The Debrief

A new BoF Insights report tracks the evolution of the fast-growing high-end footwear market — and why luxury shoppers are willing to spend more than ever on the perfect shoe.

Background:

Luxury footwear is booming as consumers opt to spend more than ever on shoes with soaring prices. The market for designer shoes is set to grow to $40 billion by 2027, up from $31 billion in 2022, according to Euromonitor International. As consumer demand grows, competition is heating up for brands from Manolo Blahnik and Christian Louboutin to Chanel and Prada who stake much of their businesses on the core segment. The market is much-changed: shoppers crave comfort, but also newness and uniqueness. They also have more choices than ever: cowboy boots, Mary Janes, stilettos and mules have been trending recently.

“There was this vibe shift occurring post-pandemic. The shoes that consumers want today look and feel very different from what they had before,” said Diana Lee, BoF’s director of research and analysis, on the heels of publishing BoF Insights’ latest report “The Statement Shoe: Reimagining Designer Footwear.”

Key Insights:

• The footwear category is poised for growth this year: 84 percent of consumers surveyed across the UK, US and China told BoF Insights they were planning on investing in footwear in the coming year. At the same time, prices for women’s footwear have increased 10 percent from 2019.
• Shoes have gotten more expensive, partially, thanks to streetwear’s hype cycle, which has conditioned consumers to shell out for limited edition items. Of course, inflation and rising costs across the supply chain have contributed to increases.
• Much about the footwear market has changed. Mass trends toward casualisation have led consumers to seek out comfort, primarily, when buying shoes.
• Still, high heels are performing well following the return of in-person events. And, the high heel space has seen a sort of reinvention as brands opt for designs that grab consumers attention — like Loewe’s eggshell and balloon designs. Meanwhile, newcomers like Amina Muaddi are stealing share.

Additional resources:

• BoF Insights | The New Statement Shoe: Reimagining Designer Footwear
• BoF Insights | What’s Next for Luxury Shoes in 5 Charts

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Background:

For fashion, one of the most alluring prospects for NFTs is how they could help brands collect royalties — forever — on secondary sales of physical goods. Though the mechanics of doing so are not ironed out yet, brands could ideally code NFTs tied to physical products with smart contracts triggered by certain conditions and benefit every time an item is sold, not just at the initial sale. But, technical loopholes used to circumvent loyalties and finicky marketplaces leave brands and creators without ways to enforce rules.

“One of the big principles of Web3 is these royalties are the idea that it's a creator led economy, it wouldn’t necessarily be controlled by a big centralised organisation ... Except that’s not really playing out,” said BoF technology correspondent Marc Bain.

Key Insights:

• Marketplaces are responding to controversy over enforcing royalties. Opensea, one of the biggest Web3 marketplaces, wants to attract creators, so it has an incentive to honour creator royalties. Newer marketplaces just looking for sales are willing to cut fees for buyers.
• This has led to an existential crisis for the NFT community, showcasing that creators are not entirely in charge in a space that was touted as having enormous potential to empower them.
• Marketplaces and infrastructure for fashion brands that would want to get royalties for secondary sales don’t exist right now. It also remains to be seen how brands would scale such a system.
• A number of start-ups including EON and Aurora Blockchain Consortium are working on linking digital identities to physical goods, but doing so is complicated.

Additional resources:

• Is Fashion’s NFT Dream Over Before It Started?
• How Fashion Is Using NFTs to Sell Exclusive Physical Products
• The Secrets to a Successful NFT Drop

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Much has changed about the world since the last recession — meaning, fashion’s reaction will shift this time around, explains BoF’s workplace and talent correspondent Sheena Butler Young.

Background:

Fashion is bracing itself for a 2023 filled with uncertainty. An impending recession hangs in the background of executives’ conversations about the year ahead. Leaders will have to strike a balance between safe-guarding their companies (which, may inevitably will include layoffs) while continuing to fuel growth and retaining crucial employees“There’s this mindshift shift that’s happened that people truly aren’t disposable ... a lot of things that would have typically happened [during a recession] are now a last resort,” said BoF’s workplace and talent correspondent Sheena Butler-Young.

Key Insights:

• In the coming months, fashion executives will inevitably start pulling recession-reaction levers, including doing hiring pauses and layoffs, reorganising responsibilities across teams and reigning in focus on experimental spaces like the metaverse.
• But, market conditions are different now compared to prior recessions, and the industry has changed drastically.
• Because of the labour shortage, CEOs are first and foremost focused on keeping workers happy.
• Teams that were once considered “nice-to-haves” and “first-to-gos” — including sustainability and diversity and inclusion — have become crucial to business function for fashion companies in the past few years.

Additional resources:

• Advice From Fashion CEOs on Leading in a Recession
• Quiet Quitting, Labour Hoarding and Other Workplace Trends, Explained

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A number of products made from leather alternatives have begun to hit store shelves. BoF’s chief sustainability correspondent Sarah Kent unpacks why it's so hard to market — and scale — these new products.

Background:

Leather alternatives have been called both industry-changing eco-innovation, and dismissed as mere plastic — covering up complexities in how products are made and how much better or worse for the environment they are. At the same time, brands are increasingly using buzzy terms like “vegan leather” and “plant-based” to sell products, without doing much to explain their environmental impact.

“You have to be very careful and very switched on to understand what it is you’re buying as a consumer,” said BoF chief sustainability correspondent Sarah Kent.

Key Insights:

• The emergence of items made with alternative materials — like mycelium, also known as mushroom “leather” — has sparked a conversation about how brands should name and market products without greenwashing.
• Because innovation is in its early stages, it's hard to understand, track and compare impact versus leather. Without clear data, the space is difficult to regulate.
• Plastic is a dirty word. But, the material is so useful, it's hard to replace in fashion. Most available leather alternatives aren’t plastic free, but rather, just feature reduced plastic content.
• For brands working with such materials, the best course of action when it comes to talking about them is to be transparent with the consumer — rather than leading them to believe they’re buying a magic, new harmless material.

Additional resources:

• The Truth About ‘Vegan Leather’
• The Debrief: Is This the Beginning of the End for Leather?

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Shein has fundamentally changed the fashion market, challenging fast fashion giants that were not so long ago in the disruptor position themselves. Once the category's upstart, H&M now finds itself struggling to keep pace as Shein redefines consumer expectations with ultra-low prices, endless selection and lightning-fast production. In response, H&M’s new CEO has unveiled a strategy to target the elusive middle market, hoping to position the retailer as more affordable than Zara but higher-quality than Shein.

This week on The BoF Podcast, executive editor Brian Baskin sat down with Senior Sustainability Correspondent Sarah Kent and Retail Correspondent Cat Chen to delve into the contrasting paths of these two retail giants and what it means for the future of fashion.

“H&M has been stuck in the middle with kind of a muddled identity ... It's trying to figure out how to differentiate itself,” said Chen. Meanwhile, Shein’s breakneck growth comes with a heavy environmental toll, raising questions about the industry’s efforts to reduce emissions.

“Shein’s growth is phenomenal, but its environmental impact has grown even faster than its sales... now outpacing all other large fashion companies,” Kent said.

Key Insights:

• H&M’s CEO Daniel Ervér is focusing on a strategy to occupy the middle ground between ultra-budget brands like Shein and more premium fast fashion like Zara. The goal is to appeal to both ends of the market with a mix of affordable basics and higher-end pieces, as Ervér explained to Chen in her interview with the CEO. “[Ervér] said they were committed to this position of wanting to offer something to everybody.
• Shein’s rapid growth has turned it into fashion’s biggest polluter, surpassing even Inditex in emissions. The company’s production model, reliance on cheap polyester, and coal-powered manufacturing contribute heavily to its environmental impact. “Over the last three years, their emissions have tripled as their sales have grown hugely,” Kent explained.
• Shein’s rapid growth has turned it into fashion’s biggest polluter, surpassing even Inditex in emissions. The company’s production model, reliance on cheap polyester, and coal-powered manufacturing contribute heavily to its environmental impact. “Over the last three years, their emissions have tripled as their sales have grown hugely,” Kent explained.
• As Shein continues its rapid growth, the company faces increasing scrutiny from regulators and potential investors regarding its environmental and labour practices. But Shein is unlikely to face major restrictions on how it operates anytime soon. “The hand of regulation moves slowly, and so far, most companies are being asked to provide a bit more transparency,” Kent said. “No one's facing any real penalties for being the worst polluter at the moment.”
• Shein’s growth may be peaking, creating opportunities for competitors like H&M. The market is always evolving, allowing established brands to find ways to stand out. “We are at the end of the beginning for Shein and Temu. ... And at the end of the day, there will always be new disruptors,” Chen shared.

Additional resources:

• H&M’s Big Bet on Fashion’s Elusive Middle
• Shein Emissions: Fashion’s Biggest Polluter?

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