Footwear Report 2020

FOOT WEAR REPORT

2020

Contents 01 02 05 06 08

Executive Summary

19

Can Footwear Sourcing Break Up with China?

10 Experts on Footwear’s Post-COVID-19 Takeaways

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Material Innovation for Sustainable Shoes

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Innovations in Sustainable Footwear Inputs

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Will Footwear Manufacturing Get an Eco-Makeover?

5 Future-Facing Footwear Trends to Watch

New Slip-on Sneaker Leaves Germs Outside

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Clover & Cobbler Wants to Own LA’s Footwear Scene

Adidas Taps Allbirds for New Sustainability Goal

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Foot Locker Sets $200M for Black-Owned Businesses

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Timberland Champions Regenerative Practices

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Footwear’s Post-Pandemic Sustainability Quandry

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Virtual Footwear Design Tech Firm Launches New Platform

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Toms on Relevance, Responsibility and COVID-19

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What’s Happening to Quality of Held-Up Inventory?

Executive Summary FOOTWEAR MANUFACTURERS ARE FACING CHALLENGES ACROSS THE SUPPLY CHAIN

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hen the pandemic hit China, footwear manufacturers felt the crunch as factories closed and components grew scarce.

The re-realization of the over-reliance on China has renewed many companies’ interest in seeking out new sourcing partners.

Whether footwear brands and retailers look to make more product in Vietnam, India or Cambodia, they’ll either be dealing with capacity constraints, quality issues or logistical flexibility, as we reveal in “Can Footwear Sourcing Finally Break Up With China?” on page 19. Even diversifying to skirt risk comes with its own risk.

What this means for footwear, is that innovation, be that in product, process or purpose, will be the key to a sustainable recovery.

Virtual design, development and selling may become a fixed part of the industry’s post-pandemic world, Marty Meade, Bearpaw vice president of sales and marketing for North America, says in “10 Experts on Footwear’s Key Takeaways from COVID-19” on page 2.

But as everything moves increasingly

online, in turn reducing sample waste and emissions output from executive travel, many companies are still grappling with the investments required to maintain sustainability progress. Some brands, as we highlight in “Footwear’s Post-Pandemic Sustainability Quandry” on page 12, are stalling while others are moving full steam ahead as consumer demand for eco-efforts hasn’t waned.

Prepared to pay for it or not, sustainability is essential for footwear manufacturer’s survival, and the sector has long lagged apparel in environmental advancements–and that’s something it can no longer afford to do.

Whether looking into new, more sustainable components, nurturing better relationships with fewer suppliers, or exploring reconceived ways to facilitate sales, sourcing and shipments, there’s a lot the footwear industry can do to ensure its recovery. Even if it means upending much of the old models to make room for something new and very necessary.

Tara Donaldson Editorial Director Sourcing journal

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Experts on Footwear’s Key Takeaways from COVID-19

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S A RA H J O N E S rom supply chain challenges to shifts in retail channels, the shoe business has been forced to adjust to manifold disruptions in light of the coronavirus. Here, 10 footwear insiders share the most important thing the health crisis brought to light about the industry.

“COVID-19 has only sped up the process of technology in the footwear industry.

We will be virtually designing, developing and even selling. If you are not well equipped and versed in technology, you will be left behind and become obsolete.”

–Marty Meade, vice president of sales and marketing North America, Bearpaw “This pandemic separated the few true consumer brands, those with real emotional consumer connection and brand fans, from the many ‘labels’ that are basically a word or someone’s name sewn or printed inside a shoe or a garment. The share of power brands has escalated during this time of crisis and will continue to grow long after. At Birkenstock, we have seen our brand amplified, even when thousands of retail stores have been shut; it has been a ‘business’ interruption, not a brand interruption in any way.”

–David Kahan, CEO, Birkenstock Americas

“The reinforcement of the ‘buy now, wear now’ mindset. Spending changed overnight and consumers simply did not buy what they did not need. It highlighted the extent to which our lifestyles drive our footwear purchases. With nowhere to go, seasonal fashion took a big hit, while more practical categories performed better. This practicality will likely continue.”

–Beth Goldstein, executive director, industry analyst, accessories and footwear, NPD Group “The pandemic drew attention to footwear’s wasteful production practices. With excess inventory abound, the footwear industry was forced to see the benefits of on-demand manufacturing. By producing to consumer demand with a nimble supply chain, companies can mitigate risk and reduce waste from overproduction.”

–Saskia van Gendt, head of sustainability, Rothy’s “New Balance relied on our strong values to steer our actions over the past few months. We were able to shift from producing footwear to making masks in our domestic factories for the healthcare community in less than a week and are extremely

“The share of power brands has escalated during this time of crisis and will continue to grow long after.”

—David Kahan, CEO, Birkenstock Americas

proud of our ability to react quickly to help those in need during the COVID-19 pandemic.”

–Dave Wheeler, chief operating officer, New Balance “The pandemic, coupled with surging Trump tariffs against footwear from China, has been a one-two punch that has exposed the frailty of supply chains, jeopardized countless jobs and threatened the very survival of many across the footwear industry. It’s become quite apparent of the need for the entire footwear industry to explore opportunities to digitize the shoe supply chain from design and development to ongoing engagement with our customers over e-commerce. Now is the time to create sourcing diversification, invest in supply chain efficiencies, and prepare for a more competitive environment post COVID-19.”

–Matt Priest, president and CEO, FDRA “The impact from Covid-19 has been clearly negative on the accounts, but the footwear industry is made up of innumerable medium and small companies that are more resilient than large groups because they are leaner and more adaptable at the moment. We therefore expect a significant impact, but we also believe we are in pole position to start faster than the others.”

–Siro Badon, president of Assocalzaturifici and MICAM “Just think about this: during 2019 almost 37 million USA people travelled overseas, and 15 million people traveled from West-

ern Europe to the USA. The propensity to buy when you travel is very high, and footwear happens to be among the top four items people buy before, during, and after travelling. So just realizing how big these numbers are is a wakeup call on the enormity of the loss for the entire footwear industry.”

–Fabrizio Gamberini, president and global chief brand officer, Vibram Corporation “The pandemic has demonstrated where old industry models are failing—not just with supply chain models, but also in how brands and manufacturers partner with each other.

Transparency between businesses in our supply chain and having insight into what brands are experiencing in real time have dramatically influenced our ability to pivot and put in place contingency planning at the factory and warehouse level. Our model of ‘collaborative manufacturing’ has enabled us to experience negligible losses with timelines and kept us on track for growth.”

–Sabrina Finlay, CEO, Otabo “The pandemic reminded us that we are not just an industry—we are a community that comes together and takes care of each other during difficult times. As the crisis relief fund for our footwear community, Two Ten has been on the frontlines during COVID-19, extending that care by providing financial aid to our colleagues who have been affected by the pandemic so they can keep food on their table and a roof overhead.”

–Shawn Osborne, president and CEO, Two Ten Footwear Foundation

“The pandemic has demonstrated where old industry models are failing...”

—Sabrina Finlay, CEO, Otabo

Material Innovation Will Power Sustainable Shoe Market to $11.8B by 2027: Report C H R I S TO P H E R H A L L

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he sustainable footwear market is set to reach a combined value of $11.8 billion by 2027, according to a study conducted by Grand View Research, supported by a growing interest among major brands to innovate new materials and production techniques.

Future growth in the sustainable footwear category will be attributable to these advancements, the U.S. market research firm said, especially when combined with functionality, comfort and appeal.

“Growing awareness among consumers, increasing education levels, social influences, and preference for sustainable products are anticipated to bode well for the market,” Grand View Research said.

“Millennials and Gen X are more inclined towards individualized products.”

Footwear brands have started to capitalize on the increased interest among consumers concerning the sustainability of their products, the research firm said, pointing to data that shows 68 percent of consumers consider sustainability to be a deciding factor when making a purchase.

Both athletic and non-athletic footwear are accounted for in the sustainable footwear segment examined in Grand View Research’s growth projection. Sustainable athletic footwear is increasing in importance as brands focus their research and development efforts in this area.

Nike’s Flyknit upper material, which is produced with new and recycled material, is nearly ubiquitous in the company’s footwear lineup, for example. Converse Renew, a footwear line under the Nike umbrella, is made from 100 percent recycled plastic.

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However, non-athletic footwear still accounted for the largest share of overall revenue in the footwear market last year, with men driving the most purchases.

As brands like Nike, Adidas, New Balance and Veja continue to release new, sustainable footwear products, they will look to the Asia Pacific region for growth.

China and India will be the most important economies in the region, according to Grand View Research, due to their massive populations and relatively untapped markets.

Rising disposable income, rapid urbanization and the increased influence of fashion trends will be prime factors determining success in Asia Pacific, it added.

In the United States, footwear sales have suffered as a result of the coronavirus pandemic, with in-store sales of fashion footwear cut in half during March.

Athletic footwear dollar sales were down in the mid-teens in the first quarter.

5 Future-Facing Footwear Trends to Watch KAT E N I S H I M U RA

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hile 2020’s low points vastly outnumber its highs—especially for retail—the footwear sector is rising to meet shoppers’ new expectations and appetites.

The first is the overwhelming move to buying online.

Heading into the pandemic, NPD Group’s industry analyst for accessories and footwear, Beth Goldstein, said just 30 percent of footwear sales were generated online. “That penetration had actually levelled out in 2019, as growth online slowed,” she said. “But as expected, the shutdown of stores jumpstarted online sales again.”

By April, nearly two-thirds of all footwear sales were taking place online, and in May, as stores began to reopen, the number contracted slightly to just over half. While online penetration will continue to decrease as shoppers return to physical retail, Goldstein doesn’t expect to see pre-COVID stats anytime soon.

“Many consumers will remain skittish about shopping in-store, and, retailers and brands have invested a lot to enhance their digital capabilities during the lockdowns,” she said.

As the industry moves forward into a world changed, likely forever, by the season’s events, it’s looking to big-picture strategy shifts, not fleeting fads, to keep shoppers engaged. Here are the five big trends to watch.

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/ HEALTH AND WELLNESS According to Goldstein, footwear will see a renewed focus on health and wellness—in both the fashion and athletic categories.

In fashion, this will manifest in a desire for comfort. Sneakers, comfort technology and the “fusion of fashion with athletic elements” will reign supreme, she said.

The NPD Group’s senior industry advisor for sports, Matt Powell, added that performance running shoes and outdoor footwear built for exploring are also expected to thrive as shoppers continue to seek socially-distant ways to stay healthy.

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/ CASUAL STYLING

Even as shoppers begin to engage cautiously in their regular pastimes and start returning to work, Goldstein asserted that “after months of hunkering down in cozy attire and slippers, no one is going to want to stuff their feet into uncomfortable shoes.”

The pandemic will likely reinforce the shift away from dress footwear that started in 2019, she said. This year, the category’s sales dropped by about 70 percent in March and April from the same period the year before.

3 5 4 / RETHINKING SEASONALITY

“Footwear will always have seasonal categories, but I think the store closures timed just as spring product was hitting floors really emphasized the consumer’s ‘buy now, wear now’ mentality,” Goldstein said. If a product wasn’t what a shopper needed in the moment, retailers likely missed the sale.

Shoppers are unlikely to spend on products they can’t wear now, especially without an inkling of when normal life will resume. “We’ll see brands and retailers focused on more seasonless, transitional options so that if we find ourselves in a situation again where we essentially miss a season, it won’t have such a negative impact,” Goldstein said.

/ QUALITY OVER QUANTITY

While the industry has had to rely heavily on promotions to recoup sales this season, consumers are generally voicing their appetite for quality, durability, versatility, and function in the footwear purchases they’re making.

Features like waterproofing and weather resistance justify a higher price point, Goldstein said, and shoppers will be looking to make purchases that will last years, not seasons. Powell added that brands that have already earned consumer loyalty stand to benefit moving forward.

In a recent poll conducted by NPD and CivicScience, one quarter of total respondents, and over one-third of respondents ages 18-34, said that they have been “more loyal to brands they know

and trust” while purchasing products like footwear during the pandemic.

/ SOCIAL AND ENVIRONMENTAL IMPACT

The emergence of COVID has not pushed sustainability down on shoppers’ priority lists, Goldstein asserted. In fact, consumer expectations of brands have grown amid 2020’s turmoil. It’s not enough just to create sustainable products—now, shoppers are looking for sustainable business models and supply chains with “lasting societal impact,” she said.

“I think that the pandemic has driven many consumers to become even more aware of how their actions impact others and society as a whole,” Goldstein said.

“Social responsibility and eco-consciousness have been such hot topics in the industry as younger consumers look to engage with brands and retailers that share their values.”

Companies with sustainable and cause-based initiatives will emerge on top, Powell said, adding that brands that have helped out during the pandemic— from the creation of PPE to donations to groups supporting social justice—will see higher consumer loyalty moving forward.

This New Slip-On Sneaker Lets Wearers Leave Germs Outside

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any consumers have taken a step back from discretionary purchases, instead prioritizing pandemic essentials. But brands with functional, protective products may have discovered the sweet spot between want and need.

Footwear startup Muvez believes it has hit that target with its line of indoor-outdoor slippers. The comfort slipons feature mesh uppers and collapsible heels, so they can be worn as slides. But the most ingenious innovation is a removable outsole that allows wearers to leave outside germs and microbes at their front doors, while continuing to wear their cozy kicks inside their homes.

According to co-founder and CEO Eric Cruz, the idea for Muvez came about long before a global outbreak prompted shoppers’ obsession with hygiene and cleanliness.

“The idea was born from wanting to create footwear that provided comfort and convenience,” he said, adding that he strove to imbue his creation with “a cool aesthetic that would speak to current trends.”

The brand appeared on popular television show “Shark Tank” in early April, at

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KAT E N I S H I M U RA

the height of the virus’ spread across U.S. communities and the world at large. Appearing on Shark Tank enabled Muvez to bypass months of painful pleas to investors, Cruz said. “A lot of startups can be years into their business and still haven’t proven their model,” he added.

The frenzy that followed “was impossible to predict,” Cruz said, noting that the launch of his germ-conscious line of footwear coincidentally coincided with the rise of a global health crisis.

“I wouldn’t have imagined the high level of interest in a product with a dual-sole functionality,” he added. “We really have a product that speaks to consumers who are a bit more conscious in terms of tracking bacteria back into the home.”

Following the show’s airing, Muvez racked up thousands of pre-orders on its direct-to-consumer site. While Cruz is conscious of exploiting the devastating impacts of the crisis, he hopes the brand can give shoppers a little peace of mind as they venture out into their newly reopened communities in the coming months.

As the brand marches forward, it will continue to iterate on the technology and look into accessories to make its products more effective. “We’re looking to develop certain enhancements, like

a footwear mat that would allow you to clean the outsole before entering your home,” he said.

The team is also keeping its ear to the ground on advancements in antiviral and antimicrobial fabrics and coatings. Cruz said Muvez won’t commit to pursuing any of these innovations until more testing has been done. “The research on how the virus can survive on footwear and surfaces is still in its infancy, and we’re not prepared to travel down that road yet,” he said.

Still, he believes “all brands should be thinking progressively” as it looks like COVID-19 will be sticking around for the foreseeable future.

In light of that reality, the company is looking to give back to the organizations and workforces combating the virus. The brand has now committed to donating $1 to the World Health Organization with every purchase. While Muvez is looking to an August delivery on men’s reorders and first shipments of shoes for women and kids, Cruz said the company is air freighting product for donation to “service the needs of those on the front lines, sooner.” A container is scheduled to arrive in July, and a reorder is already planned for August.

As Muvez continues to scale, Cruz is open to exploring retail relationships that could bolster the startup’s booming DTC business. “There’s no shortage of interest for wholesale, but we want to make sure we partner with the right platforms,” he said. The brand is also hoping to foster partnerships with other like-minded brands, designers and organizations.

“This is already beyond what I could have imagined early on,” he said. “I knew there would be a ‘wow’ factor once people saw how the product worked, but we can build upon the health benefits for long-term success.”

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Foot Locker to Funnel $200 Million into Black-Owned Businesses, Communities C H R I S TO P H E R H A L L

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oot Locker has pledged $200 million toward supporting the Black community over the next five years through investments in youth-centric Black-owned businesses, purchases from Black-owned brands and donations to organizations dedicated to creating opportunities for minorities.

Announced with support from the Footwear Distributors and Retailers of America (FDRA), Foot Locker CEO Richard Johnson said the investment reiterates the footwear retailer’s stance on fighting racial inequality and injustice in the communities it serves.

“We recognize that Black culture plays a pivotal role in shaping sneaker culture– the foundation of our business at Foot Locker, Inc,” Johnson wrote. “We believe we have an obligation to add our voice and actions to drive meaningful and lasting change across our company and within the communities we serve.”

To that end, Foot Locker said it will work to increase its marketing spend with Black-owned companies and creators while diversifying its global supply and agency investments to incorporate more Black-owned businesses.

In early 2019, Foot Locker invested $2 million in the Pensole Footwear Design Academy, a footwear education program founded by Jordan and Nike alum D’Wayne Edwards. The retailer has decided to double down on that commitment to education by pledging more funding toward Pensole programs and its Foot Locker Scholar Athletes for students of color.

Pensole regularly works with brands like Allbirds and Vibram to provide a pipeline into the industry for its students

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and recently expanded online classes to serve students who wouldn’t normally have access to the academy.

“We stand with those who are working towards eliminating the deep racial inequities that exist today,” Johnson said. “We are committed to leveraging our platform to mobilize, unite, empower, and inspire our team members and customers across the globe.”

New internship, mentorship and community outreach programs will help Foot Locker pursue that goal, bolstered by investment in education programs for Black team members through its Black Employee Resource Group, also known as BUILD. Foot Locker said it will also divert some of the funding from its annual Foot Locker Foundation “On Our Feet” gala to beneficiaries in support of Black communities, including through its scholarship program with the United Negro College Fund.

Footwear’s Post-COVID-19 Sustainability Quandary SHOEMAKERS ARE STALLING ENVIRONMENTAL INITIATIVES. BUT THEY COULD BE MORE IMPORTANT THAN EVER AFTER THE PANDEMIC JASMIN MALIK CHUA

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ven in the best of times, sustainability has proven an elusive goal for the vast swath of the $250 billion footwear industry, which has struggled for years to tread lighter on the environment without dismantling its complex supply chains and starting from scratch.

With COVID-19 sending shockwaves through the world of fashion, however, corporate efforts to suss out more eco-friendly materials, pare back carbon emissions, curtail waste and shine a light on opaque practices are taking a back seat to more immediate concerns: rescuing collapsing bottom lines amid shuttered storefronts, evaporated foot traffic and

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weakened consumer appetite in a time of widespread economic duress.

“COVID-19 has put the apparel, footwear and textile industry’s sustainability transformation on pause,” a joint report by the Sustainable Apparel Coalition, its Higg Co. spinoff and the Boston Consulting Group, warned in April. “For many brands, non-essential spending is currently frozen or being reevaluated, which in many cases includes their sustainability programs and teams.”

For footwear, the pandemic threatens to suspend or roll back efforts to ameliorate a notoriously polluting sector. Despite representing less than a tenth of the fashion industry’s total value, shoes account

“Indeed, closing the loop is more difficult with footwear than with apparel.”

for one-fifth of its environmental impacts, consulting group Quantis estimates.

Shoes are, by design, complicated—a fusion of multiple components meant to cosset, protect, enhance endurance or improve performance. A typical athletic sneaker, for instance, can consist of dozens of disparate materials, patchworked together to form a single unyielding unit of glues, leather, foam, textiles, metal and rubber. Each of those elements carries with it an inherent social and ecological cost—and challenge.

Indeed, closing the loop is more difficult with footwear than with apparel, Daianara Grullon Amalfitano, vice president of global footwear at Aldo, the world’s first carbon-neutral-certified footwear retailer, told Sourcing Journal.

“The technologies and offerings that would allow disassembling footwear and recover components to be reused or recycled are simply not available at scale, like they are for denim or cotton T-shirts, for example,” she said. “But we are continuously challenging ourselves and our partners to come up with creative solutions to foster recyclability and reuse.”

Staying on course, on the other hand, becomes less tenable when a global health crisis is involved. Publicly, footwear companies say they’re more committed to sustainability than ever and that COVID-19 has only thrown into relief the importance of preserving the health of the planet. Previously announced commitments, from industry-wide initiatives like the United Nation’s Fashion Industry for Climate Action to intra-company Science Based Targets, are still chugging along toward goal posts five to 10 years in the future, when the coronavirus is unlikely to be the same pressing concern.

Privately and practically, however, uncertainty abounds. Revenue for the global fashion sector is anticipated to shrink by roughly 30 percent this year, according to McKinsey & Company. Meanwhile, bankruptcies of several department-store giants, including J.C. Penney, Lord + Taylor and Neiman Marcus, and the financial straits of others like Sears and Macy’s are bound to hit some footwear brands, particularly those without a strong direct-to-consumer conduit, where it hurts.

Most of the recent initiatives—Adidas and Allbirds’ “zero carbon” sneaker, Veja’s repair and recycling hub in France, Sanuk’s recycled SustainaSole line and Teva’s switch to reclaimed plastic for its signature straps—were in the works long before the pathogen reared its head in December.

More announcements are in the pipeline: Later this summer, Merrell will roll out its Gridway and Undyed Collections, which it designed to reduce the amount of water utilized during production. In fall, Timberland will launch its first footwear collection using leather from ranches that employ regenerative agricultural practices, which enhance rather than deplete soil health and help draw carbon out of the atmosphere. Aldo, which delivered a sneaker that featured an upper made from recycled plastic bottles and a midsole derived from lake algae biomass last spring, will be unveiling an “expanded sustainability collection” in September.

How long this momentum will last depends on a slew of factors, including how soon government-mandated lockdowns lift and the pre-pandemic rhythms of life resume. The problem? The coronavirus, which is resurging in parts of the United States, Europe and the Asia-Pacific, keeps changing the stakes.

“From our point of view, it is still too early to assess the impact of the pandemic,” an Adidas spokesperson told Sourcing Journal, declining to comment further. (Allbirds, Nike, Reebok and Veja also turned down requests for an interview).

Still, several footwear companies are taking advantage of this involuntary global pause to regroup, reposition and chart a way forward through a retail landscape that is poised to look markedly different from the one they left behind in 2019. A growing chorus of brands, policymakers and trade organizations are calling for a “green recovery” that leverages circular-economy principles to create economic opportunities with social and environmental benefits, especially in light of climate change’s ever-looming existential threat.

A spokesperson for VF Corp., which owns the Timberland and Vans brands, says the company is currently reviewing its sustainability strategy with this

lens in mind. “Our focus on climate change and protecting natural resources will take on even greater importance in a post-COVID era,” the spokesperson said. “If we, as humans, can step up and take globally coordinated measures to address the threat of COVID-19, we believe we come together to reach solutions for climate change, which is the greatest challenge our planet faces. The threat may not seem as imminent as what we face today, but it is inevitable if we don’t change our ways.”

Investments in sustainability don’t typically come cheap, but in many cases, they can pay for themselves in the long run through water, chemical, material or energy efficiencies. Sometimes, the more eco-friendly choice is also the cheaper choice. Keen, for example, realized that applying durable water repellency to the laces of non-waterproof-style shoes was not a “need to have.” Eliminating that treatment also decreased its shoes’ chemical burden, said Chris Enlow, director of Keen Effect, the brand’s social responsibility program.

A pro-planet stance may be a neces-

sary strategical move, too. McKinsey & Company, in an April “State of Fashion” coronavirus update, described a “quarantine of consumption” that could accelerate consumer demand for brands that take “purpose-driven sustainable action.”

Pulling back from sustainability efforts could end up turning off customers who have more options than before, especially in the increasingly essential digital space.

“I think the current pandemic situation has only strengthened our belief that our consumer expects us to step up in this area,” Holly Curtis, vice president of global product at Keds, told Sourcing Journal. “Consumers are obviously shopping more online and are doing their research, [and] I believe this will lead to a faster shift across the board toward more ethical and sustainable practices.”

Gen Z-ers and millennials, in particular, have found the crisis to be a teachable moment. A poll conducted by The NPD Group in collaboration with CivicScience found that 20 percent of consumers ages 18 to 34 said buying sustainable and eco-friendly fashion is more important to them now than before the COVID-19

SPONSORED

TORAY ESTABLISHES FOUR-TIER ‘SUSTAINABILITY VISION’ TO ADDRESS GROWING DEMAND As a supplier to the footwear industry for over 30 years, Toray Performance Materials Corporation (TPMC) has developed materials that are found in millions of pairs of shoes and under the feet of 5 million podiatric patients.

Today, the raw materials supplier believes its continuous fiber-reinforced thermoplastic (CFRT®) laminates, which are constructed with carbon fiber, glass fiber or both, can maximize footwear application performance all while supporting the company’s sustainability initiatives.

Laurie Calligaris, director of sales and marketing at TPMC, told Sourcing Journal how her company addresses footwear sustainability and how COVID-19 has impacted demands from footwear clients.

What are the key differentiators in the sneaker market today and what do consumers respond to most?

Innovation, sustainability and performance! Companies that stand out are the ones that can reinvent themselves while doing so in a sustainable way and without compromising performance.

We believe that Toray CFRT® materials can achieve exactly that.

How is Toray addressing the demand for more responsible materials?

TPMC parent company The Toray Group has worked diligently to pursue a process of co-creation with every customer in the supply chain, while ensuring mutual collaboration between our inherent R&D, marketing and production strengths. Our goal is to become a Zero Discharge production facility.

Through these means, the Toray Group is endeavoring to crystallize the four special initiatives imagined under its Sustainability Vision. The initiatives focus on exploring the behavioral and systematic barriers impacting environmental outcomes and will establish a strategy for creating lasting environmental benefits: • Facility Management: Managing with less water, electricity and fuel energy consumption impacts to the environment.

• Waste Management: Reducing, reusing and recycling all possible waste generated.

• Alternative Materials and Investment in R&D: We are researching new innovative polymers which are bio based or recycled.

• Human Resources: Empowering our diverse team of employees to improve environmental, health and economic outcomes.

How has COVID-19 changed demand from your footwear clients and to what degree do you think the pandemic has permanently altered operations or relationships?

Some new projects have been put on hold due to COVID-19 and the ability to reach certain customer bases has been limited.

Also, stay-at-home orders caused many to pause testing. In some ways, the pandemic has permanently altered the way we operate.

However, we don’t see that COVID-19 has altered operations to the extent that we’re unable to adapt to this adversity. We’ve seen that footwear companies have reacted in similar ways by first and foremost having the security of customers, employees and community in mind.

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outbreak. Social impact, in an age of long-overdue racial reckoning, is also ramping up in importance, though how companies will manifest this change—hiring more Black, Indigenous and People of Color (BIPOC) in leadership roles, say, or instituting mandatory diversity and sensitivity training—remains unclear.

“I think we are moving away from brands and retailers simply focusing on sustainable product and focusing on sustainable models for long-term impact to society,” said Beth Goldstein, a footwear industry analyst at NPD Group. “So, this will include environmental and social initiatives, especially as we come out of this pandemic...as well as the renewed focus on racism and equality. Consumers are demanding change here and are holding brands accountable.”

It’s also impossible to talk about the environment without also tackling racism. “We know that the effects of climate change disproportionately harm BIPOC,” said Erika Gabrielli, senior director of global marketing at Teva. “Any action towards minimizing our environmental footprint without acknowledging environmental racism would be ignorant.”

At the same time, the pandemic has accentuated the skewed power dynamics between brands and the people, often Black or brown, who make their products in the developing world. Tackling social inequality will also mean grappling with problems such as poverty wages and exploitative working conditions in the upstream supply chain.

Footwear companies that use the crisis as an opportunity to incorporate more sustainable and equitable business practices, however, could emerge on the other side more equipped to guard against future shocks and better appointed to win the trust and support of a more conscious customer.

“We don’t want to return to normal,” said Rachel Horos, corporate social responsibility and sustainability manager at Merrell. “We want to return to better.”

Toms’ Chief Giving Officer on Relevance, Responsibility and COVID-19 THE CALIFORNIA COOL FOOTWEAR BRAND ONCE HERALDED FOR ITS ONE FOR ONE GIVING MODEL HAS OFFICIALLY EVOLVED.

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KAT E N I S H I M U RA losing the chapter on 14 years’ worth of shoe donations—to the tune of 100 million pairs—Toms has updated and augmented its goals for a new decade.

Late last fall, the company released its roadmap for what a new era of corporate social responsibility would look like. Toms’ chief giving officer, Amy Smith, spoke to Sourcing Journal this spring about the specific issues, as well as collaborations and new product lines, that are propelling the brand forward into an era where consumers are more informed than ever.

“If you don’t stand for something and you’re not investing in a meaningful way, your relevance as a brand will be called into question—especially by the younger consumers,” Smith said. Millennial and

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Gen Z consumers are up to speed on the social and environmental issues facing brands, and they’re voting for the winners with their wallet share.

“They have information and knowledge at their fingertips 24-7, and they are optimistic about the world getting better,” Smith added.

THE ISSUES There was a moment a year-and-a-half ago when Toms recognized that the world around it was changing, Smith said. “In order for us to have the greatest possible impact in the issue areas that our consumers care about, we also needed to evolve and create a more flexible and sustainable way of giving,” she said.

While the company will continue to

donate shoes in some capacity, the giving team came to the conclusion that shifting its strategy away from the One for One model that made the brand a household name was a must if it wanted to tackle bigger projects.

Now, for every $3 Toms generates, it gives $1 to a charitable organization, or “giving partner.” “Moving away from a shoe-for-a-shoe model gives us more flexibility and allows us to focus on issue areas that matter to our consumer,” Smith said.

The team distilled their goals down to three main areas: mental health, community safety and equal access to opportunities. “We believe those three things are interwoven, so when we’re supporting one, whether that’s through our shoe giving our grants giving, we’re supporting all of them,” Smith said.

Throughout more than a decade of giving shoes, the company realized its efforts were yielding multifaceted results. “We learned through shoe giving that people’s physical safety from injury and disease was being impacted. Their confidence, or mental health, was being boosted by having a new pair of activity-appropriate shoes,” Smith said.

“And being able to complete a school uniform was part of the equation, too,” she added, emphasizing how appropriate footwear often played an integral part in getting kids into the classroom.

The issue of mental health was also a particular call out from consumers, Smith said. Last year, Toms’ “Pick Your Style, Pick Your Stand” promotion empowered shoppers to fund issues with their purchases.

“Mental health was far and away the most chosen category by the consumer,” Smith said, admitting that she and her team were surprised by the result.

“Not a lot of other companies are working in the mental health space,” she said, and the consumer input validated the team’s decision to seek out organizations championing the issue this year.

Rather than sending out a request for proposals, Smith said, her team is currently sitting down with potential partners to get an understanding of their goals— along with their funding struggles.

“They may be really excited about something, but can’t figure out how to get it off the ground,” she said. “Those are the types of opportunities we’re looking for, and the selection process is as rigorous as it’s ever been.”

SUSTAINABILITY Toms now faces the challenge of rounding out its corporate responsibility profile with environmental stewardship initiatives that match the sophistication of its longstanding humanitarian efforts.

The company became a certified B Corporation in late 2018, denoting a commitment to meeting the third-party environmental group’s standards for both social and environmental performance, along with public transparency. B Corp brands have a legal accountability to balance their profits with purpose, the group claims.

That means streamlining supply chains to produce less waste, exploring new materials, and ensuring the health and safety of its manufacturing workforce.

It also means revising its roster of products and looking to sustainable material solutions. For a brand that has made its mark chiefly through a core se-

“In order for us to have the greatest possible impact in the issue areas that our customers care about, we also needed to evolve and create a more flexible and sustainable way of giving.” —Amy Smith, chief giving officer, Toms

lection of iconic slip-ons, this means attempting to strike gold with a whole new set of ingredients.

Earlier this spring, the company launched Earth Wise, a product program “rooted in earth-friendly materials and processes.” In order to receive the Earth Wise distinction, Smith said, either the upper or outer unit of the shoe must be made with a sustainable component.

The current selection of Earth Wise products includes shoes with linings and uppers made from Repreve’s plastic-bottle-based fabrics, zero-chemical plantdyed uppers, Tencel lyocell wood pulp linings, and Ortholite insoles, which contain 26 percent eco-content.

The company is also expanding its roster of collaborations, and is seeking out brands with similar values.

“Outerknown is a good example of that,” Smith said, citing the SoCal direct-to-consumer label co-founded by surfer Kelly Slater. “It’s a collaboration with a clearly value-aligned organization known for their efforts with the environment. We’re leveraging that fashion brand and coming together with them for an earth-friendly sandal.”

The limited line of men’s flip flops is made with Econyl regenerated nylon straps and features lightweight midsoles made from Bloom algae instead of traditional polymer-based EVA. Toms has a ways to go before it can claim sustainable status, Smith said.

Known for its passion for human causes, bringing the same focus to the environment will be a years-long effort.

“Some of the things that made Toms famous in the beginning are now table stakes across a majority of brands that our consumer would want to buy from,” she added.

“We are very committed to our social efforts, but we need to be sustainable,” she said. “What does that look like for Toms, and what does that look like for

Patagonia? I don’t think it’s the same. But we want to make sure that our customers know that we’re committed to both.”

COVID-19 RESPONSE As the coronavirus began its international spread in early March, Smith said, Toms’ leadership was already deep into talks about further diversifying sourcing away from China.

“I don’t sit in a leadership team meeting where we don’t talk about tariffs or what’s happening in China,” she said, adding that the company had been moving production on certain items “for a variety of reasons, from a product development standpoint,” when the virus hit.

Toms’ Chinese factories were operating short of full capacity in March, driving an expected delay on goods that should impact the selling season.

Still, despite production hiccups, decreased consumer demand and the undoubted turmoil of a January corporate restructuring, the company has responded to the crisis.

On April 1, Toms began donating onethird of net profits to the COVID-19 Global Giving Fund, which supports healthcare workers through Americares, Partners in Health and International Medical Corps, the Crisis Text Line for mental health support, and WaterAid, which is deploying hygiene and hand-washing programs in more than 30 countries.

“Now, more than ever, we are honored to apply what we have learned over the past 14 years of giving to address this global health crisis,” Smith said. “We know the best way to help is to use our resources and the power of our customer’s purchase to invest in our giving partners who are on the frontlines directly addressing this pandemic.”

Can Footwear Sourcing Finally Break Up With China?

WHILE APPAREL HAS BEEN BACKING AWAY FROM THE GLOBAL SUPERPOWER AT A STEADY PACE, FOOTWEAR COMPANIES HAVE FOUND THEMSELVES AT AN IMPASSE KAT E N I S H I M U RA

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ike the melting of the polar ice caps, China’s share of the world’s sourcing has been slowly—yet undeniably— shrinking.

A years-long trade war with the United States has driven the exodus from the country, along with rising labor costs, human rights concerns and the rise of a global pandemic that has shaken trade partners to their cores.

But while apparel has been backing away from the global superpower at a steady pace, footwear companies have found themselves at an impasse. With unrivaled capacity for production, access to raw materials, and the infrastructure to build the components needed for the Western world’s most popular styles, even the most well-positioned brands who wish they could quit China, simply can’t.

A scorched-earth breakup with their Chinese suppliers isn’t an option for most, but changing values and priorities are prompting U.S. footwear brands to explore other options. The urge to diversify away from the country that once produced 90 percent of America’s shoes has been underscored by 2020’s unprecedented challenges.

19 / FOOTWEAR 2020

China, according to Siva Yam, president of the U.S.-China Chamber of Commerce, is feeling the effects of the growing rift.

Since the coronavirus took hold early this spring, roughly 40 percent of the country’s footwear orders from overseas have been canceled, while the fate of others remains “unconfirmed and unknown.”

“The global economy has halted and this has had a tremendous negative impact on manufacturing, including footwear,” Yam said. He credited the drop in orders to financial insecurity, along with the continued trade dispute and the rise of countries like Vietnam as increasingly proficient players in the footwear game.

“Some factories have been idled,” he added, explaining that many Chinese manufacturers are not planning to return to full operating capacity until September at the earliest, due to the dearth of business. In order to mitigate the fallout and try to recoup sales, they’ve turned to producing more low-cost styles for sale online.

Brands are feeling the aftershocks of COVID-19, Yam opined, and that has led to the dramatic downturn in orders.

Companies had been “shifting to other emerging economies such as Vietnam, India, Indonesia, Brazil, and Africa” since

CHINA The world’s largest footwear producer, consumer, and exporter, with unrivaled capacity to produce its own materials and components.

before the crisis, and that trajectory is likely to continue.

In the meantime, Yam said, it has been hard for companies to interface with their suppliers because of the travel restrictions, and that fact alone has deterred them from striking up relationships with new partners in different markets.

“If they travel, the risk has been tremendous,” he said. Not only could brand stakeholders contract the virus while scouting a new factory—their flights could be canceled at a moment’s notice, leaving them stranded on foreign shores. Immigration protocols are constantly shifting, and periods of quarantine when entering or leaving a country are long and arduous.

Whether China’s footwear manufacturing sector will rebound after the pandemic remains unknown, but the country’s share of sourcing, Yam said, could “continue to shrink due to in-sourcing or diversification of risks.”

Matt Priest, president and CEO of the Footwear Distributors and Retailers of America (FDRA) believes China’s present troubles probably represent a bump—not a fork—in the road.

American brands will stick by their manufacturing partners in the country, he said, out of practicality and cost-effectiveness. “I think they’ll be a part of our future for quite some time,” he said of China, though their status as the preeminent leader in the space will likely diminish.

When it comes to footwear sourcing and manufacturing, “China does it well, and they do it quickly,” Priest said. Unrivaled access to raw materials and footwear components have solidified the

VIETNAM Footwear exports have grown exponentially in recent years, but limited capacity might see a plateau in growth.

Still imports components from China.

country as a likely permanent fixture in the industry, and that fact may also be the key to China’s advantage over burgeoning competitors. Even Vietnam, which has emerged as a top challenger in recent years, is still beholden to China for parts and pieces it can’t make on its own.

“What we’ve seen is a slow development of a supply chain that’s more supportive of production, but even to this day, a number of inputs are still being brought in from China,” Priest said. If Vietnam—one of the largest suppliers to the U.S. footwear industry—can’t go it alone, then countries like Indonesia, Cambodia, Bangladesh and Myanmar that are “further out on the sourcing frontier” have an even smaller chance at self-reliance.

Creating the ideal ecosystem for footwear production would require an industry-wide buy-in and a vertical fix, Priest said, and the interest in bolstering the development of a competing country’s entire supply chain has not yet taken hold in a meaningful way.

“The question becomes, what does diversification look like?” Priest said. Outside of Vietnam, other markets are making moves to fill in the gaps.

A strong player in the leather goods space, Priest said India’s footwear manufacturers have discussed broadening their range of offerings. Known for boots and leather sandals, the country would need to build out its skillset to include athletic shoes and sneakers in order to truly court American customers.

“We’ve spent time talking to them about product diversification based on things like the casualization of Western society, but it takes time and money,” Priest said. “We’re living in an environment where sneakers and rubber-plastic shoes rule the day, and I think China plays to that advantage.”

One place where American footwear sourcing is definitely not headed is back to the States, he added.

“We’re a mature economy and it’s a low-value, labor-intensive production process,” Priest explained. The U.S. makes big-ticket items like automobiles, airplanes and semi-conductors. “In the

INDIA The second-largest producer and consumer. With the most cattle on earth, India holds a competitive advantage in leather footwear, and houses nearly 15,000 small and medium-sized footwear manufacturers.

long-term,” he predicted, “footwear’s going to remain offshore.”

Former Stance co-founder and Future Stitch founder and CEO, Taylor Shupe, echoed the sentiment that footwear production is unlikely to come home to roost.

“It’s very hard to get U.S. citizens to be alright working in the factories,” he said.

“We’ve stigmatized factory work since the middle of the twentieth century.”

Shupe, whose vertically-integrated sock factories are based in China, said the country has carefully cultivated the perfect ecosystem for production. Building out that capacity stateside would take a lot more than a couple of factories.

“Ever since China opened up in 1978, the central government has actively fostered the systematic expansion of do-

WHERE IN THE WORLD IS FOOTWEAR SOURCED? The global footwear sourcing landscape is changing, and a host of factors have contributed to a slow but steady movement away from the world’s dominant producer. Competitors are now dueling with China for bigger pieces of the sourcing pie.

But while each of the top 10 footwear producing countries boasts their own strengths, they also have a few critical weaknesses.

For one, none boasts China’s massive capacity—not even close.

The world’s preeminent supplier has also honed the ability to craft all kinds of shoes (including American-loved sneakers and athletic shoes) where competitors like India have specialized in styles that suit their local markets. Some, like Vietnam, whose industry rivals China’s skills and expertise, still rely on the country for much-needed components like foams and technical textiles.

But for many brands that have been knocked down by 2020’s disruptions, it’s becoming clear that a modern supply chain demands diversity—not a one-size-fits-all solution.

PRODUCTION VOLUME (Million Pairs)

INDONESIA Exports have risen over the past decade, reaching critical mass in 2019.

China India

2,579

Vietnam

1,300

Indonesia

1,271

Brazil mestic manufacturing for export,” he said. “The reason for the meteoric rise of Chinese manufacturing can be summed up by strong central planning, government policies and investments, and cultural advantages.”

China’s government has shelled out big yuan to develop the industry and to maintain its competitive edge over other markets.

“In China, there are full cities devoted to sock manufacturing, keyboard manufacturing and solar manufacturing,” he explained, adding that the government encourages companies to band together based on production goals in the geographical areas that best suit their businesses. “They believe that if you get a whole bunch of people together who practice the same craft, efficiencies will be gained and innovation will thrive.”

Federal policies have been developed to foster the creation of these specialized economic zones, and companies are incentivized by tax breaks and lowered

13,478

944

Bangladesh

461

Turkey

447

Pakistan

411

Mexico

268

Italy

184

Source: Footwear Distributors and Retailers of America (FDRA)

regulations. Funding for infrastructure, logistics networks and innovation grants are also common.

Then, there are the cultural differences.

“They are generally very open and respectful to outsiders—this has been a key to acquire foreign investment and cooperation,” Shupe said of China’s business leaders. “They also have a culture of saving and investing, which has been a huge factor of transcending labor intensive manufacturing into high-tech.”

China’s advantages may be many, especially when it crafting complex styles

like athletic shoes at staggeringly high volumes. But brands looking for “quality and differentiated product” have been turning increasingly to Europe, according to Paulo Goncalves, communications director for the Portuguese Footwear, Components and Leather Goods Manufacturers Association (APICCAPS).

Over the past six years, he said, Portugal has seen a number of brands that once produced in Asia shift to the country for sourcing. “Portugal has a current capacity to produce more than 80 million pairs of shoes per year,” Goncalves asserted, adding that the sector exports more than 95 percent of its production to 163 countries on all five continents.

The country was once known primarily for its craftsmanship in the arena of formal leather footwear, but over the past decade, “there has been a significant change,” he said. “Today Portugal produces almost all types of footwear very capably,” Goncalves said, including sneakers and casual shoes.

And, in the wake of a crisis that upended global supply chains and flipped consumer demand on its head, producing in Portugal could seem like a safer bet. “In Europe, it is possible to produce high-quality shoes in smaller quantities and with a faster response, allowing the

business risk to be reduced,” he said.

Proximity to fashion capitals like Paris and Milan lend some cache to the locale, and European consumers have also come to value goods made closer to home.

“The consumer appears to have awakened to greater social awareness and is more willing to pay a fair price,” he said.

While the coronavirus shuttered Portugal’s manufacturing sector throughout the month of April, Goncalves said operations have resumed with some degree of normalcy. The quick turnaround was made possible, in part, by the tight-knit production hub based in the Northern part of the country.

“There is a consolidated cluster” of footwear companies, shoe component manufacturers, tanneries and leather goods brands, Goncalves said, and they have worked together to get back on their feet.

Portugal views footwear as an expanding industry as well as a part of its heritage, and the sector has goals to broaden its reach and expertise.

“The fact that they have invested significantly in the modernization of companies allows Portugal to be at the forefront of new product development,” he said. “Some of the most modern factories in the world are installed in Portugal.”

BRAZIL The Western hemisphere’s largest producer. While it boasts one of the globe’s biggest commercial cattle herds, three-quarters of the country’s footwear exports are rubber and plastic.

WHERE IN THE WORLD IS FOOTWEAR SOURCED? EXPORT VOLUME (Million Pairs) China

9,543

India Vietnam

262

1,272

Indonesia Brazil Bangladesh

406 113 69

Turkey

251

Pakistan

11

Mexico

26

Italy

Source: Footwear Distributors and Retailers of America (FDRA)

203

Country

Key Markets

China

U.S., Japan, Germany

India

U.S., U.K., Germany

Vietnam

U.S., Germany, China

Indonesia

U.S., China, Belgium

Brazil

Bangladesh

Turkey

Pakistan

Mexico

Italy

Paraguay, U.S., Argentina Spain, Germany, Netherlands Iraq, Saudi Arabia, Russia Saudi Arabia, Germany, Italy U.S., Guatemala, Panama Germany, France, U.S.

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Clover & Cobbler Wants to Own LA’s Footwear Manufacturing Scene LA-BASED FOOTWEAR FACTORY CLOVER & COBBLER, BRAINCHILD OF DESIGNER JACLYN JONES, HAS SEEN INCREASED INTEREST FROM BRANDS SMALL AND LARGE KAT E N I S H I M U RA

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etail has quieted in recent months as the coronavirus pandemic continues to keep shoppers indoors and away from the birthday dinners and brunches that once occasioned new duds and accessories.

The industry is using this pause in business to reflect on everything from marketing to supply chain strategy.

For many brands, bringing operations closer to home has been a longterm goal to be pursued slowly, deliberately and incrementally. But as trade relations with China have soured to an unprecedented degree, many are beginning to wonder whether the time to exit those sourcing agreements has arrived.

24 / FOOTWEAR 2020

Los Angeles-based footwear factory Clover & Cobbler, the brainchild of shoe designer Jaclyn Jones, has seen increased interest from brands small and large in recent months. The idea of manufacturing stateside, once a romantic notion reserved for expensive fringe brands, has begun to take hold as a real possibility for the mainstream.

ADDED EFFICIENCIES Jones inherited the factory and its staff from friends and mentors Salpy and Kevork Kalaidijan, who manufactured their own brand, Salpy, and a handful of others, out of a Sun Valley warehouse. When the veteran shoe designers decided to retire in

2018, they handed the reins to Jones.

The Kalaidijans initially saw interest from large American brands and Chinese factory owners who wanted to plant a stake in L.A.’s hip manufacturing scene. “They said, ‘Those are big corporations and they’ll tear this place apart,’” Jones said.

After moving the factory to Van Nuys and giving the new space an Instagram-worthy facelift, Jones endeavored to make improvements to the operations that would entice artisan brands.

“There were inefficiencies that I saw and things that I wanted to improve,” she said. “Health and safety were major concerns, but so was the environment,” she added. “I saw a lot of waste in the production lines and things that could be done better—seemingly easily.”

One of the first issues Jones tackled was the shift away from fume-emitting solvent-based glues. The factory switched over to water-based formulas to protect workers from inhaling dangerous chemicals.

Jones also made it her mission to find a home for factory waste—specifically leather scraps. She began selling or donating Clover & Cobblers’ discarded pieces to local artisans. “If we don’t have a need for it, we try to work with people and give it a second life somewhere else,” she said.

Jones is looking into making the factory’s operations solar powered—an effort that was put on hold by the corona25 / FOOTWEAR 2020

virus shutdown.

Many of the artisans that make up the 21-person production crew are cobblers with decades of experience in footwear, Jones said. Others have been pulled from other industries.

“We carve all of our heels out of wood, so we’ve found some people to help out in the wood department who are carpenters, construction workers and prop people—because we’re in L.A.,” she added.

A showroom adjacent to the factory space resembles a stylish millennial’s apartment, and serves as a workroom for designers and pattern makers.

“Part of our goal is to go against the grain of the industry and be more community oriented and collaborative,” Jones said. A swatch wall showcases leathers from eight American leather distributors, four of which are based in the L.A. area.

The team helps connect designers with local sales reps for leathers and materials, hoping to keep the business in the community—or at least in the U.S. “Although the leathers might not be American-tanned, they’re supporting American companies,” she said. “For the most part, that’s where we get our leathers for our brands and that’s where we send our customers.”

The company is also actively pursuing relationships with the world’s cutting-edge vegan leather suppliers, from pineapple to cactus-based formulations.

FROM GLOBAL TO LOCAL While Clover & Cobbler boasts a roster of 10 consistent L.A.-based brand clients, Jones said its strength is in helping first-time designers find their footing.

Early on, she instituted a no-minimums policy to give emerging brands a chance to explore their options without being weighed down by massive MOQs. Established brands are also looking to make the switch from international to local manufacturing. “Some brands are really hard to convince—they’re set in their ways,” she said. “Others are saying, ‘great, what I was doing overseas wasn’t working for me.’”

Local manufacturing allows brand owners a physical access to production

that would otherwise be impossible. “They get to come in and check on their product, to see it on the product line,” Jones said.

“It’s more of a hands-on process here.”

There are, however, some growing pains for established brands that have been maintaining an industry status quo.

“The biggest barriers are that they just want a fully packaged product,” she said. Large factories in China and Vietnam often function as full-service sourcing destinations because of their established relationships with an array of downstream suppliers.

“That’s a different concept,” Jones said. “Some brands are used to just saying, ‘purple stiletto,’ and it appears.”

Instead, Clover & Cobbler helps nurture relationships with friendly local vendors, but it’s up to brands and their designers to facilitate their own materials sourcing. “Instead of spending half our time doing that, we decided that brands and designers should bring us the products they want to use,” she said.

Smaller brands are often willing and eager to take a more hands-on approach to the work, but larger brands who want to move operations or supplement their existing assortment with Made in the U.S.A. product can run into issues.

“For most of them, it’s a time-to-market situation,” Jones said of the established brands that express interest in her factory. “They want to get things faster, and they want the flexibility of adding a new color last minute.”

While those benefits are certainly inherent to local manufacturing, price can be a sticking point, Jones said. “The problem is that they want it to sit alongside the international product at the same price,” she added. “I try to convince them to do capsule collections, or have specialty products that stand out as unique and different from the rest of their lines.”

PANDEMIC’S EFFECT As Jones contemplates her strategy for bringing new brands on board, her factory stands empty as a result of the coro-

26 / FOOTWEAR 2020

“Clover & Cobbler helps nurture relationships with friendly local vendors, but it’s up to brands and their designers to facilitate their own materials sourcing.” navirus crisis.

Clover & Cobbler shuttered its doors just days before California’s Safer at Home order—which mandated that non-essential businesses close down— took effect. Jones said the decision was her own.

“I thought about how quickly the virus could spread in our facility, on a production line where everyone is touching the product,” she said.

“Hand in hand with that, the industry outside of manufacturing was also freaking out,” she said. “We had retailers canceling orders.”

Rather than try to eke out a profit by attempting to salvage already placed orders, Jones sent out correspondence to all of her brands putting the orders on hold. “Once we and the rest of the world reopen, we’ll talk about what’s next,” she said, adding that she hoped the decision

AS BANKS TIGHTEN FUNDING, FOOTWEAR BRANDS CAN OPT FOR TRADE FINANCING Footwear, like many industries, has taken a heavy financial hit from COVID-19. But while retailers and brands may be seeking aid to cover losses, the pandemic has spurred many traditional lending institutions like banks to tighten their credit and implement stricter requirements to access funding.

In a Q&A with Sourcing Journal, Peter Maerevoet, chief financial officer at Tradewind Finance, dug into the recent financial issues plaguing footwear companies and explained how alternative financing can alleviate those concerns.

Given that you work with companies across multiple sectors, what lessons can footwear learn from other industries?

Demand ebbs and flows across industries, be it footwear or seafood. Finding a financial partner who will be flexible and answer your unique needs can help a business survive and even flourish under the most challenging of circumstances.

How has COVID-19 impacted the financing options for footwear companies today?

With bank loans out of reach, footwear companies are seeking more flexible and faster sources of funding like trade finance that can produce working capital for their brands and sourcing partners.

Trade finance firms offering vendor financing can provide funding to suppliers almost immediately and support longer payment terms for buyers, allowing greater working capital. In some cases, these firms can finance payment terms up to 180 days. For footwear SMBs without bank access that need more than government funding, alternative financing can be an effective option to inject liquidity into their business.

Cashflow is a big issue for companies following the drop in demand following the pandemic outbreak. What can brands and suppliers do to preserve the relationship with their factories?

With businesses squeezed for cash flow, a brand or supplier should consider that what is in their best interest extends to their factories, even if it means sacrificing short-term gains in favor of decisions that can preserve vendor relationships in the long term. Transparency and negotiation on payment terms are paramount to keeping supply chains intact. On the flip side, stopping payments to factories suddenly can produce irreparable damage to business relationships, with other factories wary to work with brands in the future.

For footwear companies looking beyond traditional bank financing, what are the benefits to alternative financing?

Alternative financing allows for flexible funding, with advance payments on invoices provided within two days of invoice submission in some cases. The requirements to qualify for funding are less rigid, and no collateral is necessary. Alternative financing is not a loan, so companies experiencing tight cash flow don’t have to immediately repay. When demand does rebound, funding increases as the business generates more sales.

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SPONSORED

lessened their stress.

“We had product done and sitting at the door ready to go, but even if we had sent it, they wouldn’t be able to accept or pay for it,” she said.

As for her own workforce, Jones said Clover & Cobbler’s HR team worked quickly with her furloughed staff to help them apply for unemployment benefits.

“Because we jumped on it so quickly, I think we were able to see faster results than others,” she said. Jones plans on hiring back all of her workers as soon as she feels operations can resume safely.

In the meantime, though, Clover & Cobbler has joined up with Brands x Better, a coalition of over 100 brands that have agreed to donate 10 percent of profits to COVID-19-related charity efforts.

“On the brand side, we’ve done what we can to continue selling our online product,” said Jones. “We are trying not to be obnoxious with marketing, because we know this time has been bad for people.”

Despite the pervasive anxieties caused by the shutdown, Clover & Cobbler has seen an uptick in interest from prospective designers looking to start their own brands with the factory’s help.

“Even during this time where small businesses are struggling, people have time on their hands and they’re sitting at home thinking about what they want,” said Jones.

“I think they’re wanting to be creative, and they’re reaching out and getting the information together,” she added. “That whole side of the business has been booming.”

Curating Components INNOVATIONS IN FOOTWEAR INPUTS OPTIMIZE SUSTAINABILITY AND PERFORMANCE KAT E N I S H I M U RA

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OVID-19’s impact on the footwear sector has been widespread and multifaceted, impacting both supply chains and consumer appetites.

The pandemic pushed the pause button on commerce in early March, and as unsure shoppers tightened their purse strings, brands were left with more concerns about recouping sales than forward-looking sustainability strategies.

Component manufacturers, the unsung heroes of the sector, had long marched to the drumbeat of environmentally-friendly innovation. Consumers were catching on, too, and voting with their wallets for brands that incorporate natural, bio-based or circular solutions into their designs.

But as economic anxieties solidified this spring, some experts now worry brands have taken their eyes off the ball when it comes to addressing impact.

28 / FOOTWEAR 2020

THE PRICE OF SUSTAINABILITY “Pre-COVID, it seemed like there was rising interest in sustainability,” said Michael Sadowski, a Nike veteran and contributor to environmental consultancies like SustainAbility and the World Resources Institute. “But my hypothesis is that many brands are managing their day to day business right now, like dealing with supplier relationships.”

There are plenty of fires to put out across the value chain, Sadowski said, including managing outstanding payments to manufacturers, retaining staff, and generally keeping the lights on. “I happen to know dozens of people who have been laid off from sustainability teams—it’s about what’s business-critical right now,” he said.

When it comes to new products with

the potential to disrupt, he added, “I would think that people are having second thoughts about integrating anything outside of the status quo at the moment.”

The cost of fossil fuels has also plummeted, with oil at about $40 a barrel for the first time in years. The temptation for brands to double down on building components—like midsole foams—from polymer-based EVAs or polyurethanes, is almost too great to resist. “All of those things come from oil and gas, and with the price of oil so low, it makes sustainable materials a bit of a challenge from a competitive point of view,” Sadowski said.

“Brands are furloughing staff and laying people off, so it’s hard to justify paying a premium for materials,” he added.

Companies that have already seen the imperative to act on climate issues will retain those values, Sadowski said, but the pandemic has forced them to reprioritize aspects of their businesses.

In the wake of the crisis, brands have also begun to examine the overall effectiveness of their supply chains, and the concepts of nearshoring and diversification have become attractive objectives for some.

“I think the industry has built up an efficient and dispersed value chain, where materials are flowing from country to country, and all of that works because wages are low and we’ve built the infrastructure to make that work,” Sadowski explained. “But we’ve seen with COVID that a disruption can severely throw a wrench into all of that.”

However, brands that chose to manufacture closer to home would not have to wait months for products to arrive by boat, or pay for expensive air-freighting across the globe. They’d also be able to pivot quickly on trends, and manage production on a more hands-on basis.

But manufacturing outside of Asia, where much of the world’s footwear is produced, would depend on a brand’s ability to source inputs locally. Textiles, foams, plastics, leathers and even metals go into the making of performance shoes, and many of those inputs are made in Asian markets. Athletic shoes can be made up of dozens of different components.

Manufacturing closer to home, or even in the U.S., is a tall order. “For cer29 / FOOTWEAR 2020

tain types of footwear, it could probably work,” Sadowski said, citing Rothy’s and Allbirds, whose shoes are comprised of just a handful of sustainable materials.

“If you’re making products that have relatively few components and they’re not as technically challenging to make, then perhaps that could be brought back to a domestic market.”

While 2020 has proven a challenging year for sustainable innovation, Sadowski noted new releases and partnerships with the potential to make at least a small splash.

In May, athletic stalwart Adidas announced a working partnership with Allbirds to create a performance shoe with the lowest carbon emissions on the market. And before the pandemic took hold, Nike launched its Space Hippie sneaker line, made from upcycled post-production scraps, recycled PET, and textile waste.

INSOLES Sustainable insole maker Ortholite is also continuing to innovate on its products through upcycling, along with employing new natural materials, Dan Legor, the brand’s global director of marketing, told Sourcing Journal.

More than two decades ago, Ortholite began by using recycled tire rubber as the basis for its insoles. Now, Legor said, the company has graduated to using its own factory scraps, like rubber flashing, as well as developing foams with all-natural castor oil.

The new retail landscape, Legor admitted, has proven challenging for component manufacturers to navigate. “Everything has slowed down,” he said. Trade shows have been canceled or replaced with virtual versions, and it’s making the process of connecting and collaborating with brand partners cumbersome.

“Although everyone’s been affected, we’re recognizing that it’s a moment in time and we have to adjust,” Legor said.

“I think brands are looking for what’s coming from us, because the innovation will be the piece that continues to stimulate the consumer interest and elevate the product.”

In the face of 2020’s setbacks, Ortholite is still planning to launch a revolutionary new insole product sometime this year. A fully-compostable, bio-based polymer foam is in development, though a release date hasn’t been set. The foam is made from natural oils, not petroleum, and is made to disintegrate under proper landfill conditions.

The time frame for the product’s debut “will depend on how it’s received from the brands, and how it fits into their development cycles,” Legor said.

While most brands have already put the finishing touches on products for fall 2020 and spring 2021, the following season may prove an optimal time to integrate new sustainable inputs—and invest in innovation.

When it comes to Ortholite’s overseas operations, the company has opted to continue with its current partners in China, Vietnam and Indonesia. Last year, the brand began working with a factory in Spain in the interest of diversifying and serving brands in close-by markets.

“We’re looking at our global footprint as a supplier, and understanding that we have to serve different markets differently,” Legor said.

The company is also keeping a watchful eye on India and Brazil, which are emerging as prominent players. “We’re always monitoring how things are moving, and thinking about shifting to have that alignment with the brands and where their products are actually being made and finished,” he said.

OUTSOLES Heritage outsole manufacturer Vibram is “constantly looking for ways of creating better technologies, compounds and processes” even during a pandemic, Fabrizio Gamberini, the company’s president and global chief brand officer said.

“What we do at Vibram is driven by our consumers’ needs and industry opportunities,” he added. According to Gamberini, the market is ripe for new solutions.

The company is continuing to iterate on its highly successful Eco Step sole, released in 1994, which is made from at

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least 30 percent post-production recycled waste, he said. In 2020, the brand will debut Vibram Noil, a new rubber compound made from more than 90 percent petroleum-free ingredients. The soles will be dyed with totally natural pigments, made by drying plants or extracting color from them, he said.

Calling it “the perfect sustainability product,” Gamberini said Vibram Noil will be used to create outsoles for light excursions like hiking and urban exploring.

The company’s soles are built to last, he added, explaining that Vibram’s philosophy has always been that “durability is sustainability.”

While Gamberini said the product’s release will happen in 2020, he admitted that the business was negatively impacted

by COVID-19 throughout the spring. Vibram’s China factories closed for weeks, while Italian operations ceased for more than a month. But U.S. manufacturing never paused, he said. The situation has led to some resulting delays, he added, which have impacted product testing.

That could ultimately slow their release.

The rise of the pandemic was the cherry on top of two years of tariff woes.

As a result, Vibram has made significant moves to diversify manufacturing by moving into Vietnam and Thailand.

“We do not plan to move out of China considering that Vietnam still needs to develop technical skills and they are at capacity with production,” he said. “The majority of our customers moved back to China in the last few months too,” he said.

Still, the company is making strides in establishing a truly global presence. “We have developed some third-party partners across Western Europe and Eastern Europe,” Gamberini said. And in the U.S., the company’s six-year relationship with Glacial Lakes Rubber and Plastics, a South Dakota-based manufacturer, is still going strong.

Despite facing a slew of hardships, Gamberini said, “This journey has lead the industry on pathways to more sustainable performance with less impact on the environment.” Innovation, technology and performance will remain important to shoppers and brands as they navigate the path forward, he said.

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Footwear Manufacturing Needs an Eco-Makeover WILL IT HAPPEN? G L E N N TAY LO R

O

ne thing the world realized when the pandemic ground everything to a halt, is that the resources we’re using are largely out of balance with what we actually need. For footwear supply chains, which had to tighten their own belts because of the demand crunch, COVID-19 further highlighted the waste in the manufacturing process. And that waste isn’t only the physical kind—it’s also time wasted on putting out a product consumers won’t want, waste of materials in the sampling process, and even waste generated from traveling back and forth to meetings around the world when Zoom would suffice.

The new era is going to require to an even bigger infusion of technologies and resources to accurately predict demand and gather the necessary data to eliminate waste.

Volumental is one company aiming to

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tackle the task by taking the uncertainty out of the fit equation, which would reduce the waste of returns and excess inventory from unsold stock. Combining an existing database of 12 million anonymous foot scans together with purchase data, the 3D measurement platform allows retailers to share detailed fit information about each shoe style with their manufacturing partners.

“We help brands choose fit testers that have the right foot shape for a specific size,” said Ales Jurca, vice president of footwear research at Volumental. “The brands then collect feedback from the buyers to make sure that the shoe really fits as it should fit once it hits the market.”

Going forward, Jurca said, retailers are going to have to make a better effort to implement 3D foot scanning in stores if they want to have the most accurate data about their shoppers and to create better-fitting shoes.

Darren Glenister, CEO of Material Exchange, said more factories were moving to technologies like 3D design before the pandemic hit, giving them a slight advantage over companies that scrambled to embed the tech once employees were forced to work from home.

“That helped speed up the process of reiterating the product before they had to produce any samples, which meant the speed to producing the additional footwear is much quicker and of course the environmental impact is far less,” Glenister said. “Samples don’t need to be produced as often. We’ve seen that grow a lot and we see a lot of brands starting to move to those processes. They’re not all set up to do 3D design themselves so they’re working with factories to do that for them.”

Material Exchange is looking to further its mission to create transparency and sustainability across the supply chain by leveraging its platform to deliver instant digital material sample sharing, reducing the need for, and costs involved in sharing physical samples.

“You still need the materials for the digital product, and those materials need to be the materials that you will ultimately use to produce the product when it’s approved,” Glenister said. “You need to have the visibility with the brand so that they can make faster choices about the materials they want and actually see what materials the factories are suggesting. That’s not just in terms of design aesthetics, but it’s also in terms of sustainability impact levels.”

Another part of the sampling process that footwear brands and retailers have been forced to change is how they go about travel, which will cut down spending and time in the long run, according to Bruce Wright, sales manager of North America and material digitization at X-Rite, a manufacturer of color measurement and management tools.

“Why fly around the world to see pre-production samples—and this is when you could actually fly around the world—if the company can see the product accurately in a virtual situation?”

Wright said.

Supply chain execs would traditional-

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ly make two, three or even four trips to China per year to do things they’ve now found a way to do virtually or in their own North America design offices. Given the changes in direction to more digital sampling and increased e-commerce spending, Wright said X-Rite will continue to position itself as a company that seeks to measure and optimize, not just color, but overall product appearance.

As footwear brands try to recover and figure out a better way to mitigate waste, they may also consider a business model where excess inventory is practically impossible. Although made-to-order manufacturing requires a massive undertaking in spending and a major mindset shift, the pandemic may force retailers to switch to a “design, sell, make” philosophy instead of the “design, make, sell” mindset many currently operate under.

“If you can avoid the production of something that you don’t think is going to sell or you don’t know is going to sell, that’s a great savings,” Wright said. “That sort of feedback is happening in real time rather than months after the product is made. When some companies we spoke to started doing digital design reviews, they realized that a fairly decent portion of what they thought was going to sell really didn’t. The savings in time and in not wasting things was considerable.”

VIRTUAL SHOWROOMS With waste being a considerable concern, virtual prototyping may play a large role in the advancement of footwear manufacturing capabilities. Producing a slew of shoes ahead of time, for which demand is uncertain, is far riskier than designing the piece entirely within a 3D platform, testing demand, and then moving forward with both data and greater certainty.

Italy-based luxury footwear brand Sergio Rossi offers online customization for its “sr1” heels, sneakers and slippers, enabling shoppers to mock up shoes, choosing the material, color and length of the heel. But in the wake of the pandemic, the company now has an added goal to create virtual showrooms for products that haven’t even been manufactured yet

“With waste being a considerable concern, virtual prototyping may play a large role in the advancement of footwear manufacturing capabilities.”

DIGITAL TRADESHOWS Beyond the events occurring throughout the supply chain, the trade show dynamic has very much been altered, with manufacturers, retailers and tech providers alike now forced to convene at digital events, where the focus is more on the sharing of information between parties.

One show is looking to cater directly to brands that have less access to physical materials. The Digital Materials Show is an all-digital event taking the place of two physical Materials Show events, which consists of a month-long online showcase from July 15 to Aug. 15. While the Materials Show is traditionally powered by American Events, the trade show operator partnered with Material Exchange this year to get the digital event off the ground.

Powered by the Material Exchange Digital Library, the Material Exchange Showcase is designed to act as a “Virtual Exhibitor Booth” and enable material suppliers to present a digital version of their materials to brands. Brands are required to use a pin code from suppliers to access their vaults of proprietary materials.

“The Material Exchange Digital Library Platform helped our exhibitors understand that they can upload their materials to that platform and would make it a lot easier for us to link it to the digital show,” Hisham Muhareb, founder of American Events, told Sourcing Journal.

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WHILE TARIFFS AND A PANDEMIC LINGER, FOOTWEAR CAN STILL BE SUSTAINABLE 2020 has introduced a “roulette wheel” of major issues impacting footwear, according to Matt Priest, president and CEO of the Footwear Distributors and Retailers of America (FDRA). Priest shares how footwear buying trends have changed due to the pandemic, the recurring impacts of the U.S.-China trade war and tips for improving sustainability.

Sneakers have been king but are footwear buying trends changing since the pandemic?

During the height of the pandemic, we saw a pronounced plunge in online searches of footwear indicative of people staying home and less interest in sneakers, other than a bump from ESPN’s “The Last Dance” Michael Jordan docuseries. But by late May, searches for sneakers had rebounded impressively. I think that COVID will only expedite the casualization trend seen in recent years in the U.S. and more broadly across Western society. Couple that with an increase in running, walking and other outdoor activities and I think the future for sneakers, hiking boots and sandals is bright.

What impact are trade tensions between the U.S. and China continuing to have on the footwear industry?

We look for China to be made the arch-nemesis/scapegoat as the presidential election heats up and both sides try to show who is tougher on China. In turn, trade tensions with China are all but certain to linger and likely worsen as November nears. Even before the pandemic, U.S. footwear imports were sinking at a double-digit rate from 2019—especially from China—while duties per pair were up at a double-digit rate—especially from China. Add in recently plunging demand from the pandemic and you’ve got an unwelcome recipe for the footwwear industry headed into the second half of 2020.

Footwear has lagged behind apparel when it comes to sustainability. Where can the industry get some quick wins?

By nature, shoes aren’t less sustainable because they are more durable than clothing and are less likely to find their way into a landfill. But companies are doing better around incorporating new sustainable materials. In our minds, three easy sustainability wins for footwear include: Product: Digitizing product development, which reduces material waste and allows our companies to choose more sustainable materials.

Production: FDRA’s Shoe Waste Pilot Program is enabling collective action among brands that are working with factories to properly measure, organize, sort and sell waste. This allows the industry to incentivize the entire footwear supply chain to think more critically about reducing production waste.

Package: Optimized packaging allows our companies to reduce the use of packaging materials while also saving money on freight.

SPONSORED

in order to gauge audience reaction.

This could prove a significant upside for a company that has traditionally produced more than 1,000 shoes per day by hand, according to Riccardo Sciutto, group CEO of Sergio Rossi.

“There is no waste of leather, no waste of heel and no waste of energy,” Sciutto said during a panel at the PSFK Future of Retail 2020 event. “Our factory is already 100 percent green energy, so I love this point, but I can also save that energy and be a little bit more open with the customer and let them decide what they like before also producing.”

Adidas Taps Allbirds for Ambitious New Sustainability Goal KAT E N I S H I M U RA

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hen Allbirds said it would openly share its sustainability smarts with the footwear industry at large, it wasn’t messing around.

Global athletic apparel and footwear phenom Adidas has joined forces with the Silicon Valley upstart in an effort to create a performance shoe with the lowest carbon emissions on the market.

Adidas said the two brands will explore innovations that would impact the entire footwear supply chain—from manufacturing to transportation methods—in an effort to reduce their carbon footprint.

The newly revamped process will be analyzed using both brands’ life cycle assessment tools, “ensuring for double the accountability,” Adidas said.

Meanwhile, the collaborative shoe will be designed to meet Adidas’ rigorous performance standards, standing up to repeated impact and providing support through regular wear-and-tear.

In light of the rise of a global pandemic and the economic fallout that proceeded its spread, many brands have entered crisis mode. Focusing all of their attention on recouping losses has set back some sustainability commitments, even for those that had big goals in place for 2020.

“As we look ahead to what comes next, we have not lost sight of reimagining what’s possible for all of us, as we remain committed to tackling hard-hitting issues head-on–for all of our teammates and our planet,” Adidas said.

According to the German firm, the footwear industry emits 700 million metric tons of carbon dioxide each year, which adds up to 80,775,444 homes’ energy use for one year.

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A single running shoe made with synthetic materials has a carbon footprint of between 11.3-16.7 kilograms of carbon dioxide, the company said–and it would like to take that number down to zero.

Both brands have been lauded in recent years for their efforts to make over the footwear supply chain, mostly through the championing of innovative, earth-friendly materials.

Adidas’ Parley for the Oceans partnership began as a capsule collection in 2015, and the collaboration has since grown exponentially. The brand has sold more than one million pairs of shoes made from plastic waste retrieved from oceans

and waterways, and has committed to using only recycled plastics in all of its synthetic-based products by 2024.

“Our brands don’t want to just participate in the sustainability conversation, we want to continue being catalysts and creators of substantial improvement,” James Carnes, vice president of Adidas brand strategy, said in a statement. “The recent progress that our brands have made in the name of sustainable innovation has created the perfect momentum for this partnership to influence industry practices forever.”

Sustainable stalwart Allbirds was founded on the promise of cutting out the toxic components that make up the bulk of footwear products on the market.

From naturally regenerative wool to its renewable, sugarcane-based SweetFoam midsoles, the company has attempted to revamp virtually every ecologically-damaging substance used in the process of footwear production.

“There is an urgent need to reduce our global carbon number, and this mission is bigger than just Allbirds or Adidas,” said Allbirds co-CEO Tim Brown. “Whether we realize it or not this is a race that we are all running together as a planet and it is one that trumps the day-to-day competition of individual companies.”

Timberland Champions Regenerative Practices in Cattle Farming KAT E N I S H I M U RA

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uilding upon efforts to revolutionize leather production and protect the world’s ecology, heritage outdoor label Timberland is forging stronger ties with the world of regenerative agriculture.

The company famous for its durable leather boots recently launched a working relationship with Colorado’s The Savory Institute, a 501(c)(3) non-profit group facilitating the large-scale regeneration of the world’s grasslands.

Mimicking the natural movement of herd animals, regenerative grazing practices allow grass to rest and re-grow after being feasted upon by hungry heifers. That downtime makes for an overall healthier ecosystem, as grass acts as

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a magnet for CO2, Zachary Angelini, Timberland’s manager of environmental stewardship, told Sourcing Journal.

“Regenerative cattle ranching piqued our interest about four years ago when we learned of several scientific papers demonstrating how these practices could help to actually pull carbon out of the atmosphere—where we obviously don’t want it—and store it in the soil, where we do want it, because it increases fertility and the ability for soil to hold water,” he said.

The partnership with The Savory Institute augments the company’s established work championing the issue of regenerative farming.

Last fall, Timberland joined forces with Other Half Processing, which sourc-

es cattle hides from Thousand Hills Lifetime Grazed regenerative ranches. The Minnesota-based group partners with farmers, ranchers and tribes to source hides and quality cattle byproducts from animals that are more sustainably raised.

Through that pilot program, the brand sourced traceable hides that will be utilized in select footwear and accessory collections set to hit the U.S. market this fall.

Conventional approaches to cattle ranching have been identified as a major contributor to climate change, Angelini said, promoting soil degradation and losses in biodiversity. “Regenerative cattle systems not only contribute less to these major environmental problems, but can be used to actively reverse them,” he added, by building up the health of the soil and promoting above and below-ground biodiversity.

Timberland has been working to revamp problematic practices in leather tanning for more than a decade. The company co-founded the Leather Working Group in 2005, which audits and directs tanneries across the globe in the pursuit of more sustainable processes.

Now, Timberland is taking on a different part of the leather supply chain, focusing on the farms where cattle are raised. Since delving into the practice of regenerative farming, the brand has been working to integrate farms and ranches that advocate for the practice into its supply chain—and create a pathway for the rest of the industry to follow.

“Our aim is that through this network, we can partner with leading brands in both the food and apparel space,” Angelini said. There are opportunities to make use of “the wide variety of materials coming from regenerative farms,” he said, and through these collaborative efforts, groups across industries can “send signals through the marketplace” to increase the amount of land being used regeneratively.

In addition to meeting USDA standards, the farms in Timberland’s Regenerative Leather supply chain are

also certified and verified by third-party organizations, like the American Grassfed Association (AGA), and The Savory Institute’s Ecological Outcome Verification Program.

“The AGA ensures that the cattle are 100 percent grass fed, meaning never fed grain during their lives,” Angelini said.

The AGA guidelines also stipulate that cattle must reside on open grass pastures, and must never be given growth hormones or antibiotics.

The Savory Institute’s Ecological Outcome Verification program measures regenerative outcomes like soil health, carbon sequestration, soil water holding capacity, and biodiversity.

On the product side, Timberland is committed to growing its regenerative leather use year over year, with the aim of achieving widespread adoption across product lines, Angelini said.

The fall 2020 season will see the debut of a shoe made with leathers sourced from the Thousand Hills Cattle Company within its Earthkeepers Edition line.

Through the product line, Timberland pilots eco-innovations it hopes to eventually scale.

Timberland is also pursuing regenerative sourcing opportunities in Australia and Brazil, Angelini said.

Virtual Footwear Design Tech Firm to Launch Platform for New Digital-First Normal KAT E N I S H I M U RA

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s the fashion world moves toward a more technologically advanced future, innovations in digitization are helping designers eliminate unnecessary steps in the product development process.

Digital design and development solutions company 4D ShoeTech has developed an online collaborative workspace for designers, developers and other stakeholders, featuring next-generation technologies to streamline the process of creating a shoe, from conceptualization through execution.

4D ShoeTech’s platform enables designers to draft, prototype and showcase their work in incredibly photorealistic digital 3D, known throughout the industry as 4D. The technology eliminates the need for costly and wasteful physical samples at a time when speed to market is critical.

With 3D CAD modeling capabilities, designers have the tools to build shoes from the ground up, including virtual versions of heels, outsoles, bottoms, lasts and mold-making components. Once a designer has put the finishing touches on their creation, a 4D digital sample can be created and shared.

The platform integrates X-Rite Pantone TAC7 Technology, which allows for the precise, photorealistic capture of materials like fur, embroidery and textile textures, as well as embossed leather, metallics and other design details. Advanced computer vision and artificial intelligence enable tiling and exact pattern creation.

4D ShoeTech’s suite of tools also includes cost-saving 3D-printing capabili-

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ties, allowing designers to physically sam“4D technology eliminates ple prototype the need for costly and heels, outsoles, bottoms, comwasteful physical samples ponents, acat a time when speed to cessories and market is critical.” mold-making elements in rigid or flexible materials from their own offices.

When it comes to the digital samples the platform is built on, the prototypes are “neither flat nor static as a traditional .JPEG or .PNG image reads,” the company said in a statement. “The viewer can visually ‘feel’ the full texture of the product, as it has the ability to move or spin like in a motion capture or animation, making the appearance of the product incredibly lifelike.”

Using the new web-based platform, designers, manufacturers, sales reps and buyers can experiment with changes to shoe designs simply by dragging and dropping available swatches and color ways.

The platform’s developers described remote working as “the new norm in today’s climate.” As physical trade shows and expositions have been canceled, postponed or put on indefinite hiatus due to the COVID-19 crisis, virtual showrooms and events are increasingly becoming integral to wholesale channels.

“By applying 4D ShoeTech technology, a designer or sales rep will be able to easily create digital line sheets and online virtual sales showroom to exhibit their collections to global buyers with the click of a button,” the company noted.

What’s Happening to Footwear Quality With Inventory in a Holding Pattern?

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S A RA H J O N E S old is always a risk factor in footwear, but the pandemic is heightening the potential for the fungus to develop on finished

products.

The typical timeframe for product to travel from production to the consumer is being drawn out, as finished merchandise sits longer in factories, overseas distribution centers or domestic facilities. Meanwhile, major apparel groups, like Gap and PVH have said they are considering packing and holding unsold goods from the Spring and Fall 2020 season for next year.

This added time is not in footwear brands’ favor when it comes to quality control.

“The longer something sits around in adverse conditions, the more probability there is for mold to occur,” said Sal Cesario, global sales and marketing manager at Micro-Pak. “If you have the right conditions for mold, and then you throw in time, and more time, then the risk goes up dramatically.”

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Mold and mildew spores are often present in the air, but the main factor for whether mold becomes an issue on surfaces is climate. “Footwear made of natural materials like leather or cotton uppers can hold up to 8 to 18 percent of moisture by weight respectively,” said Pankaj Sarda, director of global softlines technical services at Intertek. “Moisture content of such high percentage, in humid and warm environments, provides suitable ambient condition for mold to grow and build up over a period of time.”

A mold-friendly atmosphere can be combatted through climate control within storage facilities or factories, and Sarda advises temperatures between 60 to 70 degrees Fahrenheit. Humidity levels should also be monitored regularly and kept below 50 percent.

Some factories that are now holding goods for longer may not have the same level of climate control as a stateside DC. Compounding the problem, a number of countries in Southeast Asia are experiencing a rainy season. “Depending on

the monsoon seasons, you can have anywhere from two to three months’ time where it’s just high heat and humidity and it rains every day, so product never has a chance to actually dry out,” said Randy Burk, executive vice president at Quality Corrections & Inspections.

Footwear companies often take preventative measures such as placing desiccants or anti-mold stickers into shoeboxes. “We believe the best way to prevent mold is to prevent it from the inside out,” Cesario said. Outside of the shoebox, other best practices include the use of desiccants in master cartons, shipping containers and warehouses to reduce moisture.

But these products become less effective over time. Desiccants have a set capacity, after which they will no longer absorb moisture. Meanwhile, solutions with active ingredients, such as Micro-Pak anti-mold stickers or PE sheets for polybags, have a shelf life. According to Cesario, the shelf life of active anti-mold solutions is “more than necessary for what a typical transportation cycle would be.” However, with long-term storage, companies have to be more diligent. Micro-Pak advises to change out its desiccants, stickers and PE sheets if goods are stored more than six months.

The company also suggests regular mold checks on merchandise every 30 days.

Along with keeping packaging solutions effective, it is important that product is handled and packed away properly.

“All it takes is a couple damaged boxes for the product to potentially lose its integrity,” said Jeff Leake, business development at Quality Corrections & Inspections.

QCI estimates that about 99 percent of imported products have no quality issues, but in footwear the import volumes are massive. According to the United States International Trade Commission, about 99 percent of the total 2.5 billion pairs of shoes sold in the nation in 2018 were imported.

Quality control plays a vital role in weeding out potential mold issues early. But COVID-19 travel restrictions have prevented some of these teams from

reaching overseas factories. QCI expects that even if firms have quality control in place overseas, the demand for additional inbound audits will increase to ensure that goods arrive as expected. Additionally, if companies are storing product longterm, a best practice would be conducting quality checks again before merchandise heads to retail.

If a product is found to have mold, QCI estimates that in upwards of 95 percent of cases it can be returned to “first quality” condition and saved from a landfill. For cases of mold or mildew, Quality Corrections & Inspections will clean, sanitize and repackage shoes. Shoes may also be treated with ozone and an antimicrobial to remove odors and prevent mold from returning.

Even before COVID-19, mold remediation accounted for at least 60 percent of all the footwear fixes the high-volume rework company handled. “Mold and mildew issues on product in general is an issue that everybody has from time to time, it’s just not widely talked about,” said Burk.

In the case of mold and mildew, it pays to take a proactive approach. QCI has seen brands without inbound AQLs discovering mold issues only once product had made it to retail, forcing them to send shoes back to DCs for remediation.

Additionally, if a minor case of mold turns up in a particular shoe style, some companies will send all of the shoes from that purchase order to have them cleaned and repackaged as a preventative measure.

The costs of not acting are high if a product gets into consumers’ hands. “In addition to recall costs, brands could also incur lawsuit settlement costs filed by affected individuals,” Sarda said.

Some of the repercussions, including brand and reputation damage, are harder to calculate but valuable to prevent.

“Taking precautions and doing things, protective measures, is a worthwhile investment,” said Cesario. “For very little cost, it’s definitely worth the peace of mind, and the benefit of eliminating those potentially costly outcomes that everyone wants to try to avoid.”

Footwear 2020 is a Sourcing Journal Media publication, which features a compendium of the most noteworthy stories published by the media company focused on the footwear manufacturing and innovation landscape, as well as original reporting on related topics exclusively for our partners.