The Federal Association of the German Footwear and Leather Goods Industry records that in the German shoe industry, the post-pandemic recovery path continues. The ‘before Covid-19’ level, however, has not yet been fully reached and the question arises as to whether and when there will be a clear and strong recovery of sales, imports and exports.
The positive market results are clouded by the uncertainty of the war in Europe, and the still high inflation in the manufacturing sector and in consumer prices. Ukraine, which is suffering greatly from Russian aggression, and Brexit continue to weaken trade with other countries. Nevertheless, the sector is looking to the future with cautious optimism, also thanks to opportunities such as SHOES Düsseldorf – an important indicator of the mood in industry and retail.
Surveys on the economic situation and the general state of mind of the players in the German shoe industry revealed various concerns. The shortage of skilled workers puts companies in constant search of specialists in all areas, e.g. for technical and commercial departments. Shoe production requires specialised knowledge in materials science, product management and quality control. Added to this is the new supply chain law and rising energy prices, which are being sought to be offset by investments in energy efficiency and sustainability.
THE TURNOVER AND EMPLOYMENT SITUATION
The turnover of German shoe manufacturers increased significantly in 2022 compared to 2021 and shows that the market gained momentum and vigour with the end of the pandemic measures. Total sales increased from EUR 1.99 billion in 2021 to EUR 2.17 billion in 2022, which corresponds to an increase in sales of 9 per cent.
Sales in Germany in 2022 amounted to EUR 1.61 billion. Sales abroad also recovered slightly, with a growth of 8.9 per cent. They amounted to EUR 559.3 million in 2022 and EUR 513.4 million in 2021.
The number of companies with 50 or more employees remained stable at 33 in 2022. An average of about 8,200 employees per year work in these companies, compared to 7,600 in 2021. This corresponds to an increase of 7.9 per cent. Gross wages increased slightly, although lagging the increase in consumer prices.
THE PRICING SITUATION
In January 2023, producer prices continued to rise and after a decade in which the price trend was very moderate, mostly in the order of 1% per year, we are talking about a turning point. In 2022, the year-on-year increase was 6%.
A clear annual average increase of 7.9% across the entire basket was also recorded in consumer prices, which were mainly affected by rising energy and personnel costs. Again, inflation is being felt and if there is no turnaround, this will be reflected in the incoming orders situation. Therefore, the industry remains cautious in its assessment of how rising prices will affect overall consumption and shoe purchases in 2023.
THE FOREIGN TRADE SITUATION
In 2022, shoes with a total value of EUR 9.6 billion were exported from Germany. In 2021, the number was still EUR 8.04 billion, which corresponds to an increase of 19.4 per cent. With regard to imports, the total value was EUR 14.3 billion compared to EUR 11.2 billion in 2021. This is an increase of 27.7 %.
The upturn in foreign trade was particularly evident in the second half of 2022. Since July last year, import and export figures have soared significantly. In the first half of the year, 175.2 million pairs of shoes with a total value of EUR 4.2 billion were exported, while in the second half of the year, 225.75 million pairs of shoes with a value of EUR 5.4 billion were exported. A similar picture emerges for imports: in the first half of 2022 the value was EUR 5.8 billion, in the second half EUR 8.5 billion. It can be said that there is a renewed consumer desire to buy shoes, both sports and for specific occasions of use, as well as fashion. It seems that, after the restriction caused by the pandemic, people are again investing more money in fashion.
Positive signs also in exports. The neighbouring countries Poland and France are traditionally the most important sales markets for shoes from Germany. In 2021, footwear worth EUR 926.2 million was exported to France, while in 2022 the figure exceeded EUR 1 billion. The value of exports to Poland was even around EUR 1.3 billion (2021: EUR 1.08 billion). This corresponds to an increase of 20.4 per cent. On the other hand, trade with the UK, also due to Brexit, is decreasing significantly. Whereas in 2021 shoes worth EUR 37 million were exported, in 2022 the value was only around EUR 20 million.
Italy remains the most important European country from which Germany imports shoes, with a total value of around EUR 1.3 billion. Looking outside Europe, this role is played by China: in 2021, the total value of imported shoes was EUR 2.7 billion, in 2022 it was already EUR 3.9 billion, which corresponds to an increase of 44%. In second place is Vietnam, which has long been an important trading partner for the German shoe industry. India on the other hand is becoming an increasingly important trading partner for shoe imports.
For 2023, growth impulses are expected for both sales, imports and exports. With the easing of restrictions due to the pandemic and the further decrease of inflation risks, the industry hopes for a further recovery during 2023.
However, the numerous regulations already implemented or announced in Brussels and Berlin are burdening the German shoe industry with additional red tape. New requirements in the supply chain or in the labelling of products also burden manufacturers of shoes and leather goods. This leads to increased documentation and costs.
The recovery can only be complete and lasting if a turning point is the conclusion of new free trade agreements and the demand for efforts to provide more relief and support for the industry’s challenges.