Portuguese footwear industry rethinks its path to success

By

Estela Ataíde

Translated by
Barbara Santamaria

Published
May 20, 2019

After gaining reputation as a quality manufacturer for retailers, the Portuguese footwear sector is adapting itself to meet the latest trends and betting on innovation to drive further growth. Currently exporting 95% of output, mostly to European markets, the sector has also turned its focus to other regions over the past two years and is trying to gain momentum as a private label manufacturer and supplier of national brands.

Conquering new markets

Luxury and sports brands including Prada, Chanel, Louis Vuitton, Adidas, Birkenstock, Tommy Hilfiger and Paul Smith use Portuguese companies to produce their footwear collections. But Luís Onofre, president of APICCAPS (Portuguese Footwear, Components, Leather Goods Manufacturers' Association), wants to take the industry one step further as part of the organisation’s goal to “put ‘Made in Portugal’ shoes on the map”. Supporting local brands and their global expansion is also a priority. And the sector seems primed for more growth.

Between 2010 and 2017, exports increased by more than 50%, reflecting the industry’s efforts to elevate the profile of Portuguese footwear.
The sector’s biggest export markets are France, where it shipped €410 million worth of shoes in 2017, Germany (€376 million), the Netherlands (€281 million), Spain (€174 million) and the United Kingdom (€125 million) but Portugal is also looking to tap into new markets such as the United States - the world’s largest importer of shoes, according to the World Footwear Yearbook. The US imported 2.39 billion pairs of shoes in 2017, almost four times the number recorded by Germany, which imported 692 million shoes and is the second biggest importer globally.

New retail challenges

But despite growing for the eighth consecutive year in 2017, exporting 83.3 million pairs of shoes worth €1.96 billion, the sector suffered a decline last year. Exports fell 2.85% in terms of value to €1.90 billion although shipments grew to 85 million pairs and were up 2.4%. The downturn not only affected the Portuguese footwear industry but also the Italian and Spanish, and could be linked to the general slowdown threatening the global economy, according to Paulo Gonçalves, communications director at APICAAPS. The widespread adoption of activewear has also had an impact, shifting consumers away from classic shoe styles in favour of trainers from brands including Nike and Adidas.

In addition to being the man at the helm of the APICCAPS and future president of the European Confederation of the Footwear Industry (CEC), a role he will take up on 24 May, Luís Onofre has his own namesake brand. He highlights how the activewear movement has impacted the sector: “I don’t know exactly how much we lost due to this trend, but I believe that in the past two years it has been approximately 50% worldwide.”

Founded in 1964, shoe manufacturer Dura, which exports 95% of its production, has also seen a dramatic change in what customers want, said commercial manager Agustín Marques. “In the past were were more classic, but now we have changed a bit because brands are looking for sportier looks,” he said. His private label business has been forced to adapt, as well as his own brand Exceed Shoes. Founded in 2010, his label has now a sportier element.

The same thing happened to Carité, which produces 450 pairs of shoes a day - all of them destined for export. With annual revenues of €26 million, the company, whose main markets are the Netherlands (where it exports almost 45% of its production), Germany (29%) and England (8%), is constantly ready to meet the evolving needs of the market, said Manuela Rodrigues from the sales team. “The new generation [of consumers] is used to wearing trainers, so if we design classic footwear, it has to be equally comfortable.”

Portuguese companies are also tapping into the growing global demand for sustainable footwear. Bolflex, which produces 22,000 pairs of soles per day (15,000 rubber soles and 7,000 plastic ones), said 20% of its products are made using recycled materials. Additionally, the firm makes sure to recycle as much as possible in a bid to cut waste, and these scraps will be used to create new collections in the future.

Attracting the new generation

In addition to the trends affecting the retail sector in general, the sector is facing a possible labour shortage. The footwear industry (including manufacturers of shoes, components and leather goods) has welcomed almost 10,000 new workers since 2010, adding 45,443 jobs in 2017. 40,080 of these were in the footwear sector. But this is not enough to keep the momentum going, and some industry insiders have expressed concerns over the slower labour market growth.

As the struggle to find “new generations who want to work in the footwear industry” spreads throughout Europe, Luis Onofre think it is essential to show younger people how much the industry has changed, particularly with regards to the improvement of working conditions. Leandro Melo, general director of the CTCP (Portuguese Footwear Technological Centre) shares this belief, saying it is necessary for the industry to change its bad image “so that young people can be interested in working in it”.

Recruiting more young workers and educating talent is one of the strategic goals of the FOOTURE 4.0 programme. Launched in 2015, it aims to invest up to €50 million in innovation by 2020. The programme is designed and led by APICCAPS and the CTCP, and brings together more than 70 entities including companies, start-ups, universities, intelligence centres and organisations of scientific and technological nature.

In parallel, APICCAPS is planning to invest €18 million in promotion and branding activities to support the Portuguese industry’s relations with other countries by the end of 2019. Among the activities planned for the year, approximately 200 Portuguese shoe companies will join international trade events and the funding will be also used to promote local brands. More than 230 new footwear brands have been created in Portugal since 2010.