Analyzing Key Issues and Impacts in the UK Footwear Sector Report

This report examines the UK footwear sector, focusing on key issues such as increasing demand and unemployment. It categorizes these issues using a PESTLE analysis, exploring their positive and negative impacts on businesses within the sector. The report highlights the growth in footwear dem...Read More

Report

Table of Contents
INTRODUCTION ..........................................................................................................................3
Key issues....................................................................................................................................3
Categorizing the issue by using PESTLE model.........................................................................4
Positive and negative impact on the business..............................................................................5
Reflection.....................................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Footwear sector is one of the major segment of the Footwear Industry in the specific
country. The sector involves manufacturers and distributors of boots, shoes, scandals, sneakers
and other types of footwear. The purpose behind manufacturing footwear is t comfort and protect
human foot while the wearer is performing different activities (Crisp and Powell, 2017). The
sector is facing various types of issues that impacts the profitability of the business. The Report
will outline issues that are affecting footwear sector of UK, use of PESTLE model to categorize
the issues, impact of issues on business, reflection that describes challenges faced while
preparing the report etc.
Key issues
There are various types of challenges that are affecting the footwear sub sector. These are
as follows -
Increasing demand :
The demand of footwear has increased from previous years. Due to this, the footwear
sector of UK is grown in year 2018-19 as compared with last five years. The interest of people
have been increased in high quality footwear manufactured by footwear manufacturers which is
the major reason behind expansion of footwear industry as firms has targeted to increase their
presence in foreign countries as well. The increase in the demand is for the women leather shoes,
men's leather boots and shoes, slippers, women's boots, infant's footwear etc. The increase in the
demand for designer shoes, sports shoes are the main cause behind the growth of footwear
market. The demand for footwear comprises different types of footwear for consumers belonging
to all types of age categories (Footwear Market, 2018).
Due to increase in demand, manufacturers are now more focussing on adopting
innovative technologies for manufacturing better quality footwear for the customers. The male
segment has accounted for highest market share of the footwear market at global level. However,
the segment of women is forecasted to grow with better growth rate in coming years. Therefore,
it provides various opportunities of growth and development of companies that are involved in
manufacturing and distributing footwear products.

There is increase in sales of footwear by 8% in year 2017 as compared with growth of
sales of clothing items. In year 2019, leather footwear is the largest segment of the market with
market volume of us $ 6906 million. Further, the demand of footwear is forecasted to be grow by
13.7% in next five years. It will reach at £9.5 billion in year 2022. The increase in demand is due
to various factors such as rate of inflation which is at 2% in year 2017. Due to this, sales volume
will be maximum 2% in year 2022.
Unemployment :
It can be defined as the situation in which an individual is not able to get the employment
but would like to be in full time employment. In year 2018, 555,000 people get employment in
fashion related industries in United Kingdom. From which only 5000 people are employed in
manufacturing of footwear. Most of the jobs are available in retail sale of clothing as compared
with manufacturing shoes etc. Only 8% people work in are working in wholesale of footwear.
The least amount of jobs is available in manufacturing of footwear (de la Porte Simonsen,
Petrella and Santoro, 2018). For Example - The rate of unemployment in UK has increased up to
3.9 percent in three months in August 2019 as compared with the previous period
(Unemployment rate in UK, 2019). It means that fewer people get employment in the sector of
footwear in UK.
Further, skilled workforce is required to manufacture high quality of shoes, sneakers etc.
Due to lack of proper skills and abilities in the staff members they are not able to get proper
employment in the sector of footwear in UK. Due to lack of adequate skills, manufacturers of
footwear are facing various problems of talented employees that are able to manufacture shoes,
sandals etc. The companies are required to outsource workers from other countries.
Categorizing the issue by using PESTLE model.
The term PESTLE analysis refers to the tool that helps to monitor and analyse the factors
that are existing in macro environment of the country. These factors impact the sales and
performance of the business. The above issues are categorized with the help of PESTLE model.
This is as follows -
Economical factor -
The issue of increase in demand and unemployment in UK can be categorized in
economical factor as these factors are somewhat influenced by the economy of the country. For
Example - According to the Office for National Statistics, the employment in British economy

has been increased by 32,000 in three months to April 2019. The rise is weakest in the month of
August and only 99000 people are added to the overall workforce (Hassani and Silva, 2018). The
employment in footwear sector is also classified under the category of economical factor because
this has been affected due to economic conditions of the country. The impact of Brexit is also
one of the major reason behind rate of unemployment in UK. Companies are required to
outsource workers from other countries due to lack of skilled workforce required for
manufacturing footwear such as shoes, sneakers etc. Therefore, the issue of unemployment that
footwear sector is facing is classified under economical factor.
Another issue is increase in the demand of footwear by different types of customers that
are using the footwear. There are various economic factors due to which demand of footwear has
increased in UK. It includes purchasing power of buyers, population in the country, rate of
interest on which customers can borrow funds, rate of inflation etc. The sales of footwear
manufacturing firms has been increased due to increase in demand of customers for women
leather shoes, slippers, women's boots, men's leather boots and shoes and infant's footwear etc.
One of the major reason due to which demand of people for footwear has been increased is
power to buy products which is known as purchasing power (Longhi and et.al, 2017).
For Example - The purchasing power of people living in UK has increased by 0.7%.
Further, foreign exchange currency rate of pound also leads to increase in demand of buyers for
consumer durable products. Another factor that leads to increase in demand for footwear is
increase in total population of the country. For Example - In year 2017, the population of UK is
estimated at 66 million which is the largest ever. Further, the increase in population remain
continue to grow in coming years. Moreover, the rate of inflation also impact the ability of
people to buy goods. The rate of inflation in United Kingdom in year 2018 was 2.48% as
compared with previous year. This has been beneficial in improving the purchasing power of
people living in the country.
Positive and negative impact on the business.
The issue of increase in demand and unemployment will impact organizations operating
in footwear sector in different ways. One issue will impact in positive manner and other issue
will affect the business in negative manner.
Positive impact -

The increase in demand of footwear has created a positive impact on companies that are
operating in footwear sector in UK. There are various companies that has benefited from
increase in demand of the products. For Example – New Balance Athletics Company operates in
footwear industry in UK that offers products like sportswear, athletic shoes, apparel etc. The
increase in demand for these products has provides various advantages to the firm. This has lead
to increase in customers of the company. For Example - In year 2018, there are total 1141000
customers for sports shoes and 128000 customers for sports accessories. In year 2018, nearly 1.1
million people have bought the sports shoes of New Balance company. Another positive impact
is that increase in demand has lead to increase in revenue of the firm. In year 2016, total revenue
of the company was $3800 million. Whereas, in year 2017 the total revenue was $4500 million.
Therefore, it can be concluded that increase in demand of footwear has creates positive impact
on sales, revenue of the company. Further, improvement in the share of business in the market
will help to gain competitive advantage over other companies. Therefore, New Balance Athletics
Company is one of the top footwear company in UK.
Negative impact -
Another issue that is unemployment in the country will negatively affects the business of
firms that are operating in footwear sector. The unemployment in UK will impact footwear
companies in negative way. For Example – Church's shoes is the company that operates its
business in retail industry. It offers a wide range of shoes to customers (Safonovs and Upadhyay,
2017). In year 2018, only 555,000 people get employment in fashion related industries in United
Kingdom. It means that, there is a situation of unemployment. This will affect the sales and
revenue of company. Company will have to conduct training and development programmes to
improve the skills of workers. Further, the management will require providing assessment and
training resources. This will lead to an increase in expenses of the company (Roukova,
Keremidchiev and Ilieva, 2016). UK requires more flexible apprenticeship scheme for
companies involved in footwear sector. Further, the situation of unemployment will weaken the
buying of customers. Less number of people will buy footwear of the company. This will
negatively influence the sales and profitability of the business (Yang, 2015).
Reflection.
I have faced various challenges while writing and preparing this report. Firstly, I faced
various difficulties in understanding how to write introduction and conclusion of the Report. I

make efforts to avoid unnecessary statements and overly wordy introduction. I have written only
major points in the Report that also includes statistics related with companies that are operating
their business in the sector of footwear industry in UK. While writing the conclusion of the
Report I have fully research on footwear sector of the country. So that, I can easily summarize
major points to be included in conclusion part of the Report.
Another difficulty I have faced is in deciding the overall structure of the Report. My tutor
has supported me a lot in writing the structure in proper format that is Report should include
headings as well as sub-headings, bullet points etc. Further, I have faced various difficulties in
collecting information to write the Report in effective manner such as through secondary sources
such as books, journals, articles, magazines etc. Further, after collecting the information I have
analysed that whether I can support my answer with the information and details or not. I have
realized that, the approach adopted by me helps to write the answers in appropriate manner.
Another thing I have focused on is to minimize the level of Plagiarism.
I have read different types of books that helps me to write text in correct way and I have
also cited the information provided by different authors in correct way. Moreover, my friends
have helped me in writing the Report in my own words. Another challenge I have faced is that I
have lacking writing skills. Therefore, I have joined classes that helps me to write the Report in
effective way. The skill will help me in preparing projects and reports in the future. Moreover, I
have also attended classes in the college that helps to improve my current level of skills like
communication skill, writing skill etc.
CONCLUSION
The above Report has outlined that the two major issues that footwear companies are
facing is increase in demand and level of unemployment in the country that has created positive
and negative impact on the firm. It has been concluded that, the demand of products offered by
companies has increased as compared to previous years. This has lead to positive impact on sales
and profitability of the firm like New Balance Athletics Company. Further, the Report has also
explained that unemployment creates negative impact on the sales of companies such as
Church's shoes etc.

REFERENCES
Books and Journals -
Crisp, R. and Powell, R., 2017. Young people and UK labour market policy: A critique of
‘employability’as a tool for understanding youth unemployment. Urban studies. 54(8).
pp.1784-1807.
de la Porte Simonsen, L., Petrella, I. and Santoro, E., 2018. Inflation Dynamics and Price
Flexibility in the UK (No. 13027). CEPR Discussion Papers.
Hassani, H. and Silva, E.S., 2018. Forecasting UK consumer price inflation using inflation
forecasts. Research in Economics. 72(3). pp.367-378.
Longhi, S., and et.al, 2017. Gender and unemployment. Analysis of Understanding Society: the
UK Household Longitudinal Survey.
Roukova, P., Keremidchiev, S. and Ilieva, M., 2016. Footwear Industry: Delocalization and
Europeanization. In The Moving Frontier (pp. 227-250). Routledge.
Safonovs, R. and Upadhyay, A., 2017. Is your Brexit supply chain resilient enough? The British
footwear manufacturers’ perspective. Strategic Direction.
Sharma, D., 2019. Competition Analysis and 3 year Roadmap for Allen Solly Footwear and
Handbags.
Singleton, C., 2018. Long‐Term Unemployment and the Great Recession: Evidence from UK
Stocks and Flows. Scottish Journal of Political Economy. 65(2). pp.105-126.
Smith, P., 2016. Google's midas touch: Predicting uk unemployment with internet search data.
Journal of Forecasting. 35(3). pp.263-284.
Yang, T., 2015. Localization of New Balance brand marketing strategy for Chinese markets.
Online -
Unemployment rate in UK. 2019. Online Available Through :
<https://tradingeconomics.com/united-kingdom/unemployment-rate>
Footwear Market. 2018. Online Available Through : <https://www.marketwatch.com/press-
release/footwear-market-global-industry-size-share-trends-growth-demand-and-forecast-
2018-2026-2018-11-20>