The leather and footwear industry is one of the industries that has been severely damaged by the Coronavirus epidemic.
At the outset of the epidemic, the Adidas CEO emphasized that shoes were the first product to remove the coronavirus and home quarantine from the household basket. The true extent of the virus’s impact on the shoe industry is still unclear, and statistics are limited, but the World Shoe Association predicts that shoe consumption will decline by 22.5 percent by 2020.
In this regard, the highest drop in sales is forecast for continental Europe (about 27%), followed by a 20% drop in sales for Asia. For a more accurate estimate, it is good to note that in Italy alone, shoe sales fell 32 percent in March.
Meanwhile, the sales of reputable brands have decreased in proportion to their level of readiness to face critical situations. This has had an impact on both the manpower employed in the firms and the level of sales. In the United States alone, an estimated 4 million workers are affected by the shoe supply chain.
At the sales level, different brands have performed differently, and in the following, we will examine the conditions of some of the most important brands.
The German brand Adidas has probably suffered the most from the Coronavirus. In the first three months of 2020 alone, the brand saw a 50 percent drop in sales in China. It was not just a matter of a 50 percent drop in sales, but also because existing sales were based on discounts and the increase in overhead costs due to widespread store closures ultimately resulted in a 95 percent drop in gross profit for the brand in China.
The problem is that Adidas still has no predictions about a return to normalcy, and has now reached out to the government to make up for the situation and has received a $ 3.3 billion loan from the German government.
Sales of the American brand Under Armor also fell 23 percent to $ 930 million, which means a loss of $ 152 million for the brand. The calculation of this loss on the value of the company’s shares is equivalent to 34 cents per share. The problem does not end there. Estimates suggest that in the second quarter of 2020, the brand’s sales will decrease by 50 or even 60 percent.
Under the current circumstances, Ander Armor is completely immersed in the defensive lock. Among the brand’s actions has been a 25 percent reduction in the salaries of managers, so that it may be able to compensate for the problem of closing its 388 stores in March.
In the turmoil of the Coronavirus market, only Nike has survived so far; Thanks to the readiness of its online sales infrastructure, Nike alone accounts for 25 percent of China’s footwear market. The brand has had to close about 7,000 branches in China since the start of the Corona epidemic, but Nike’s strategy of relying on online sales led to the brand’s release, and Nike succeeded in opening its sales office in the first quarter of 2020. It only closes with a 5% reduction, which of course seems to be due to the discounts offered by Nike in order to ensure its stability and manage the transfer of its customers from real space to cyberspace.
Certainly, the Internet should be considered the most important tool for connecting with the whole world. With the help of the Internet, you cross the boundaries of space in a fraction of the time and access areas and people that may never and in no other way be accessed with this speed and ease. Making money from the Internet can be a great way. For the development of the business and the specific identity (brand) of each product.
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