Economy

On a shoestring: Covid-19 to knock down footwear industry revenue by 15% this fiscal

Our Bureau Mumbai | Updated on May 06, 2020 Published on May 06, 2020

The footwear industry is staring at a revenue loss of 10-15 per cent and even more pronounced impact on profit this fiscal with no revenues during the Covid-19 lockdown period, with closure of retail outlets and restriction of delivery of non-essential items in certain areas.

The average selling price of the footwear industry may also be lower due to the expected discounts as companies try to convert the limited footfalls into sales post Covid-19 to shore up their cash flows and liquidate inventory, said rating agency ICRA.

Kapil Banga, Assistant Vice-President, ICRA, said other factors, such as lower disposable incomes, consumer sentiment, closure of educational institutes, offices, public spaces, and a drop in movements, will keep the demand for footwear subdued in this fiscal.

This apart, he said the fall in consumers spending is expected to be more pronounced on the premium segment than the value category.

E-commerce shift

Moreover, the pandemic may catalyse the shift to e-commerce, which currently accounts for less than 10 per cent of total sales. However, with the norms of social distancing expected to remain in place, along with the fear of stepping out in public places, the share of sales from e-commerce will increase significantly in the near term.

Exports of footwear, which were down 8.5 per cent last fiscal, may continue to remain subdued, as key markets reel under Covid-19. Exports declined sharply by 37 per cent in March.

In FY19, 45 per cent of India’s exports of leather footwear and leather products were to the UK, Germany, the US and Italy.

Published on May 06, 2020
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