Shoe prices are going up. And they could get even higher as the holidays approach.
As overall consumer prices rose by 5.4% in September compared to a year ago, according to the Bureau of Labor Statistics’ monthly report, footwear also continued to show increases, a trend that has been building since July.
Shoe prices increased 6.5% in September, compared with the year-ago period, with the women’s category up 4.9%. Prices for kids shoes rose 11.9%, and men’s increased 5.5%.
Overall, footwear prices have steadily increased in the last two months, compared to 2020. Footwear prices rose 5.1 % in August and 4.6% in July compared to those months in 2020. In June, women’s prices surged 7% year over year, marking the sharpest price hike in nearly 32 years, according to the Footwear Distributors and Retailers of America (FDRA).
In light of the most recent data, the FDRA pointed out that U.S. consumers are currently seeing shoe prices increase at the fastest rate in over 20 years, with year to date footwear prices up 3.2%.
The organization’s monthly Shoe Price Report outlined a few key reason for the price surge, including higher wages for retail workers and higher import charges and duties.
A general labor shortage has prompted certain retailers to offer higher pay and benefits to attract and maintain talent, which has led to retailers raising prices to compensate for money spent on wages. In August, 721,000 workers quit retail jobs. Meanwhile, the Bureau of Labor Statistics reported that average hourly retail earnings rose in September to $22.27.
“Shoppers typically accustomed to modest inflation may be surprised this holiday season to find limited staff in stores to explain why prices are appreciably higher,” said FDRA chief economist Gary Raines.
The rise in footwear prices can also be attributed to a rise in footwear import charges, which rose to $146.3 million in August. This marked the seventh month of a year over year increase in a row. Duties also rose for the sixth straight month in a row in August to $320.6 million.
“Footwear shoppers are feeling the repercussions from both higher duties from China and surging demand that are pushing retail footwear prices dramatically higher,” said Raines. “We expect these gains to last well into next year.”
As the holidays near, rising costs are yet another concern for shoppers who hope to find shoes this season. A global shortage of rubber and plastic, which are essential in the production of sneakers, has made it difficult for factories to produce enough product to meet demand, a phenomenon exacerbated by labor shortages and factory shutdowns abroad in China, Malaysia, and Vietnam.
These shortages have driven up prices for certain raw materials. In some cases, companies are sitting on millions of dollars worth of inventory, because the don’t have access to certain materials to complete unit production. Container costs have also risen 500% since pre-pandemic levels, Cowen analysts said in a report. Overall, this translates to a smaller profit margin for retailers and a higher price point for consumers.