Athletic Footwear Industry Analysis
The global athletic footwear market has shown steady growth in recent years with only minimal slowing down during the global economic crisis. China, as a leader, contributing over 63% of the world’s production, followed by Vietnam, Italy, Indonesia, Belgium and Brazil. It grew by 2.6% in 2009 to reach a value of $196.3 billion. In 2014, the global footwear market is forecast to have a value of $230.8 billion, an increase of 17.6% since 2009 (starta.co.uk). The U.S. continues to be the leading consumer in this market, even though it was projected that in the coming years it will be preceded by Europe and Asia. The athletic footwear market will be analyzed using Porter’s Five Forces where footwear retailers are players, buyers are individual consumers, and footwear manufacturers are the key suppliers.
The market is dominated by large retail groups such as Foot Locker, Inc. Nike, Inc, Adidas AG, Finish Line, Inc. that hold a strong position in the market bargaining power over suppliers. Rivalry is the strongest between these large groups. The footwear is a basic necessity, so sales volumes are high what reduce buyer power.
Much of the footwear has been produced in low-cost manufacturing locations, such as South-East Asia. Many domestic manufacturers in Western countries are unable to compete effectively with South East Asia manufacturers, as a result, many Western suppliers have gained power within the market by offering highly differentiated products including high-end designer footwear. The high number of manufacturers in low-cost manufacturing regions weakens the power of supplier as switching there is easy.
With the exception popular brand name manufacturers such as Nike, Adidas, Puma, New Balance, etc. it is difficult for a manufacturer to establish themselves in retail and therefore forward integration is rare. New