AAFA Conference Discusses Today's Issues and What Lies Ahead
On Tuesday, leaders of the footwear industry gathered to address hot-button issues at the American Apparel and Footwear Association's (AAFA) "Navigating the U.S. Footwear Market in 2012 and Beyond" conference.
Carl Steidtmann, chief economist and director of consumer business at business advisory firm Deloitte, began the conference with an update of where the economy stands and what to expect in the future, warning that the economy may be tipping into another recession. He cited international risks, such as the possibility that Europe may soon find itself in a depression, oil prices continuing to rise, and China's uncertain future. He also added that domestic problems--such as policy gridlock, a high unemployment rate and the housing market's continuous struggle--could all contribute to another economic downturn. Steidtmann did, however, conclude with an optimistic outlook for the future, saying that technology, government policy, the United States' young population and acceptance of immigrants, and a natural gas boom could contribute to a brighter outlook in the years to come. He also stated that times of economic hardships often mark the start of many big businesses. "Big risks create big opportunities," Steidtmann said.
Alison Paul, vice chairman and U.S. retail and distribution leader at Deloitte, continued the conference on a much lighter note by instructing footwear leaders on how to win over consumer confidence. She relayed results of a consumer survey taken this past spring, which showed that customers felt that the economy is improving, but that necessities such as food and paying bills remain their main priorities. The majority of customers also believed that stores are not offering value for their money, compared with years past. Paul said retailers see online shopping sites like Amazon as their number one threat--as they should. Fifty-six percent of respondents this year said they shop online, which grew from 51 percent in 2011. She also stressed the importance of an online presence for retailers. From having a wireless connection in their stores to creating Facebook pages to stay connected to their customers, Paul maintained that these are all important aspects for retailers to consider. Another point made in the survey is that customers are increasingly using their smartphones to make purchasing decisions. She encouraged all retail employees to refresh their strategies and put the customer experience first, understand new tools and technologies, allow all feedback (including negative comments) on their website or Facebook page, and unify their inventory across all channels, from online shopping to their store.
The AAFA Vice President of International Trade Nate Herman, who was also the host of the conference, spoke about sourcing, focusing on the biggest U.S. importer: China. Despite the country's excellent infrastructure, reliability, labor supply and ability to produce various scales of products--from 100 to 100,000 SKUs--China is not without its problems. For example, wages have tripled, labor shortages are on the rise, costs have gone up due to currency appreciation, fewer factories are open, manufacturers are more focused on creating goods for domestic use and the speed to market has slowed because of slow steaming and factories moving inland. Many footwear restrictions focus on imports from China specifically, Herman noted, going on to discuss which countries could possibly take China's place. He cited Vietnam, Indonesia, Mexico, the Dominican Republic, Cambodia, Bangladesh and Nicaragua as possibilities, but pointed out that each country has its good features--like duty-free access, a large workforce and familiarity with the U.S.--and bad qualities, which include lack of inputs, no deep sea ports and higher wages. Herman concluded with a number of issues to consider: inputs, infrastructure, the country's stability and its overall size.
After a break for lunch--during which members of the footwear community were all abuzz about Wolverine WorldWide and its partners acquiring Collective Brands, Inc.--leaders of the industry sat down for a panel discussion moderated by Katie Abel, global news director at "Footwear News." Larry Tarica, president of Jimlar; Danny Wasserman, president of Tip Top Shoes; and Rob DeMartini, president and CEO of New Balance Athletic Shoes, Inc., began their discussion with addressing the much-talked-about issue. DeMartini stated that for any brand, "It's a balance of brand development versus acquisition and growth," adding that this gain came at the right time for Wolverine. The discussion quickly turned to a more pressing subject--the weather. Tarica and Wasserman both expressed concern over the weather's effect on shoe sales, as well as hope that this year's forecast is better than last--although Tarica did mention that fashion boot sales were up last year due to the lack of a cold, snowy season.
The three powerhouses then went on to echo many of the former discussions of the day, stressing the importance of social media and the online consumer, how customer service should always remain a priority, the increasing number of people looking to buy American and their outlook for the future. "It's all weather dependent," Wasserman said, "but I'm optimistic because you have to be." Added DeMartini: "We've never had as robust growth potential as we have right now. You can only focus on what you can control. I'm feeling good."