There are approximately 1,200 active footwear stores in Israel, not including footwear departments active in large retail chains. According to data collected by the Central Bureau of Statistics, average footwear expenditure in the year 2003 was 1.6 billion NIS, and 0.9 billion NIS during the first half of 2004 - an increase of 12% in activity.
The industry includes specialty stores according to specific market segments: men’s footwear, women’s footwear, children’s footwear, and sports footwear however, stores with 2 or more types of footwear are sold, particularly large, established stores. Large retail chains with footwear departments also carry a wide variety of footwear.
- Footwear is a product affected by fashion changes, and therefore the phenomenon of “dead inventory” is widespread in the industry, as well as promotional sales and end of season sales.
- The industry suffers from high seasonality.
- The wide array of vendors results in varying footwear quality.
- Brand names take effect mainly in regards to sports footwear.
- Imported footwear sales are growing and local footwear production is decreasing.
- A growing number of chains specializing in footwear sales are located mainly at malls or shopping centers.
Customers: Defining the Target Market and its Size, Market segmenting
The target market includes the general population, segmented according to age and gender, usage, and income levels.
- Similar footwear stores
- Competition from large retail chains or chains specializing in footwear.
- Stores specializing in sports footwear compete with airport duty free shops and their various, widespread stores.
There are currently approximately 230 active footwear manufacturers and importers in the market. Over the last few years, imported footwear purchases have increased and locally manufactured footwear sales have decreased. Imported products are usually perceived as having more quality, however this perception is not necessarily accurate, as cheap footwear from the Far East is also imported alongside quality imports.
- High importance is credited to the store’s location and design of shop window.
- Promotional sales, particularly at end of season.
- Stores trading in brand names and retail chain stores enjoy additional national marketing conducted by the manufacturer or chain.
Factors Affecting Success:
Location of the store and density of competitors in the area, store and shop window design, footwear selection.
Human resources in the industry are usually comprised of non-professionals, although it is recommended that store manager and sales representatives have prior experience.
Store renovation, equipment- furniture, shelves, cash register, design, and initial inventory.
Industry revenue and profitability
Yearly revenue per working establishment and typical profit percentages depend upon the store’s location, price levels, and footwear quality. Average raw yearly profit: At the beginning of the season, raw profit per footwear is higher as footwear value decreases towards the end of season.
According to estimation, average revenue at footwear stores has decreased by approximately 20% over the last 6 years.
Typical Terms of Payment
- Customer sales take place in cash, checks, or credit cards. Sometimes the business allows the customer to pay with a postponed check or in installments.
- Purchase from vendors is in cash or up to 60-90 day credit.
Business insurance (for content and inventory), third party insurance, employer’s liability insurance, and loss of income insurance. In addition to the above, an insurance agent should be consulted in regards to the need for additional insurance.
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