Footwear in Thailand- EuroMonitor

FOOTWEAR IN THAILAND Euromonitor International February 2017

FOOTWEAR IN THAILAND

LIST OF CONTENTS AND TABLES Headlines ..................................................................................................................................... 1 Trends .......................................................................................................................................... 1 Competitive Landscape ................................................................................................................ 2 Prospects ..................................................................................................................................... 3 Category Data .............................................................................................................................. 4 Table 1 Table 2 Table 3 Table 4 Table 5 Table 6 Table 7 Table 8 Table 9 Table 10 Table 11

Sales of Footwear by Category: Volume 2011-2016 .................................... 4 Sales of Footwear by Category: Value 2011-2016 ....................................... 4 Sales of Footwear by Category: % Volume Growth 2011-2016 ................... 4 Sales of Footwear by Category: % Value Growth 2011-2016 ...................... 5 NBO Company Shares of Footwear: % Value 2012-2016............................ 5 LBN Brand Shares of Footwear: % Value 2013-2016 .................................. 5 Distribution of Footwear by Format: % Value 2011-2016 ............................. 6 Forecast Sales of Footwear by Category: Volume 2016-2021 ..................... 7 Forecast Sales of Footwear by Category: Value 2016-2021 ........................ 8 Forecast Sales of Footwear by Category: % Volume Growth 20162021 ............................................................................................................. 8 Forecast Sales of Footwear by Category: % Value Growth 2016-2021 ....... 8

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FOOTWEAR IN THAILAND

FOOTWEAR IN THAILAND HEADLINES  Footwear increases by 6% in current value terms in 2016, to reach THB82.0 billion  The athleisure trend drives the growth of sports footwear  Men’s footwear registers the strongest current value growth of 6% in 2016  Bata Shoe of Thailand leads footwear in value terms in 2016  Footwear is expected to see a value CAGR of 5% at constant 2016 prices in the forecast period, to reach THB103.2 billion in 2021

TRENDS  The athleisure trend was witnessed over the review period, and this trend was still strong during 2016. Some people tend to wear sneakers to work, as many offices allow a relaxed dress code on some days. Given that consumers are also participating in more sports activities, they are therefore interested in purchasing sports footwear or sneakers in response to their healthy lifestyles. When fashion style influences purchases, the decision becomes more complicated. In terms of supply, players launched limited editions of footwear to stimulate demand.  Due to the fact that Thai consumers typically like casual styles of outfits and footwear, they normally own at least sandals or slippers at home to wear for unofficial occasions. Compared with men, women tend to have more sophisticated demands for footwear, and footwear is amongst the favourite items they like to collect, apart from bags. The trend towards sneakers influenced demand for footwear amongst women. Some brands made a move by having more varieties of women’s sports footwear. The launch of Nanyang Sugar by Nanyang Marketing was a highlight. The company launched an extensive new line of pastel coloured sneakers targeting the younger generation in 2016. It comes in seven sizes, from 35 to 41, with seven fruity pastel colours. Customers get two pairs of shoelaces when purchasing a pair of Nanyang Sugar.  The extremely prominent athleisure trend in footwear had an impact on demand amongst male consumers. A number of men were interested in purchasing sneakers or sports footwear. With demand shifting towards sports footwear, demand for other types of footwear, such as leather shoes, boots and sandals, was negatively impacted. With this trend, they tend to wear sneakers more often, pairing casual street sneakers or gym sneakers with their daily outfits, including jeans, shorts or trousers.  Children’s footwear remained the least dynamic category within footwear in Thailand in 2016. Their routine is rather fixed around going to school and having a relaxing time with family; therefore having school shoes is a must. As a result, black and brown canvas shoes are purchased for boys, whilst black leather school shoes are purchased for girls. Students normally wear white canvas shoes for sports days at school. Over the review period, children’s footwear saw price competition. In 2016 it witnessed a more aggressive environment, with brands developing new product launches and attempting to expand their customer base together with distribution channel coverage.  Due to the strong athleisure trend amongst Thai consumers, their preference tends to be shifting towards casual fashion inspired by sports, as well as urban street fashion trends. Gym sneakers, running shoes, training shoes, as well as casual street sneakers, are becoming more popular and eroding the shares of the other types of footwear available in the

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marketplace, such as leather flats, high heels, boat shoes, loafers and boots. However, demand for sandals and slippers remains strong, as consumers normally opt for these types of footwear for relaxing and unofficial occasions.  In terms of distribution, footwear specialist retailers, mainly located in department stores and shopping centres, are the places consumers normally look when wanting to buy a pair of shoes. Footwear sections in shopping centres provide a range of brands for both men and women, and special promotions and price discounts are usually offered from time-to-time. Nonetheless, when it comes to sports shoes or sneakers, consumers tend to get products at sports goods stores in shopping centres. Some brands provide exclusive shops with independent space, whilst others are offered at sports footwear distributors, namely Sports World, Super Sports, Carnival Store, SneakaVilla and Hoops Shop. Distribution is expanding, as internet retailing is being developed. Certain brands have developed their own websites for online transactions, whilst some brands rely on other retailers. For example, Bata footwear is available via online retailing – Bata products are exclusively offered at Central.co.th and Lazada.co.th.  Within the fragmented footwear environment in Thailand, there are a lot of local and international brands present. There are also certain leading footwear specialists in the market. Bata benefits from consumption amongst Thai children in terms of school shoes. Moreover, Bata provides a wide range of products for all backgrounds and ages. Its products are normally offered at affordable prices, with wide coverage in terms of distribution channels; it has a strong foothold as a leading footwear specialist in the country.  There is an emerging trend of using the internet in footwear in Thailand. This is either as an alternative shopping channel for digital-minded consumers, or the use of digital marketing strategies with the purpose of getting connected to a modern target audience. For example, during 2016 Crocs by CRC Sports launched a digital campaign with an increasing marketing budget through the online channel. Brand loyalty campaigns are being developed, encouraging consumers to participate and building a strong relationship with the brand. For example, Croc Love & Fun and Lucky Draw online campaigns were run, whereby consumers could win special prizes.  As internet retailing of footwear is actually only an emerging trend, there were no strong footwear-specific internet retailers in 2016. Most of the footwear products available online can be found through the exclusive websites of brands, or from leading retailers such as Central.co.th, Robinson.co.th and Lazada.co.th.

COMPETITIVE LANDSCAPE  In 2016, Bata Shoe of Thailand continued to lead footwear in Thailand, accounting for a share of 4% in value terms. The highlight of Bata’s product development was the launch of Bata Heritage in two key models, as well as new product collaborations in order to emphasise its uniqueness compared with other products in the marketplace. Thanks to the athleisure trend in footwear, Nike and adidas Thailand managed to successfully maintain second and third positions in 2016.  Amongst the fragmented footwear category, Bata Shoe of Thailand achieved a strong increase in value sales in 2016, thanks to its strategic move to create product differentiation and to bring back vintage footwear. Two models of Bata Tennis shoes and Bata Bullets were exclusively launched at the Bata pop-up store at the Siam Discovery branch in October 2016. Moreover, new product collaborations with cartoon characters were introduced to the market. There was Bata canvas Finding Dory, available from 3-7 UK sizes at only THB399, and Bata

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Tennis featuring Peanuts to celebrate the 65th anniversary of Peanuts. Also, Bata Comfort was launched, embedded with antibacterial technology.  Both domestic and international players compete in footwear in Thailand. A good blend of domestic and international brands was seen in footwear in 2016. Local branded footwear tends to compete on distribution coverage, as well as offering competitive prices. On the other hand, branding and cutting-edge technologies embedded in products are amongst the key selling points for international footwear, and the price range can also be higher accordingly.  In 2016, various product developments with innovative technologies and brand collaborations helped to stimulate demand amongst Thai consumers. Most players attempted to offer product differentiation in order to distinguish themselves from other brands available in the marketplace. New product offerings presented included Reebok/Face Stockholm Classic leather shoes, Reebok CrossFit Nano 6.0 for women and Kendrick Lamar/Reebok Classic Leather “Perfect Split” Pack. Timberland offered the Timberland football leather limited collection of 6-inch boots, released for the NFL’s 50th anniversary.  Apart from the new launches mentioned above, there was also adidas NMD collection, available in a limited number of pairs in Thailand. Bata Heritage Collection was also relaunched in Tennis and Bullet models. The products were only available in certain locations worldwide, including Tokyo, Paris, Korea, the US and Thailand. A customisation trend was seen in footwear in 2016. Havaianas Thailand launched the Havaianas Feet-Fun-Fit campaign, allowing its customers to explore Havaianas’s exclusive collections and challenging activities. The MYOH: Make Your Own Havaianas campaign was for customers to create their own unique design of Havaianas.  Private label products are present in footwear in Thailand; however, demand remains limited to low-income consumers. Since there are various local and international brands of footwear offered in various styles and in a wide price range, there is little room for growth in private label. Moreover, brands normally employ pricing tactics by using price discounting and promotional campaigns to keep their prices very competitive. Consumers tend to postpone purchases in order to buy branded products rather than getting private label products.

PROSPECTS  Over the forecast period footwear is expected to increase by a value CAGR of 5% at constant 2016 prices, to reach THB103.2 billion in 2021. There is room for growth, and the performance is likely to be very promising. Even though demand amongst domestic consumers could be sensitive due to the uncertain market sentiment, inbound tourists, especially Chinese tourists, are expected to be key purchasers of such products, since there are some products at comparatively cheaper prices compared with those offered in their own countries.  Compared with the CAGR seen over the review period, the forecast value CAGR at constant 2016 prices is expected to see a slowdown in footwear. As sales of footwear were driven largely by sports footwear in the review period due to the athleisure trend, this trend could reach its peak over the forecast period, and could decelerate. As a result, footwear might not be able to rely as much on the trend in the forecast period. Nonetheless, with the opportunities foreseen, new entrants could be attracted to the market and it could lead towards a more competitive environment.  With aggressive competition expected to be witnessed, the overall value growth of footwear could be restrained by promotional campaigns and price discounting. Even though there could be robust demand for new product launches, especially for special product collaborations, as well as limited collections of famous brands, distinctive items will normally be available only in

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limited numbers, and might not be sufficient for the overwhelming demand in the marketplace. As a result, the overall category could be threatened by these factors.  Amongst all the categories in footwear, women’s footwear is expected to be the most dynamic over the forecast period. Women’s demand when purchasing footwear could become more complicated. Shoe lovers in particular may tend to collect footwear in various styles and patterns in order to fulfil their functional and emotional needs. On the other hand, as men are becoming more stylish, their demand for footwear could become more varied. Some men look for high boots or leather shoes to wear in order to reflect a fashionable overall look.  Brands in the market will focus on running attractive marketing promotions and campaigns in order to attract the attention of the target audience and stimulate sales. It is likely that various kinds of price promotions will be seen, including buy-one-get-one free, getting 20% discount when purchasing two pairs of shoes, or lucky draw campaigns to win cash coupons, air tickets and other special prizes. In addition, co-promotion is likely to be developed, with cooperation by business alliances in order to synergise the customer base and create differentiation in marketing programmes. This includes CSR programmes for developing the sustainability of the brand and company.

CATEGORY DATA Table 1

Sales of Footwear by Category: Volume 2011-2016

'000 units

Children's Footwear Men's Footwear Women's Footwear Footwear Source:

2011

2012

2013

2014

2015

2016

11,044.5 34,103.8 45,265.1 90,413.4

11,353.8 35,268.2 47,302.0 93,924.0

11,637.6 36,391.8 49,194.1 97,223.5

11,893.6 37,483.5 50,915.9 100,293.1

12,131.5 38,495.6 52,545.2 103,172.3

12,349.9 39,458.0 54,121.6 105,929.4

Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 2

Sales of Footwear by Category: Value 2011-2016

THB million

Children's Footwear Men's Footwear Women's Footwear Footwear Source:

2011

2012

2013

2014

2015

2016

4,255.3 21,129.7 33,506.7 58,891.7

4,425.5 22,608.8 36,857.4 63,891.7

4,624.6 24,236.6 39,437.4 68,298.7

4,828.1 25,933.2 42,000.9 72,762.1

5,035.7 27,696.6 44,646.9 77,379.3

5,242.2 29,469.2 47,325.7 82,037.1

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Table 3

Sales of Footwear by Category: % Volume Growth 2011-2016

% volume growth

Children's Footwear Men's Footwear Women's Footwear

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2015/16

2011-16 CAGR

2011/16 Total

1.8 2.5 3.0

2.3 3.0 3.6

11.8 15.7 19.6

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Footwear Source:

2.7

3.2

17.2

Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 4

Sales of Footwear by Category: % Value Growth 2011-2016

% current value growth

Children's Footwear Men's Footwear Women's Footwear Footwear Source:

2011/16 Total

4.1 6.4 6.0 6.0

4.3 6.9 7.2 6.9

23.2 39.5 41.2 39.3

NBO Company Shares of Footwear: % Value 2012-2016

% retail value rsp Company Bata Shoe of Thailand PCL Nike Inc adidas Thailand Co Ltd Central Group SSL Healthcare Thailand Co Ltd Nanyang Marketing Co Ltd Jaspal Co Ltd Thai Top Sport Co Ltd SCS Footwear Co Ltd Minor Corp, The H&M Hennes & Mauritz AB GRI Fashion Thailand Co Ltd Prada SpA German Sport & Lifestyle Co Ltd FitFlop Ltd Forever 21 Inc Dapper General Apparel Co Ltd Peppo Fashion Group Deckers Outdoor Corp GRI Accessories (Thailand) Co Ltd Burberry Group Plc Central Retail Corp Others Total

Table 6

2011-16 CAGR

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Table 5

Source:

2015/16

2012

2013

2014

2015

2016

3.5 1.5 1.7 0.9 2.9

4.3 1.8 1.8 1.3 3.0

4.2 1.9 1.8 1.4 2.1

4.2 2.2 2.1 1.5 1.7

4.2 2.6 2.3 2.0 1.6

2.1 1.0 0.7 1.0 0.5 0.0 0.5

1.7 1.3 0.7 1.2 0.6 0.2 0.5

1.6 1.3 0.8 1.1 0.7 0.3 0.5

1.5 1.2 1.0 1.0 0.8 0.4 0.5

1.6 1.3 1.1 1.0 0.7 0.5 0.5

0.5 0.4

0.5 0.4

0.5 0.4

0.5 0.5

0.5 0.5

0.9 0.4 0.3

0.8 0.4 0.2

0.7 0.4 0.2

0.6 0.4 0.3

0.5 0.4 0.3

0.2 0.1 0.1

0.2 0.1 0.1

0.2 0.1 0.1

0.2 0.1 0.1

0.2 0.1 0.1

0.1 80.7 100.0

0.1 78.7 100.0

0.1 79.4 100.0

0.1 79.1 100.0

0.1 78.0 100.0

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LBN Brand Shares of Footwear: % Value 2013-2016

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% retail value rsp Brand (GBO)

Company (NBO)

Bata (Bata Ltd) Nike adidas (adidas Group) Scholl (Merck & Co Inc) Nanyang Marie Claire (Bata Ltd) Reebok (adidas Group) Payless ShoeSource (Payless Holdings) Lyn Charles & Keith (Charles & Keith Holdings Pte Ltd) Replay (Equibox Holding SpA) H&M Nine West (Nine West Holdings Inc) Prada Puma (Kering SA) FitFlop Breaker Forever 21 Footwork Popteen Dapper Mini Shoes Bubble Gummers (Bata Ltd) Catcha Mango (Punto Fa SL (Mango)) Sanuk Steve Madden (Steve Madden Ltd) Burberry adidas Kids (adidas Group) Hush Puppies (Wolverine World Wide Inc) Nine West (Jones Group Inc, The) Others Total Source:

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2013

2014

2015

2016

Bata Shoe of Thailand PCL Nike Inc adidas Thailand Co Ltd SSL Healthcare Thailand Co Ltd Nanyang Marketing Co Ltd Bata Shoe of Thailand PCL

2.8 1.6 1.7 3.0

2.6 1.8 1.8 2.1

2.6 2.1 2.0 1.7

2.6 2.4 2.2 1.6

1.7 1.3

1.6 1.3

1.5 1.4

1.6 1.4

Thai Top Sport Co Ltd Central Group

0.7 0.4

0.8 0.5

1.0 0.7

1.1 1.1

Jaspal Co Ltd Minor Corp, The

0.8 0.6

0.8 0.7

0.8 0.8

0.8 0.7

Central Group

0.6

0.6

0.5

0.5

H&M Hennes & Mauritz AB GRI Fashion Thailand Co Ltd Prada SpA German Sport & Lifestyle Co Ltd FitFlop Ltd SCS Footwear Co Ltd Forever 21 Inc Jaspal Co Ltd SCS Footwear Co Ltd Dapper General Apparel Co Ltd Central Group Bata Shoe of Thailand PCL

0.2 -

0.3 0.5

0.4 0.5

0.5 0.5

0.5 0.4

0.5 0.4

0.5 0.5

0.5 0.5

0.8 0.5 0.4 0.4 0.4 0.2

0.7 0.5 0.4 0.4 0.4 0.2

0.6 0.5 0.4 0.3 0.3 0.3

0.5 0.5 0.4 0.3 0.3 0.3

0.2 0.2

0.2 0.2

0.2 0.2

0.2 0.2

SCS Footwear Co Ltd Peppo Fashion Group

0.3 0.2

0.3 0.2

0.2 0.2

0.2 0.2

Deckers Outdoor Corp GRI Accessories (Thailand) Co Ltd Burberry Group Plc adidas Thailand Co Ltd

0.1 0.1

0.1 0.1

0.1 0.1

0.1 0.1

0.1 0.1

0.1 0.1

0.1 0.1

0.1 0.1

Central Group

0.1

0.1

0.1

0.1

GRI Fashion Thailand Co Ltd Others Total

0.5

-

-

-

78.9 100.0

79.6 100.0

79.3 100.0

78.3 100.0

2015

2016

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Table 7

Distribution of Footwear by Format: % Value 2011-2016

% retail value rsp 2011

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2012

2013

2014

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Store-Based Retailing - Grocery Retailers -- Modern Grocery Retailers --- Convenience Stores --- Discounters --- Forecourt Retailers --- Hypermarkets --- Supermarkets -- Traditional Grocery Retailers --- Food/drink/tobacco specialists --- Independent Small Grocers --- Other Grocery Retailers - Non-Grocery Specialists -- Apparel and Footwear Specialist Retailers -- Leisure and Personal Goods Specialist Retailers --- Sports goods stores --- Other Leisure and Personal Goods Specialist Apparel Retailers Other Non-Grocery Apparel and Footwear Specialists - Mixed Retailers -- Department Stores -- Mass Merchandisers -- Variety Stores -- Warehouse Clubs Non-Store Retailing - Direct Selling - Homeshopping - Internet Retailing - Vending Total Source:

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99.2 9.2 8.8

99.2 9.2 8.8

99.1 9.2 8.8

99.1 8.8 8.5

99.1 8.6 8.3

99.0 8.5 8.2

8.8 0.4

8.8 0.4

8.8 0.4

8.5 0.3

8.3 0.3

8.2 0.3

-

-

-

-

-

-

-

-

-

-

-

-

0.4

0.4

0.4

0.3

0.3

0.3

68.1 35.0

67.5 34.7

67.3 36.4

67.5 36.0

67.5 36.5

67.4 37.0

6.4

6.5

6.9

7.2

7.3

7.5

6.4 -

6.5 -

6.9 -

7.2 -

7.3 -

7.5 -

26.7

26.3

24.0

24.3

23.7

22.9

22.0 22.0 0.8 0.4 0.4 100.0

22.5 22.5 0.8 0.4 0.4 100.0

22.6 22.6 0.9 0.4 0.4 100.0

22.8 22.8 0.9 0.4 0.5 100.0

23.0 23.0 0.9 0.4 0.5 100.0

23.2 23.2 1.0 0.4 0.6 100.0

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Table 8

Forecast Sales of Footwear by Category: Volume 2016-2021

'000 units

Children's Footwear Men's Footwear Women's Footwear Footwear Source:

2016

2017

2018

2019

2020

2021

12,349.9 39,458.0 54,121.6 105,929.4

12,559.8 40,405.0 55,637.0 108,601.8

12,760.8 41,293.9 57,139.2 111,193.8

12,939.4 42,119.7 58,567.7 113,626.8

13,107.6 42,877.9 60,910.4 116,895.9

13,264.9 43,606.8 62,250.4 119,122.2

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Table 9

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Forecast Sales of Footwear by Category: Value 2016-2021

THB million

Children's Footwear Men's Footwear Women's Footwear Footwear Source:

2016

2017

2018

2019

2020

2021

5,242.2 29,469.2 47,325.7 82,037.1

5,347.0 30,765.8 49,360.7 85,473.6

5,464.7 32,181.1 51,631.3 89,277.1

5,601.3 33,725.8 54,161.3 93,488.3

5,758.1 35,412.1 56,869.3 98,039.5

5,930.9 37,253.5 59,997.1 103,181.5

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Table 10

Forecast Sales of Footwear by Category: % Volume Growth 2016-2021

% volume growth

Children's Footwear Men's Footwear Women's Footwear Footwear Source:

Table 11

2016/17

2016-21 CAGR

2016/21 Total

1.7 2.4 2.8 2.5

1.4 2.0 2.8 2.4

7.4 10.5 15.0 12.5

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Forecast Sales of Footwear by Category: % Value Growth 2016-2021

% constant value growth

Children's Footwear Men's Footwear Women's Footwear Footwear Source:

2016/2017

2016-21 CAGR

2016/21 TOTAL

2.0 4.4 4.3 4.2

2.5 4.8 4.9 4.7

13.1 26.4 26.8 25.8

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