Footwear Wholesaling in Australia Industry Report

Finding its feet: Slow revenue growth will be
driven by the shift to premium products
IBISWorld Industry Report F3714
Footwear Wholesaling
in Australia
August 2013
Claudia Burgio-Ficca
2 About this Industry
15 International Trade
28 Regulation & Policy
Industry Definition
16 Business Locations
28 Industry Assistance
Main Activities
Similar Industries
18 Competitive Landscape
29 Key Statistics
Additional Resources
18 Market Share Concentration
29 Industry Data
18 Key Success Factors
29 Annual Change
18 Cost Structure Benchmarks
29 Key Ratios
3 Industry at a Glance
19 Basis of Competition
4 Industry Performance
20 Barriers to Entry
Executive Summary
20 Industry Globalisation
Key External Drivers
Current Performance
22 Major Companies
Industry Outlook
22 Pacific Brands Limited
10 Industry Life Cycle
30 Jargon & Glossary
23 Nike Australia Pty Ltd

24 Adidas Australia Pty Ltd
12 Products & Markets

12 Supply Chain
26 Operating Conditions
12 Products & Services
26 Capital Intensity
13 Demand Determinants
27 Technology & Systems
14 Major Markets
27 Revenue Volatility
www.ibisworld.com.au | (03) 9655 3881 | info@ibisworld.com
Footwear Wholesaling in AustraliaAugust 2013 2
WWW.IBISWORLD.COM.AU
About this Industry

Industry Definition
Industry operators primarily purchase a

range of footwear products from
manufacturers and sell these goods to
retailers, generally with minimum or no
further development of the items. Most
wholesalers in the industry undertake
Main Activities
The primary activities of this industry are
sales and administrative activities, such

as establishing relationships with
manufacturers and retailers to ensure the
reliable supply and demand of stock,
marketing and advertising their products,
and storage and transportation of stock.
Mens footwear wholesaling

Womens footwear wholesaling
Childrens footwear wholesaling
Work-related footwear wholesaling
Unisex footwear wholesaling
The major products and services in this industry are

Childrens shoes
Mens shoes
Other footwear
Womens shoes
Similar Industries
C1352 Footwear Manufacturing in Australia

Footwear manufacturers produce footwear.
G4252 Footwear Retailing in Australia
Industry participants sell boots, shoes and other forms of footwear to customers.
IBISWorld
writes over 500 Australian

industry reports, which are updated
up to four times a year. To see all
reports, go to www.ibisworld.com.au
Additional Resources
For additional information on this industry

www.ausindustry.gov.au
AusIndustry
www.tfia.com.au
Council of Textile & Fashion Industries of Australia Limited
www.ragtrader.com.au
Ragtrader
Industry at a Glance
Footwear Wholesaling in 2013-14
Key Statistics
Snapshot
Revenue
Annual Growth 09-14
Annual Growth 14-19
Profit
Wages
Businesses
$2.0bn
-1.1%
1.1%
$128.4m $80.0m 177
Demand from footwear retailing
Revenue vs. employment growth
NIKE Australia Pty

Ltd 6.3%
adidas Australia
Pty Ltd 5.7%
% change
Pacific Brands
Limited 13.7%
12
% change
Market Share
2
4
6
Year 06
0
4
08
10
Revenue
12
14
16
18
Year
20
07
09
11
13
15
17
19
Employment
SOURCE: WWW.IBISWORLD.COM.AU
p. 22
Establishments
6.5%
Demand from
footwear retailing
2.3% 0.4%
TAS
ACT
SA
0.3%
NT
10.3%
Demand from
department stores
32.4%
WA
Real household
disposable income
NSW
16.8%
Trade-weighted index
QLD
Consumer
sentiment index
31%
VIC
p. 4
SOURCE:
SOURCE:
Industry Structure
Life Cycle Stage

Revenue Volatility
Decline
Low
Regulation Level
Technology Change
Light
Low
Capital Intensity
Medium
Barriers to Entry
Industry Assistance
Medium
Industry Globalisation
Low
Concentration Level
Low
Competition Level
High
FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 29
Medium
Industry Performance
Executive Summary | Key External Drivers | Current Performance

Industry Outlook | Life Cycle Stage
Executive
Summary
The Footwear Wholesaling industry has

struggled over the past five years, with
revenue expected to contract by an
annualised 1.1% through 2013-14.
Trading conditions across the industry
have been affected by declines in the
price of shoes and an increase in
wholesale bypass activity. Fluctuations in
retail demand for footwear along with
variations in disposable income,
consumer sentiment and the trade
weighted index also influenced industry
performance during the period. Industry
profitability has suffered due to strong
competition between players and declines
in product margins. Industry revenue is
expected to post weak growth of 1.0% to
reach $2.0 billion in 2013-14.
Footwear prices over the past five
years have been negatively affected by
continued growth in the number of
imports from low-cost producing
countries. The resulting decline in the
average price of footwear hindered
revenue growth and constrained
profitability for operators. The collapse of
global financial markets led to a
deterioration in economic conditions,
rising unemployment and weak
consumer sentiment. Despite
government stimulus payments, sales
were affected by the changing domestic

climate. Price discounting tactics by most
major footwear retailers and department
stores eroded product margins and
industry profitability. Falling profit
margins encouraged some industry
participants to exit the industry,
demonstrated by the significant
contraction in establishment and
employment numbers.
Industry revenue is forecast to post
weak annualised growth of 1.1% over the
next five years, reaching $2.1 billion in
2018-19. While consumer expenditure
on footwear is set to increase, footwear
retailers are expected to continue
bypassing wholesalers in preference to
buying directly from manufacturers.
Industry import volumes will be
influenced by an anticipated decline in
the trade weighted index, making
imports more expensive. Continued
competition across the industry will lead
to further consolidation in enterprise
and establishment numbers during the
period. Despite this, industry
profitability is forecast to post slow
growth over the next five years due to a
shift in focus by wholesalers from
low-cost imports to premium products
and services.

Demand for footwear at the retail level
influences the level of new orders
received by footwear wholesalers. As
retail demand for footwear increases,
there is a corresponding rise in the level
of new footwear orders for wholesalers.
Demand from footwear retailing is
expected to increase in 2013-14 due to an
upturn in retail trading conditions.
in 2013-14 due to continued caution in

consumer spending. This is a potential
threat to the industry, as it may hinder
revenue growth.
Demand from department stores

Along with footwear retailers,
department stores are key suppliers of
footwear products. An increase in
demand for footwear across department
stores creates new orders for footwear
wholesalers to fill. Demand from
department stores is expected to decline
Real household disposable income

Trends in real household disposable
income influence demand for footwear at
the retail level. As disposable income rises,
consumers are able to spend more on
discretionary purchases such as footwear,
boosting new orders for wholesalers.
Disposable income is expected to increase
over 2013-14. This is a potential
opportunity for the industry to boost sales
through higher retail orders.
Trade-weighted index
The value of the Australian dollar,

continued
compared with its major trading

partners, affects the Footwear
Wholesaling industry. An increase in the
value of the Australian dollar boosts the
affordability of imported products,
making overseas footwear items more
accessible for wholesalers. The tradeweighted index is expected to decrease in
2013-14 due to fears regarding the
strength of the domestic economy.
Consumer sentiment index

Fluctuations in consumer sentiment
influence the level of retail spending by
consumers. An increase in sentiment
reflects a rise in optimism among
consumers, leading to higher spending
on discretionary items such as footwear.
Consumer sentiment is expected to
increase in 2013-14 due to an upturn in
economic and political stability.
Real household disposable income
12
10
% change
% change
0
4
8
Year
4
2
07
09
11
13
15
17
19
Year
08
10
12
14
16
18
20
Current
Performance
Footwear wholesalers have struggled

over the past five years, with revenue
expected to contract an annualised 1.1%
through 2013-14. Revenue has been
constrained by declines in the price of
footwear, wholesale bypass and the
impact of the financial crisis.
Profitability has suffered, with
wholesalers reducing product margins in
a bid to maintain their competitive edge.
Trading conditions for wholesalers have

also been influenced by the performance
of the industrys key external drivers
including demand from footwear
retailers and department stores, trends
in real household disposable income and
consumer sentiment and fluctuations in
the trade-weighted index. Industry
revenue is expected to grow 1.0% to
reach $2.0 billion in 2013-14.
The economic
downturn
The demand for goods provided by this

industry is dependent upon footwear
consumption levels at the retail level, and
this is affected by factors including
consumer sentiment, household
disposable income and unemployment.
The Australian economy suffered a
downturn in 2008-09, narrowly avoiding
a recession. Consumer sentiment
declined sharply for the year,
constraining discretionary spending as

nervous consumers put their money into
savings. However, household disposable
income increased over 2008-09 due to
the Federal Governments two economic
stimulus packages, low interest rates and
petrol prices, which supported retail
spending for the year.
Expenditure on footwear at the
downstream retail level weakened during
Falling profitability
this period, which flowed on to

wholesalers. Based on Australian Bureau
of Statistics (ABS) data, retail spending
on clothing, footwear and accessories fell
1.0% in 2008-09. This followed growth in
the previous two years. IBISWorld
expects that these factors combined
caused industry revenue to contract by
1.7% for the year.
The overall economy improved over
2009-10, and consumer sentiment
increased during the first part of the year.
Consumers were generally encouraged by
relatively low interest rates, rising house
prices and the news that Australia had
avoided a recession. However, consumer
sentiment fell several times in the second
half of the year, following a series of
interest rate rises by the Reserve Bank. In
the absence of further government fiscal
stimulus payments, household disposable
income growth weakened, which
constrained spending by households.
Retail growth weakened as 2010-11
progressed, and consumers remained
concerned over economic uncertainty
overseas and increased their savings.
The country reached its steepest savings
rate in half a century. According to ABS
data, retail spending on footwear and
associated products posted weak growth
(in nominal terms) during the year,

reflecting the shift on consumer
consumption patterns towards savvier
product choices. Retail spending on
footwear and associated products
continued to decline in 2011-12, leading
to a second year of successive declines in
revenue for industry wholesalers.
Footwear consumption patterns rose
over 2012-13 and this trend is expected
to continue into 2013-14. Industry
revenue during this period has been
driven by continued growth in
disposable income levels and an upturn
in consumer sentiment.
Industry operators have struggled to

remain profitable over the past five years.
The continued trend in wholesale bypass,
coupled with the flow-on effects of the
global financial crisis, led to lower profit
margins and capital difficulties.
Wholesalers and retailers were forced to
implement a wide range of strategies to
boost their bottom lines. Many operators
overhauled their supply chains and
implemented cost-saving measures during
the economic slowdown. The effects of
government stimulus payments to
consumers peaked in the June quarter of
2009, but did little to alleviate the tough
trading environment in which textile,
clothing and footwear retailers and
wholesalers operate in the longer term.
Over the past five years, wholesaling
margins have reduced as demand grows

for retailers to discount footwear.
Discount retailers have grown solidly,
while department stores have struggled.
Wholesale margins are expected to
narrow further as fewer or cancelled
orders from retailers lead to more
aggressive retail price markdowns.
Wholesalers have been forced to become
low-cost providers to remain profitable.
This means that the majority of licence
agreements that wholesalers held
previously are now controlled by
manufacturers based in foreign countries,
where labour costs less and
environmental regulations are less strict
than in Australia.
Overall, profitability among major
players within the industry is steadier
Industry revenue
2
0
% change
The economic
downturn continued
2
4
6
Year 06
08
10
12
14
16
18
20
Falling profitability
continued
than for smaller players. The Footwear

Wholesaling industry is still expected to
maintain a low concentration level due to
the large number of small players in the
industry. Although industry
concentration remains low, trends in
other parts of the wholesaling division
suggest that concentration may rise in
the future. This is despite the number of
small operators with limited financial
resources to merge operations. Rising
concentration in retailing means that
more retailers are ordering on a national
scale. Independent footwear wholesalers

and internal wholesaling divisions of
footwear manufacturers are expected to
benefit from improvements in inventory
management, distribution systems and
logistics over the period. These efficiency
gains are expected to ease cost pressures
generated from footwear manufacturers
and retailers. Retailers and footwear
manufacturers dominated much of the
increased import purchases, and
wholesalers did not benefit much from
tariff reductions.
Participation and
customers
Over the five years through 2013-14,

industry enterprise and establishment
numbers are expected to have
contracted, as players chose to exit due
to falling profit margins and difficult
trading conditions. Enterprise numbers
are expected to fall at a faster rate than
establishments, which suggests the
industry has undergone a period of
rationalisation. Meanwhile, the number
of employees per establishment has
fallen as establishments struggled to
remain profitable.
Many footwear retailers are
undertaking wholesale bypass and
contacting manufacturers directly rather
than using the services of wholesalers, in
order to improve profit margins and
maintain a competitive edge.
International footwear retail chains

including Aldo and Novo are increasing
competition due to their economies of
scale, giving them the ability to control
operations from the manufacturing level
through to retail. Effectively, these types
of companies are increasingly bypassing
the services offered by the industry. In
addition, department stores and
supermarkets have started to offer a
wider selection of footwear. Big W and
Myer have started aggressive store
expansions in recent years, thus
increasing competition for smaller
retailers, which are the main customers
of the industry. Again, these department
stores are large enough to undertake
wholesale bypass, placing further
pressure on industry operators.
Industry
Outlook
Footwear wholesalers are expected to

face further difficulties over the next five
years, with revenue forecast to post weak
annualised growth of 1.1% through
2018-19. Trading conditions will be
influenced by changing retail demand
patterns and continued pressure on
product margins, which will suppress
profitability. Industry performance is also

expected to be driven by variations in key
external drivers including trends in real
household disposable income, consumer
sentiment and fluctuations in the trade
weighted index. Industry revenue is
expected to grow 1.3% in 2014-15 and
reach $2.1 billion by 2018-19.
Revenue and profit
Industry revenue is forecast to post weak

growth over the five years through 201819. Despite a rise in disposable income
levels, volatility in consumer sentiment
will soften spending on footwear at the

retail level. As a result, new wholesale
orders for footwear will be hindered by
fluctuations in retail activity. Continued
Revenue and profit

continued
growth in retailers bypassing the

wholesale function and sourcing products
directly from manufacturers is also
expected to suppress revenue growth.
Industry trading conditions are likely
to be influenced by continued growth in
import penetration, albeit at a
considerably slower rate than the five
years through 2013-14. Imports already
dominate the Australian market, aided in
part by a tariff reduction introduced in
2010. Import growth is expected to
plateau over the next five years as the
market reaches capacity. Import levels
are also expected to be influenced by an
overall decline in the trade weighted
index, which will decrease the value of
the Australian dollar, making imports
more expensive. Footwear wholesalers
will find it hard to compete with cheap
footwear imports during this period, due
largely to footwear manufacturers and
retailers attempting to control price and
product margins.
Industry profitability is projected to rise
marginally over the five years through
2018-19. Footwear wholesalers are
expected to move away from competing

with low-end imports and to invest more
resources into developing premium
products and services. This is consistent
with similar trends in other textile
markets. Logistics and supply-chain
management will be critical factors
affecting the competitiveness of the
industry. The Australian market will more
readily embrace prints and designs once
they have already been proven in the
European and North American markets.
Customers are also demanding a faster
turnaround of these designs, as fashion
websites instantly inform consumers
everywhere of the new developments in
fashion capitals. Given this, the success of
a wholesaler in this new market
environment is dependent on its ability to
make these designs available in the
shortest time frame and at the cheapest
price. Many textile wholesalers seeking to
bring products to market more quickly
will need to invest resources into their
logistics systems in order to remain
competitive in the medium term, and to
improve profitability.
Competition
Industry competition is expected to

increase as a result of rising import levels
and continued growth in wholesaler
bypass. As a result, further
consolidations across the industry will
lead to a contraction in enterprise and
establishment numbers during the
period. Employment levels are also
forecast to decline over the next five
years, leading to fall in wage costs for
operators. Major industry participants
have engaged in acquisition activity to
increase market presence and
profitability. The sports and leisure
footwear segments will experience
slightly stronger growth, as participants
such as Adidas and Nike are subsidiaries
of global companies with the advantage
of economies of scale and large
marketing budgets. This will cushion the
impact of decreasing profit levels, which
will be a pervasive trend for other
industry operators.
Variables in long-term forecast
conditions include changes in fashion
trends. A new style can potentially boost
industry revenue through effective
marketing or product innovations.
Discretionary spending on footwear
could be materially reduced in periods of
economic uncertainty or during periods
of pessimistic sentiment. Rising internet
purchases from manufacturers overseas
represent a leakage of industry demand.
Specialty footwear wholesalers will
continue to face strong competition from
traditional department stores that are
able to offer a broad selection of brandname shoes right across the price
spectrum. A strong international supply
infrastructure also provides a
competitive advantage in global
sourcing. Department stores have strong
buying power and are able to get
Competition
continued
discounts on bulk purchases. However,

this is also a weakness, as they tend to
stock a broad range of shoes and to avoid
niche areas. This represents an
opportunity for footwear wholesalers at

the high end of the price spectrum,
where the exclusivity of fashionable
brands will ensure strong margins.
Life Cycle Stage
Footwear retailers are increasingly

bypassing wholesalers and buying
directly from manufacturers
Growth rates are consistently below the
rate of growth in the overall economy
% Growth in share of economy
There are stable and clearly

segmented product groups
20
Maturity
Quality Growth
Company
consolidation;
level of economic
importance stable
High growth in economic

importance; weaker companies
close down; developed
technology and markets
15
Key Features of a Decline Industry

Revenue grows slower than economy
Falling company numbers; large firms dominate
Little technology & process change
Declining per capita consumption of good
Stable & clearly segmented products & brands
10
Quantity Growth
Many new companies;

minor growth in economic
importance; substantial
technology change
Sport and Camping Equipment Retailing

Footwear Retailing
Department Stores
Footwear
Wholesaling
-5
-10
-10
Decline
Footwear Manufacturing
-5
Shrinking economic
importance
10
15
20
% Growth in number of establishments

Industry Life Cycle

This
industry
is D
eclining
Industry wholesalers are expected

operate in the decline phase of their life
cycle over the 10 years through 2018-19.
The declining life cycle status can be
attributed to the weak growth in value
added, decline in establishment numbers
and well segmented product market.
The industry is expected to post
annualised growth in value added of
0.3% over the 10 years through 2018-19,
compared with annualised growth in
total Australian GDP of 2.5% over the
same period. Growth in value added been
affected by a decline in the average price
of footwear, due to an increase in the
level of imports from low-cost producing
countries, keeping prices down. Industry
value added has also been affected by
footwear retailers, including
independent, chain and department
stores, who have continually sought
direct links with manufacturers in order

to compete more effectively for the
consumer dollar.
Industry enterprise and establishment
numbers have trended downwards,
reflecting continued consolidation across
the industry. The decline in enterprise
and establishment numbers can also be
attributed to increased wholesaler bypass
activity in the industry.
The declining life cycle status of the
industry can also be attributed to the
product market for footwear, which is
stable and clearly segmented. However,
the sports and leisure footwear wholesale
segment, including major players Nike and
Adidas, is partially cushioning the decline
evident across other wholesale segments,
such as womens fashion footwear, which
have been significantly affected by the
trend towards wholesale bypass.
Footwear Wholesaling in Australia August 2013
12
Products & Markets
Supply Chain | Products & Services | Demand Determinants

Major Markets | International Trade | Business Locations
Supply Chain
KEY BUYING INDUSTRIES

G4241
Sport and Camping Equipment Retailing in Australia

The industry supplies outdoor and athletic footwear to these stores.
G4252
Footwear Retailing in Australia

Footwear wholesalers supply footwear to shoe stores.
G4260
Department Stores in Australia

The industry supplies a range of footwear to department stores.
KEY SELLING INDUSTRIES

C1352
Products & Services
Footwear Manufacturing in Australia

Footwear manufacturers supply a range of footwear to wholesalers.
The product market for footwear

wholesalers comprises four key
categories: womens shoes, mens shoes,
childrens shoes and other footwear. The
relative share of each segment has posted
modest change over the past five years
due to variations in consumer demand.
Womens shoes
Womens shoes dominate the footwear
wholesale market, accounting for 49.3%
of industry revenue in 2013-14. As a
proportion of industry revenue, this
segment has remained relatively stable
over the past five years. Shoes for
women come in a broad selection of
prices, styles and colours. Women
typically spend more on shoes and
purchase more shoes than men. This
variation is largely a function of fashion
and aesthetic motivations with regard to
style. Women also tend to demand a

much broader range of shoes than men
do. Given the large proportion of fashion
shoes sold, margins for womens shoes
are also materially higher than margins
for other segments.
Mens shoes
Mens shoes are the second largest
product segment, accounting for 27.4% of
industry revenue in 2013-14. Over the
past five years, there has been a shift
within the mens shoe segment from
athletic shoes to casual and fashionable
street shoes. The decline in demand for
athletic shoes weakened margins for
retailers selling brands such as Nike,
Adidas and Reebok. As a result, growth in
segment revenue over the past five years
has been offset by the slight contraction
in mens athletic shoe sales. Mens shoes
Products and services segmentation (2013-14)
6.1%
Other footwear
17.2%
Children's shoes
27.4%
Men's shoes
Total $2.0bn
49.3%
Women's shoes
13
Products & Markets
Products & Services

continued
come in a smaller variety of styles and

colours than womens shoes. There is still
a reasonably broad range of mens
footwear products with regard to price
and quality. Discounting has also been
prevalent at the low end of the market, as
a lack of differentiation has increased the
commoditisation of products.
Childrens shoes
The childrens shoes segment has grown
from an almost non-existent base to
account for 17.2% of industry revenue in
2013-14. Childrens and infants shoes are
less affected by fashion trends and are
more focused on practicality and comfort.
Childrens footwear was once a highly
commoditised area where the major basis
of competition was price. Due to the
trend for fewer children per household in
Demand
Determinants
The industry provides footwear to

independent footwear retailers, footwear
retail chains and department stores.
Demand from retailers is largely driven by
fashion trends and consumer spending
habits. Retailers demand products that
meet the needs of their customers in order
to ensure inventory turnover. Fashion
cycles have become shorter over the past
five years as consumers seek to keep
up-to-date with the latest trends. Seasonal
changes also dictate the type of footwear
demanded by consumers. For example,
boots are popular in winter, while sandals
sell more easily during the winter season.
Wholesalers need to offer suitable and
on-trend ranges of footwear to maintain
strong relationships with footwear retailers.
The demand for footwear is closely
associated with real household disposable
income and consumer sentiment.
Increases in income and consumer
sentiment lead to greater expenditure on
consumer goods such as footwear.
Australia, parents are spending more on

those children. The market for higher
priced and fashionable childrens shoes
has contributed to growth in the relative
size of this segment over the past five
years. The size of this segment, as a
proportion of industry revenue, has also
been influenced by growth in Australias
birth rate.
Other footwear
Other footwear accounts for 6.1% of
industry revenue in 2013-14. Footwear
in this segment includes unisex
footwear, footwear used for medical
reasons and work footwear that is not
gender specific. As a proportion on
industry revenue, the other footwear
segment has remained relatively
unchanged over the past five years.
However, as with most developed

economies, as general income levels
increase, households spend less on
products and more on services. Basic
clothing is not a discretionary item and
increases in population levels leads to
greater demand for clothing and apparel.
The price of footwear relative to other
goods is a significant factor. As the price
of clothing falls relative to other products
(due to increased levels of cheap
imports), consumers are willing to
purchase larger volumes of footwear.
Structural changes in footwear
retailing and tariff reductions affect
demand. Retailers are tending to buy
directly from the manufacturer, thereby
bypassing wholesalers. Falling tariffs
over the past decade have made imported
footwear more affordable. The increase in
production from the low-cost Asian
manufacturing region is contributing to
lower prices, rendering local
manufacturers relatively uncompetitive.
14
Products & Markets
Major Markets
The major markets for footwear

wholesalers include speciality footwear
retailers, discount stores, department
stores and other retailers. The relative
size of each major market has undergone
modest change over the past five years,
due to trends in consumer shopping
habits and the type of footwear sold by
each retailer.
Specialty stores
Specialty stores are expected to represent
the single largest market for footwear
wholesalers, accounting for 35.0% of
industry revenue in 2013-14. As a
proportion of revenue, the specialty store
segment has remained relatively stable
over the past five years. Consumer
demand for footwear from specialty
stores has been influenced by volatility in
economic conditions due to the global
financial crisis.
Discount Stores
Discount stores are regarded as the
fastest growing retail channel for
footwear, surpassing department stores
and accounting for 31.0% of industry
revenue in 2013-14. Discount stores offer
consumers a large number of brand name
products, but do not charge the high
prices generally associated with these
products. Growth in discount stores has

drawn the interest of wholesalers, who
view them as potentially more lucrative
partners than department stores. As a
result, brand name merchandise is
finding its way into these stores.
Department stores
Department stores are expected to
account for 18.0% of industry revenue
in 2013-14. The relative share of
industry revenue generated by this
segment has declined over the past five
years. The growing buying power of
department stores has made it easier
for them to bypass the wholesaling
function and source directly from
overseas or local manufacturers instead
of local wholesalers.
Other retailers
The other retailers segment includes hobby
and surf-wear retail stores, safety footwear
retailers, mixed footwear stores, camping
and uniform stores, specialty hobby stores
and internet retailers. The other retailers
segment is expected to account for 16.0%
of industry revenue in 2013-14. The
relative size of this segment has posted a
modest rise over the past five years, largely
due to growth in the volume of purchases
made via internet retailers.
Major market segmentation (2013-14)
16%
Other retailers
18%
Department stores
35%
Specialty footwear retailers
31%
Discount stores
Total $2.0bn
15
Products & Markets
International Trade
The industry is heavily involved in

distributing both imported and exported
footwear. Imports are purchased from
overseas manufacturers and other
wholesalers, while exports are purchased
from domestic manufacturers to be sold
overseas. By convention, the actual value
of imported and exported goods is not
accounted for at the footwear wholesaling
level. Rather, it is accounted for at the
upstream manufacturing level.
Imports
Footwear imports are expected to post
weak growth over the five years through
2013-14. Import volumes during this
period have been affected by the global
financial crisis and the resulting
downturn in the domestic economy.
China is the largest supplier of footwear

to Australia due to its lower cost of
production over other footwear
manufacturing countries. Other key
import countries include Vietnam, Italy
and Indonesia.
Exports
Footwear exports are expected to decline
over the five years through 2013-14. Export
demand has been hinder by the collapse of
global financial markets and continued
issues of price competitiveness compared
with low cost producers such as China.
Growth in the value of the Australian dollar
over the past five years has also affect
export volumes. Key export countries
include New Zealand, Israel, Papua New
Guinea, and the United Kingdom.
Products & Markets

Business Locations 2013-14
NT
0.3
QLD
16.8
WA
10.3
SA
6.5
NSW
32.4
ACT
0.4
VIC
31.0
Establishments (%)
Cold Zone (<10)
<25
<50
Hot Zone (<100)
Not applicable
TAS
2.3
Products & Markets
Distribution of establishments vs. population

40
30
20
10
WA
VIC
TAS
SA
QLD
NT
NSW
0
ACT
The geographic spread of the industry is

closely related to the population
distribution for each of the states. New
South Wales, Victoria and Queensland
combined account for approximately
80% of footwear wholesaling locations.
Hence, footwear wholesalers tend to be
located in states that are more populated
as they have relatively higher levels of
consumer demand.
New South Wales is expected to
account for 32.5% of total industry
establishments in 2013-14. Footwear
wholesalers in New South Wales benefit
from the higher income earned by this
states residents compared to the national
average. In addition, the state supports a
wide range of footwear retailers, which
work closely with wholesalers to ensure
supply meets consumer demand.
Victoria is regarded as the second
largest market for footwear wholesalers,
accounting for 28.3% of total industry
establishments in 2013-14. Like New
South Wales, Victorians are expected to
spend more per capita on footwear than
the national average in 2013-14. State
demand for footwear is driven by
population levels, a wider variety of
products and styles on offer, higher
average incomes and higher prices.
Queensland has exhibited strong
population growth over the past five
years, leading to growth in industry
establishments. However, the states
Percentage
Business Locations
Establishments
Population
population share is expected to be

higher than industry establishments
and revenue, which suggests a lower
average spend by consumers. This in
part can be attributed to weather
conditions, which encourage the use of
lower-price sandals, thongs and
summer-themed footwear. The highend fashion footwear market in the state
is also small relative to New South
Wales and Victoria. The share of
industry establishments relative to the
population suggests that store growth
will continue in this state, as more
wholesalers expand or enter the market.
Competitive Landscape
Market Share Concentration | Key Success Factors | Cost Structure Benchmarks

Basis of Competition | Barriers to Entry | Industry Globalisation
Market Share
Concentration
Level
Concentration
in
this industry is L ow
Key Success Factors

IBISWorld
identifies
250 Key Success
Factors for a
business. The most
important for this
industry are:
The industry is characterised by a low

level of concentration as the top four
players account for less than 40.0% of
the market. In addition to the top
players, the industry also supports a
range of smaller sized operators.
Barriers to entry and capital investment
for players are both at a medium level.
As a result, new operators are not
significantly impeded from entering the
industry. Furthermore, the industry is
in the decline phase of its life cycle,
characterised by a fall in establishment

numbers, clearly segmented product
groups and continued impact of
wholesaler bypass.
Concentration has increased over the
past five years due to consolidation of
small operators, with limited financial
resources. Growth in concentration levels
at the retail level has also enhanced the
ability of larger sized retailers to bypass
traditional wholesalers and purchase
footwear directly from manufacturers.
Guaranteed supply of key inputs

Operators require solid agreements with
manufacturers that products will be
delivered on time and as ordered.
should meet price and fashion trends as

demanded by consumers.
Having contacts within key markets

Wholesalers benefit from holding a
portfolio of retail clients, as opposed to
relying on one business for the majority
of their revenue.
Ability to alter goods and services
produced in favour of market conditions
The range of footwear on offer to retailers
Cost Structure
Benchmarks
The industry is highly fragmented, with

the top three players accounting for less
than 30.0% of industry revenue. As a
result, cost structures vary widely
between industry participants. While
larger companies incur greater costs,
these companies operate at lower per
unit costs due to economies of scale.
Smaller companies that operate at lower
costs do so at the expense of volume.
Profit
Returns do not account for a large
portion of the industry. The retail
industry in Australia has been extremely
competitive over the past five years.
Wholesalers have been forced to engage
in intensive promotional activity with
customers, keeping margins low. Low
returns are also the result of the
industrys declining life cycle stage, with
Ability to avoid wholesale bypass

Wholesalers need to ensure they
remainprice and product competitive,
or risk being bypassed by retailers
whowill source products directly
frommanufacturers.
Having marketing expertise
Well-developed sales and marketing
skills are essential for a successful
wholesaler.
a high level of competition from domestic

and foreign companies. Industry players
have also been subject to pressures from
downstream retailers and consumers for
lower-price products.
Purchases
Purchases are the single largest
expense item for industry operators,
and are characteristic of businesses in
the Wholesale Trade division. Over the
past five years, purchase costs have
declined due to the high Australian
dollar and lower interest rates.
Footwear is subject to variable fashion
and seasonal trends, so wholesalers
focus on moving stock quickly to make
the most of a particular trend. It is
essential for footwear wholesalers to
have sufficient stock on hand to meet
customer demand. Products are sold to
Cost Structure
Benchmarks
continued
major markets, generally without

further processing, modification or
development of the goods.
required to provide clients with

personalised attention and have
extensive product knowledge.
Wages and depreciation

Wages are expected to account for less
than 5.0% of industry revenue, while
depreciation accounts for less than 2.0%,
reflecting the industrys tendency to
avoid substantial capital costs. Capital
expenditure consists primarily of
purchases of office equipment,
warehouse machinery and computer
software. This reflects the labourintensive nature of the industry. Staff are
Other
Other expenses include insurance, freight
costs and advertising costs. Insurance
costs have increased over the past five
years. Freight costs have been influenced
by growth in petrol prices. Industry
advertising costs tend to be high due to
the greater profit margins received from
the branding of products. Larger players
in the industry encounter significant
research and development costs.
Sector vs. Industry Costs

Average Costs of
all Industries in
sector (2013-14)
100
Percentage of revenue
80
1.3
1.0
4.8
6.4
7.1
Industry Costs
(2013-14)
0.7
1.8
6.5
1.3
10.3
4.1
60
40
78.6
1.0
Profit
Rent
Utilities
Depreciation
Other
Wages
Purchases
75.0
20
0
Basis of Competition
Level & Trend
ompetition
C
in
this industry is
Highand the trend
is I ncreasing
Footwear wholesalers face high levels of

competition and the trend is increasing.
Internally, operators compete on the
basis of price, product range and quality.
Externally, the industry is subject to
strong competition from manufacturers
who supply directly to end market and
bypass the wholesale process.
Internal competition
Price is the main basis of competition
between players. Wholesalers need to
offer footwear products at a competitive
price in order to secure repeat orders
with retail customers. At the higher end
of the market, brand name footwear is
generally associated with better-quality
Basis of Competition
continued
Barriers to Entry
Level & Trend
arriers to Entry
B
in this industry are

Mediumand S
teady
Industry
Globalisation
Level & Trend
lobalisation
G
in
this industry is
Lowand the trend
is I ncreasing
items. As a result, competition is based

on the ability of wholesalers to secure
contract for the supply of branded
merchandise. At the middle and lower
end of the market, wholesalers need to
provide retail customers with a wide
variety of footwear that meet the price
and fashion trends demanded by
consumers. The level of after sales
service, geographic location and delivery
reputation of wholesalers are also
The industry has medium barriers to

entry, and the trend is increasing. The
industry is operating in the decline
stage of its life cycle stage and growing
at a slower rate than the overall
economy. Changes in the industrys
buyers marker reflect the growing trend
for manufacturers and retailers to
bypass traditional wholesalers.
Furthermore, existing contracts and
agreements between established
retailers and wholesalers can make it
difficult for new wholesaling companies
to gain clients. Licence agreements
provide wholesalers with exclusive
distribution of certain brands.
Industry competition levels are high.
Operators compete on the basis of price,
product range and quality. They are also
subject to strong competition from
manufacturers and importers seeking a
share of the market. Capital intensity for
the industry is medium. Key investment
requirements include transportation
The industry has a low level of globalisation,

and the trend is increasing. The majority of
industry players are locally based and only
operate in Australia. As a result, the level of
foreign ownership is low. However,
globalisation levels have increased due to
growth in footwear imports and the
outsourcing of production functions by
footwear manufacturers.
The wholesale function has changed
considerably over the past two decades.
Wholesaler once strive to ensure
important basis of competition between

industry players.
External competition
The industry is subject to significant
competition from manufacturers. Growth
in the number of retailers sourcing
products directly from local and
international manufacturers has affected
the competitiveness and revenue base for
industry players.
Barriers to Entry checklist

Competition
Concentration
Life Cycle Stage
Capital Intensity
Technology Change
Regulation & Policy
Industry Assistance
Level
High
Low
Decline
Medium
Low
Light
Medium
vehicles, warehouse facilities and

computerised systems that enable
product ordering and tracking. These
costs may hinder the entry of new
players, given the low requirement for
labour by the industry.
The industry has a low level of market
share concentration. Generally, this
would entice new players into the
industry. However, strong competition
across the industry has led to the exit or
consolidation of smaller sized operators.
distribution between supplier and

retailer was performed at maximum
efficiency. Today, the ability to select
sources and production in line with
required inventory levels, sales and
budgets may require overseeing
operations, teams and marketing
campaigns in various locations
worldwide. Along with this, a greater
collaborative working style between
companies, buyers and product
developers is becoming more
Industry
Globalisation
continued
important as larger retailers

increasingly manufacture their own
brands. Meeting targets on price,
quality and delivery targets for
wholesalers was always important in
this industry. Furthermore, the ability
to manage relationships with Chinese

factories and suppliers to ensure
product lines are replenished at the
shortest possible lead times, while
stillensuring lowest possible cost is
just as important.
Major Companies
Pacific Brands Limited | Nike Australia Pty Ltd
Adidas Australia Pty Ltd | Other Companies
Major players
Nike Australia Pty Ltd 6.3%
(Market share)
74.3%
Other
Adidas Australia Pty Ltd 5.7%

Pacific Brands Limited 13.7%
Player Performance
Pacific Brands
Limited
Market share: 13.7%
Industry Brand Names
King Gee
Volley
Julius Marlow
Clarks
Slazenger
Grosby
Pacific Brands operates as a major

supplier, manufacturer and retailer of
footwear, clothing and textiles. The
company is listed on the Australian and
New Zealand stock exchanges and is
administered from its head office in
Hawthorn, Victoria. Company
operations are divided into three
segments: underwear, workwear and
HFO (homewares, footwear and
outerwear). Financial results for the year
ended 30 June 2012 indicate that the
company generated $1.3 billion in total
revenue. Company operations relevant
to the industry are confined to the
wholesale of footwear.
The Pacific Brands footwear group is
the largest manufacturer and supplier of
footwear in Australia. The company
controls several brands including Julius
Marlow, Clarks, Hush Puppies, Grosby
and Volley. The company also operates in
the United Kingdom through wholly
owned subsidiary Pacific Brands (UK)
Limited. A significant proportion of
footwear manufacturing is carried out
offshore, by foreign firms, to company
specifications and standards. Pacific
Brands also imports footwear from

various countries.
Established in 1893, Pacific Brands
originally traded as Pacific Dunlop as a
manufacturer of bicycle tyres. The
company began producing footwear and
other sporting goods in the 1930s, and
started making mattresses in 1960. The
company entered the textile, clothing and
footwear manufacturing sector in the
1970s with the acquisition of underwear
and sock manufacturer Holeproof. The
Pacific Brands division of Pacific Dunlop
(Ansell) was created in 1985, followed by
the acquisition of underwear producer
Bonds in 1987. In 2012, Pacific Brands
was nearly acquired by US-based private
equity firm Kohlberg Kravis Roberts,
which made an offer worth $600.0
million. While no formal acquisition
procedures took place, the offer led to
increased interest from other parties.
Financial performance
Pacific Brands industry specific revenue
contracted an annualised 0.6% over the
five years through 2012-13,
underperforming the industry (in nominal
Pacific Brands industry segment performance*

Revenue
($ million)
(% change)
EBIT
($ million)
2007-08
270.8
-3.4
36.4
2008-09
256.1
-5.4
-19.6
2009-10
267.2
4.3
5.1
2010-11
247.8
-7.3
-61.4
2011-12
261.4
5.5
13.1
2012-13
262.2
0.3
13.3
Year
*Estimate
SOURCE: IBISWORLD
Major Companies
Player Performance
continued
terms). Industry specific profitability

remained volatile during the period, due
to weak retail conditions as a result of the
global financial crisis and its lingering
effects on the Australian economy. The
weak retail market led Pacific Brands to
restructure its operations and implement
a number of initiatives, including a shift to
offshore sourcing and manufacturing and
the divestment of non-core brands. The
performance of the footwear, outerwear
and sport segment also suffered due to
currency effects (the delayed effects of
currency declines) and stock writedowns.

Industry specific profitability posted solid
returns over the two years through
2012-13, due largely to the due to the
benefits attained with offshore sourcing
and the high Australia dollar. Additionally,
the companys Volley brand gained
significant exposure after being
announced as the official casual shoe for
the Australian Olympic team in 2012. The
company also launched a new range of
King Gee safety boots, which aided the
growth in profitability.
Player Performance
Nike Australia Pty Ltd operates as a

wholesaler and retailer of sporting footwear,
clothing and equipment. Established in
1992, the company is a wholly owned
subsidiary of the US-based Nike Inc and is
Abbotsford, Victoria. Financial results for
the year ended May 2012 indicate that the
company generated $203.1 million in
revenue. Company operations relevant to
the industry only include those activities
pertaining to footwear wholesaling.
In November 1998, Nike Inc. opened its
first Niketown store in Australia, located in
the Melbourne CBD. With over 1,200
square metres of selling space, Niketown
stocked 85.0% to 90.0% of the companys
product range, as opposed to a maximum
of 25.0% of the Nike product range carried
by any single Australian retailer. While
Nike closed the flagship Melbourne store

in February 2007 (due to poor trading),
the company has since expanded to 26
stores Australia wide (except for in the
Northern Territory and the ACT).
Nike Australia Pty

Ltd
Market share: 6.3%
Industry Brand Names
Nike
Nike Australias industry-specific revenue
rose an annualised 1.4% over the five years
through 2012-13, outperforming the wider
industry (in nominal terms). Following the
collapse of the global financial markets,
Nike Australia announced plans to
reorganise its global business and create six
new geographical groups as part of an
ongoing restructure in 2009. The objective
of the restructure was to bring goods closer
to market and reduce management overlap.
While the restructure boosted revenue and
profit in 2009-10, financial results
Nike Australia Pty Ltd industry segment performance*

Revenue
($ million)
(% change)
EBIT
($ million)
2007-08
113.0
N/C
2.1
2008-09
115.0
1.8
-3.7
2009-10
118.0
2.6
6.0
2010-11
117.0
-0.8
2.1
2011-12
120.0
2.6
1.7
2012-13
121.0
0.8
1.8
Year
*Estimate
SOURCE: IBISWORLD
Major Companies
Player Performance
continued
contracted in 2010-11 and remained weak

over the two years through 2012-13.
Industry-specific profit also suffered over
the past five years as product margins were

slashed in a bid to move stock through the
slower trading environment,
Player Performance
Adidas Australia Pty Ltd operates as a

wholesaler and retailer of sporting
footwear, apparel and equipment under
the Adidas and TaylorMade brands.
Established in 1992, the company is part
of Germany-based Adidas Group, a
global producer of sportswear and sports
equipment. Australian operations are
Mulgrave, Victoria. Financial results for
the year ended December 2011 indicate
that Adidas Australia generated $180.4
million in total revenue and employed
355 people. Company operations
relevant to the industry include footwear
wholesaling activities.
restructuring operations to remain

competitive, Adidas relied on its brand
name to weather the retail storm over the
past five years. Adidas Australias strong
performance prior to the global financial
crisis can be attributed to strong retail
demand of the companys Autumn/Winter
2007 Womens Collection and the
successful promotion of the ICC World
Twenty20 Tournament. In addition, results
for 2006 were boosted by interest from the
Commonwealth Games and the World Cup,
coupled with the integration of Reebok into
the Adidas AG group. However, subsequent
to the global downturn, Australian and
international demand for discretionary
footwear softened, evidenced by the
companys contracting revenue over most
of the period. Industry-specific profitability
is expected to have posted mixed results
over the past five years, due to volatility in
trading conditions and variations in
product margins.
Adidas Australia Pty

Ltd
Market share: 5.7%
Adidas Australias industry-specific revenue
rose an annualised 1.4% over the five years
through 2012-13, outperforming in the
wider industry. While other industry
players focused on reducing debt and
Adidas Australia Pty Ltd industry segment performance**

Year*
Revenue
($ million)
(% change)
EBIT
($ million)
2007
102.0
N/C
2.5
2008
105.0
2.9
0.4
2009
112.0
6.7
5.0
2010
108.8
-2.9
6.0
2011
108.0
-0.7
7.0
2012
109.5
1.4
5.0
*Year end December **Estimate
Other Companies
A number of overseas companies have

distribution rights to high-profile
brands. Many operators in the industry
are small firms that employ fewer than
10 people. These participants often
import a variety of footwear brands and
SOURCE: IBISWORLD
distribute them to a wide number of

retail outlets.
Associated Retailers Limited
Estimated market share: 2.0%

Associated Retailers Limited operates as
Major Companies
Other Companies
continued
a large buying and marketing group.

Established in 1961, Associated Retailers
is an unlisted public company with
operations in Australia and New
Zealand. The companys brands include
Camping World, Compleat Angler,
Manchester House, Mensland, Shoex,
Sportscene, Sportspower and Toyworld.
As a buying intermediary between

manufacturers and retailers, Associated
Retailers is able to deliver purchasing
economies, enabling its members to
obtain textile products at cheaper prices
from manufacturers. Total company
revenue for the year ended June 2013 is
reported to have reached $238.7 million.
Associated Retailers Limited financial performance

Year
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
Revenue
($ million)
(% change)
EBIT
($ million)
242.0
257.1
293.3
275.4
269.1
238.7
N/C
6.2
14.1
-6.1
-2.3
-11.3
2.4
2.7
3.3
-0.9
4.1
N/C
SOURCE: ANNUAL REPORT
Operating Conditions
Capital Intensity | Technology & Systems | Revenue Volatility

Regulation & Policy | Industry Assistance
Capital Intensity
Level
The level
of capital
intensity is M
edium
The industry exhibits a medium level of

capital intensity. For every dollar spent
on wages, $0.31 is spent on capital.
Wages are one of the industrys smaller
expenses and are incurred through the
need to sell, handle and move stock.
These roles do not add much value to the
products and as a result, advances in
computer technology have led to the
automation of an increasing number of
these tasks.
Wholesalers do encounter some capital
expenditure costs such as the purchase
and maintenance of large fleets of
vehicles for transporting goods, mobile
phones for communication between staff,
large commercial wholesaling properties
for housing stock, and IT systems for
tracking and ordering stock. Technology
is used for stock control, inventory
management and supply chain
management. As the industry continues
Capital intensity
Capital units per labour unit

0.5
0.4
0.3
0.2
0.1
0.0
Economy
Wholesale
Trade
Footwear
Wholesaling
Dotted line shows a high level of capital intensity

to adopt new technology to increase

operating efficiencies, capital intensity
will continue to increase and labour
intensity will continue to fall. This also
partially explains why margins are low
within the industry.
Tools of the Trade: Growth Strategies for Success

Investment Economy
Recreation, Personal Services,

Health and Education. Firms
benefit from personal wealth so
stable macroeconomic conditions
are imperative. Brand awareness
and niche labour skills are key to
product differentiation.
Information, Communications,
Mining, Finance and Real
Estate. To increase revenue
firms need superior debt
management, a stable
macroeconomic environment
and a sound investment plan.
Footwear Retailing
Traditional Service Economy

Wholesale and Retail. Reliant
on labour rather than capital
to sell goods. Functions cannot
be outsourced therefore firms
must use new technology
or improve staff training to
increase revenue growth.
Capital Intensive
Labour Intensive
New Age Economy
Sport and Camping Equipment Retailing
Department
Stores
Footwear Manufacturing
Footwear
Wholesaling
Change in Share of the Economy
Old Economy
Agriculture and Manufacturing.
Traded goods can be produced
using cheap labour abroad.
To expand firms must merge
or acquire others to exploit
economies of scale, or specialise
in niche, high-value products.
Technology & Systems The industry exhibits a low level of

of
Technology
Change is L ow
Revenue Volatility
Level
The level
of
Volatility is L ow
the worldwide footwear industry, with

companies operating in various
international locations.
Adopting XML (Extensible Markup
Language) is expected to cut transaction
costs as distributors and manufacturers
will be able to exchange business
documents electronically. Documents
will be able to be tagged and can then be
more easily translatable than in HTML.
Radio-frequency identification (RFID)
technology is being introduced to make
existing supply-chain processes more
efficient. Products are tagged with chips
that announce their identity when hit
with a non-line-of-sight electromagnetic
field. This assists with forecasting
demand and managing inventory levels.
Industry revenue exhibits a low degree of

volatility. Volatility can increase as
demand for footwear changes in response
to trends in consumer preferences,
fashion styles and seasonal needs.
Footwear is regarded as a basic item
required by most consumers. As a result,
the industry is subject to a natural level
of footwear sales each year. The
absorption of the footwear wholesaling
functions by manufacturers and retailers
has also influenced the industry volatility.

Growth in wholesaler bypass has
continued to erode the revenue potential
for the industry.
Other factors may also influence the
performance of industry revenue including
trends in real household disposable
income, consumer sentiment and
fluctuations in the trade weighted index.
For more information on these see the Key
External Drivers section of this report.
A higher level of revenue

volatility implies greater
industry risk. Volatility can
negatively affect long-term
strategic decisions, such as
the time frame for capital
investment.
When a firm makes poor
investment decisions it
may face underutilised
capacity if demand
suddenly falls, or capacity
constraints if it rises
quickly.
Volatility vs Growth
1000
Revenue volatility* (%)
Level
The level
technological change. The main

technological development to affect the
industry has been the electronic
management of the supply chain.
Distribution management software (e.g.
Eclipse and iDistribute) provides complete
end-to-end supply chain management
solutions by combining planning,
execution, collaboration and monitoring
capabilities. Supply-chain management
software allows inventory to be stored on
a national or international basis, requiring
fewer regional distribution centres.
Internet technology is used to
communicate product information
globally. This has further
internationalised global supply chains in
Hazardous
Rollercoaster
100
10
Footwear Wholesaling
1
0.1
Stagnant
30
10
Blue Chip
10
30
50
70
Five year annualised revenue growth (%)

* Axis is in logarithmic scale
Regulation & Policy

Level & Trend
he level of
T
Regulation is
Lightand the
trend is S
teady
Industry Assistance
Level & Trend
he level of Industry
T
Assistance is
Mediumand the
trend is D
ecreasing
There are no major government

regulations that affect the industry.
Firms must adhere to general
regulations regarding business
operations such as health and safety
regulations, trading hours, the
Competition and Consumer Act (2010),
tenancy regulations and copyright laws.
Industry operators also need to abide by
general occupational health and safety
regulations for their workers.
Companies must also abide by
environmental laws in relation to
pollutants and discharges into the
environment. While no formal regulation
relates to this, preparation for this is vital

for companies that want to remain
competitive. According to IBISWorld, the
relatively small the size of Australias
textile, clothing and footwear sector on
the global scale means it should be able
to adapt quickly and implement industrywide changes to create a formidable,
sustainable competitive advantage.
For mens footwear, Australian
manufacturers follow mens shoe sizing
from the United Kingdom. For womens
footwear, domestic manufacturers follow
the US and Canadian womens footwear
shoe-sizing system.
Tariff rates for footwear were reduced

from 10.0% to 5.0% in 2010. The
industry is covered by umbrella antidumping legislation that protects it from
imports at excessively cheap prices.

Furthermore, industry participants are
eligible to claim a 125% tax concession
for research and development costs.
Key Statistics
Industry Data
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
Sector Rank
Economy Rank
Revenue
($m)
2,108.0
2,127.6
2,111.9
2,123.1
2,087.8
2,101.5
1,994.4
1,928.1
1,954.8
1,975.0
2,000.7
2,016.7
2,038.9
2,067.4
2,090.1
36/43
367/629
Annual Change
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
Sector Rank
Economy Rank
Revenue
(%)
0.9
-0.7
0.5
-1.7
0.7
-5.1
-3.3
1.4
1.0
1.3
0.8
1.1
1.4
1.1
29/43
467/629
Industry
Value Added
($m)
Establishments
241.2
287
244.8
289
241.9
299
242.4
301
238.8
299
239.5
295
231.3
293
225.7
288
229.1
289
231.0
285
234.5
283
237.3
279
239.2
279
242.0
277
245.7
274
39/43
42/43
513/629
470/629
Enterprises
184
187
192
191
189
187
184
180
181
177
175
172
171
169
164
40/43
437/628
Employment
1,712
1,743
1,793
1,804
1,734
1,709
1,701
1,672
1,676
1,634
1,624
1,598
1,588
1,570
1,560
42/43
559/629
Exports
---------------N/A
N/A
Imports
---------------N/A
N/A
Wages
($m)
83.8
84.9
87.1
87.4
84.6
83.5
83.0
81.2
81.7
80.0
79.2
77.8
77.1
76.1
75.3
41/43
565/629
Domestic
Demand
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Industry
Value Added Establishments
(%)
(%)
1.5
0.7
-1.2
3.5
0.2
0.7
-1.5
-0.7
0.3
-1.3
-3.4
-0.7
-2.4
-1.7
1.5
0.3
0.8
-1.4
1.5
-0.7
1.2
-1.4
0.8
0.0
1.2
-0.7
1.5
-1.1
26/43
38/43
429/629
535/629
Enterprises
(%)
1.6
2.7
-0.5
-1.0
-1.1
-1.6
-2.2
0.6
-2.2
-1.1
-1.7
-0.6
-1.2
-3.0
40/43
563/628
Employment
(%)
1.8
2.9
0.6
-3.9
-1.4
-0.5
-1.7
0.2
-2.5
-0.6
-1.6
-0.6
-1.1
-0.6
40/43
571/629
Exports
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Imports
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Wages
(%)
1.3
2.6
0.3
-3.2
-1.3
-0.6
-2.2
0.6
-2.1
-1.0
-1.8
-0.9
-1.3
-1.1
40/43
568/629
Domestic
Demand
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Average Wage
($)
48,948.60
48,709.12
48,577.80
48,447.89
48,788.93
48,858.98
48,794.83
48,564.59
48,747.02
48,959.61
48,768.47
48,685.86
48,551.64
48,471.34
48,269.23
33/43
417/629
Share of the
Economy
(%)
0.02
0.02
0.02
0.02
0.02
0.02
0.02
0.02
0.02
0.02
0.01
0.01
0.01
0.01
0.01
39/43
513/629
Key Ratios
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
Sector Rank
Economy Rank
IVA/Revenue
(%)
11.44
11.51
11.45
11.42
11.44
11.40
11.60
11.71
11.72
11.70
11.72
11.77
11.73
11.71
11.76
27/43
598/629
Imports/Demand Exports/Revenue
(%)
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Figures are inflation-adjusted 2014 dollars. Rank refers to 2014 data.
Revenue per
Employee
($000)
1,231.31
1,220.65
1,177.86
1,176.88
1,204.04
1,229.67
1,172.49
1,153.17
1,166.35
1,208.69
1,231.96
1,262.02
1,283.94
1,316.82
1,339.81
13/43
49/629
Wages/Revenue
(%)
3.98
3.99
4.12
4.12
4.05
3.97
4.16
4.21
4.18
4.05
3.96
3.86
3.78
3.68
3.60
38/43
607/629
Employees
per Est.
5.97
6.03
6.00
5.99
5.80
5.79
5.81
5.81
5.80
5.73
5.74
5.73
5.69
5.67
5.69
23/43
363/629
Jargon & Glossary
Industry Jargon
LEAD TIMEThe time from the moment a supplier

receives an order to the moment it is received by the
purchaser.
OFFSHORINGThe transfer of manufacturing
operations to another country, regardless of whether
the work is outsourced or stays within the same
corporation or company.
IBISWorld Glossary
BARRIERS TO ENTRYHigh barriers to entry mean that

new companies struggle to enter an industry, while low
barriers mean it is easy for new companies to enter an
industry.
CAPITAL INTENSITYCompares the amount of money
spent on capital (plant, machinery and equipment) with
that spent on labour. IBISWorld uses the ratio of
depreciation to wages as a proxy for capital intensity.
High capital intensity is more than $0.333 of capital to
$1 of labour; medium is $0.125 to $0.333 of capital to
$1 of labour; low is less than $0.125 of capital for every
$1 of labour.
CONSTANT PRICESThe dollar figures in the Key
Statistics table, including forecasts, are adjusted for
inflation using the current year (i.e. year published) as
the base year. This removes the impact of changes in
the purchasing power of the dollar, leaving only the
real growth or decline in industry metrics. The inflation
adjustments in IBISWorlds reports are made using the
Australian Bureau of Statistics implicit GDP price
deflator.
RFIDRadio-frequency identification, which is an object

or tag that is applied to a product, person or animal for
the purpose of tracking and identification using radio
waves.
WHOLESALE BYPASSA trend whereby the wholesaler is
bypassed in the supply chain, such as when retailers
purchase directly from the manufacturer.
INDUSTRY REVENUEThe total sales of industry goods

and services (exclusive of excise and sales tax); subsidies
on production; all other operating income from outside
the firm (such as commission income, repair and service
income, and rent, leasing and hiring income); and
capital work done by rental or lease. Receipts from
interest royalties, dividends and the sale of fixed
tangible assets are excluded.
INDUSTRY VALUE ADDED (IVA)The market value of
goods and services produced by the industry minus the
cost of goods and services used in production. IVA is
also described as the industrys contribution to GDP, or
profit plus wages and depreciation.
INTERNATIONAL TRADEThe level of international
trade is determined by ratios of exports to revenue and
imports to domestic demand. For exports/revenue: low is
less than 5%; medium is 5% to 20%; and high is more
than 20%. Imports/domestic demand: low is less than
5%; medium is 5% to 35%; and high is more than
35%.
EMPLOYMENTThe number of permanent, part-time,

temporary and casual employees, working proprietors,
partners, managers and executives within the industry.
LIFE CYCLEAll industries go through periods of growth,

maturity and decline. IBISWorld determines an
industrys life cycle by considering its growth rate
(measured by IVA) compared with GDP; the growth rate
of the number of establishments; the amount of change
the industrys products are undergoing; the rate of
technological change; and the level of customer
acceptance of industry products and services.
ENTERPRISEA division that is separately managed and

keeps management accounts. Each enterprise consists
of one or more establishments that are under common
ownership or control.
NONEMPLOYING ESTABLISHMENTBusinesses with

no paid employment or payroll, also known as
nonemployers. These are mostly set up by self-employed
individuals.
ESTABLISHMENTThe smallest type of accounting unit

within an enterprise, an establishment is a single
physical location where business is conducted or where
services or industrial operations are performed. Multiple
establishments under common control make up an
enterprise.
PROFITIBISWorld uses earnings before interest and tax

(EBIT) as an indicator of a companys profitability. It is
calculated as revenue minus expenses, excluding
interest and tax.
DOMESTIC DEMANDSpending on industry goods and

services within Australia, regardless of their country of
origin. It is derived by adding imports to industry
revenue, and then subtracting exports.
EXPORTSTotal value of industry goods and services sold

by Australian companies to customers abroad.
IMPORTSTotal value of industry goods and services
brought in from foreign countries to be sold in Australia.
INDUSTRY CONCENTRATIONAn indicator of the
dominance of the top four players in an industry.
Concentration is considered high if the top players
account for more than 70% of industry revenue.
Medium is 40% to 70% of industry revenue. Low is less
than 40%.
VOLATILITYThe level of volatility is determined by

averaging the absolute change in revenue in each of the
past five years. Volatility levels: very high is more than
20%; high volatility is 10% to 20%; moderate
volatility is 3% to 10%; and low volatility is less than
3%.
WAGESThe gross total wages and salaries of all
employees in the industry. Benefits and on-costs are
included in this figure.
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Footwear Wholesaling in Australia Industry Report

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Finding its feet: Slow revenue growth will be

driven by the shift to premium products

IBISWorld Industry Report F3714

2 About this Industry

28 Regulation & Policy

18 Market Share Concentration

18 Key Success Factors

18 Cost Structure Benchmarks

Key External Drivers

22 Pacific Brands Limited

10 Industry Life Cycle

30 Jargon & Glossary

23 Nike Australia Pty Ltd

12 Products & Markets

12 Products & Services

27 Technology & Systems

www.ibisworld.com.au | (03) 9655 3881 | info@ibisworld.com

Footwear Wholesaling in AustraliaAugust 2013 2

About this Industry

Industry operators primarily purchase a

The primary activities of this industry are

sales and administrative activities, such

Mens footwear wholesaling

The major products and services in this industry are

C1352 Footwear Manufacturing in Australia

writes over 500 Australian

For additional information on this industry

Footwear Wholesaling in AustraliaAugust 2013 3

Annual Growth 09-14

Annual Growth 14-19

Demand from footwear retailing

Revenue vs. employment growth

NIKE Australia Pty

Key External Drivers

Life Cycle Stage

Footwear Wholesaling in AustraliaAugust 2013 4

Executive Summary | Key External Drivers | Current Performance

The Footwear Wholesaling industry has

were affected by the changing domestic

Key External Drivers

Demand from footwear retailing

in 2013-14 due to continued caution in

Demand from department stores

Real household disposable income

Footwear Wholesaling in AustraliaAugust 2013 5

Key External Drivers

compared with its major trading

Consumer sentiment index

Demand from footwear retailing

Footwear wholesalers have struggled

Trading conditions for wholesalers have

The demand for goods provided by this

constraining discretionary spending as

Footwear Wholesaling in AustraliaAugust 2013 6

this period, which flowed on to

(in nominal terms) during the year,

Industry operators have struggled to

margins have reduced as demand grows

Footwear Wholesaling in AustraliaAugust 2013 7

than for smaller players. The Footwear

scale. Independent footwear wholesalers

Over the five years through 2013-14,

International footwear retail chains