According to the latest statistics released by the American Apparel and Footwear Association (AAFA):
In 2020, the US apparel and footwear industry directly employed about 3 million Americans and employed another 2.3 million indirectly.
In 2020, on average, every man, woman, and child in the United States spent $1,067.93 to buy 51.8 pieces of clothes and 5.8 pairs of shoes.
In 2020, US apparel and footwear production accounted for 3.5 percent and 2.3 percent of the US market, respectively.
Due to COVID-19, in 2020, US imports of apparel and footwear sank 16.4 percent and 23.5 percent, respectively. However, imports still supplied 96.5 percent of apparel and 97.7 percent of footwear available in the US market.
In 2020, the average effective tariff rate hit records for both apparel and footwear, reaching 15.5 percent and 13.0 percent, respectively.
First, footwear sourcing is much less diversified than apparel. As manufacturing footwear both requires specialized machines and can be labor-intensive, over 80% of US footwear imports came from three countries only, namely China, Vietnam, and Indonesia. This sourcing pattern is very different from apparel products, for which US companies have far more choices. Other than the top three, US also imports some high-end footwear products from Italy.
Second, while China remains No.1, Vietnam has quickly become the second-largest footwear supplier for the US market. Vietnam’s market shares (by value) reached a new record high of 32.9% in the first six months of 2021, up from 20% in 2017. Especially since the US Section 301 action began to affect footwear imports from China, US retailers have increasingly moved sourcing orders from China to Vietnam to mitigate trade war’s negative impacts [Note: most footwear products are covered by Tranche 4A].
As of June 2021, top US retailers that carry footwear “Made in Vietnam” include Puma, Nike, UGG, Vans, and New Balance.
Third, US retailers source from Vietnam primarily for volume items targeting the mass market. Industry sources show that from Aug 2020 to Aug 2021, sneakers/trainer shoes “Made in Vietnam” on average were priced 30%+ cheaper than those “Made in China” in the US retail market.
Meanwhile, Vietnam still lags far behind China in terms of the variety of products it makes. For example, industry sources show that from Aug 2020 to Aug 2021, US retailers imported around 110K different types of footwear (at the SKU level) from China, but only 13K from Vietnam.
Overall, Vietnam’s COVID lockdown will primarily affect medium to lower-priced volume products carried by US footwear retailers. However, the lockdown’s impacts on retailers’ sourcing portfolio and product availability in the market could be modest. In other words, US consumers may still find many footwear products to choose from in the store but with a higher price tag.Notably, from June 2020 to July 2021, the US retail price for footwear went up by over 7.4% already.