Children's shoes market situation

Retailers look to the future with cautious optimism

The average rate of consumption of shoes in the children's segment in kind is about two times higher than in the adult, therefore it is considered more stable and profitable. However, the general economic recession, declining incomes of the population and other crisis phenomena negatively affected this segment. The marketing director of Egorievsk-Obuv OJSC, one of the oldest manufacturers of children's shoes in Russia, Andrei Kapusta outlined the current market situation by this fall and prospects for the end of 2015 — the beginning of 2016.

In general, the “Brownian movement” of all market participants was characteristic of the spring-summer 2015 season. Each has developed for himself his own path of survival and preservation of market share. An active redistribution of the retail market has also begun. The crisis “cleared” relatively attractive rental areas and almost fixed rental rates, which provides new players with the opportunity to exit. If in the segment of adult shoes there is a significant decrease in the frequency of purchases, then in the children's segment this decrease is less pronounced (due to the need to purchase shoes / clothes with the growth of a child), but there is a noticeable shift in consumption to cheaper brands - face migration of consumers. A feature of the market for children's shoes is the early start of the autumn sales season - with the sale of a school range.

Currently, the following trends are characteristic of “childhood”:

• The frequency of purchases has decreased;
• The consumer began to devote more time to the selection of goods. Both in offline and in online stores, the number of shops / sites visited when choosing shoes has increased;
• There was a “migration” of consumers to the low price segment of children's shoes;
• There has been a trend towards import substitution due to the rise in price of imported shoes and the growth of patriotic sentiments among Russians, in addition, some consumers have a more loyal attitude to domestic brands due to historically higher standards of product safety;
• The supply of imported shoes decreased.

Why domestic children's shoes are not cheaper than imported

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Prices for imported shoes mostly depend on the exchange rate of the national currency and, accordingly, assume all the risks and uncertainties of this exchange rate. It would seem that in such conditions a “window of opportunity” appeared for Russian manufacturers, which are less dependent on currency fluctuations than foreign ones. However, at present, in Russia it is practically impossible to produce modern, high-quality children's shoes from 100% of Russian components. Therefore, within three months (November 2014-January 2015), these opportunities “collapsed” due to the increase in the cost of imported components. And even at present, suppliers of shoe materials do not see any prerequisites for lowering their selling prices. Accordingly, the already established prices for domestic shoes are unlikely to systematically change downward. State programs for the development of light industry and the development of the children's goods industry, at best, make it possible to compensate for part of the interest rates on loans or proclaim the goal of promoting the industry as a whole. At the same time, the first of the support measures is not widely used due to the crisis in the financial market and the very limited ability to attract borrowed financing. The effect of the promotion of the brands “Russian Quality”, “Made in Russia” or import substitution has not yet occurred.

Winter forecast

The situation with the Winter-2015 season remains highly uncertain. On the one hand, all sellers made up their plans at the height of the crisis and preferred not to take risks and not “reorder” shoes. On the other hand, all the links in the distribution chain have excess reserves from last season. The crisis affected the financial system: no one offers “long” money, the existing financing has already been reviewed and continues to be reviewed by banks in the direction of the cost of using borrowed funds. The average cost of winter shoes for the final consumer is very significant - therefore, he will be very careful and picky in his choice and will try to minimize the number of purchases, focusing only on the necessary ones. In general, in the coming winter, the children's shoe market will "feel for the bottom" of quantitative sales, and from the spring of 2016, market participants will "reload" their business development strategy.

According to a study by RBC Shoe Retail-2015 (carried out in February-March 2015), the total volume of footwear production in the Russian Federation amounted to 110,6 million pairs, including children's shoes - 39,4 million pairs. The share of production of children's shoes increased from 2010 of the year from 32,4% to 35,6%. According to this study, “on average, there are about 2,8-3 pairs per year” per capita, which, according to Andrei Kapusta, is a “somewhat underestimated figure.” According to expert estimates, in a year a child needs a minimum of 6 pairs of shoes, taking into account "maturity" and the secondary market, the figure may be slightly less - on average, 5 pairs. Thus, the volume of the children's market (1-14 years - 21,6 million people) can be estimated at 108 million pairs of shoes. There are currently no official statistics on the volume of production and sales of children's shoes.