Hype sneakers and slippers: how Covid-19 is polarising the footwear industry

Who would have thought, a year ago, that high heels would be being thrown unceremoniously to the back of the wardrobe, or that Crocs would be labeled the coolest shoe of the year? In the last twelve months, we have seen almost every corner of the consumer-facing sector shaken by the Covid-19 crisis – and the footwear category is no exception. With global shifts in the way we live and work, footwear brands, retailers and manufacturers have been forced to rethink their offering to cater for sudden changes in consumer demands.

Many of these changes are unsurprising, directly reflecting our new reality. Sales of slippers, for example, have soared over the last few months, as lockdown restrictions kept people indoors. In the 12 weeks to 20 September 2020, even before winter had hit, spending in the UK on both men’s and women’s slippers increased by 46% to £36.8m. By December, sales of John Lewis’ sheepskin slippers had skyrocketed 60%. Footwear giants such as Ugg and Birkenstock have renewed their focus on comfort-focused indoor shoes, and we’ve also seen a shift towards premium products, with consumers willing to spend more on slippers in the knowledge that they’ll be worn all day, every day, safely hidden beneath the desk on every Zoom.

Never slow to miss an opportunity, even fashion labels have integrated slippers into their collections, with London Fashion Week designer Molly Goddard collaborating with Ugg on fake fur slippers styles, and Balenciaga launching heeled slippers in its SS21 line.

“Even before the crisis, the move away from formalwear was already in motion, with clean sneakers increasingly becoming acceptable office attire.”

Equally dynamic are the booming sales of wellies and walking shoes during Covid-19, especially once wet weather hit the UK. In October 2020 alone, heritage brand Hunter saw a 127% increase in sales of its classic Original Tall Boot – as one executive commented: “when people think wellies, you buy Hunter”. Likewise, with home fitness suddenly a priority, running shoes and performance product sales soared.

The sudden upsurge in slippers and outdoor shoes corresponds with a dramatic dip in demand for formal workwear. Even before the crisis, the move away from formalwear was already in motion, with clean sneakers increasingly becoming acceptable office attire. Covid-19 has fast-tracked this trend and widened the gap between the two areas of the market: according to insights firm NPD, the dress shoe segment dipped 12% in 2019, before plummeting 71% in the second quarter of 2020.

Casual footwear brands, by contrast, are holding strong. Last week, Dr Martens made its stock market debut at 370p a share, valuing the bootmaker at £3.7bn. The company has proved immensely resilient to Covid-19: despite the lockdowns which forced its 130 high street stores to close, Dr Martens delivered an 18% rise in sales to £318m in the six months to September 2020, with profits growing by 30% to £86.3m. Dr Martens’ IPO may not be the only significant footwear transaction, with German business Birkenstock exploring a sale to private equity group CVC Capital Partners that could value it at more than €4bn.

As is often the case in challenging times, brands have doubled down on their hero products to drive sales. Just as the famous Dr Martens 1461 shoes and 1460 boot show no signs of slowing, we’ve seen Adidas continue to grow its Superstar, Samba and Stan Smith ranges and Nike launch more and more variations of their Dunk, Air Force One and Jordan styles.

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In fact, these retro icons dominate limited-edition lines and high-profile collaborations which have also flown off the shelves. When Dior and Nike’s Air Jordan 1 High OG limited-edition sneaker went on sale, for example, customers queued in the rain outside Selfridges to get their hands on a £2,200 pair.  This trend saw resale values of hype sneakers rocket with May and June 2020 becoming the biggest months for sales in the history of StockX, the secondary marketplace for sneakers, with the  “Flint” Air Jordan 13“Royal Toe” Air Jordan 1, and “Fire Red” Air Jordan 5 accounting for $25m in gross merchandise alone in those months. The resale market looks set to keep growing, with GOAT Group securing a strategic investment from Groupe Artemis, the controlling shareholder of Kering last month, valuing it at $1.75bn.

The resilience of the casual market might not spell the end of high heels. There is an optimism amongst footwear CEOs, who are confident that demand for formalwear and dress shoes will bounce back once lockdown is over. While businesses have certainly pivoted their offerings towards flats, sales of exceptional heels and high price-point leather shoes are being driven by emotional purchasing, as customers treat themselves to products to bring them comfort in these uncertain times. As mid-market ranges struggle to attract attention, demand for luxury products remains high.  As one CEO put aptly: “price-points have been key this season… the market is polarising.”

“There is an optimism amongst footwear CEOs, who are confident that demand for formalwear and dress shoes will bounce back once lockdown is over.”

Moving beyond category performance, the entire footwear sector has had to adapt to the move online. In a sector becoming known for its focus on experiential retail, and one that has been relatively slow to embrace digital transformation, it has been interesting to see how businesses have pivoted. In luxury, brands such as Gucci and Dior have forged digital partnerships with Snap Inc to allow consumers to ‘try on’ their newest styles using AR technology. While users can’t test the fit through their Snapchat app, they can certainly get a feel for what the product looks like on, and remain engaged with the brand and product online.

More practically, retailers have doubled down on digital innovation to provide personalised services remotely. Hotter Shoes, for example, is capitalising on its recent roll-out of in-store 3D foot scanning technology. By prioritising data collection in-store, Hotter can send customers personalised communications with recommended products in their preferred style and size when shops are closed. “We’ve invested heavily in the technology,” said Hotter Shoes CEO Ian Watson when we caught up with him last week, “and we’re using our store portfolio to digitise the consumer.”

Image credit: Hotter Shoes

Looking ahead, there are a number of challenges that businesses in the footwear sector will have to face.

Consumers who resisted ecommerce for footwear have now been converted and it is likely that many will not go back to physical retail. At a time when the high street has become crowded, with little differentiation between footwear retailers, businesses must commit to providing incredible in-store experiences which represent the brand, include high levels of digital integration and move beyond convenience to draw the customer in. Even in the digital space, one CEO we spoke to expressed concerns about how his product was being represented online by pureplays, and told us that he’d had to provide photography to ensure optimum brand representation.

“Product innovation and sustainability will also be key priorities moving forward.”

Product innovation and sustainability will also be key priorities moving forward. While the economic impact of the pandemic means that consumers will be making more considered purchasing decisions, data shows that exceptional products will still sell. Nike, for example, scored a surprise hit with its sustainable Space Hippy sneaker, which became the ninth best-selling trainer last year. Design and functionality will be more important than ever, and the mid-market segment will have to work hard to achieve a point of difference.

For senior leaders in the space, this is a crucial juncture. Covid-19 threw into sharp relief the need for agility, flexibility and a firm grasp on every aspect of the supply chain. The crisis will undoubtedly widen gap the between the industry leaders and laggards, and with the added complexity of Brexit, for businesses to come out on top, leaders must rebuild their organisations with creativity, sustainability and digital transformation at front and centre.

mathew.dixon@thembsgroup.co.uk  | Elizabeth.Shelley@thembsgroup.co.uk  | @TheMBSGroup