INFORMACIÓN DE MODA, TECNOLOGÍA Y MERCADOS PARA LA INDUSTRIA DEL CALZADO
NEWS | REPORTS | Colombia
Colombia | 11/08/2022

COLOMBIA: After difficulties, strong recovery of the sector

Although the exit from the pandemic was traumatic, the leather and manufactures industry is currently facing an encouraging growth scenario.


With the reactivation of consumption, footwear sales grew and generated greater industrial activity.

Beginning of a new stage

“Since the opening of face-to-face commercial activity (approx. March 2021), the footwear sector has had a fairly significant recovery. Orders from merchants to factories resumed, due to the reactivation and growth of consumption, which corresponded to the higher rate of vaccination achieved. After confinement, people began to go out, buy and travel, in addition to increased tourism and normalization of school activities. As a result, in 2021, the footwear sector grew 41% compared to 2020, although we are still 5% below the production of 2019”.

“The first indicators for 2022 are positive, and allow us to project an annual growth of 5% in footwear production, with a higher percentage in sales and a recovery in employment, which in the first quarter of 2022 was 13.5 %, compared to the same period in 2021”.



Supplies: provision and prices

“It was a very complex issue that affected and still affects the industry. The world production centers, for health and logistics reasons, lowered their volumes, which brought about shortages and increased prices. A specific case was that of PVC, a widely used supply in footwear, which before the pandemic cost $900 a ton, and in the middle of the pandemic it went to $2,000. Thus, manufacturers, compulsorily, had to transfer these increases to their products, even some could not fulfill their commitments due to the lack of raw materials. The same happened with other supplies such as PU and EVA. It is expected that with the passage of time prices will stabilize".

“On the other hand, the shortage of hides has also worsened due to the increase in exports in fresh or wet-blue state to China and Italy, reducing availability for local tanneries and factories. The situation becomes more serious due to the growth of live cattle exports, and the decline in slaughter".

“Another factor that influenced manufactures production was the strong increases in transportation. There were increases between 400% and 500% in container freight rates, which had a strong impact on the prices of final products. Everything as a whole, higher costs and scarcity, affected the footwear offer that was surpassed by the demand”.

Workforce

“There are difficulties in getting skilled labor for the manufacture industry. The phenomenon here in Colombia is that many people employed in factories, after the pandemic, did not return to their original workplaces and decided to set up their own businesses informally. A large part of this circuit is dedicated to the manufacture of copies of international brand products, such as NIKE, ADIDAS, etc.”

“Faced with this problem, we consulted SENA -National Apprenticeship and Employment Service- and there they told us that the sector was no longer attractive to young people. That there is a generational change that wants to have another type of job. To this is added that the offer for training is insufficient and there are few people dedicated to training”.

"We know of businessmen who have gone out looking for staff in working-class neighborhoods".

Evolution of consumption

“Household spending on footwear in 2021 was 3.39 billion pesos, which represented an increase of 38% compared to 2020. Total consumption in 2021 was 118 million pairs, a very strong recovery, which almost reaches 2019 levels".

“The very particular case was called by economists as ‘revenge purchases’. It is about that after confinement, where we all wore basic and comfortable shoes, when going out to the street, people bought what they could not buy during the pandemic. For those who had the capacity, frequent purchases of up to 2 and 3 pairs were made. Currently, an average consumption of 2.3 pairs per person has been reached, when in a pandemic it was 1.7”.

Conformation of the offer

“Of every 3 pairs sold in the country, one is of formal national origin; the other is due to declared importation; and the remainder is due to smuggling and informality. The latter is very high, especially in brand copies. There are estimates that 24 million pairs are produced in this circuit, which if formalized, would reach 70 million per year. Currently, here an original NIKE or ADIDAS shoe costs about 300 thousand pesos, when a triple A replica (as they call it) is obtained for 150 thousand pesos”.

“Regarding the price index, between January and April 2022, it increased by 4.5%, when historically it was no more than 1%. Necessarily, producers had to transfer the cost increases of the supplies to the final prices so as not to work at a loss. For example, a boot that last year cost 35 thousand pesos, today with the accumulated, costs between 45-48 thousand pesos”.

Exports

“We are working hard on the internationalization of the sector, with the support of Procolombia and the Secretariat of Economic Development of Bogotá. Also with the governments of different departments and business chambers. We participate in the 'Quality to Export' program, where the government grants the resources so that entrepreneurs can be certified to export, and in other actions to promote foreign trade. We have help to invite international buyers to our fairs and carry out trade missions to other countries, which are giving us very good results”.

“Footwear sales abroad increased 62% in 2021 compared to 2020. The United States is the main buyer with 25.4%, followed by Ecuador 24.8% and Costa Rica 10.2%. We want to continue growing in the northern country, since Colombian footwear has a 0 tariff for entry. At the same time, we expect imports to have a more moderate pace, due to the increase in freight rates and others, while local merchants pay more attention to national products".

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