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Igor Surin, President of the Russian Union of Tanners and Shoemakers (RSKO), at a press breakfast at the Fashion Style Russia exhibition on January 18, 2023, said: “... I would like domestic production, a domestic product to occupy at least 50% of our market.” So far, in the Russian shoe industry, which will be discussed in this review, this share does not exceed 25%. So is there any hope that the dream will come true? Surprisingly, there is. But everything is in order.

Imports and exports: both are on the rise

According to the latest study by the German agency Statista from November 2022, Russia is the eighth largest global footwear market. In 2021, its volume reached nearly $11 billion, up from the previous year's fall. At the same time, depending on the season, the supply of imported shoes on the market reaches 79.3%, and this figure also increases.

In 2021, the country's footwear imports totaled approximately $3.66 billion (up from $2.89 billion a year earlier). From China alone, Russia imported more than half of this volume - in excess of $2 billion. Another 25% of imports in the aggregate were provided by Vietnam, Belarus, Indonesia and Turkey. Italian manufacturers account for 9% of all footwear imports to the Russian Federation (however, in the category of genuine leather footwear, their share is about 20%).

However, in parallel with imports, the production and export of footwear from Russia also grew. The cost of shoes produced and shipped in Russia in 2021 exceeded 66.5 million rubles (for comparison: in 2017 this figure was just over 48 million rubles). In physical terms, 107 million pairs were produced in Russia in 2021, which is more than 13 million pairs more than the production volume of the previous year. (CAN BE PROVIDED AS INFOGRAPHIC) At the same time, the most produced category of shoes in Russia over the past years has been shoes with textile uppers - in 2020, about 27.9 million pairs of them were produced, while shoes with leather uppers - 20.3 million pairs, and sports shoes - 1.5 million pairs.

In 2021, the volume of shoes exported from Russia amounted to $253.38 million, an increase of almost $15 million compared to 2020. For example, shoes worth more than $98 million were supplied to Belarus, and Kazakhstan took second place in the list of Russian export markets.

Prices up, quantities down

All market analysts agree on one thing: the events of 2022 have given the Russian shoe market a multidirectional vector of movement. On the one hand, many international shoe brands left Russia, and this weakened retail, but boosted domestic production, not only of finished shoes, but also of components. The Russian footwear market as a whole in 2022 was characterized by high dynamics and the highest growth in market volume in recent years. On the other hand, the depreciation of the ruble at the end of 2022 and the real decline in household incomes also weakened the demand for light industry goods, or forced part of the population to switch to purchases in a lower price segment.

In 2019-2022 the average prices of Russian manufacturers for waterproof footwear with soles and uppers made of rubber or plastic, except for footwear with a protective metal toe cap (read: protective), increased by 31%: at the same time, the growth in 2022 was 9.9%.

In 2019 - 2022, the average retail price for low shoes, men's shoes with genuine leather uppers in 2022 increased by 9.2% compared to the previous year and amounted to 4,733.6 rubles per pair.

Russian consumers buy an average of 2.39 pairs of shoes per person per year, well behind 5-6 pairs in Europe and 7-8 pairs in the US. And the most significant market share is occupied by sales of women's shoes - 45.6%.

Is a 15 percent increase in sales a lot or a little?

The result of all these divergent trends was an increase in footwear production in Russia in the first half of 2022 by 7.3% compared to the same period last year. The data of the Ministry of Industry and Trade is also confirmed by the CRPT: since February 2022, an increase in footwear production has been observed in Russia, amounting to approximately 32% in three months. As follows from the research of the center, if in February the volume of footwear production in Russia amounted to 11.5 million pairs, in March 13 million pairs were produced, in April - 14.7 million, and in May - 15.2 million. revenue of domestic producers was recorded in March 2022 and amounted to 46.8 billion rubles.

The production of global market players is growing: Zenden Group’s revenue for 2021 increased by a quarter and amounted to 14.5 billion rubles, the revenue of all companies of the Ralf Ringer group, according to SPARK-Interfax, in 2021 exceeded 9.5 billion rubles, and from the Chelyabinsk holding "Unichel", which produces every tenth pair of leather shoes in Russia, 3.052 billion rubles (an increase of + 7.3% per year - just like the average for the industry). At the same time, companies faced certain problems in the supply of components, materials, rising costs and changes in logistics. ). At the same time, companies faced certain problems in the supply of components and materials, rising costs and changes in supply chains, and at the very end of 2022, pressure from the tax service.

All in all, according to OFD Platform, the largest operator of fiscal data, the volume of sales of all footwear in real terms increased by 15% in Russia (according to experts, mainly due to the “whitewashing” of regional trade). And in the first half of 2022, the number of outlets officially selling shoes increased by 19% across the country compared to the same period last year, including in Moscow by 3% and in St. Petersburg by 11%.

In addition to the natural desire of major players to capture profitable locations left by former tenants, it suddenly turned out that in the country at the moment there are already about 1000 own brands of clothing, footwear and accessories that can compete with brands that have left the domestic market (data from the Ministry of Industry and Trade of the Russian Federation). In the footwear business, these new brands will mainly position themselves in the premium and luxury segment, which  has withstood the current economic turbulence.

Source: https://legprom.review/?ysclid=lfmhhxqsw0469467763