Kurt Salmon: 50 percent margins on luxury ladies' shoes

19 October 2012 Consultancy.uk

The luxury segments of shoes for women are booming worldwide. Because the footwear has become so lucrative, with the highest sales per square foot and profit margins in the market, global retailers are rapidly expanding and enhancing shoe departments.

To anticipate on this trend, the luxury retailer Macy’s announced it will soon open the world’s largest women’s shoe department in New York, selling approximately 300,000 pairs of shoes. This trend is also visible in the Netherlands, both Jimmy Choo and Shoebaloo recently opened a shoe store in the PC Hooftstraat in Amsterdam. Luxury shoes from top brands can range from €400 to €2,500 per pair.

The start of the trend

The trend was born in the late 1990s and early 2000s, when the serie "Sex and the City" made designers Louboutin, Manolo Blahnik and Jimmy Choo household names. Blahnik's open-toed Sedaraby d'Orsay pumps and the red soles on Louboutin's covered platform shoes became icons beyond the New York fashion world. "It became visually apparent from a long distance that someone was wearing Louboutin of Jimmy Choo" said Robert Burke, partner at a luxury-goods consulting firm in New York.

Woman shoe store

Gross margin of 50% percent

From a recent report by Kurt Salmon, a consulting firm specialized in retail, it can be concluded that luxury shoes have gross margins as wide as 50% at luxury department stores. In comparison, the next most profitable items are handbags and apparel, both with a maximum of 40% - 45%. Muriel Gonzalez, Executive Vice President at Macy's, acknowledges the finding: "There is no question that luxury shoes are the most productive in terms of sales per square foot".

Research also shows that they are becoming increasingly season less and ageless. And especially in the luxury segment, shoes are so prominent now that women increasingly are buying outfits to go with their shoes, rather than vice versa. As a result of these upcoming trends, customers are much more willing to pay a high premium on shoes. 

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