Market Overview
21,4
%
MARKET GREW IN VOLUME TERMS
30,7
%
MARKET GREW IN VALUE TERMS
MARKET VOLUME
In 2017, the volume of the Russian footwear market grew considerably: involume terms — by 21.4%, to 329 million pairs, in value terms — by 30.7% to 1,363 billion rubles. Shoe imports increased considerably — by 33.1% in pairs and by 39.6% in value terms. Russian production showed growth too: by 4.4% and by 12.6% respectively.
Significant increase in imports and market volume in physical terms is explained by the fact that major retail chains increased their purchase volumes, and some volume of footwear purchased in 2017 will be sold in 2018, for example, in the winter season of 2017-2018. However, because the market volume is calculated in the study according to the apparent consumption formula, the shoes are posted as sold in 2017.
Such high dynamics of the footwear market is attributable to several factors:
-
Changing consumer behaviour, positive consumer sentiment index: consumers have adapted to the current economic situation and are willing to purchase more actively; according to GfK research company, in February 2017 the index of consumer sentiment left the negative zone for the first time from 2014.
-
Effect of pent-up demand: footwear is a product that has a period of physical deterioration amounting to an average of 1.5-2 years; in 2017 buyers who scrimped on buying shoes for the previous two years, began returning to stores.
- In 2017, shoe retailers increased their orders from factories and purchase of product, given the previous two factors and expecting that the positive trend on the market will continue and will increase in 2018.
CALCULATION OF FOOTWEAR MARKET VOLUMES IN VOLUME TERMS IN 2012-2017
mln pairs
| Indicator |
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
2017 to 2016, % |
| production |
102.7 |
131.4 |
115.8 |
93.2 |
96.3 |
100,6 |
4.4% |
| import |
391.6 |
401.8 |
323.7 |
237.3 |
177.9 |
236,9 |
33.1% |
| export |
4.9 |
5.7 |
5.5 |
3.5 |
3.1 |
8,3 |
166.5% |
| market volume |
489.4 |
527.5 |
434.0 |
327.0 |
271.1 |
329,2 |
21.4% |
Source:
DISCOVERY Research Group calculations
CALCULATION OF VOLUMES OF THE FOOTWEAR MARKET IN VALUE TERMS IN 2012-2017
RUB bln
| Indicator |
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
2017 to 2016, % |
| production |
139.7 |
185.3 |
186.4 |
205.0 |
279.3 |
314.4 |
12.6% |
| import |
701.0 |
739.3 |
767.2 |
783.0 |
777.4 |
1,085.5 |
39.6% |
| export |
8.8 |
10.5 |
13.0 |
11.6 |
13.5 |
36.8 |
172.6% |
| market volume |
831.9 |
914.1 |
940.6 |
976.5 |
1,043.2 |
1,363.1 |
30.7% |
Source:
DISCOVERY Research Group calculations
Note:
the market volume in 2012 was calculated on the basis of the dollar rate of 30.98 RUB to USD;
- the market volume in 2013 was calculated on the basis of the dollar rate of 32.73 RUB to USD;
- the market volume in 2014 was calculated on the basis of the dollar rate of 38.47 RUB to USD;
- the market volume in 2015 was calculated on the basis of the dollar rate of 65.2 RUB to USD;
- the market volume in 2016 was calculated on the basis of the dollar rate of 67.2 RUB to USD;
- the market volume in 2017 was calculated on the basis of the dollar rate of 58.3 RUB to USD.
MARKET SEGMENTATION
FOOTWEAR MARKET STRUCTURE BY STYLE (MEN’S, WOMEN’S, CHILDREN’S) IN 2017
RUB bln and %
Source:
Calculation of DISCOVERY Research Group
FOOTWEAR MARKET VOLUME IN RUSSIA BY TYPES OF SHOES (SUMMER, WINTER, DEMI SEASON, SPRING-AUTUMN) IN 2017
% of the volume terms
Source:
Calculation of DISCOVERY Research Group
FOOTWEAR MARKET VOLUME IN RUSSIA BY TYPES OF SHOES (SUMMER, WINTER, DEMI SEASON, SPRING-AUTUMN) IN 2017
% от стоимостного выражения
Source:
Calculation of DISCOVERY Research Group
Winter shoes occupy almost half of the volume in value terms in the market structure, because the autumn-winter season is the key one for Russia’s shoe retailers accounting for approximately 50% of annual revenue.
THE FOOTWEAR MARKET VOLUME IN RUSSIA BY FEDERAL DISTRICTS (WITH SEPARATE MOSCOW AND ST. PETERSBURG) IN 2012-2017
In 2017, the main share of the footwear market falls on the Central (29.9%), Volga (17.4%) and Northwestern (12.9%) Federal districts.
The footwear market share of Moscow in the total market volume is 23.3%, the market share of St. Petersburg is 7.9%. In its chain development strategy for the next 3 years, Obuv Rossii lays emphasis
on the central part of Russia, because, on the one hand, it is a promising market, where a substantial part of the footwear sold in Russia is, on the other hand, the Company has not been represented in this region yet compared to the Urals, Siberia and the Far East. In 2018, Obuv Rossii plans to open stores throughout Russia; 30 per cent of outlets will start operating in the central part of Russia.
THE FOOTWEAR MARKET VOLUME IN RUSSIA BY FEDERAL DISTRICTS (WITH SEPARATE MOSCOW AND ST. PETERSBURG) IN 2012-2017
RUB bln
| Federal District |
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
| Northwestern FD |
95.1 |
105.6 |
108.5 |
149.1 |
140.9 |
176.3 |
| incl. St. Petersburg |
56.5 |
58.0 |
59.7 |
86.5 |
80.3 |
109.0 |
| Central FD |
264.1 |
286.6 |
295.9 |
305.5 |
305.8 |
407.7 |
| incl. Moscow |
194.1 |
215.7 |
221.9 |
235.2 |
232.4 |
317.3 |
| Volga FD |
141.3 |
156.3 |
162.7 |
146.5 |
176.3 |
237.7 |
| Southern FD |
57.9 |
63.7 |
64.9 |
69.4 |
79.3 |
105.0 |
| Ural FD |
119.2 |
134.1 |
135.4 |
127.9 |
136.7 |
165.0 |
| Siberian FD |
68.6 |
75.5 |
80.0 |
94.8 |
103.3 |
135.0 |
| North-Caucasian FD |
39.0 |
40.8 |
40.4 |
39.0 |
49.1 |
65.5 |
| Far Eastern FD |
46.8 |
51.4 |
52.7 |
44.9 |
52.1 |
70.8 |
| TOTAL |
831.9 |
914.1 |
940.6 |
976.5 |
1043.2 |
1363.1 |
Source:
Calculation of DISCOVERY Research Group
SEGMENTATION ACCORDING TO PRICE
In 2017, the low-price segment made up the main footwear market share among price segments: 63% of the market volume in volume terms and 57% of the market volume in value terms.
THE FOOTWEAR MARKET VOLUME IN RUSSIA BY PRICE SEGMENTS IN 2012-2017
mln pairs
| Indicator |
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
| Low-price |
336.7 |
363.5 |
294.7 |
215.2 |
181.4 |
207.4 |
| Mid-price |
141.9 |
153.0 |
130.2 |
104.7 |
84.0 |
111.9 |
| High price |
10.8 |
11.0 |
9.1 |
7.2 |
5.7 |
9.9 |
| TOTAL |
489.4 |
527.5 |
434.0 |
327.0 |
271.1 |
329.2 |
MARKET BEHAVIOUR BY PRICE SEGMENTS, 2012-2017, FORECAST FOR 2018,
as percentage of the value terms of the market
Source:
Calculation of DISCOVERY Research Group
VOLUME OF PRICE SEGMENTS ON THE FOOTWEAR MARKET IN VALUE TERMS IN RUSSIA IN 2012-2017, FORECAST FOR 2018
RUB bln
Source:
Calculation of DISCOVERY Research Group
FOOTWEAR MARKET STRUCTURE BY PRICE SEGMENTS IN 2017
RUB bln and %
Source:
Calculation of DISCOVERY Research Group
In 2017, the proportion of the mid-price segment of the market increased from 32 to 35% in value terms. It testifies to gradual restoration of the market and consumer demand. According to the forecasts of the Discovery Research Group, the upward trend in the proportion of the mid-price segment will continue in 2018.
Note:
- the volume of price segments in 2013 was calculated based on the rate of 32.73 rubles per US dollar.
- the volume of price segments in 2014 was calculated based on the rate of 38.47 rubles per US dollar.
- the volume of price segments in 2015 was calculated based on the rate of 65.2 rubles per US dollar.
- the volume of price segments in 2016-2017 was calculated based on the rate of 67.2 rubles per US dollar.
- the market volume in 2017 was calculated on the basis of the dollar rate of 58.3 RUB to USD.
CONSUMPTION LEVEL
Analysts of DISCOVERY Research Group estimate that, according to the results of 2017, footwear consumption per capita amounted to 2.24 pairs of shoes per person, the growth made 21%.
According to the forecasts of DISCOVERY Research Group, the consumption of footwear in the coming 5 years will slowly grow: shoe consumption in 2018 will be 2.35 pairs per capita, by 2022 this figure will increase to 2.86 pairs of shoes.
CONSUMPTION IN 2012-2017
pairs of shoes per capita
| Indicator |
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
| Footwear market volume, mln pairs |
489.4 |
527.5 |
434.0 |
327.0 |
271.1 |
329.2 |
| Population, mln people |
143.0 |
143.3 |
143.7 |
146.3 |
146.5 |
146.8 |
| Per capita consumption |
3.42 |
3.68 |
3.02 |
2.24 |
1.85 |
2.24 |
MARKET CONSOLIDATION
According to the results of 2017, the TOP-10 players of the footwear market possess 23.4% of the market in terms of value in 2017, the TOP-20 players — 32.6%. An increase in the share of TOP-10 and Top-20 is connected with the fact that during the second half of the year the imported deliveries increased sharply, while the sales of the leading chains in the Top-20 are primarily formed of imports.
According to DRG’s estimates, scattered shoe stores (44%) are the key sales channel on the market. The shoe chains make up 34% of the sales of the market volume in terms of value in 2017.
Thus, so far considerable sales on the footwear market falls on unorganized retail, therefore there is a good opportunity on the market for further consolidation and growth of the leading footwear retailers share.
Such channel as e-commerce demonstrates growth too. According to data from 2017, the volume of online sales makes 9% of the total footwear market volume. The growth in 2017 was almost 47%. Development of new sales channels is a promising line. So, the dynamics of Obuv Rossii in this line exceeds the market growth rate: in 2017, omni-channel receipts of the Company (taking into account e-commerce) increased by 56%, their share in retail revenue reached 10%.
THE LEVEL OF SHOE MARKET CONSOLIDATION IN RUSSIA (TOP-10/20) IN 2017
% of total value
Source:
DISCOVERY Research Group calculations
THE STRUCTURE OF THE SALES FORMATS ON THE FOOTWEAR MARKET IN RUSSIA IN 2017
% of the value
Source:
DISCOVERY Research Group calculations
THE MARKET VOLUME OF ONLINE SHOE SALES IN RUSSIA IN 2012-2017
RUB bln
| Indicator |
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
| volume of online sales |
56.6 |
63 |
68.7 |
74.2 |
83.5 |
122.7 |
| rate of growth |
|
11.40% |
8.90% |
8.00% |
12.50% |
46.92% |
Source:
DISCOVERY Research Group calculations
TOP-10 PLAYERS ON THE RUSSIAN FOOTWEAR MARKET
In 2017, Kari was again the market leader with the biggest number of stores on the market: the number of stores in this chain in Russia amounted to 787. Obuv Rossii occupies the second place with its 535 outlets.
TOP-10 PLAYERS ON THE RUSSIAN RETAIL MARKET ACCORDING TO THE NUMBER OF SHOE STORES IN 2013-2017
млрд руб.
| № |
Company |
2017 |
| 1 |
Кari |
in RF — 787 (total 930) |
| 2 |
Obuv Rossii |
535 |
| 3 |
Unichel |
526 |
| 4 |
Belwest |
276 |
| 5 |
Zenden |
254 |
| 6 |
Monro |
220 |
| 7 |
Chester/Carnaby/TJ collection |
206 |
| 8 |
Respect |
185 |
| 9 |
Ralf Ringer |
169 |
| 10 |
Ecco |
157 (with partners — 243) |
Source:
official web sites of the companies
A FORECAST FOR THE MARKET TO THE END OF 2018
Market Drivers:
- Changing consumer behaviour, positive consumer sentiment index.
- Effect of pent-up demand: customers who previously scrimped on buying shoes, will be returning to stores.
- Buyers from the low-price segment are returning to the mid-price segment, because the economic situation is gradually improving.
- Low consumption level and the pronounced seasonality: Russia lags far behind Europe and the United States according to consumption indicators. During the crisis, the consumption of footwear fell almost to the physical deterioration level. It will gradually recover.
- Gradual improvement of the legal framework (a draft of shoe marking): as a result, the development of professional footwear market and of large shoe chains offering quality stock.
- Gradual crowding out of no-name players, scattered shops and a decline in the share of commodity markets: development of large shoe chains that have their own brands, good positioning and offer highquality products.
- Domestic shoe manufacturers will further invest in development, develop new sales channels and increase volumes of output.
A FORECAST FOR THE MARKET TO THE END OF 2018
mln pairs
| Indicator |
Value |
| production |
113.5 |
| import |
239.4 |
| export |
11.6 |
| market volume |
341.3 |
Source:
Study of Discovery Research Group
FORECAST FOR THE MARKET TO THE END OF 2018
RUB bln
| Indicator |
Value |
| production |
363.2 |
| import |
1,113.2 |
| export |
53.9 |
| market volume |
1,422.5 |
Source:
Study of Discovery Research Group
DESCRIPTION OF MAIN SEGMENTS
DISCOVERY Research Group distinguishes three main price segments on the Russian footwear market::
SEGMENTATION OF THE RUSSIAN FOOTWEAR MARKET ACCORDING TO PRICE
RUB thous.
| Price segment |
Boundaries, thous. rub per pair |
| Low-price |
Up to 3 thous. rub |
| Mid-price |
3-7.5 thous. rub |
| High |
More than 7.5 thous. rub |
Note.
The price segments were determined on the basis of expert survey data that is publicly available on the Internet. To identify price segments, analytical market reviews were also used
THE OBUV ROSSII SHARE IN THE FOOTWEAR MARKET IN GENERAL AND IN THE MID-PRICE SEGMENT
In 2017, the share of Obuv Rossii in the mid-price segment amounted to 2.26%, in the total market — 0.79%.
OBUV ROSSII’S SHARE OF THE FOOTWEAR MARKET IN VALUE TERMS AND IN THE MID-PRICE SEGMENT IN 2017
RUB bln and %
| Indicator |
2017 |
| Obuv Rossii, sales |
10.8 |
| Volume of mid-price segment |
477.1 |
| Footwear market volume |
1,363.1 |
| Obuv Rossii’s share in the mid-price segment |
2.26% |
| Obuv Rossii’s share in the footwear market volume |
0.79% |
Source:
DISCOVERY Research Group calculations
ANALYSIS OF THE MID-PRICE FOOTWEAR MARKET SECTOR
In 2017, the mid-price segment amounted to RUB477.1 bln. or 35% of the market size. Its share increased by 3 percentage points compared to 32% in 2016. The mid-price segment is characterized by a low level of consolidation. In 2017, the share of the three largest chain companies in this segment amounted to 4.7%. The largest player in this segment is Obuv Rossii — 2.26% of the mid-price segment of the footwear market. The second and the third places belong to Respect and Ralf Ringer.
THE VOLUME OF THE MID-PRICE SEGMENT IN 2013-2017
RUB bln and %
|
2013 |
2014 |
2015 |
2016 |
2017 |
| Market share, % |
39 |
34 |
33 |
32 |
35 |
| Volume, RUB bln |
356.7 |
309.7 |
322.3 |
333.9 |
477.1 |
Source:
DISCOVERY Research Group calculations
TOP-10 PLAYERS IN THE MID-PRICE SEGMENT ACCORDING TO THE NUMBER OF STORES IN RUSSIA IN 2017
| № |
Company |
2017 |
| 1 |
Obuv Rossii |
535 |
| 2 |
Respect |
185 |
| 3 |
Ralf Ringer |
169 |
| 4 |
Tervolina |
99 |
| 5 |
Paolo Conte |
77 |
| 6 |
Mascotte |
69 |
| 7 |
Salamander |
60 |
| 8 |
Geox |
60 |
| 9 |
Francesco Donni |
57 |
| 10 |
Calipso |
54 |
Source:
official web sites of the companies
ECONOMY AND UPPER-PRICE SEGMENTS
In 2017, the economy segment stood at RUB776.5 bln or 57%. The level of consolidation was 9.1%. The biggest player is the Kari chain, the second place belongs to Unichel and Belwest. In 2017, the high price segment amounted to RUB109.5 bln or 8%. The level of consolidation was 33%. The largest retailer in the high price segment is Ecco companies. The second and third places belong to Chester/Carnaby/ TJ collection and Ekonika.
ECONOMY SEGMENT VOLUME IN 2013-2017
RUB bln and %
|
2013 |
2014 |
2015 |
2016 |
2017 |
| Market share |
0.52 |
0.59 |
0.61 |
0.62 |
0.57 |
| Volume, RUB bln |
475.3 |
548.2 |
595.6 |
646.8 |
776.5 |
Source:
DISCOVERY Research Group calculations
TOP-5 PLAYERS IN THE ECONOMY SEGMENT ACCORDING TO THE NUMBER OF BRANDED STORES IN 2017
| № |
Enterprise |
2017 |
| 1 |
Кari |
in RF — 787 (total 930 |
| 2 |
Unichel |
526 |
| 3 |
Belwest |
276 |
| 4 |
Zenden |
254 |
| 5 |
Monro |
220 |
Source:
official web sites of the companies
THE VOLUME OF THE HIGH PRICE SEGMENT IN 2013-2017
RUB bln and %
|
2013 |
2014 |
2015 |
2016 |
2017 |
| Market share |
0.09 |
0.07 |
0.06 |
0.06 |
0.08 |
| Volume, RUB bln |
82.5 |
65.1 |
58.6 |
62.6 |
109.5 |
Source:
DISCOVERY Research Group calculations
TOP-5 PLAYERS OF THE HIGH PRICE SEGMENT ACCORDING TO THE NUMBER OF STORES IN 2017
| № |
Enterprise |
2017 |
| 1 |
Ecco |
157 (with partners — 243) |
| 2 |
Chester/Carnaby/TJ collection |
206 |
| 3 |
Ekonika |
129 |
| 4 |
Rendez-Vous |
79 |
| 5 |
Baldinini |
52 |
Source:
official websites of the companies
Note
. Stores were attributed to a price segment based on where the larger part of the company’s variety of stock falls into
RUSSIAN FOOTWEAR PRODUCTION
Over the past four years, the share of imports declined. It is explained by the fact that during the crisis the market dwindled and the volumes of shoes imported into Russia decreased too. At the same time, the proportion and level of Russian production increased as domestic factories got some competitive advantage as a result of the ruble devaluation, and a number of Government measures such as a ban on the purchase of light industry products imported for municipal and public use, contributed to the development of the market for special and working footwear.
In 2017, the trend changed: during the second half of the year, import shipments soared, primarily due to the fact that large shoe chains increased imports of their products. Russian shoe production, because of relatively small volumes and limited variety of stock, cannot fully meet the needs of the shoe chains in diverse footwear collections. As a result, the share of imports in the total size of the market began to rise, and by the end of the year amounted to almost 80%.
Also, Russian footwear production has maintained a positive trend and grew by 4.4%, surpassing 100 million pairs. Russian shoe factories are gradually increasing production volumes, serving certain segments of the footwear market: they mainly specialize in men’s shoes, shoes of textile and polymeric materials, working footwear, and casual style shoes.
Russian
THE SHARE OF IMPORTS AND THE PROPORTION OF IN-HOUSE PRODUCTION IN THE TOTAL VOLUME OF THE RUSSIAN FOOTWEAR MARKET IN 2012-2017
% of the value
| Indicator |
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
| import |
84.26% |
80.88% |
81.56% |
80.19% |
74.52% |
79.64% |
| production |
16.79% |
20.27% |
19.82% |
21.00% |
26.78% |
23.06% |
Source:
Study of Discovery Research Group
THE VOLUME OF RUSSIAN FOOTWEAR PRODUCTION, 2013-2017
mln pairs and the rate of growth
| Indicator |
2013 |
2014 |
2015 |
2016 |
2017 |
2017 to 2016, % |
| production |
131.4 |
115.8 |
93.1 |
96.3 |
100.6 |
4.44% |
Source:
Study of Discovery Research Group
FORECAST FOR THE MARKET UP TO 2022
FORECAST OF MARKET DEVELOPMENT IN RUSSIA IN 2018-2023
mln pairs and the rate of growth
| Indicator |
2017 |
2018 |
2019 |
2020 |
2021 |
2022 |
2023 |
| production |
100.6 |
113.5 |
126.3 |
142.5 |
154.7 |
166.4 |
175.7 |
| import |
236.9 |
239.4 |
243.3 |
249.5 |
257.7 |
263.4 |
267.8 |
| export |
8.3 |
11.6 |
12.5 |
13.4 |
13.8 |
14 |
14.6 |
| market volume |
329.2 |
341.3 |
357.1 |
378.6 |
398.6 |
415.8 |
428.9 |
| rate of growth |
|
3.68% |
4.63% |
6.02% |
5.28% |
4.32% |
3.15% |
Source:
Study of Discovery Research Group
FORECAST OF MARKET DEVELOPMENT IN RUSSIA IN 2018-2023
RUB bln and the rate of growth
| Indicator |
2017 |
2018 |
2019 |
2020 |
2021 |
2022 |
2023 |
| production |
314.4 |
363.2 |
442.1 |
527.3 |
595.6 |
673.9 |
737.9 |
| import |
1,085.5 |
1,113.2 |
1,143.5 |
1,197.8 |
1,262.7 |
1,369.9 |
1,446.1 |
| export |
36.8 |
53.9 |
58.8 |
64.3 |
67.6 |
72.8 |
77.4 |
| market volume |
1,363.1 |
1,422.5 |
1,526.8 |
1,660.8 |
1,790.7 |
1,971.0 |
2,106.7 |
| rate of growth |
|
4.36% |
7.33% |
8.78% |
7.82% |
10.07% |
6.89% |
Source:
Study of Discovery Research Group
Note.
the projected market size was calculated based on the dollar rate in 2016
ОMajor Trends On the Market:
- Gradual market growth: in the coming 3-5 years, the shoe market will grow at an average of 4-5% per year in volume terms and by 6-8% in terms of value.
- Gradual Increase in Consumption: According to the consumption level, Russia (2.24 pairs per person per year) significantly lags Europe (5-6) and United States (7-8). According to experts’ forecasts, in the coming years the consumption of footwear per person will reach the pre-crisis performance.
- Gradual Increase in Consumption: According to the consumption level, Russia (2.24 pairs per person per year) significantly lags Europe (5-6) and United States (7-8). According to experts’ forecasts, in the coming years the consumption of footwear per person will reach the pre-crisis performance.
- Development of Russian footwear brands, new formats: footwear market is still weakly saturated; many formats are not represented; mono-brand shoe chains of Russian origin are few.
- Development of the mid-price segment of the market: the most appropriate segment for the development of mono-brand store format. Buyers from the low-price segment are returning to the mid-price segment, because the economic situation is gradually improving. According to the GfK research company, since February 2017,
a positive consumer sentiments index has been observed, suggesting that retailers can expect some growth in demand.
- Development of a concept of a store of the future as a universal service center: the trend is typical in general for retail, when stores are not just shelves for products, but service centers, which offer their customers different services.
- Development of e-commerce and omnichannel sales: shoes and clothes are one of the fastest growing segments of the online trading market. This trend will continue. The growth will be accounted mainly for the fact that offline retailers and manufacturers will start working online.
