Sports Insight

sportsinsightmag.com January/February 2019 Sports Insight • 21 Retail and Consumer Confidence "2019 is going to be a really interesting year because we've come off a pretty strong year retail-wise, even though brick-and- mortar is still trying to right-size versus ecommerce and online. "But the American economy and the U.S. consumer has confidence. There is more disposable income, discretionary income in the pockets of our consumers. So, our hope is that we will continue to drive toward a record sales year. 2018 will be a record year with sales pushing $90 billion, which is amazing. 2019 will be the question. Will that continue? Will we continue to see growth? Or will some of the softening of the economy and the expectation that a recession is not too far away? Will that start to take hold as we see some of these cyclical trends take effect within our economy? Will that have an impact on footwear? That's one of the big questions for 2019." Trade "We spent most of 2017 worried about a tax reform bill negatively impacting the importing community, including just about every footwear company. We spent 2018, most of the time, worried about the trade war with China and whether or not the [Trump] administration would apply additional duties on Chinese-made foot- wear sold in the U.S. 2019 will be the year that we will continue to worry about the engagement with China, but I think the story of the year will be that the relationship is forever changed." Sustainability "Beyond that, what is sustainability? Right now, brands like Allbirds and Adidas are defining what sustainability means to them and their consumers. But what does that mean on the back end? And how does the industry continue to build momentum in exploring sustainable materials, sustain- able processes for producing footwear, shortening supply chains, using digital development? All these things are swirling around our minds here and how we can best serve the industry." Sourcing and China "As an industry, we are about 69 percent of footwear volume out of China entering the U.S. market. It was 93 percent not too long ago. So we've been moving away, A lot of that has been driven by the athletic companies. But if you're making cheap, mass retail footwear for working fami- lies, your Chinese import penetration in those categories is quite high and those companies are trying to search for ways to diversify. And the challenge for that is, What capacity is left in places like Vietnam? Will these duties come to fruition? For all of [China's] challenges, it's efficient. The footwear industry has been there for many years. They make the products we like, and the quality is great. "And all things considered and all things being equal, the duty rate out of China is the same duty rate out of Vietnam and the same duty rate out of Indonesia. So as long as there's not additional duties attached to Chinese-made footwear, there is not going to be a lot of incentive for these mass retail companies to leave China in droves. And a lot of our brands are global. Just because they're sticking around in China, it doesn't mean they are selling that produced footwear in the U.S. marketplace. It might be for the European Union or Chinese con- sumers that are so important to the growth models for many of our companies." n The Footwear Industry W H O W E T A L K E D T O Matt Priest President of the Footwear Distributors and Retailers Association (FDRA) 2018 will be a record year with sales pushing $90 billion, which is amazing. 2019 will be the question. The American economy and the U.S. consumer has confidence. There is more disposable income, discretionary income in the pockets of our consumers.

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