Carl-August Seibel
Chairman
Federal Association of the German Footwear and Leather Goods Industry
• Sales collapse of the German footwear industry in the second half of 2020 caused by the coronavirus
• Employment still remains stable
• Preventing additional burdens / strengthening the downtown areas
Sales collapse of the German footwear industry in the second half of 2020
After an auspicious start of the year, sales of the German footwear industry experienced a real collapse with the mandatory lockdown of the stationary retail. Compared to the same period of the previous year, sales dropped to 1.28 billion euros, a 21.0 percent sales decrease. In Germany, the drop in sales even reached 22.5 percent compared to the sales of the first half of 2019.
Fortunately, however, this sales trend did not affect the employment situation in the German footwear industry. In the first half of 2020, German footwear manufacturers could keep employment stable, employing 15,600 workers. Compared to the same period of the previous year, this is equivalent to a 0.7 percent increase. It has been possible to keep as many qualified workers as possible in a crisis phase as well certainly and very substantially thanks to the expanded possibilities of the reduced working hours offered by the federal government. These regulations remain initially valid until December 31, 2020. An extension is being discussed and welcomed by the German footwear industry.
Corona crisis
With regard to the further development of the infection figures, the duration of the crisis and the measures that still need to be taken at the national and international level, the biggest challenges for the footwear sector lie currently in the uncertainty caused by the corona crisis. All of this has significant effects both on the investment decisions, on the design of the supply chain, on the demand to be expected and ultimately, on the staff and production planning.
That in the middle of the biggest worldwide economic crisis of the postwar period the federal government unwaveringly adheres to the so-called Supply Chain Law is more than incomprehensible. The German fashion industry demands that there should be no more burdens for the industry so the expected and above all fast recovery of the economy that everybody desires can be attained. To clarify: The German footwear industry is also unreservedly in favor of observing human rights. The issue, however, is whether the German mid-sized companies are able to implement this objective throughout the world, and specifically not only with their direct contractual partners, but also with their sometimes countless suppliers. What governments cannot accomplish, as the latest examples of Belarus, Hong Kong, Iran or Saudi Arabia show, entrepreneurs should secure. And bear the liability if violations occur. In addition, this is a national solo effort. If there should be a legal regulation, it should be at least valid at the European level.
From the point of view of the German textile, footwear and fashion industry, such a Supply Chain Law punishes precisely the companies that are worldwide on top when it comes to social and environmental standards. The German footwear industry produces according to the world’s highest environmental and social standards, it observes human rights and is committed against child labor. Many brands vouch for this with their name and invest a lot.
Only together we will come out of the corona crisis – and this applies especially to the global supply chain. With a law that distorts competition, is hostile to mid-sized companies and burdens companies without solving the real problems, we will not achieve it.
Whereas digital retailers still managed to benefit from the crisis, stationary retailers (which were already under pressure) were hit hard by the ordered store closings and restrictions of the corona crisis. We welcome the various initiatives aimed at strengthening the downtown areas and stationary retailers. The possibilities that the sector has for moving forward through collaboration is manifested, for example, in the joint recommendation of the association groups and the HDS/L to move the seasonal rhythms and in the current developments in the ECC. In a show of solidarity, the retail and the industry agreed on the ECC industry solution for data clearing and on a joint content platform. The two large buying groups in the footwear retail, ANWR and SABU, agreed on a joint strategy with the Federal Association of the Footwear and Leather Goods Industry HDS/L, the merchandise management system supplier Etos and the Brandt retail group. With the product content data, pictorial material, inventory and sales data service components, various products such as merchandise trading and digital signage can be offered on this sector’s infrastructure platform. Representatives of the sector rightly speak of a milestone. A tool has been created by this, whereby inner-city footwear retailers can also exist in the digital competition.
Outlook
The corona pandemic is changing the footwear sector in the most dramatic way with an incredible speed. The coronavirus has developed from a supply shock in the first two months of the year to a demand shock of an unprecedented magnitude. The sudden closing of the stationary retail outlets blocked this sales channel from one day to the next. Even after the shutdown has ended, uncertainty characterizes the business and allows only to proceed with caution. It is hoped that the gradual elimination of the restrictions caused by the coronavirus will contribute to an economic recovery. We believe that the economic stimulus package will help, but a burden moratorium on all political and administrative levels is necessary for a long-term recovery. We are surprised that parts of the federal government take the view that a so-called Supply Chain Law should be promoted now. The question is raised whether the acting stakeholders are aware of the serious situation in the industry. Since consumption in Germany depends on the well-being of the manufacturing industry, the efforts made in the industrial and economic policy must be continued.
The further development of the footwear industry cannot be foreseen. It depends on the duration of the pandemic and additional possible measures and their effects on the sector. Due to this uncertainty, a prognosis is not possible. We hope that the consumer mood recovers quickly, thereby giving an impetus both to retailers and the footwear industry.
Press release
HDS/L
2 september 2020