Footwear Industry Analysis: Clarks Shoes' Path to Success Case Study

Footwear Industry Analysis: Clarks Shoes' Path to Success

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Introduction: Footwear Industry Analysis: Clarks Shoes' Path to Success

Companies must grasp the numerous internal, external and competitive factors that impact their decision-making process as the footwear business evolves. The following report examines three theoretical models relevant to footwear company decision-making: PESTLE, SWOT and Porter's Five Forces model. These frameworks would assist to gain a better grasp of the internal and external variables influencing the footwear industry, such as financial, economic and political circumstances, customer tastes and competitor efforts. The report critically assesses the effect of 3D printing, Augmented Reality and Artificial Intelligence on the future of the footwear business in addition to the frameworks. The evaluation would allow the report to provide realistic suggestions for future managers to capitalise on the chances and resolve industry challenges. The in-depth analysis and suggestions in the report will provide managers with the knowledge and insights they need to make educated decisions and remain ahead of the competition in the quickly changing footwear industry.

Task 1:

SWOT:

Strength	Weakness
? Strong brand reputation and heritage dating back to 1825 (Clarks.co.uk, 2023) ? Wide range of shoes for men, women and children ? Strong social media presence and global distribution network with over 1,000 stores (Clarksjobs.com, 2023). ? Using high-quality components and workmanship with an emphasis on comfort and durability ? A variety of product lines, including boots, sandals, formal shoes, casual shoes and athletic shoes	? High cost in comparison to rivals. ? Recent years have seen little development in products ? Reliance on conventional brick-and-mortar shops may be harmed by the rise of e-commerce ? Limited global reach in comparison to some rivals
Opportunity	Threat
? Growth into new areas, such as those in “Asia” and “South America” ? Increasing demand for sustainable and ethical products, which Clarks has started to address with the launch of the "Made to Last" collection (Clarks.com, 2023) ? Increasing desire for supportive shoes that are also comfortable, a key feature of Clarks footwear ? Introduction of cutting-edge technologies such as Augmented Reality and Artificial Intelligence, to improve the customer experience	? Increasing competition from established brands such as Nike, Adidas and Reebok, as well as new entrants in the market ? Consumer purchasing is affected by market volatility or economic downturns. ? Adjustments in fashion trends and consumer choices ? Uncertainties in politics and the economy, especially regarding trade tariffs and Brexit

Table 1: Internal Environment of Clarks shoes

Analysis:

Despite its high price point and lack of product innovation, “Clarks Shoes” has a solid brand image and distribution network overall. Opportunities for development include entering new markets and meeting the rising demand for “eco-friendly” and “comfortable footwear” (Gogoi, 2021). Threats to the brand's success include deteriorating economic and political conditions and rising competition.

PESTLE:

External factors	Description	Impact on the company
Political factors	? Certain countries have regulations that restrict foreign businesses from directly marketing to their customers. ? UK government instability, the “Russian-Ukrainian war” and inflation are external factors that could impact the footwear businesses.	The trade agreement between the “UK” and the “EU” covers trade and goods, services and intellectual property, as well as digital trade. Direct customer marketing for Clarks shoes may be difficult in nations with stringent laws. Instability in the “UK government” and the ongoing “Russian-Ukrainian conflict” may also have a negative effect on world economic circumstances, possibly resulting in a decline in consumer spending and the demand for footwear. The cost of raw materials, production and distribution for “Clarks shoes” could rise due to inflation, which would have an impact on their profit margins.
Economic factors	? Footwear expenditure by UK households totalled around “10.95 billion GBP” in the year 2021 (Statista.com, 2023). ? Footwear manufacturers experienced a peak in 2019, with an annual turnover of “731 million British pounds”, which declined significantly in 2020 to “536 million British pounds” (Statista.com, 2023) ? The UK's footwear sales volume experienced a “10.9% growth in 2021”, surpassing the previous year's figures (Statista.com, 2023).	The UK footwear industry has been experiencing significant changes in recent years. Despite the challenging year in 2020 due to the pandemic, there has been a rebound in sales volume in 2021, with a growth of “10.9%” (Statista.com, 2023). This positive trend is likely to have a direct impact on footwear manufacturers such as “Clarks Shoes”, who may experience an increase in demand for their products. With footwear expenditure by “UK” households amounting to “10.95 billion GBP”, there is considerable potential for “Clarks” to capitalise on this growth trend and boost their annual turnover, particularly given their strong reputation and brand recognition within the “UK footwear market”.
Social factors	? Consumers' purchasing choices may change as “sustainable and ethical production” methods become more widely known. ? The desire for footwear businesses may be impacted by changes in fashion trends and consumer preferences.	"Clarks shoes" may be affected by consumers' shifting purchasing choices as "sustainable and ethical production" methods gain more awareness. This could lead to a change in consumer preferences for shoes that are "eco-friendly and ethically made", which may prompt "Clarks" to adapt its production methods to meet this growing demand (Minh and Ngan, 2021). Additionally, changes in fashion trends may also influence "consumer preferences for footwear", which may impact "Clarks” sales and market share". In order to remain competitive in the market, "Clarks" may need to keep up with evolving consumer preferences and make strategic changes to its product offerings and production methods.
Technological factors	? "E-commerce and digital marketing" can provide new sales channels and opportunities for footwear companies to reach their customers. ? “Artificial Intelligence”, “Augmented reality” and “3d printing” are the new emerging technologies	In order to expand their customer base and access new sales channels, Clarks shoes can significantly benefit from embracing "e-commerce and digital marketing". The development of new technologies, such as "Artificial intelligence", "Augmented reality" and "3D printing", would allow "Clarks" to improve the client experience even more and increase sales.
Environmental factors	? The future promises a shift towards greater sustainability, with an increasing emphasis on the use of “eco-friendly materials” and circular services. ? “Environmental laws” may have an impact on a business's “production and supply network”.	The “manufacturing and supply chain” for “Clarks shoes” can anticipate significant changes as “environmental regulations” tighten up (Feizabadi and Alibakhshi, 2022). In order to stay competitive and relevant in the market, the business must adjust to the trend towards sustainability by utilising “eco-friendly materials and circular services”.
Legal factors	? Changes in “employment laws and regulations” can impact the footwear industry. ? The capacity of the business to protect its brand and designs may be impacted by “intellectual property laws”. ? UK factory Act was passed in the fiscal year of 1833 (Parliament.uk, 2023).	The “labour practises and expenses” of “Clarks shoes” may be impacted by changes in employment laws and regulations, which may have an effect on their competitiveness. The ability of “Clarks” to secure its brand and designs from infringement may be impacted by “intellectual property laws”, which could result in a loss of revenue and market share.

Table 2: External Environment of Clarks shoes

Analysis:

Political elements like unstable governments and international conflicts can have an influence on the global economic environment, which can then have an effect on consumer spending and the demand for footwear. Economic variables, such as changes in sales volume and expenditure by UK households, may have a direct effect on Clarks' annual turnover. The sales and market share of Clarks may also be impacted by social factors like shifts in customer preferences and fashion trends (Feizabadi and Alibakhshi, 2022). In order to stay competitive and relevant in the market, Clarks may need to modify its production processes in response to the creation of new technologies and environmental regulations. The competitiveness and revenue of Clarks may also be impacted by changes to employment and intellectual property regulations.

PORTER’S FIVE FORCES:

Forces	Description	Influence and future strategy
The threat of New Entrants	? The threat of new entrants to the shoe industry is relatively low, as the market is highly competitive and already dominated by established players. ? The industry's high capital investment requirements to create a manufacturing and distribution network function as a barrier to entry (Culot et al. 2020).	As the cost of opening an online shop has decreased due to the growth of e-commerce, it might encourage more new businesses to enter the shoe industry's online retail market. Clarks must put more effort into preserving and enhancing its brand recognition and consumer loyalty. (Moderate)
Bargaining Power of Suppliers	? Given the numerous large and diverse suppliers of raw materials like leather, rubber and synthetic fabrics, the bargaining strength of suppliers in the shoe business is moderate. ? Depending on worldwide supply and demand, the price of these materials can change, which may have an effect on shoe manufacturers' profitability.	As a result of its diverse supplier base and ability to swap suppliers when necessary, Clarks has less supplier power (Jin and Smith, 2021). In order to forge long-term alliances and guarantee the supply of premium materials, “Clarks” could also forge tighter ties with its suppliers. (Moderate)
Bargaining Power of Buyers	? Customers have a lot of options and are able to quickly switch between brands or retailers, giving them significant bargaining power in the shoe business (Polese et al. 2019). This is particularly true in the realm of Internet retail, where customers can quickly compare prices and reviews. ? Numerous consumers are price conscious and might select less expensive alternatives, which may have an impact on the profitability of shoemakers.	Customers have a broad range of options in the competitive shoe market. In order to set itself apart from rivals and keep customers, Clarks should keep putting quality and customer satisfaction as top priorities. (High)
The Threat of Substitutes	? Since customers have many choices for footwear, including sandals, boots, sneakers and slippers, there is a high risk of substitute goods or services entering the shoe market (Janson, Newman and Dhokia, 2022). ? As more people choose to wear sneakers or other athletic shoes as part of their everyday outfits, the distinction between shoes has also become hazier as athleisure wear has become more popular. ? In some circumstances, such as at the seashore or at home, customers may choose to go without shoes entirely.	Customers might switch to different shoe companies. Clarks should keep emphasising product innovation and developing distinctive designs that set its goods apart from those of rival companies. Clarks must also focus on providing a versatile shoe which can be worn everywhere, irrespective of the situation. (High)
Rivalry Among Existing Competitors	? Due to the large number of major players fighting for market share, there is intense competition in the shoe business. ? Smaller companies and retailers now have an easier time breaking into the market and competing with established players thanks to the growth of e-commerce. ? Another important element is price competition, as consumers frequently shop around for the best prices and may switch between brands based on price.	In order to remain competitive, Clarks must maintain an emphasis on comfort and quality while extending its product line and discovering new markets. They must also focus on the pricing department, as customers prefer affordable shoes. Clarks also need to improve upon the e-commerce sales for their products.(High)

Table 3: Competitive Environment of Clarks Shoes

Analysis:

Overall, the threat of new entrants is low due to the high capital investment required, but the growth of e-commerce may encourage more online retail businesses to enter the market. The bargaining power of suppliers is moderate, as there are numerous diverse suppliers, but changes in worldwide supply and demand can impact profitability. Customers have significant bargaining power due to the broad range of options available, particularly in the realm of Internet retail. There is a high risk of substitute goods or services and intense competition among existing competitors (Clark, Chapleo and Suomi, 2020). In order to remain competitive, Clarks must focus on preserving and enhancing its brand recognition, forging tighter ties with suppliers, maintaining an emphasis on comfort and quality, extending its product line, discovering new markets and improving e-commerce sales.

Task 2:

Discussion on emerging technologies promoting economic growth of the footwear company, Clarks Shoes

The footwear industry has been evolving with the implementation of new technologies. The integration of new technologies in footwear has impacted not only the new footwear companies' operations but also how consumers interact with the footwear. The impact of emerging technologies on the future of footwear companies has been significant and it is essential to evaluate these impacts to make the necessary recommendations for future managers (Kumar et al. 2022). There are several technologies like AI, 3D Printing, Augmented Reality or AR and Internet Of Things or IOT and many more that assist to provide potential opportunities for organisations such as Clark Shoes to enhance their managing skills and business operations in this competitive market.

3D printing is one illustration of an emerging technology that is important to footwear companies. This technology enables businesses to make customised shoes while increasing manufacturing productivity and lowering costs. Augmented reality, AR is another emerging technology that can be used to provide consumers with a virtual try-on experience, improving the customer purchasing experience (Jiang et al. 2021). Artificial intelligence or AI, is another new technology which can help businesses like Clark Shoes to anticipate consumer tastes andtrends, optimise output and provide personalised suggestions.

Wearables, smart textiles and sustainable materials are some of the other new technologies that are relevant to the footwear industry. Wearables can be embedded in shoes to provide statistics on users' physical exercise, health and wellness (Yoon, Lee and Shin, 2020). Smart textiles can be used to make shoes that adjust to various weather situations, while sustainable materials can help the footwear business lower its environmental effect.

The following are three particular emerging technologies that are pertinent to footwear companies:

Artificial Intelligence:

Artificial Intelligence is one of the emerging technologies that has significantly impacted the footwear industry. Ai-powered design tools have completely changed the way that footwear businesses create innovative and highly customised designs while also “simplifying the design process and lowering costs” (Agrawani, 2022). The footwear business can improve its design skills, accelerate the design process and launch new products more rapidly by utilising AI-powered design tools.

Recommendations:

“Clarks Shoes” can anticipate fashion trends and consumer tastes using AI algorithms and build designs appropriately. This can assist the business in staying ahead of the competitors, lowering the risk of overproduction and reducing wastage. Furthermore, AI-powered recommendation systems can assist consumers in finding the ideal set of shoes, increasing sales and customer happiness. As a result, future Clarks Shoes executives may want to consider investing in AI-powered tools for design, manufacturing and marketing. The company should also concentrate on providing a personalised experience for consumers through the use of AI-powered recommendation systems. “Clarks Shoes” may want to explore collaborating with tech firms that specialise in AI-powered design and recommendation systems (Soni et al. 2022). This can help to ensure that the business, Clark Shoes, is using cutting-edge technology and can profit from the knowledge of tech experts.

3D Printing:

The effect of 3D printing on the apparel industry is substantial. Companies can now produce customised shoes while increasing the speed and effectiveness of the production process and lowering costs. However, 3D printing technology adoption may necessitate a substantial expenditure in apparatus, software and personnel training (Bastawrous et al. 2022). 3D printing technology has the potential to improve the viability of footwear manufacturing. The technique allows for the manufacturing of shoes with fewer components, resulting in less trash and a lower ecological impact. Furthermore, because 3D printing allows businesses to rapidly prototype and create new designs, it can help Clark Shoes to react “fast to changes” in customer demands and fashion trends.

Recommendations:

Clarks Shoes can use 3D printing technology to make unique and customised patterns. The technology allows the company to increase the effectiveness of the production process and reduce costs by removing the need for physical prototypes. However, 3D printing technology adoption may necessitate a substantial expenditure in apparatus, software and personal training. Therefore, future managers of Clark Shoes could consider investing in 3D printing technology to produce unique designs and optimise the production process. The company should also concentrate on training their workers to use the technology effectively and to streamline the manufacturing process (Doolani et al. 2020). Furthermore, the business Clark Shoes can explore collaborations with 3D printing service providers to decrease upfront investment and risk.

Augmented Reality:

Augmented Reality also known as AR is one of the emerging technologies that overlays digital content on the real world, providing the viewer with an interactive and immersive experience. AR can have a major impact on both the consumer experience and production process in the footwear industry. Augmented Reality can improve the shopping experience for the consumer by enabling them to virtually try on shoes and see how they appear and fit before making a purchase. This can minimise returns while increasing consumer satisfaction. Furthermore, augmented reality can be used to provide other information about the shoes, such asmaterials, features and evaluations, allowing consumers to make more informed purchasing decisions (Gatter, Hüttl?Maack and Rauschnabel, 2022). AR can also be used to increase speed and accuracy in the manufacturing process. AR-poweredsmart glasses minimise the risk of errors in the manufacturing procedure and enhance the quality of the final product resulting in an increasing consumer affection rate for Clark Shoes (Del Carpio and Vera, 2021). AR can also be used in the planning process to makevirtual versions of shoes and visualise how they would look and feel before the manufacture of shoes.

Recommendations:

“Clarks Shoes” can profit from Augmented Reality, AR technology by integrating it into their shopping experience, using it for product demonstrations, leveraging it for marketing initiatives, training and development and collaborating with AR technology suppliers. Customers can have a virtual try-on experience by incorporating AR into the purchasing experience, enabling them to make more informed choices and boosting sales. Clarks Shoes can use augmented reality to showcase the features and advantages of their shoes in an engaging and dynamic manner. “Clarks Shoes” can also create memorable marketing initiatives by interacting with their brand in an entertaining and engaging manner, bringing their shoes to life in a virtual world (Hollensen, Kotler and Opresnik, 2022). The company can also use augmented for training and development, creating AR experiences that educate employees about the features and benefits of their shoes, how to correctly fit them and how to provide exceptional customer service. Finally, Clarks Shoes can collaborate with AR technology companies to create creative AR solutions that meet their particular requirements, allowing them to remain ahead of the competition and improve the customer experience.

Conclusion:

Finally, in today's quickly changing business environment, the footwear sector faces numerous challenges. In order to effectively manage these challenges, businesses must use various theoretical models to evaluate their internal and external surroundings and make strategic choices. PESTLE, SWOT and Porter's Five Forces are some of the most helpful models for footwear businesses. These models offer useful insights into a variety of industry-related variables, such as finance, personnel, economic and political conditions, customer tastes, rival efforts, material procurement and more. Furthermore, new technologies are changing the way footwear businesses function and managers must be conscious of these technologies in order to capitalise on opportunities and handle challenges.

Clarks Shoes is a well-known business in the footwear market and its recent success has been commendable. One can make a general conclusion about the company's success by analysing key performance factors such as finance, CSR, profits per share, ethics and culture. Clarks Shoes' income has steadily increased over the years in terms of money. Clarks experienced a significant setback in the fiscal year 2020/21, following a period of recovery in the previous year. The company's income in 2020/21 was 775 million British pounds, a decline from the previous year due to the COVID-19 pandemic (Statista.com, 2023). The company reported a substantial loss of over 180 million pounds, which was the largest loss recorded in its history (Statista.com, 2023). Clarks Shoes has also worked to better its financial sustainability by cutting expenses and restructuring operations.

Clarks Shoes has achieved considerable progress in terms of CSR in recent years. The business has set lofty goals for reducing its carbon impact and incorporating sustainable materials into its goods. Clarks Shoes has also adopted ethical labour practises throughout its supply chain and has been recognised for its efforts, including certification from the Good Business Charter. Earnings per share, EPS is a key financial statistic that gauges a company's revenue. The business has worked to increase profitability by cutting expenses and improving working effectiveness. Clarks Shoes' business culture emphasises ethics and the company has made steps to ensure that its operations reflect its values. The business has stringent labour standards and ethical procurement policies in place to ensure that its vendors satisfy its high ethical standards. Clarks Shoes has also developed a Code of Business Conduct and Ethics to assist its workers in making ethical decisions.

Another essential element of Clarks Shoes' performance is culture. In order to enhance its goods and client experience, the business has a strong culture of invention and has invested in new technologies such as 3D printing and virtual reality. Clarks Shoes also prioritises employee growth and involvement, providing training and development programmes and encouraging diversity and inclusion in the workplace.

Finally, Clarks Shoes has demonstrated strong financial development, a dedication to sustainability and ethical practices, high earnings per share and a positive company culture in recent years. Despite the challenges presented by the COVID-19 pandemic, the business has continued to engage in innovation and employee growth. In order to drive development and success in the footwear industry, future managers should concentrate on keeping financial stability, continuing to adopt sustainable and ethical practices and promoting positive company culture.

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