As the spread of novel coronavirus (COVID-19) continued to deepen across the world through the first half of March, it’s clear it’s having a big impact on the running shoe industry.
Almost every brand has reported some shoe and apparel lines being slowed or halted due to supplier chain disruption in East Asia countries. Although the majority of running shoes have been shifted away from Chinese factories in recent years, shoe factories in Vietnam, Indonesia, Malaysia and Cambodia have reportedly been on the verge of running out of raw materials because trade has been cut off with textile and component suppliers in China.
And that will likely mean delay, postponement or canceling of some shoe models and apparel lines slated for the third and fourth quarter of 2020 and through 2021, officials at several brands told Running Insight last week.
Although no brands contacted by Running Insight were willing to talk on the record about specific supply-chain challenges and how that might impact getting product to market during the late spring, summer and fall, every person contacted suggested that it’s much worse than anticipated.
And that doesn’t even begin to account for the lost sales during what is expected to be a worldwide retail decline in the first quarter, the cancelation of hundreds of races and events around the globe and the possible postponement of the Tokyo Olympics.
“Yeah, this is turning into a long-term situation,” says one VP–footwear at a U.S.-based brand. “First and foremost, we are hoping this pandemic resides and that good health is the order of the day going forward. But for now it’s still a huge two-fold problem, both the health issues and the manufacturing delays.
“I think some brands have been working hard to source materials from different places, but it’s still not a very good situation right now as far as keeping things on schedule,” he adds.
Although only about 30 percent of running shoes are produced in China, a glimpse of the overall decline in the footwear industry can be seen through the 15.7 percent drop from shoes imported from China based on year-over-year numbers as of early February, according to the Footwear Distributors & Retailers of America.
“Some are trying to build when the rain has already started, but smart brands have been working with suppliers to diversify out of China to make sure they weren’t too over-reliant [on China],” Andy Polk, SVP at the Footwear Distributors and Retailers of America, told Footwear News recently. “Things are going to get very squeezed and a lot of people are shuffling around trying to find suppliers. You can negotiate [with suppliers on] some of this, but I think you’re going to see cost increases in the supply chain for spring and summer.”
While most running vendors felt the impact of virus, Seattle-based Brooks was among the brands that felt the impact the most on a day-to-day basis. The Seattle area was one of the epicenters of the outbreak and, as of March 14, Washington state had more positive cases (510) and deaths (37) than any other state.
Although Brooks has had no known exposure among its U.S. staff as of Feb. 13, the company paused all non-critical business travel in and out of its Seattle headquarters and encouraged employees to work from home and avoid face-to-face meetings.
“We are assessing the situation daily and following recommendations from the CDC, WHO and local public health authorities,” Brooks CEO Jim Weber said in a statement late last week. “Our priorities are helping employees stay healthy and safe, keeping our business running, servicing our customers and staying connected with each other.”