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April/May 2011

Tough trading conditions

for brands

Laurence Slotsky
LAURENCE SLOTSKY is a veteran SA footwear brand builder with 27 years’ experience in the industry. NIC DU TOIT asked him about trading prospects for the footwear and apparel industries

There is no lack of challenges faced by footwear and clothing industry: labour problems compounded with the huge increases globally in cotton, rubber and oil have resulted in unprecedented manufacturing price increases of between 20–35% over the past year. Add to that the dumping of cheap imports and the unscrupulous copying of international brands and their designs in poor inferior quality.

Sourcing product in China, the biggest global manufacturer of footwear and apparel, has become extremely challenging, says Laurence Slotsky of Footwear Trading.

After nearly three decades in the business of building brands, he has survived more than one dip in the market and has seen more brands come and go than some youngsters knew existed. During this time he has contributed to the establishment and growth of several successful and well-known brands and in-house labels, and made many sourcing trips to China, where he had been witnessing the ongoing changes in the labour culture and the resultant problems experienced by the factories.

This has recently had major worldwide price implications for goods imported from China.

“The Chinese workers continue to demand higher wages as payback for working far away from their home towns. Gains in income brought about by legislation had the result that they are keener to work inland for less in order to be near their families and homes,” he observed. “This increases the pressure on factory employers, who have been forced to increase salaries further, in order to entice and stabilise the workforce in their factories.

In addition, the increase in commodity prices puts factories under further pressure to increase prices.

Factory owners are compelled to incentivise their labour force based on unit output and productivity and therefore only accept orders with larger minimum quantities. Previously factories were prepared to accept orders for say 850 pairs, but they now demand 1 500 as the minimum. This creates higher risk for importers and larger markdowns for slow sellers, putting margins under pressure.

Brands and recession

The effect of the global economical downturn and extremely low recovery rate is further compounding the problem. Slotsky says that the SA retail industry, especially the apparel and footwear sectors, is very soft at the moment, as the lower and middle class consumers continue to have little disposable income. Credit chains are weathering the storm better than most of the independents, who are very price driven.

Simultaneously, there is an over-supply of footwear in the market. People are copying any product that seems to be doing well, and sell only on price. This is confusing for the consumer, as all products start to look the same, even if prices might differ substantially. Copy products are becoming more like commodity items he believes, and many independent retail windows are starting to look the same with no product or brand differentiation. There is no bottom price for this sector of the market which is becoming flooded with the same look-alike products.

Authentic international brands in the middle to top segment of the market are still performing relatively well as consumers continue to aspire to wear these brands. In a time of recession international brands cannot afford to fall into the trap of reducing quality to reduce the cost of the product, he believes. “The four most significant points to retain long term brand equity and sustainability is unique product design and differentiation, great quality, correct distribution channels and value for money,” he says.

House brands and imported labels, which do not have true brand equity, trade mainly on price and often copy so called winners from international brands in inferior materials, without any identifiable unique features, at very competitive price points. The confusion comes in when there is a surplus of the same look under many labels varying in quality, price and distribution.

He says you must be in touch with what’s happening globally, but think local. “Go and have a look at what is happening in Paris, but know how to adapt it to Parys,” is his motto.

Footwear Trading growing

Footwear Trading is quite happy with the sustainable growth of their brands and the new opportunities that presented themselves in their wholesale and retail divisions.

Their objective is to expand their Skechers flagship stores into at least 15 key national locations within the next three years. “It has been proven globally that wherever you have a flagship presence in a key centre or mall, the turnover of that brand increases in other retail locations in the same centre. Our intension is not to compete with our retail customers, but to showcase the brand in its entirety and increase general consumer brand awareness,” reassures Slotsky.

The growth in the fitness category with the Skechers shape-up and tone-up programmes, together with the Kim Kardashan campaign, has resulted in record sales for Skechers. “We have had to airfreight specific stock in to keep up with the consumer demand.”

Footwear Trading recently signed a long term licence deal for Sissy Boy footwear in the sports and street footwear categories. “This well established, aspirational, ladies brand affords us the opportunity to expand our ever-growing ladies footwear division and to replace the Soviet brand.”

The Sissy Boy brand has established itself as one of the best performing ladies jeans wear brands in the market and is driven by a dynamic team of passionate individuals under the leadership of Ronald Sassoon — a legend in the clothing industry. The first Sissy Boy Sport ranges will be delivered into the SA market for summer 2011.

Casoli is another Footwear Trading brand that is expanding at a rapid rate. “We have had unprecedented sales with our winter ranges due to the unique styling at key price points,” he says. Summer will see the introduction of ladies Casoli as well as Casoli sports.

Fila continues to grow on an annual basis. “It is a trusted brand with great product at very competitive retail price points,” says Slotsky. “After the huge success of our Fila sandal range in summer 2010, we expanded this range with unique product and anticipate growing this sandal category by over 100 % in volumes for summer 2011.”

Levis footwear introduces some unique product categories of commercial men’s, ladies and kids footwear for summer 2011. “Espadrilles are a must-have for summer 2011 and Levis will have an extensive range of men’s, ladies and kids espadrilles. We have a very well-focused range of commercial product across all genders for summer 2011, which has been expanded on the successes of our bankers.”

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