It’s practically a fact of modern-day life that economies ebb and flow, experiencing periods of boom — during which wages are high, unemployment is low and people are spending — and bust — when wages fall, unemployment rises and people lack money for leisurely and even necessity spending. You might recall the last major U.S. economic hiccup, “The Great Recession,” which lasted from 2007 to 2009 and saw the housing market crash and the auto industry cave during the biggest financial crisis in recent history.
These days, recession talk has quieted and the economy has improved — gas prices are lower and the current jobless rate is right around 5.5 percent, compared with 10 percent in 2009 at the height in the recession period.
Still, market watchers have expressed some concern lately that American consumers are not spending their extra cash on retail.
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Specifically, apparel and accessories such as handbags — with Michael Kors and Coach declining amidst chatter of “handbag fatigue” — have not been getting the play that their investors and proprietors like to see.
Meanwhile, as the slight retail lull continues, footwear has emerged as an anomaly, almost unaffected by the ebbing and flowing of the market and seeing steady interest even in the toughest of times.
Here are four reasons why:
Functionality
We love a cute, snazzy pair of shoes as much as anyone who works at a publication called Footwear News should, but there’s also an important health-and-wellness element that backs the argument to grab a new pair every now and then. Shoes go a step beyond providing “a look” — investing in a sturdy and reliable pair could be a health-related necessity. (Just ask any podiatrist.)
In fact, the American Podiatric Medical Association and the American Academy of Podiatric Sports Medicine have published tons of literature regarding how to select the perfect shoes for a range of activities.
“You wear shoes every day — they support your entire body,” said Wunderlich Securities Inc. analyst Danielle McCoy, making a case for replacing worn-out footwear. “You can get away with wearing the same pair of jeans over and over, but you have to periodically update your footwear.”
Hence, American consumers might feel justified in passing up a new dress or suit but not necessarily the latest, most supportive pair of running shoes.
A Cost-Effective Way to Stand Out
“Shoes are a relatively low-dollar expense,” explained Canaccord Genuity Group Inc. analyst Camilo Lyon. “That’s why it’s the first category that does well coming out of a recession — someone can buy a new pair of shoes and feel good about the purchase without fear of breaking the bank.”
Sure, a pair of shoes can often cost more than a single element of one’s outfit — a shirt, for example — but it’s often a more sensible investment for a night out on the town than the purchase of a whole new ensemble.
“Footwear is a way to change the look of an outfit at a lower cost than buying a new outfit in some cases,” explained B. Riley & Co. LLC analyst Jeff Van Sinderen.
McCoy agrees.
“I think the emotional connection when buying shoes is similar to buying accessories — you can wear a pair of jeans and a basic tee, but the shoes (and handbag) are what truly spices up your outfit,” said McCoy.
Trend Right
For market watchers, the lack of trends across footwear and apparel has been concerning for some time, but insiders say footwear is leading the way for improved trends across the industry.
“There are often new trends in footwear when there are not a lot of new trends in apparel, and that helps drive footwear sales,” Van Sinderen noted.
Brands like Steve Madden, McCoy pointed out, are expected to benefit from improvements in the fashion footwear space, while, Skechers USA Inc. has been tapping into casual-athletic trends.
“If there are good fashion trends, the consumer will find a way to buy,” noted Lyon.
Emotional Ties
When was the last time you came across a line that spanned the length of the entire block as people waited for the latest T-shirt release? Our guess is not lately.
Consumers tend to have what marketing experts describe as “loyalty beyond reason” when it comes to footwear.
“I would argue that more people are passionate about shoes than are passionate about apparel,” said Van Sinderen. “There are some exceptions, but it’s rare to see folks lining up for the next Gap product release, but you certainly do see them line up to buy some of the latest Nike releases.”
And no economic downturn is going to keep a diehard sneakerhead away from the latest “must-have” sneaker.
