UK was £28,400. In year 2019,
the disposable income of people has increased by 1.4 %. Increase in disposable income leads to
rise in demand of footwear in the country. Due to the above reasons, both the issues are
categorized under the category of economic factor.
Impact of issues on the business.
Positive impact – The issue of increase in demand of footwear will have positive impact on the
performance of companies that are operating their business in footwear sub sector in UK.
For Example :

Church's shoes is one of the popular English footwear manufacturing firm. It belongs to
retail industry. It was founded in year 1873 by Thomas Church along with three sons. The
company mainly deals in shoes. The increase in demand of footwear in UK resulted in various
advantages for the company such as improvement in sales and profitability etc. Moreover, there
is an increase in customer base of Church's shoes. Net sales of the parent company of Church's
shoes has increased from 1,498,554 euros in year 2017 to 1,753,693 euros in year 2018. Another
positive impact of increase in demand is that, it has resulted in increase in gross profit of the
company. The gross margin has increased from 829857 euros in year 2017 to 934445 euros in
year 2018. Increase in demand of the products means that, more people are willing to buy the
goods manufactured by firms that are operating in footwear sector (Velásquez and Meunier,
2017).
Negative impact -
The increase in cost of raw material like electricity, labour etc. will have negative impact
on the performance of company. For Example : New Balance company belongs to footwear
industry. It was founded in year 1906 by William It offers products such as athletic shoes etc. If
the cost of acquiring raw material, labour is high it will increase the cost of producing footwear.
As a result it will decrease the level of profits of the company. Further, less amount will be
available for investing funds for expansion activities (Ndou, Gumata and Ncube, 2017).
Reflection
There are various challenges that are faced by me while preparing this Report. These are as
follows -
I have faced different types of barriers in preparing the report. Firstly, I faced various
difficulties in analysing the way to write introduction and conclusion of the Report. Further, I
have made efforts to avoid unnecessary statements and overly wordy introduction. I have written
only important and specific points in the Report. Moreover, I have faced challenges in collecting
the facts, figures and statistics related with organizations that are operating their business in the
sector of footwear industry in UK. Such as Church's shoes etc. While writing the conclusion of
the Report I have conducted research on footwear sector in UK. So that, I can easily present
major points to be included in conclusion part of the Report.
Another challenge faced by me is in deciding the overall format of writing the Report.
My tutor has helped me a lot in writing the Report in correct format that includes bullet points,

headings as well as sub-headings etc. Further, I have faced various challenges in gathering
information to write the Report in effective manner such collecting details from secondary
sources such as journals, books, articles, magazines etc. After collecting the details, I have
examine that whether I can support my views with the details, information or not. I have realized
that, the method adopted by me help to write the Report in correct manner. Further, I have made
focused to minimize the level of Plagiarism. I take care of making proper citations with the name
of authors. Other than this, I realized that I lack good communication and research skills.
Moreover, I also analysed that I possess certain skills such as team working skills, presentation
skills etc. To improve the skills that are lacking in me I have joined English classes that helps me
a lot in writing and presenting the Report in better way. Moreover, I have also attended classes in
University that helps to prepare the Report in effective way.
CONCLUSION
From the above Report it has been concluded that the major issues that footwear sub
sector is facing are increase in demand of footwear such as sneakers, slippers, shoes, boots etc.
and the rise in cost of raw material.
The Report has explained that the growth of the manufacturing sector shown decline due to
increase in prices of inputs and commodities that are used for manufacturing footwear. The
demand of footwear in men's segment has increased due to more interest of males in fashion and
style. Moreover, it has been concluded that the value of exports from UK has increased in 2019
as compared to previous year. The Report has explained various challenges that are faced while
preparing the Report and also the ways to overcome them.
REFERENCES
Books and Journals -
Econometrics, C. and Garden, C., 2015. Consumer Prices in the UK: Explaining the decline in
real consumer prices for cars and clothing and footwear. mars.
Johnston, A. and Huggins, R., 2018. Regional growth dynamics in the service sector: The
determinants of employment change in UK regions, 1971–2005. Growth and Change, 49(1),
pp.71-96.
Macchion, L., and et.al, 2017. Personalisation management in supply networks: an empirical
study within the footwear industry. International Journal of Manufacturing Technology and
Management. 31(4). pp.362-386.

Ndou, E., Gumata, N. and Ncube, M., 2017. UK Economic Policy Uncertainty Shock and the
South African Economy: Inferences from the Exchange Rate, Exports and Inflation
Channels. In Global Economic Uncertainties and Exchange Rate Shocks (pp. 51-72).
Palgrave Macmillan, Cham.
Safonovs, R. and Upadhyay, A., 2017. Is your Brexit supply chain resilient enough? The British
footwear manufacturers’ perspective. Strategic Direction.
Schamp, E.W., 2016. Fashion industries on the move: spatial restructuring of the footwear sector
in the enlarged European Union. Zeitschrift für Wirtschaftsgeographie. 60(4). pp.155-170.
Schmidt, O., and et.al, 2017. The future cost of electrical energy storage based on experience
rates. Nature Energy. 2(8). p.17110.
Sharma, D., 2019. Competition Analysis and 3 year Roadmap for Allen Solly Footwear and
Handbags.
Taleizadeh, A.A. and Noori-daryan, M., 2016. Pricing, manufacturing and inventory policies for
raw material in a three-level supply chain. International Journal of Systems Science. 47(4).
pp.919-931.
Velásquez, A. and Meunier, L., 2017. COMPARATIVE MARKETING ANALYSIS OF THE
UK AND GERMANY FOR GLOBAL SUSTAIN.
Online -
The UK Footwear Market. 2017. Online Available Through :
<https://www.prnewswire.com/news-releases/the-uk-footwear-market-2017-2022-
300497345.html>
How much does it cost to make a sneaker ?. 2019. Online Available Through :
<https://sneakerfactory.net/sneakers/2019/05/cost-to-make-a-sneaker/>