The Italian footwear industry is facing critical challenges

It is a red alert for Made in Italy footwear. The rising prices, driven by the top-tier positioning of Italian production, are increasing the turnover of the Italian footwear industry. However, the sector continues to lose companies, with 561 fewer footwear manufacturers reported in 2022 compared to 2019. When measured in millions of pairs, the disparity is stark, with a negative difference of 17 million pairs from the 2019 figures. Furthermore, after two years of strong recovery, culminating in 2022 surpassing pre-Covid levels in both production value and exports, there has been a change of direction in the industry in the past year.

Provisional data presented by Assocalzaturifici on the eve of the last Micam trade fair still pointed to sluggish growth in total turnover, standing at 14.6 billion euros (+0.9%). However, the outlook for the current year is far from optimistic. Furthermore, it is not only the manufacturers with their own brands who are suffering, having already endured significant downsizing over the past decade, but also the production partners of major brands, hit by the ongoing collapse of orders with peaks of -30% in some districts of Made-in-Italy shoes. Among manufacturers, confidence levels are rather low. «54% of footwear manufacturers fear closing the first half of the year with a decrease in turnover compared to the first half of 2023. We will, therefore, need to wait until the second half of the year, if not until 2025, for a significant recovery in the overall sector», Assocalzaturifici President Giovanna Ceolini explained.

The size of companies exacerbates the impact of the production slowdown. Analysis by PwC, based on Mediobanca data, reveals that 74.2% of Italian footwear manufacturers employ fewer than nine individuals, with 20.1% having between 10 and 49 employees. Consequently, a mere 4.7% of shoe companies fall within the 50-249 employee bracket, while just 1% exceed the 250-employee mark. As small businesses, they are vulnerable to acquisition by luxury brands aiming to secure reliable suppliers of Made-in-Italy shoes. Moreover, they face the risk of exiting the market, especially during times of crisis. Erika Andreetta, partner and head of consulting services in the retail & consumer Goods division at PwC, underscored that «the Italian footwear sector is facing challenges such as declining production volumes, rising production costs, international competition, and geopolitical uncertainty. Nonetheless, the sector’s excellence in quality, innovation, and design under the Made in Italy label remains a crucial asset when competing in global markets».

Therefore, major brands are rushing to provide support, even through investments in key subcontractors, as in the case of Otb’s recent announcement on March 25 regarding its supplier Stephen. Additionally, they are establishing platforms in crucial districts, as Lvmh is doing in the Fermo-Civitanova area (in the region of Marche), mirroring previous initiatives in Riviera del Brenta (Veneto). «Preserving the craftsmanship districts through academies, vocational schools, establishing brand-specific hubs, or spontaneous collaborations among entrepreneurs will be the true challenges for the sector, alongside investments in circular economy and sustainability. Therefore, we expect, on the one hand, a push for collaboration and, on the other, significant investments that can embrace sustainability and technology applied to the sector», Andreetta added.

Meanwhile, at Assocalzaturifici, efforts are being made to protect subcontractors, whose position appears particularly vulnerable. President Giovanna Ceolini emphasized that «more companies are shifting towards subcontracted production processes, and it is imperative to support these entities. We are working to create a platform to foster synergies with large corporations that currently hold dominant positions». In Riviera del Brenta, where the footwear sector exceeded 2 billion euros in revenue in 2022, largely due to manufacturing for luxury brands, there is a prevailing belief that the era of massive acquisitions has come to an end. Daniele Salmaso, section president at Confindustria Veneto Est, explained that «given the ongoing restructuring in luxury, I do not anticipate further significant operations. We manufacturers must now be able to connect with emerging brands and designers, develop targeted collaborations with them for the future, and innovate products in line with new European regulations on eco-design, which will revolutionize the fashion scene».

In the region of Marche, Italy’s leading region in terms of pairs of shoes produced, Valentino Fenni, Section President at Confindustria Fermo, observes a mixed picture. «While some footwear companies are experiencing 12% growth based on 2023 data compared to 2022, with a surge in sales in China, others are considering price increases due to their brand strength without significant repercussions. However, they represent a different world from what I face daily. We are seeing a rise in furlough requests, more than double compared to 2023, including from subcontractors of luxury brands, which are facing an average 30% decrease in orders, halting production and primarily affecting small, single-client subcontractors». Fenni called for government intervention to revitalize manufacturing in the region. «Our competitors are not just China and Vietnam, or Indonesia and Turkey, but also other European countries that have created internal competition. It is inexplicable that labor costs in Portugal are half of Italy’s. Marche deserves to receive, at least, the same 30% tax relief already granted to southern Italy», he concluded. (All rights reserved)