Selling Shoes In Brazil

A recent BBC news report covers some riots over shoes in Spain:

Elche is the capital of Spain's footwear industry and has been hard hit by Asian competition.  Many Spanish manufacturers blame their current crisis on cheap Asian imports.  Several hundred people have taken to the streets for a second day in the Spanish town of Elche to protest against Chinese-owned shoe firms.  Some protesters held banners reading "Chinese out" - others smashed windows.  Last week, the protest took a more menacing turn when two Chinese-owned warehouses and a lorry belonging to a Chinese entrepreneur were set on fire.  The attacks caused damage estimated at hundreds of thousands of euros.  The protesters in Elche say the unfair competition is not just a matter of cut-price products. A significant proportion of Chinese-imported goods in Spain is untaxed and sold on black markets, making it impossible, they say, for legal businesses to compete.

This article is a hypothetical exercise about how a Chinese shoe exporter might break into the Brazilian market.  Most marketing projects will begin with an evaluation of the existing market.  Shoes are presumably a mature market since people have worn them since time memorial.  We will now refer to the 2004 TGI Brasil study.  This is a survey of 5,312  persons between the ages of 12 to 64 years old interviewed during the first half of 2004.  During this interview, 45% of the respondents said that they have purchased shoes in the past 12 months.

The market potential analysis will typically also look for some breakdown such as those shown in the chart below.  Obviously, women buy more shoes than men, and rich people buy more shoes than poor people.  The market analysis may also involve looking at pricing levels and fashion trends.

(souce: 2004 TGI Brasil)

So far so good.  But is this all?  So far, the prospective Chinese merchant knows that this is a mature market that operates within certain price levels for certain product lines.  Is it time to start shipping?

Ah, there is one key piece of information missing.  Shoes are not a one-size-fits-all product line.  They come in various sizes.  Most marketing studies do not ask for physical measurements from their respondents, but TGI Brasil is an exception in that the respondents are actually asked about their shoe sizes.  The frequency distribution of shoe sizes in Brazil is shown in the chart below.

(souce: 2004 TGI Brasil)

Ah, alas, this is still not good enough because the shoe market consists of two completely different markets: men's shoes and women's shoes, and men and women have very different shoe sizes.  The chart below shows the frequency distribution of shoe sizes by gender.

(souce: 2004 TGI Brasil)

This is a straightforward exercise to show that sometimes even the simplest thing not done can result in huge merchandise inventories not moving because of incorrect assumptions.

(posted by Roland Soong, 9/27/2004)

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