Footwear Industry Footwear Industry - empirica

Footwear
products, combining differentiation and low cost. This has been pioneered, for example,
in the EU funded project euroshoe 89 which, however, has not yet turned into actual
market applications.
Bargaining power of suppliers
Bargaining power of suppliers is low, as they are fragmented; supply exceeds demand
and can easily be substituted. In a situation like this, the incentive for footwear
manufacturers to improve e-business links with suppliers is not related to their bargaining
power. It is instead related to the aim of gaining efficiency and getting cost savings along
the value chain. This situation is also reflected by the survey data (Exhibit 3-23) which
indicate that both SCM and links with the ICT systems of suppliers are lower than on
average across all sectors studied this year by e-Business W@tch.
Bargaining power of customers
The bargaining power of customers in the footwear industry is high, as distribution is
relatively more concentrated than manufacturers; thus, distribution can switch their
suppliers with limited cost and market impact.
The e-business impact potential on customers’ negotiation power is also high: e-Business
offers the possibility of enhancing industry-trade relations through improved processes
such as customer service, logistics, stock replenishment, and order management.
Customers are increasingly expecting this service level (see Section 3.8.1 – drivers of e-
business).
Furthermore, collaboration and market integration between producers and distribution is a
trend that offers growth and differentiation. New collaborative models include the
implementation of solutions aimed at profiling customers’ interests, at collecting critical
information about the consumer’s buying process, and at keeping inventory levels
synchronised with the demand. The further development of e-business, and the
increasing integration along the footwear sector’s value chain, could create mutual
competitive advantages for manufacturers and retailers.
From the experiences of the case studies, however, it appears that the situation differs for
external and internal distribution networks. External distribution networks appear not to
exert their (potential) bargaining power in the field of e-business, i.e. create pressure on
manufacturers to implement the systems and solutions described above. While there are
successful examples of e-business integration with proprietary distribution networks (see
the case studies on Alpina and Moreschi in Section 4.2), there are few examples of such
integration with external distribution networks. This is also reflected by this year’s survey
results (see Exhibit 3-29) indicating that ICT links between the information systems of
suppliers and customers in this sector are still very limited.
89
http://euroshoe.itia.cnr.it (April 2006)
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