For Brazil, the worst of its recent recession appears to have blown over for now, and though its retail industry may still be reeling from the 40,000 or so apparel and footwear stores that shuttered in the last two years, and manufacturing is feeling the sting of rising raw material costs, sourcing is starting to see a silver lining.
Footwear brands and manufacturers exhibiting at Couromoda 2018 in São Paulo this week seemed to be in agreement that tough times have made for more resourcefulness in the sector—whether that means more innovation, new materials and processes, better supplier relationships, or in some cases, opting for more imports.
For women’s fashion footwear brand Vicenza, it’s been about investing in differentiation.
“We now see our clients are looking for design—not only the material—so we have a lot of materials today,” said Jean Coronetti, who does marketing for the company. “The leather in Brazil is a high price right now, so we have to be creative to change things.”
Part of keeping prices down in the facing of rising leather costs has been about incorporating alternative materials like neoprene and synthetics with new effects and treatments into the collection for Fall/Winter ’18. So trends like the sock boot and over-the-knee stretch boot have been fitting for the brand when it comes to cutting costs.
“These materials are getting better because the moment in fashion is asking for it,” Coronetti said. “And the suppliers are improving the materials, they are making leather, not just buying it in other countries and importing it. They are investing in making in Brazil.” For Vicenza, more options for domestic leather, has meant being able to work more closely with the factories, keeping an eye on the quality and co-developing to get the best material.
Beyond the back end, Brazilian footwear brands are starting to think more about the global market and producing with international buyers in mind.
“We are thinking bigger than before,” Coronetti said. In the past, Vicenza created different collections for different countries, but now the company is thinking on a global scale and creating collections with wider reach. They’re also quickening their time to market.
“It’s easier to see what’s happening out there now. It’s not what’s going to be happening six months from now, it’s real time and we are improving how to produce for real time,” Coronetti said. To do it, Vicenza buys a material, plans to use it for certain styles in a collection, and then only sells that style for a set, short period of time. This means no reordering a material and waiting for it to be produced and delivered. It’s onto the next collection. “The collections are shorter and we’re doing more collections in a season, so this makes it possible to work with certain material we have in stock and deliver in a short time.”
Production times in Brazilian factories average around 30 days from order to shipping, with delivery adding roughly another 30 days to the European and U.S. markets, factoring in transit and customs processing. Shipping within Brazil can range from two to 10 days. As the majority of the country’s footwear factories are in the South of Brazil, transit to the North takes the most time, and customs across the Brazilian states, where footwear duties can vary from one to the next, can also tie up delivery times.
At men’s footwear brand Ferracini, while the focus has been on producing shoes for the Brazilian market, the country’s economic crisis meant finding materials outside of it.
“The most important thing in Ferracini is the quality of the product, and of course this year was very, very difficult because all of the materials either increased the price or became poor quality,” said Valessa Lourenço, who works in the export/import department at Ferracini. “We saw a lot of factories start to make poor quality of your styles, your product, because they needed to reduce the prices.”
As such, Ferracini, which sells in boutiques in New Jersey, Boston and Miami, took to importing materials for its high-tech, comfort driven soles to inject in Brazil, and brought in leather, lining and textile inputs from places like Italy, Uruguay and Argentina.
“The cost of leather has increased a lot,” Lourenço said, “So we were looking at different suppliers [to keep costs down] and doing other things like changing the finish of the leather.”
Beyond thinking creatively about cutting costs for its all leather collections, Ferracini has invested in its line of Dry technology, which has a valve built into the sole to improve breathability and reduce perspiration, without allowing any water from rain to enter. With its Flow technology, Ferracini built a heel inside the shoe to minimize impact, and opted to skip the hard insole to make the shoe more comfortable and more flexible.
Technology has been key for kid’s brand Kidy, too.
“In Brazil, we’re in a moment where the economy still has some instability, and the markets are suffering,” Kidy product manager André Henz said. “So there are two ways—are we going to work to reduce the price and sell more, or make research and invest in technology to have a different product?”
Kidy chose the latter, and instead of solely competing for price, the company has turned to things like high-tech fiber optics woven into the fabric of a girl’s shoe, lighting it from within in colors that can be changed at a touch of a built-in button. They’ve also changed the concept of wearable technology for kids, with one boy’s shoe coming with a microchip in the tongue, from which a 3-D dragon emerges when the shoe is paired with a Kidy app. It becomes a game as the child can “fly” the dragon by moving the shoe around and looking at it through the app.
“We look for technology in general, but we need to understand the kids’ universe, their consumptions, games, preferences, what they like,” Henz said.
That’s the key reason research has been so big for Kidy, and the company’s next investigative mission will see it in France, Italy, England, Japan, South Korea and China. China, so far, has been where Kidy’s sourcing the more high-tech elements for its shoes, though the bulk of its inputs still come from Brazil.
“Brazil is a good country, really creative, and I believe that Brazil is looking for what’s modern,” Henz explained. “We need to improve the technology, like the electric technology, but we have other qualities in Brazil that these countries that have the technology don’t have.”
It’s a sentiment Schutz, among the biggest names in Brazil’s footwear sector, agrees with.
For Schutz, sourcing outside of Brazil isn’t a consideration, and partnership has been part of what keeps its factories delivering the quality that’s long been associated with Brazilian footwear.
“One thing that we pride ourselves on is being Brazilian made,” said Kevin Patera, director of wholesale for Schutz USA. “We sit in a very interesting price range. A lot of our competitors are about 30 percent cheaper than we are, and a lot of our competitors are about 35 to 40 percent more expensive than we are. So with that we get a lot of people from the lower end trading up because of the quality…and we also get some of the people from the more advanced contemporary market trading down towards us because they realize that the quality from the Brazilian leather factories is really superior to anything else that they’ve seen in the contemporary market.”
The 23-year-old brand started making inroads into the U.S. market five years ago and it’s outlined plans for greater growth in the country this year.
Schutz makes all of its shoes in Brazil from Brazilian materials, and the company owns 10 percent of its factories and outsources the other 90 percent, though its usually the largest supplier in those outsourced factories, which makes for a stronger relationship, according to Patera.
“Our relationships and our size as a company is something that really works to our benefit when it comes to costing and sourcing,” Patera said. “But I think that in general we have really strong relationships with our buyers and our retailers and we kind of understand that we have to hold hands together and work through some of the margin challenges that are going to face us in the next year or so.”
What Brazilian footwear needs next
It may take some time yet for U.S. and European buyers to turn back to Brazil as it emerges from crisis, but though U.S. footwear imports from Brazil slipped nearly 12 percent year over year to the end of October, the country is still the No. 10 supplier to the U.S. for footwear, according to data from the Office of Textiles and Apparel (OTEXA).
With quality down pat, greater innovation in technology will be what Brazil needs to further improve its appeal for footwear sourcing.
That’s what it will take for brands like Ferracini to look for more local raw materials.
“They need to bring us more development,” Ferracini’s Lourenço said. “Our DNA is different leathers, different colors, different technologies all the time. We used to have 35 new soles every year, so we develop so much. It’s in our DNA, we cannot stop it. If we need to look for new suppliers we will, because we need to keep this DNA.”
Coronetti from Vicenza agrees.
“I think with our design, our identity, the other countries can see something new, something different and I think the investment in the product can make things go better for Brazil,” he said. “It’s not like before with just copies. We have a lot of identity now.”