Microsoft Word - ROADMAP_Footwear_MEXICO final version November 30.doc

ENABLING DEVELOPING COUNTRIES TO SEIZE ECO-LABELOPPORTUNITIES PROJECTMARKET INFORMATION AND ECO-LABELLING ROADMAPPACKAGEFOOTWEAR PRODUCTS FROM MEXICODIRK SCHEERSUPPORTED BY DR. FRIEDER RUBIK AND DANIEL SPEDAFINAL VERSIONHEIDELBERG / GERMANY, NOVEMBER 30, 2008

Scheer (IW)Roadmap leather footwear

November 2008page 10 of 56

Contact

Institut fr kologische Wirtschaftsforschung (IW) gGmbHInstitute for Ecological Economy Research (IW) gGmbH

Dirk ScheerBergstr. 7, 69115 Heidelberg/Germany Tel.: ++49-(0)6221/649160Fax: ++49-(0)6221-27060Email: dirk.scheer@ioew.de

AcknowledgmentsThis paper was written by Mr. Dirk Scheer with contributions from Dr. Frieder Rubik and Daniel Speda of the Institute for Ecological Economy Research (Institut fr kologische Wirtschaftsforschung, IW) and Nydia Suppen from the Mexican Institute for Standardization and Certification.DisclaimerThis document is not for distribution and is not an official UNEP or EC document. It has been prepared as a background for discussion at the national Workshop on Eco-labelling held in Leon / Mexico on October 6-7, 2008, and for related follow-up capacity building and technical assistance activities in the framework of the Enabling developing Countries to seize eco-label opportunities project. Please do not quote any text from this paper.

Content

1 INTRODUCTION5

2 PART I: MARKET INFORMATION72.1 General European market data72.1.1 European footwear market and industry82.1.2 Footwear consumption in Europe102.1.3 European importing countries of Mexican footwear122.2 Suitable markets152.2.1 Identification of suitable markets152.2.2 Specific information on suitable markets162.2.3 Attitudes of consumers towards footwear202.2.4 The EU Eco-labelled footwear262.3 Promising subgroups322.4 Report of experiences - Sabatini Calzature33

3 PART II: PRACTICAL ROADMAP353.1 Eco-labelling your products tips on the EU-Flower application procedure363.1.1 The EU Eco-label application procedure363.1.2 The EU Eco-label criteria373.1.3 The EU-Eco-label Competent Bodies393.1.4 The EU Eco-label Assessment and verification requirements403.2 Customer policies successful placing of eco-labelled products on the European market413.3 Networking business relationships strategic alliances and co-operation473.3.1 Business organisations473.3.2 Fairs of suitable markets513.4 Marketing activities523.5 Final recommendations and strategic proposals54

4 REFERENCES56

List of TablesTab. 1: Divisions of footwear according to activity and material used5 Tab. 2: Description footwear segments with the corresponding PRODCOM and HS codes _ 6 Tab. 3: Population and GDP and new EU countries7 Tab. 4: EU production of footwear 2001 2005, million / millions of pairs8 Tab. 5: Global footwear consumption (2002 in million pairs)10 Tab. 6: EU consumption of footwear 2001 2005, million / millions of pairs11 Tab. 7: Understanding of the EU Eco-label in the suitable market countries25 Tab. 8: List of EU-Eco-label awarded footwear28Tab. 9: The EU Flower for leather footwear: selected assessment and verification requirements for selected criteria.40Tab. 10: European business clients of Mexican footwear exports47

List of Figures

Fig. 1: Footwear industry in Italy (Source: Junckert 2008: 2)9Fig. 2: Footwear industry in Spain (Source: Junckert 2008: 3)9 Fig. 3: Main destination countries of Mexican footwear exports (2006) (Comtrade)12 Fig. 4: EU import countries of Mexican footwear (HS 64 and HS 6403) (2006) (Comtrade) 13Fig. 5: Suitable markets: Mexican footwear exports to and footwear consumption in selected EU Member States15Fig. 6: Distribution structure17 Fig. 7: Footwear retail distribution in France, 2003 in % of value (CBI: 2004)18 Fig. 8: Footwear retail distribution in Germany, 2003 in % of value (CBI: 2004)18 Fig. 9: Footwear retail distribution in Italy, 2003 in % of value (CBI: 2004)19 Fig. 10: Footwear retail distribution in Spain, 2003 in % of value (CBI: 2004)19 Fig. 11: Footwear retail distribution in the UK, 2003 in % of value (CBI: 2004)20 Fig. 12: French footwear market segmentation by activity, 2003, % market share in pairs _ 21 Fig. 13: French footwear market segmentation by material, 2002, % market share in pairs 21 Fig. 14: German footwear market segmentation by activity, 2003, % market share in pairs 21 Fig. 15: German footwear market segmentation by material, 2002, % market share in pairs 21 Fig. 16: Italian footwear market segmentation by activity, 2003, % market share in pairs 22 Fig. 17: Italian footwear market segmentation by material, 2002, % market share in pairs _ 22 Fig. 18: Spanish footwear market segmentation by activity, 2003, % market share in pairs 23 Fig. 19: Spanish footwear market segmentation by material, 2002, % market share in pairs 23 Fig. 20: British footwear market segmentation by activity, 2003, % market share in pairs _ 23 Fig. 21: British footwear market segmentation by material, 2002, % market share in pairs_ 23 Fig. 22: Knowledge and recognition of the eco-label25 Fig. 23: Number of companies per product group (Sep. 2008)27 Fig. 24: Number of products awarded with the Flower by product group (Sep. 2008) 27 Fig. 25: Evolution of awarded footwear producers in Europe since 200428 Fig. 26: Overview on the application process (source: Eco-label Helpdesk 2008)36 Fig. 27: Footwear retailers /wholesalers in suitable market countries44

1 IntroductionThe Sustainable Consumption and Production Branch of the United Nations Environment Programmes Division of Technology, Industry and Economics together with InWEnt Capacity Building International and other partners has started a 4-year project co-funded by the European Commission and the German Federal Ministry for Economic Cooperation and Development aiming at promoting eco-labelling in emerging economies. The project involves several countries (Brazil, China, India, Kenya, Mexico and South Africa) that have selected different export product groups (textiles, footwear, appliances and paper) for which the project will help to seize eco-labelling opportunities.

The Start-Up Workshop held in Bonn December, 3-4 2007 showed that target country partners require more specific information on eco-labelling market opportunities and detailed eco-labelling procedures. Thus, the present document provides market information and suggestions on how to successfully place eco-labelled leather footwear on the European market. It focuses on footwear eco-labelled with the EU Eco-label. In any case, information on suitable markets, successful placing of the products, and marketing strategies are valid in general for good eco-labelling practices.

The Mexican partners from politics and business & industry decided for leather footwear as most promising product group for eco-labelling activities. In the literature (CBI 2004) product group definition is either according to activity or to material (see Tab. 1)

Tab. 1: Divisions of footwear according to activity and material used

Based on activityBased on material

Sports This footwear is generally used for sporting purposes. However, some of these types are also often used in day-to-day life. Examples of footwear which make up this segment are footwear used for running, walking, soccer, basketball, fitness, aerobics, etc.Rubber/Plastic This segment generally distinguishes the following footwear with rubber/plastic uppers: sport (ski boots), indoor (slippers) and outdoor footwear.

Leisure /Casual Footwear used for leisure purposes can be simi- lar in appearance to the footwear designed for sports purposes but intended for spare time lei- sure activities. However, due to the dressing down trend, this type of footwear is increasingly being worn in the office. Generally, more fashion- able footwear is also included in this segment.Leather This segment generally distinguishes the following footwear with leather uppers: sport, indoor and outdoor. The outdoor segment will be further divided in outdoor footwear with leather soles and outdoor footwear with other (non-leather) soles.

Classic/ Formal This segment includes the more traditional formal footwear, like high-heeled shoes for women.Formal styles in footwear change relatively little over the years. This segment is under increasing pressure from casual footwear.Textile This segment generally distinguishes the following footwear with textile uppers: sport, indoor and outdoor. The indoor footwear will be further divided into indoor with rubber/plastic soles and indoor with other soles. The outdoor footwear will be further divided in outdoor with rubber/plastic outer soles and outdoor with other outer soles.

Based on activityBased on material

Outdoor/Rugged A general term for this type of footwear is boot. A type of footwear with the opening above the ankle. This segment includes boots both utility (walking, climbing, etc.) as well as fashion boots. Examples of boots are: desert boots (or chukka boot or floats), side gore boots (or Chelsea boots), mukluk, etc.Others This segment includes footwear with other uppers, safety footwear, waterproof outdoor footwear and parts of footwear.

Source: CBI 2004: 9-10

When it comes to footwear data systematization worldwide, the classification system used is the Harmonised Commodity Description and Coding System (HS). Main emphasis is on gathering and exposing trade data and flows between countries. Relevant classification category is chapter 64 Footwear, leggings, similar articles and parts thereof of the HS code. In the European Union the so-called PRODCOM system is used to report annual production values. Both the HS and the PRODCOM system classify according to material used. Tab. 2 gives details on the relevant codes.

Tab. 2: Description footwear segments with the corresponding PRODCOM and HS codes

SegmentsProdcom codesHS codes

Rubber/plastic uppers 19.30.12, 19.30.21, 19.30.23 6402

Leather uppers 19.30.13, 19.30.21, 19.30.23 6403, 6405

Textile uppers 19.30.14, 19.30.22, 19.30.32 6404, 6405

Others 19.30.11, 19.30.31, 19.30.32 19.30.40 6401, 6402, 6403, 6405, 6406

Source: CBI 2004: 10

According to the EU Eco-label criteria the product group definition is broader. It is defined as All articles of clothing designed to protect or cover the foot, with a fixed outer sole which comes into contact with the ground. As one can see footwear for EU eco-labelling is not restricted to leather materials. However, criteria thresholds for durability differentiate footwear categories based on activities and individuals respectively (e.g. general sports, school footwear, casual, mens/womans town, fashions, infants, indoor).

In the following, chapter 2 will give detailed information on the European footwear industry and their corresponding markets, identify suitable markets for Mexican footwear imports, and report on firm-based experiences with the EU Flower. Chapter 3 provides a practical roadmap with tips on the application process, the successful placing of eco-labelling products on the European market, and hints on increasing the visibility of eco-labelling products and marketing strategies, while chapter 4 draws conclusions.

2 Part I: Market Information

2.1 General European market dataWe present data first for the whole European market and analyse the development of sales (i.e. consumption) figures and present statistical information on exports from Mexico to Europe and the different import countries. We conclude with some recommendations for the key national markets. Afterwards, we present some statistical information for the proposed markets. When it comes to statistical information, data on footwear consumption shows considerable incoherencies even within publications by the same agency (in particular within the very interesting studies done by the Dutch Centre for the promotion of imports from developing countries). Therefore, interpretation of data should be used for identifying general trends.

The European Union market

With almost 500 million citizens, the EU combined generates an estimated 30% share of the world's nominal gross domestic product (US$16.8 trillion in 2007). The EU has developed a single market through a standardised system of laws which apply in all member states, guaranteeing the freedom of movement of people, goods, services and capital. It maintains a common trade policy, agricultural and fisheries policies, and a regional development policy. Fifteen member states have adopted a common currency, the Euro. Tab. 3 shows key data of selected EU member states.

Tab. 3: Population and GDP and new EU countries

Source: CBI 2004: 11

2.1.1 European footwear market and industry

The European production of footwear shows a sharp trend of decline in recent years. Main reason is the strong Asian competition with China being currently the world number one footwear producer. For the time being, Europe is responsible for around 5% of world production. Other important producers are Latin America (6%), North America (5%) and areas such as Russia, Romania, Australia, Turkey or the Middle East. However, as has been mentioned China is by far the most important producer covering around 60% of world production. Asia as a whole including China contributes 75% of worldwide available shoes today.

Tab. 4: EU production of footwear 2001 2005, million / millions of pairs

Sources: CBI 2007: 13

The EU footwear sector consisted of ca. 11,000 producer companies employing ca. 250,000 people in 2005. Compared to data available two years earlier the figures had fallen and show trends of a lack of competitiveness on world scale. Total EU footwear production in 2005 valued ca. 15,583 million Euro. Due to the fact of new EU Members such as Romania and Bulgaria with relevant share of footwear production, in the EU today, there are approximately 18,000 producers employing over 350,000 people. This has increased due to the 100,000 people that work in the footwear industry in Romania and Bulgaria, whose production figures are now included in the EU.

A closer look on footwear production patterns by Member States (see Tab. 4) reveals that European footwear business is still a Mediterranean business: Italy and Spain cover around two third of EU production (see Junkert 2008).

Italy

Fig. 1: Footwear industry in Italy (Source: Junckert 2008: 2)

Italy still remains by far the largest and most significant footwear producer in Europe. On world scale Italy is the fifth largest footwear producer. Though production costs are a main competitive barrier, Italy succeeded coping with intense world-competition from low-cost countries due to the fact of outsourcingcost-extensive production stages (namely production of the uppers of shoes) to low labour cost countries mainlyin Eastern Europe (with Romania benefiting from it). However, starting from the millennium Italy has seen a steady decrease with an annual average change of -6.3% within the period 2001 until 2005. There is a high degree of territorial concentration among Italian footwear companies. They are mainly located in the following Regions: Marches, Tuscany, Venetia, Lombardy, Campania, Apulia and Emilia Romagna. Some Italian footwear producers are, among others: Filanto, Pol Scarpe (Geox), Basicnet, Rossi Moda, Tods and, in the sports footwear sector, Lotto and Diadore.

Spain

Fig. 2: Footwear industry in Spain (Source: Junckert 2008: 3)

Similarly, Spain, ranking second among EU-27 footwear production, experienced a sharp decrease from 1999 onwards. Between 1999 and 2005 production value in Spain decreased from 3,158 million Euro to 2,152 million Euro in 2005 which corresponds to an average annual percentage change of 8,7%. When it comes to volume pairs production the Spanish output reduced from 209 million

pairs to 127 million pairs in the reviewed period. Like in Italy main reason has been fierce low cost competition from Asian and Latin American countries. This led Spanish producers to change their business strategies away from the production of midrange quality products towards mid-high and top-end lines of superb quality with design components. Similar to Italian producers, the Spanish companies are in general small and medium sized companies. Due to their small-size, Spanish footwear producers are known to be very flexible when it comes to product development and production outputs. However, a barrier of this business model is a weakness to introduce and maintain strong brands. Spanish companies among others are Kelme, Coflusa SA (Camper), Ivan Shoes SL, Calzado Jos Vicente SL, Sendra Boots, Ras, Magrit, Pura Lopez and Jaime Mascaro.

2.1.2 Footwear consumption in Europe

The global footwear market

Global footwear consumption1 has been 12,469 million pairs of shoes in 2002 (see Tab. 5). The table reveals that major countries and/or regions such as China, Asia, Europe and North/Central America are in equal shares (around a fifth of total world consumption) responsible for footwear consumption. Thus, the EU is a major consumption market with a market size of around 20% of world footwear consumption.

Tab. 5: Global footwear consumption (2002 in million pairs)

Global Footwear Consumption (2002) (in million pairs)

Regionmillions of pairs% of total

China2,76822.2

Asia (excluding China)2,70621.7

Europe (all)2,54420.4

North & Central America2,38119.1

Middle East, Africa, Oceania1,1729.4

South America8987.2

Total12,469100

Source: Batelco Jordan (see: http://uploads.batelco.jo/jib/uploads/footwear.pdf)

The European footwear market

Taking a closer look at the European market, Tab. 6 shows the country based footwear consumption patterns according to value and volume for several years. The value of footwear consumed (ex-factory sales) summed up to ca. 48 billion Euro in 2005. Biggest markets are Germany, UK, France, Italy and Spain. These five countries cover more than 70% of the European footwear market. Not surprisingly most new Eastern European Member States (e.g. Bulgaria, Romania, and Estonia) show the biggest annual increase of footwear consumption due to the fact of improving living conditions and earnings.

1Desk research on footwear consumption data revealed on various occasions inconsistencies with the data available. Hence, data interpretation should be done with care, though the generic message of the data remains clear.

Tab. 6: EU consumption of footwear 2001 2005, million / millions of pairs

Source: CBI 2007: 5

When it comes to consumer expenditure, the picture is a little different due to differing consumption patterns in the countries related to average amount yearly spent in footwear and the number of pairs annually purchased.

The European Union market for footwear can be judged a mature and stable market. After the recession occurring in 2001 the market started to recover since 2005. Consumer expenditure on footwear in 2005 was estimated as stable at about 48.6 billion Euros (not including Luxembourg, Malta and Cyprus).

Germany and the UK are the biggest footwear market in the EU with a market share of 18% (Germany) and 16.7% (UK). Next ranges France (16%), Italy (11.8%) and Spain (8.5%). Altogether, these five countries cover more than two third of European footwear consumption. Average rate on individual footwear consumption is 102 Euros and 4.3 pairs of shoes a year (CBI 2008). Especially the North-Western countries have experienced low growth figures. Between 1999 and 2003, the German, French and Belgium footwear market only increased by 2.7, 4.1 and 1.1 percent. Moreover, some interesting footwear consumption data are available for the big 5 markets (see CBI 2008): Germany: the German consumption per capita is close to the EU average. In absolute figures, per capita consumption is 103 Euros and 3.9 pairs of shoes a year.

The United Kingdom: consumers in the UK are keen on buying footwear. Per capita consumption is 135 Euros and 5.6 pairs of shoes resp. annually which is considerably above EU average. Spain: per capita consumption among Spanish consumers is 96 Euros a year which is below the EU average. However, when it comes to volume pairs, the Spanish consumers buy 4.8 pairs a year. That indicates lower purchase prices mainly in the low and medium quality segment. Italy: Average consumption in Italy is 108 Euros a year or 4.3 pair of shoes each consumer. This is close to the EU average. France: France is amongst the main consumers of footwear in Europe. Per capita consumption of 133 Euros and six pairs is well above the EU average.

2.1.3 European importing countries of Mexican footwear

Footwear sector in Mexico

In Mexico, the leather and the footwear industries are strongly linked, since in average between 1994 and 2007 around 68% of the production of leather has been designated to the manufacturing of footwear (INEGI Instituto Nacional de Estadstica: 2007). These industrial sectors employ more than 114,000 workers which correspond to 0.66% of the total work force. It is estimated that these two industrial sectors represent 0.38% of the national GNP and 0.66% in relation to the manufacturing industry with high economic significance for some regions. There are more than 7,490 companies in the sector including tanneries, leather, footwear and other related products (INEGI, 2004); 65% correspond to the footwear industry. The leather and footwear industry is mainly composed of SMEs, 94.5% of the total of companies.

Fig. 3: Main destination countries of Mexican footwear exports (2006) (Comtrade)

350300250200150100500Million dollarsThe volume of footwear exports was around 300 million US$ in 2006 (INEGI, 2007). InMexico the footwear balance of trade has been negative since 2002 and it has not been able to recover, even if a number of strategies to promote the increase of footwear exports have been launched. Fig. 3 shows the main destination countries of Mexican leatherproducts. The table shows that the USA is by far the most relevant importer of Mexican shoes (with US$ 288 millions a share of about 90%).

A closer look on the European landscape of Mexican footwear imports is interesting (see Fig.

4). On one hand it reveals that main European importers are Italy (US$ 3.6 million), Germany (US$ 2.1 million), Spain (US$ 1.5 million) and France (US$ 1.1 million). Thus, main European footwear consumption markets are already in view of the Mexican exporters, even though exports show a moderate quantity compared to Mexican exports towards the US. However, another aspect is most interesting. In Fig. 4 we compared the Mexican exports towards Europe according to the generic HS Code on footwear and a more specific on, namely:

Fig. 4: EU import countries of Mexican footwear (HS 64 and HS 6403) (2006) (Comtrade) 40000003500000300000025000002000000150000010000005000000HS 64HS 6403HS Code 64: Footwear, gaiters and the like; parts of such articles. DollarHS Code 6403: Footwear with outer soles of rubber, plastics, leather or composition leather and uppers of leather.The graph shows that Mexican footwear exports to Europe is almost exclusively with uppers ofleather except for Italy. In the Italian case, leather footwear is about 63% of total footwear exports to Italy. The remaining of Mexican exports towards Italy is on parts of footwear (including uppers whether or not attached to soles other than outer soles); removable in- soles, heel cushions and similar articles; gaiters, leggings and similar articles, - the so-called HS 6406. The trade amount of Mexican parts of footwear has been 1,355,393 Dollar in 2006 (Comtrade). Thus, the Mexican footwear industry plays a crucial role as a supplier for the Italian footwear industry delivering parts of footwear.

The Mexican footwear industry remaining challenges

As reported by the Mexican project partners, the Mexico European Union Business Center, as part of the Ministry of Economy Integral Program to support small and medium size enterprises (PIAPYME) launched the program Technology for the design of footwear for exportation to European Union in 2003 and 2004. This program is coordinated by COFOCE, the Coordinator of Foreign Commerce of the State of Guanajuato, and involves workshops in 22 companies focused on the improvements of design.

The demand side analysis showed that in the footwear industry fashion and design are often related to innovation and technical development. It is difficult for most of the Mexican companies producing leather and footwear to be as innovative and encourage technical changes as companies in other leading footwear manufacturing countries. Furthermore, ecological standards and regulations hamper Mexican companies to adapt and adopt the new materials that are required to have less impact on the environment.

It is clear that even the leading footwear producers in the world, China and India will be exposed to stricter environmental purchase demand from the international market. In this regard a challenge to footwear manufacturers is imposed worldwide; technology and innovation play a major role in manufacturing greener leather and footwear. For instance, retailers are more and more interested in greening their image and proposing brand environmental standards to their suppliers. Eco-labels can than be a way of going even further, demonstrating and communicating to consumers, environmental excellence throughout the product value chain.

According to Leather International, 2007, the world production of footwear is around 20 thousand million pairs. China in 2006 produced 40% of leather and 70% of footwear worldwide. Even though brand name manufacturing will be a market asset, Chinese exports will be very vigorous challenging Mexican footwear industry (for instance by Chinese producers like Aokang). Against that background eco-labelling is a useful and innovative instrument to differentiate the product portfolio delivering products of environmental excellence and present the producing company as a leading frontrunner to competitors and private and commercial business partners.

Mexico has the clear need to increase competitiveness and look for higher levels of productivity; although the main export market is the US, the worlds biggest consumer of shoes, other markets should be of interest to the sector as well. The tanning industry will have to satisfy increasing requirements concerning its materials, such as biodegradability and recyclability; thus research and development play an important role in the future of this industry.

2.2 Suitable markets

2.2.1 Identification of suitable markets

Crosschecking the results from Mexican footwear towards the EU against European footwear consumption patterns reveals that Mexico exports already to the most important European footwear market, namely Italy. Moreover, business relation-ship including footwear exports already exist with Germany, Spain, France and the UK. Exports towards the Netherlands, Denmark and Sweden are, however, modest.

Based on these empirical evidences we recommend

To consolidate and complete business relationships with Italy, Germany and Spain, To prepare market access and further develop the French and British market.

The following Figure links Mexican most important footwear export to corresponding market sizes based on consumption.

Fig. 5: Suitable markets: Mexican footwear exports to and footwear consumption in selected EU Member States

+

DEFR

Footwear consumption (market size) in EU countries

UK

develop market

consolidate marketITES

Explanation: DE = GermanyUK = United Kingdom IT = ItalyFR = France ES = Spain_

+_Mexican footwear exports

Source: own elaboration

2.2.2 Specific information on suitable markets

In the following we will illustrate the main footwear trade channels in the European Union based on research done by CBI (see also Figure 6):

Intermediaries in the footwear sector

1. Importers/Wholesalers:As more and more footwear consumed in the EU is not produced within Europe anymore but in Asia, the importance of importers/wholesalers has been gaining in the recent past. Importers/wholesalers deliver to independent footwear retailers, mail-order companies and department stores and this however in smaller scale to footwear multiples. The development that these customers prefer to sell more and more from stock instead of reordering in bigger quantities is strengthening the importers/wholesalers position. The wholesalers buy their products from manufacturers around the world and hold their stock at their own risk. Mark-ups tend to be around 20-30% for them. On the other side, big retailing companies try often successfully to purchase abroad and to bypass importers/wholesalers. 2. Importing manufacturers:Manufacturing companies play an important role in the footwear distribution system. Many manufacturers sell their products to retailers but some even function as retailer themselves. Manufacturers with own outlet stores are for example C&J Clark Ltd. (UK), Groupe Eram (France) and Bata (Czech Republic). 3. Agents:Sales agents act as independent intermediary between the producer and retailer. They receive a commission from the producer, usually about 10-15% of the turnover. Nowadays many agents start to build up a stock on their own, which makes them practically act like a wholesaler themselves. Agents mainly operate in the middle/high quality and price segment. 4. Buying Groups:Buying groups are single dealers/retailers that form a group to act as one economic force when it comes to footwear procurement. The main reason why buying groups exist is to reduce costs by obtaining considerable discounts and saving money through shared logistics. Nevertheless, being a buying groups member can come with some restrictions to the single participant: in order to achieve such economies of scale as described before, one has to accept a limited range of products which can be ordered. One of the biggest groups worldwide is ANWR with about 2000 members (and about 4000 outlets) and a turnover of 2.4 billion Euros a year.Coming to the point of sale level towards consumers, the footwear retail sector is again highly fragmented. One can distinguish between footwear specialists and non-specialists. Specialists are exclusively footwear-sellers, for instance, independent footwear retailers, footwear multiples and chains of company-owned stores. On the contrary, non-specialists offer footwear as one product among others within their portfolio (e.g. supermarkets, mail order companies).

Fig. 6: Distribution structure

Source: CBI 2004: 50

European footwear retailers country patterns

The picture of footwear retailers in Europe is pretty complex both, when it comes to different strategies within a single national market and with regards to the targeted consumer groups. As the importance of the different retailers measured in % market-share differs considerably amongst European markets, the retailers will be discussed country-wise (see below).

Nevertheless, there are some divisions to classify the European retailing market into groups. For example one could divide into service and low-margin retailers. The first ones offer some extra value, especially when it comes to aspects of quality, service and choice. Low- margin retailers aim at consumers where the price is the only driving force at the decision making process. Another differentiation can be made between specialised and non- specialised retailers. The first ones amongst them for example independent retailers sell mainly footwear and maybe some related products like handbags and clothing. Non- specialised retailers - such as super- or hypermarkets or department stores generate a significant part of their turnover with products other than footwear.

France:

Fig. 7: Footwear retail distribution in France, 2003 in % of value (CBI: 2004)

As one can see in Fig. 7 the share of independent retailers is still at about 1/4 of turnover in footwear. The fierce price competition has and will lead, however, to a shift in market share towards footwear multiples. The biggest multiples in France are Groupe Vivarte and Groupe Eram. Groupe Vivarte operates under a great variety of brand names in the French market (for instance La Halle and Chaussland aux Besson). A bit more than half of the groups turnover is generated with footwear, the rest comes from clothing. Groupe Eram is both, the second biggest footwear retailer in France and a very bigproducer running hundreds of stores under different names. Since price aspects become more important to some consumers, hyper-& supermarkets have increased their share in the footwear market. Big players here are namely Carrefour, E.Leclerc and Auchan.

Germany:

Fig. 8: Footwear retail distribution in Germany, 2003 in % of value (CBI: 2004)

Independent retailers still have a high market share in Germany but the buying groups and multiples are gaining in importance. The major buying groups are the Garant Schuh & Mode AG and ANWR. Garant has some 5000 members (of which are about 2000 in Germany). The main German multiples are Deichmann (acting in 16 other countries apart from Germany) with more than 1000 outlets. Other important multiples are Grtz and Reno. Important department stores are Karstadt Quelle (now under the name/group Arcandor) and Kaufhof (as part of the Metro Group) with each more than 100 stores within Germany.

Italy:

Fig. 9: Footwear retail distribution in Italy, 2003 in % of value (CBI: 2004)

The Italian footwear market is still and so unlike most of the other European markets dominated by independent retailing stores (as one can see in Fig. 9). Even so, footwear multiples such as Bata (with some 250 stores under different names in Italy) and department store groups such as the Coin SpA Group and the La Groppo Rinascente have a noticeable market share. Another threat for Italian retailers are the factory outlet stores which are being built way closer to mayor cities than in most of the otherEuropean cities. In the sportswear sector Intersport plays an important role, having more than 300 outlets in the whole country.

Spain:

Fig. 10: Footwear retail distribution in Spain, 2003 in % of value (CBI: 2004)

The Spanish market structure is comparable to the Italian market as independent retailers dominate the footwear sector. This can amongst other things be explained with a close link between small scale footwear producers and comparable small shops. Anyhow, the market share of these independent retailers is decreasing to the advantage of footwear multiples, hypermarkets and department stores. The biggest footwear multiple in the Spanish market is the French Vivarte Group with about 150 stores. Another important multiple is Camper with its more than 50 outlets. The biggest department store player is the El Corte Ingles Group with more than 50 stores.

United Kingdom:

Fig. 11: Footwear retail distribution in the UK, 2003 in % of value (CBI: 2004)

As one can see, the UK market has one of the lowest market shares of independent retailers. Instead, footwear multiples, department stores and sports retailers dominate the market. The biggest player in the entire United Kingdom is clearly the footwear producer C & J Clarks Ltd. The company sells its shoes through its more than 550 outlets (running under different names). Another retailing producer is Stylo Plc. with more than 280 outlets in the UK. The second largest footwear retailer is the department store company Marks & Spencers, selling footwear in its more than 300 outlets. The leading sportswear retailers are JJB Sports, JD Sports and the Black Leisure group with several hundred outlets each.

2.2.3 Attitudes of consumers towards footwear

In general there is very limited information available on (end-) consumer behaviour and the consumption of eco-labelled footwear. However, there is knowledge and data available on European footwear consumption on Member State level.

European footwear consumption country patterns

In the following, we will present some specific information on consumption country patterns in Italy, Germany and France. The information has been gathered and analysed by the several CBI studies, for instance CBI 2004.

France

In 2003, the French consumer spent individually ca. 130 Euro on footwear. The segmentation among gender is comparable to the German market with ca. 51% market share for women, 32% for men and the remaining 17% for children footwear. French consumers especially the young - have become more interested in fashion than it has been in the past. However, even if there is a clear trend towards more informal leisure outfit all over Europe, the French consumer can be considered slightly more traditional. Fig. 12 and Fig. 13 reveal the French segmentation by material and activity. Casual footwear is predominant in the French market with almost 60% followed by sport shoes. Leather uppers are the predominant materials with a market share of about 41%.

Fig. 12: French footwear market segmentation by activity, 2003, % market share in pairs

Fig. 13: French footwear market segmentation by material, 2002, % market share in pairs

Source: CBI 2004

Germany

The German footwear market is most relevant due to its large population (around 80 million). There is a clear gender issue among German footwear purchase. Women footwear purchase counts for about 49% market share, while the mens share is ca. 31%. Every fifth pair of shoes is sold for childrens use. Compared to Italy, purchase criteria are slightly different. Germans are less fashion and more price-conscious. Fitting, comfort and quality are the most important purchase criteria. Taking a look on segmentation by material and activity, the German market shows high relevance of casual and to a less degree sport shoes. The major role of quality is reflected in the overall predominant leather uppers which accounts for almost 70% of all footwear sold in Germany in 2002.

Fig. 14: German footwear market segmentation by activity, 2003, % market share in pairs

Fig. 15: German footwear market segmentation by material, 2002, % market share in pairs

Source: CBI 2004

Italy

In 2003, Italians spent on average ca. 108 Euro per capita on footwear. Decisive purchase criteria are style, fashion and quality. Thus, Italians set value on premium quality products. As one can see from Fig. 16, casual footwear (leisure) is the predominant type of shoes sold in Italy. However, even though classified as casual these shoes are more distinct and formal compared to, for instance, the average German casual footwear. Due to the fact of high significance of quality and fashion outfit in Italy, the market is more formal and stylish as compared to the other selected EU countries. Brand names play a crucial role in the Italian footwear market. When it comes to material segmentation, Fig. 17 reveals that textiles and leather material are predominant. Considering the material in value terms, leather even shows a bigger market share with ca. 49% (CBI 2004) an indicator that leather shoes are sold much more expensive than the others.

Fig. 16: Italian footwear market segmenta- tion by activity, 2003, % market share in pairs

Fig. 17: Italian footwear market segmenta- tion by material, 2002, % market share in pairs

Source: CBI 2004

Spain

The Spanish footwear market is very mature but fragmented. Footwear has become a valued accessory product especially among women. It is now an essential fashion influenced product. Most important purchase criteria are fashion, design and comfort. However, informality is gaining ground in the Spanish market. An example is the success of the Spanish brand Camper. The data below shows the predominance of casual footwear covering more than two third of the Spanish market. On the other hand, leather uppers are less significant in Spain as compared to the other selected EU countries.

Fig. 18: Spanish footwear market segmentation by activity, 2003, % market share in pairs

Fig. 19: Spanish footwear market segmentation by material, 2002, % market share in pairs

Source: CBI 2004

The United Kingdom

The British consumer is compared to continental trends more formal and stylish especially regarding work. However, even in the UK the casual footwear market is in the mean time the most important one. Price is a key purchase aspect for British consumers. The most important material is leather uppers with a market share of 60%, followed by textile covering ca. 30%.

Fig. 20: British footwear market segmentation by activity, 2003, % market share in pairs

Fig. 21: British footwear market segmentation by material, 2002, % market share in pairs

Source: CBI 2004

Green consumption in Europe and consumer behaviour aspects related to footwear

Several studies in recent years show a high level of environmental awareness in Germany. While it increased steadily during the 1980s, it is now stable at a high level. Between 70 and80 per cent of the population consider themselves environmentally aware (Kuckartz/Rheingans-Heintze 2006). Even if in a particular study other topics (e.g. unemployment, terrorism) exceed the environment in importance, all studies confirm that environmental issues are always among the three most important socio-political problems. According to experts, a decrease in environmental awareness can be considered unlikely. However, many research hinted to the fact to differentiate among consumer awareness and action. Environmental awareness is not automatically leading to green consumerism. One of the reasons could be the lack of proper consumer information enabling consumers to make purchasing choices based on environmental consideration. The role of eco-labels is therefore crucial in making the sustainable choice an easy choice.

Taking a look at European Union level, a Eurobarometer survey reveals that exactly three- quarters (25% totally agree and 50% tend to agree) say they would be willing to buy environmentally friendly products even if they were more expensive than normal products, while nearly a fifth is not willing to change consumer behaviour (Eurobarometer 2008: 27). However, when asked what Europeans had done in the past month for the environment including the item bought environmentally friendly products marked with an environmental label, the results are considerably lower. 17% of respondents reported that they had done this in the past month (Eurobarometer 2008: 27).

and the EU Eco-label on national level

In winter 2006, a survey has been carried out in EU-25 covering more than 24,000 European citizens interviewed fact-to-face on behalf of the Directorate-General Environment of the European Commission. The aim was to identify the Europeans awareness of the European eco-label that is what it stands for. The respondents were given eight pre-defined answer types in order to choose one corresponding best to their understanding of the label. The answer categories covered, for instance, ecological products and services label (the right one), green energy label, Bio-food label or safe product label.

Taking a closer look on the suitable markets identified above (see table 7), it reveals that only in Germany the right answer category scores first place with a moderate 11%. However, the understanding of the EU Eco-label as an ecological products and service label can be found among the first three places in all the countries analysed. But in general one has to state that the understanding of the EU Eco-label among European citizens is modest with an EU-25 average of 11%. On the other side, 48% of the interviewed answered that they do not know the label.

Tab. 7: Understanding of the EU Eco-label in the suitable market countries

Suitable market countryFirst placeSecond placeThird place

FranceGreen energy label (13%)Ecological products and services label (12%)Other (spontaneous) (11%)

GermanyEcological products and services label (11%)Bio-food label (10%)Green energy label (8%)

ItalyBio-food label (12%)Ecological products and services label (11%)Safe products label (9%)

SpainOther (spontaneous) (9%)Green energy label (8%)Ecological products and services label (7%)

UKGreen energy label (12%)Ecological products and services label (11%)Bio-food label & others (sponanous) (both 3%)

Source: EU Commission 2007

and the impact of the EU Eco-label marketing activities

The EU Commission regularly carries out marketing campaigns to raise the knowledge and the awareness of the EU Eco-label throughout Europe. The so-called Flower Week highlights the eco-label with country-tailored TV spots, events and marketing activities. Do these campaigns have an effect on the consumer?

Kvistgaard Consult (2005) examined the effects of the Flower week which took place in 2004 in several EU Member States, namely Austria, Belgium, Denmark, France, Italy, the Netherlands and Sweden. They carried out surveys among the targeted population in these countries and examined among other topics recognition and knowledge of the eco-label. Their results are presented in the following figure. One can see that recognition in Denmark where the Flower Week has been carried out in the corresponding period the effect is remarkable compared to the other countries.

705960Recognition50Knowledge3740302117162015106610543110ATBEDKFRCou ntriesITNLSEPercentageFig. 22: Knowledge and recognition of the eco-label

Source: Kvistgaard Consults (2005a: 35 and 37)

Towards green shoes beginning of a success story?

In many respects the discussion on leather and footwear is similar to the discussion on textiles and clothing, although there are fewer environmental labels in this product group. Like textiles, the consideration of environmental friendliness has not been a key issue among consumers in the past. However, there are several hints towards a changing trend among consumers when it comes to purchase textiles and shoes. While organic cotton products have been a niche market over years, just recently there is a boosting of organic cotton sales. According to a publication of Organic Exchange, a non-profit trade association, the global production of organic cotton increased by 53% from 2005/2006 to 2006/2007; global organic cotton sales are projected to increase from $583 million in 2005 to $2.6 billion by the end of 2008 (see: http://www.organicexchange.org/Documents/fiber_press.pdf).

The same trend may occur in the footwear sector. One example of a change of attitude among producers is the case of Timberland. Since the fall 2006 Timberland experiments with a label communicating the energy used in making the shoes, the portion that is renewable and factorys labor record (Cortese 2007). In spring 2007, Timberland introduced the so-called Green Index a measure of the environmental impact of the products. The goal is to provide consumers with information on the ecological footprint of the products. The company announced to expand the programme in 2008 to include a full range of outdoor footwear products (see: www.timberland.com/corp/index.jsp?page=csr_green_index).

2.2.4 The EU Eco-labelled footwear

The EU Eco-labelling Scheme (known as EU Flower; see: http://www.eco- label.com) established in 1992 is a voluntary environmental labelling scheme for consumer products. Criteria for a product group are developed considering the life cycle. Environmental criteria are being developed for a wide range of everyday products. The scheme does not cover food, drink or pharmaceuticals. Most important product categories are touristaccommodation services, textiles products, paints and varnishes, and cleaners. The majority of the applying companies come from Italy, France, and Denmark. Fig. 23 shows the number of companies with Eco-labels per product group. One can see that currently nine companies have licences for eco-labelling their footwear products.

Fig. 23: Number of companies per product group (Sep. 2008)

Companies with the Ecolabel - by Product group

2177674714541232214 14 1510 10 9954230000000250

200

150

100

50

0

Fig. 24: Number of products awarded with the Flower by product group (Sep. 2008)

Number of products awarded with the Flower - by Product Category

78871034231830425021712683796150 50 5424 31 3019 190000000900

800

700

600

500

400

300

200

100

0

Fig. 24 shows the number of products awarded with the Flower per product category. The differences among licences and number of products awarded are due to the fact that companies have a licensee to eco-label several products within their product range. All in all, the graph shows that currently more than 3,500 products and services bearing the EU Flower are on the European market.

The European eco-label for footwear has been awarded to currently nine footwear producing companies in Europe. Altogether, these nine producers have awarded 61 products so far. Within four years the number of awarded producers remained more or less stable varying form seven to eleven (see Fig. 25). The reduction from eleven to nine is due to a withdrawal of two companies who did not prolong their license.

Fig. 25: Evolution of awarded footwear producers in Europe since 2004

Evolution of awarded producers in Europe since 2004

111098712

10

8

6

4

2

0March 2004March 2005March 2006March 2007March 2008

Source: EU Helpdesk personal communication

Tab. 8 shows the currently EU-Flower awarded footwear products and their corresponding manufacturers. The table reveals that producers mainly from Italy traditional footwear producing country and Swedish and Spanish producers are eco-labelling their footwear products with the EU-Flower. Data on the market share and turnover of eco-labelled products within these countries are not available to the public.

Tab. 8: List of EU-Eco-label awarded footwear

Product / ServiceManufacturer/Service Provider/Retailer

Calzatura articolo ECO CE 01 S3

OVER TEAK s.r.l

Calzatura articolo ECO CE 03 S3

Calzatura articolo ECO CE 05 S1 p con fiori

Calzatura articolo ECO CE 28 S3

Calzatura articolo ECO CE 29 S3

Calzatura articolo ECO CE 391 S1 P

Calzatura articolo ECO CE 44 S3

Calzatura articolo ECO CE 53 S1 P

Product / ServiceManufacturer/Service Provider/Retailer

Eco - Jack (2 models)3A ANTONINI S.p.A.

Ecoalmar collectionINDUSTRIE CALZATURE S.R.L

LineaModali Ecoalamar

ECOGREENCALZAT. FRATELLI SOLDINI

Linee di modelli Ecogreen professionale

ECOSABATINICALZATURIFICIO RELAX S.N.C

Linea modelli Eco-Pollice (19 models)TACCONI S.P.A.

Aequa the Eco-Chic (16 models)GAZZONI ECOLOGIA S.R.L.

Collection AmazonasPIKOLINOS INTERCONTINENTAL SA

Boot model no 5458, size 25-33

SKOFABRIKEN KAVAT AB

Boot model no 5808, size 20-30

Boot model no 5818, size 20-30

Boot with wool lining model no 5938, size 19-26

Childs shoe, model no 5268, size 20-30

Sandal, models no 5228 and 5218, size 20-30

Shoe for small child, model no 5108, size 18-24

Source: EU Helpdesk personal communication

A closer look on the sub-product groups currently eco-labelled with the EU-Flower reveals that safety shoes, town footwear, indoor footwear such as slippers and sandals as well as child shoes are dominant. We can conclude that specialisation on several sub-product footwear is promising to succeed with the EU-Flower.

Tab. 9 Eco-labelled footwear sub-products

CompanyCountrySub-Products

OVER TEAKItalySafety shoes

GAZZONI ECOLOGIAItalyTown footwear

3A AntoniniItalyTown footwear

INDUSTRIE CALZATUREItalySafety shoes

TACCONIItalySafety shoes

CALZAT. FRATELLI SOLDINIItalyTown and safety footwear

CompanyCountrySub-Products

CALZATURIFICIO RELAXItalyIndoor footwear, slippers and sandal

SKOFABRIKEN KAVAT ABSwedenChilds shoes

PIKOLINOS INTERCONTINENTAL SASpainTown footwear

Current developments the SCP action plan and the revision of the EU Eco-label

Product-related environmental policy has been discussed among EU policy makers under the headline of Integrated Product Policy (IPP) and nowadays under the topic Sustainable Consumption and Production (SCP). The main objective is to link several policy measures in order to integrate sustainability into the economy. The European Commission elaborated a strategy to support an integrated approach to further sustainable consumption and production and promote its sustainable industrial policy. This effort culminated in publishing the so-called Action Plan on the Sustainable Consumption and Production and Sustainable Industrial Policy on July 16, 2008 alongside with several other proposals on sustainable consumption and production that will contribute to improving the environmental performance of products and increase the demand for more sustainable goods and production technologies.

According to the EU Commission the core of the Action Plan is a dynamic framework to improve the energy and environmental performance of products and foster their uptake by consumers. This includes setting ambitious standards throughout the Internal Market, ensuring that products are improved using a systematic approach to incentives and procurement, and reinforcing information to consumers through a more coherent and simplified labelling framework, so that demand can underpin this policy (EU 2008: 2-3). The Action Plan consists of three parts: stimulating smarter consumption and environmentally better products, leaning production, and global market activities for sustainable products.

To support smarter consumption the following activities are intended:

Extension of EuP-Directive: The EuP Directive (COM (2005)32 EC), that establishes a framework for setting eco-design requirements for all energy using products (e.g. computers, televisions, water heaters) should be extended to cover all energy-related products except for transportation. As energy-related products, the Action Plan considers () those products that have an impact on energy consumption during use (EU 2008: 4). Two complementary measures are announced, namely obligatory minimum requirements and voluntary advanced benchmarks. Labelling of products: The different labelling approaches of the Commission should be strengthened by extension of the mandatory energy label to cover a wider range of products, including the ones belonging to an updated EuP-Directive, and by improving the performance of the voluntary European eco-label by further developing it as a label of excellence.

Incentives: The Commission intends to establish a more harmonised basis of incentives, but restricts this approach to green public procurement (GPP) and state aid. For GPP, a linkage to the energy labelling is envisaged by identifying a labelling class as a reference level below which public authorities are not allowed to procure products. The same level should be used for state aid of Members States below which incentives are not allowed to be set. In addition, it is announced that the Commission will examine options for revising the European energy taxation frame and other European fiscal incentives. Other measures: As a supplement to the measures described above, a consistent data base and reliable methods should be prepared to assess the environmental features of products, their market dissemination and to monitor the temporal development. GPP should be supported by additional voluntary measures, namely guidelines, indicative targets and tender specifications for public procurers as well as voluntary common criteria for product categories not falling under the EuP Directive. Also a monitoring of GPP is foreseen. Work with retailers and consumers: The Commission intends to launch a retail forum to initiate a greening of retailers. Besides that, the Action Plan refers to the EU consumer policy strategy and its goal to empower consumers. Leaning production as second part is intended to extend, amplify and accelerate the part dealing with smarter consumption. As concrete actions boosting of resource efficiency, supporting eco-innovation and enhancing the environmental potentials of industry are intended. The Action Plan is not restricted to the single European market, but plans also to promote international trade in environmentally friendly products and services, to promote good practises internationally and to promote sectoral approaches.Against that background the EU Commission published a proposal for a revision of the Community Eco-label scheme. Among other the Commission proposed a new layout for the Eco-able as shown on the right. According to the Commission the following commitments will be foreseen for the revised EU Eco-label regulation (EU 2008a: 6-7): Better linkage of the EU eco-label with other sustainable production and consumption actions: that is to establish synergies between different product-related policy instruments in order to reduce the administrative burden on companies. Introduction of measures to encourage harmonisation with other eco-labelling schemes: For companies wishing to apply for more than one eco-label, harmonising measures can only reduce their administrative burden. Costs of tests could be reduced by 100% if one label is already held as no additional testing or verification would be required. More product groups: It is planned to double the number of eco-label requirements from

25 to 40-50 up to the year 2015. Simplification of criteria and quicker criteria development: It is intended to simplify the procedure for criteria development and to concentrate requirements on the most significant environmental impacts during the life cycle of the considered product group. Introduce a template for criteria documents to ensure they are more user-friendly: It is foreseen to standardize criteria documents and make them more user-friendly. Incorporate guidance for Green Public Purchasing into criteria development: Procurement officers will have easier access to EU-wide harmonised criteria and companies will have a level playing field if the same criteria are used across Europe in technical specifications for contracts. Abolition of annual fees: The Commission intends to abolish the annual fees based on turnover calculation of sold eco-labelled products. The registration fees should be limited up to not more than 200 Euro.These proposals have to be agreed among the Commission and the Member States which is foreseen for the next year 2009.

2.3 Promising subgroups

European demand side characteristics

Deciding for the type of shoes to be eco-labelled and successfully exported is a very critical decision and depends highly on the exporters enabling technologies, skills and existent product range. In general, it seems more promising to have something different and at short supply for the European market except following the same product line as other EU importers. The European consumption patterns in the identified suitable markets revealed a dominance of casual footwear in all five countries considered. Taking a look on segmentation by material, leather is the predominant material used among footwear sales in these countries (with the exemption of Italy). The market share of leather material in the suitable market countries ranges from 36.7% (Italy) to 69.5% in Germany.

Taking a look on current EU eco-labelled footwear products, the product range:

is exclusively on casual shoes with leather uppers, covers specific target groups, i.e. for children, includes the sub-groups indoor shoes, sandals, moccasin, slippers and outdoor hiking shoes.

and promising sub-products

Against that background we recommend as most promising casual footwear with leather uppers in a medium to high price segment. Taking the presentations and experiences of the Mexican target country workshop held in Len October 6-7, 2008 into account, it revealed that the Mexican footwear industry is strong in producing excellent quality products in particular in the classic and formal mens and womans footwear segment. These

products show high chances to succeed in the European market in the medium and high price segment due to its high quality standards sold at competitive price levels. Bringing in an added eco-labelling value seems even more promising. Moreover, summer season products, specific niche market shoes, and customer-related shoes are promising for the European market.

Specific types could be:

classic/formal mens and womans footwear in the medium to high price segment, summer season products (e.g. sandals, slippers, moccasin), specific niche markets such as safety shoes and/or health shoes, and customer-related products (child shoes, hiking footwear and boots).

2.4 Report of experiences - Sabatini CalzatureThe history of Sabatini Calzature goes back to 1896, when Luigi Sabatini decided to open up a small workshop for making shoes to measure. The focus was from the very beginning on high quality production from choosing and tanning the leather, creating the designs and hand stitching. The development of this specific sector, in which the Sabatini company has already achieved great success, is now being continued by Federico Sabatini. After receiving a university degree majoring in the shoemaking industry, Federico carried out considerable research on the physiology of the foot, in order to develop and introduce new, innovative, high-tech materials, combining them with the traditional Sabatini quality.

EU-Flower experiences of Sabatini Calzature

The company started experimenting with the EU-Flower six years ago. Currently, the company has two products bearing the EU-Flower. It is the product line named Ecosabatini with the corresponding model codes S57 and S62. When they started in the year 2002, eight products have been eco-labelled with five in the summer collection and three in the winter collection. The company stayed with the mentioned bestseller models. Currently the company offers around 250 different footwear products. According to personal communication with Federico Sabatini, all products would meet the EU-Eco-label requirements. For the winter 2009, Sabatini Calzature plans to apply for further eco-label certification for slippers and shoes.

The decision to apply for the EU-Ecolabel has been based on the following main motivations and characteristics: The companys main characteristic being a hand-made production which is able to respect the environment, the need to raise the knowledge and publicity of the brand-name, Sabatini Calzature would like to sell their products to consumers who are looking for comfort shoes and paying attention to the environment.The application process for getting the EU-Flower has been judged as a big effort by Sabatini Calzature. It has been a considerable workload to meet and testify the laws and

procedures. One of the most difficult efforts has been to meet the criteria focussing on suppliers. This is especially on the leather industry supplying the footwear-makers with semi- finished leather products. It has been difficult for the company to convince the leather and sole suppliers to inform on the environmental performance of their products in order to fulfil and testify the Eco-label criteria.

The market experiences of Sabatini Calzature show on one hand promising financial indicators. Being asked to quantify any change for financial indicators through the adoption of the Eco-label, the company reported the following data for its eco-labelled products: Sales in 2007 (pairs): 2% (4.000 pairs),Turnover 2007: 1,5% (100.000 euro), Investments 2007 (marketing area): 8.000 Eros.

The company uses the EU-Eco-label systematically for its marketing activities. The label stands for excellence and environmental premium products and is used widely in Sabatinis marketing efforts such as in catalogues, show cards and magazines and advertisements.

However, a critical issue of the EU Flower is still the lack of publicity within the shoe market. The flower is not very well known among footwear consumers. According to Sabatini calzature there is a strong need for marketing activities especially at the point-of-sale. Besides the lack of knowledge of the EU-Flower among footwear consumers, the production costs of eco-friendly footwear has been judged a crucial issue by Sabatini calzature. According to them producing eco-goods includes high costs which retailers and the final consumer is in general not willing to pay. Even in the high premium footwear segment, the price is still a crucial issue and the willingness to pay for environmentally benign products is modest.

The future and outlook: Based on the current experiences with the EU-Eco-label, the company is convinced that there is a need to expand the eco-label on its product portfolio. Sabatini calzature plans to introduce the eco-labelled products for the winter collection 2009 (winter slippers). Next steps for the company are to elaborate a new selling strategy to increase the eco-label brand visibility.

Being asked if footwear exporters from developing countries (for example Mexico and Kenya) would benefit from certifying their products with the EU-Flower, Sabatini calzature stated clearly: if the exporters operate in the medium to high price premium level, eco- labelling is a good opportunity to indicate a unique quality. If exporters focus on low quality mass products, eco-labelling brings no benefit.

3 Part II: Practical RoadmapThis second part, starting from practical aspects of the application procedures of the EU Eco- label, is meant to be a practical roadmap on how successfully place eco-labelled leather footwear on the (European) market, including promising marketing and visibility strategies. Even if the focus is meant to be footwear eco-labelled with the EU Eco-label, much of the text is valid for any Type-I eco-label.

The main suggested steps of this roadmap are the following:

Step 1: Eco-labelling your products applications and procedures (see 3.1) Decide on the benefit of the EU-Eco-label according i.e. to market perspectives, and suitability of criteria Go through the application procedure and get the label Step 2: Customer policies successful placing of eco-labelled products (see 3.2) Inform your business association and government responsible of your eco- labelling activities Look for private companies that can be your customers Step 3: Business networking - Strategic alliances and co-operation (see 3.3) Explore the European footwear retail landscape: networking with business associations and sector events (e.g. fairs) Develop partnerships with some reliable NGOs and consumer organisations to advertise eco-shoes Step 4: Marketing activities company & sector presentation and image (see 3.4) Promote eco-labelled footwear products as sustainable and responsible. Use open window of climate change (carbon footprint communication)

3.1 Eco-labelling your products tips on the EU-Flower application procedureThe following subchapters inform shortly on the application procedure, the criteria, Competent Bodies (CB) and test laboratories. First of all, however, a company must assess and decide on the benefits of the EU-Eco-label. Relevant aspects to be considered in the assessment are, for instance, the following: Conformity assessment, needed to understand how far a company is to comply with the EU eco-label criteria. Market responses, e.g. to get a green price premium, increase market shares, anticipate market behaviour changes, future standards. Company related drivers and barriers, e.g. - corporate image, company/branding strategies, set up of environmental expertise.

3.1.1 The EU Eco-label application procedure

The European eco-label has a clear application procedure, summarised in the figure below.

Fig. 26: Overview on the application process (source: Eco-label Helpdesk 2008)

The Spanish Technological Institute for Footwear and its Related Industries (INESCOP) has launched an interesting website on the EU-Flower for footwear (see: http://www.life- ecofoot.inescop.es/). They provide substantial and detailed information on all the information needed for carrying out the application process with a 5-step approach: STEP 1: Get in contact with a Competent Body in the country where the footwear is produced/imported: Here you get all the necessary information about the application process. STEP 2: Carrying out the tests and collecting the information: First, a test laboratory must be contacted to carry out test procedures. The Competent body will provide you with useful information. After having carried out the tests, the application form can be filled out and send to the Competent Body. STEP 3: Application Evaluation: The Competent Body will check the application form and the test results received. If the product is suitable, the Competent Body will inform the European Commission and the other State Members, so that, if they wish, they can present objections. STEP 4: The Eco-label award: In case no objection has been received the Competent Body will award the producer/importer with the eco-label. The eco-label is valid as long as the criteria are in force. STEP 5: Checking the fulfilment of the criteria: During the period of the certification, the Competent Body may carry out further inspections on the company and ask for new tests in order to guarantee continue fulfilment of the criteria.

3.1.2 The EU Eco-label criteria

The currently valid criteria for the EU- Flower are under review and will be updated.The ecologicalcriteria fortheproduct group footwear, as well as the related assessmentand verification requirements, shall be valid until March 31,2010.Thecheck-listbelow informsfora quick-time assessment only onthecurrently valid criteria.

The EU Commission has elaborated a users manual2 for the application process for eco- labelling footwear. The aim is to give guidance for companies that are interested for Flower. The application also describes the procedures for controlling continuous compliance with the criteria, once the eco-label has been granted.

2See: http://ec.europa.eu/environment/ecolabel/pdf/footwear/footwear_usermanual_2001.pdf

3.1.3 The EU-Eco-label Competent Bodies

Applicants are allowed to address their applications to every Competent Body in the countries involved, these are all 27 Member States of the European Union and in addition Iceland and Norway3. We recommend contacting one of the Competent Bodies (CB) in the different European countries suggested as most promising export market, their contact details are in the table below. In Spain, there are several Competent Bodies available covering different provinces. It could be very useful to enter in contact with the Italian competent body, which is in the process of leading the revision of the EU Eco-label criteria for footwear.

GermanySpainMadrid

Ms Da. Carmen Jimnez

Servicio de Promocion y Disciplina

Mr Christian LoeweCataluaAmbiental

Federal Environmental AgencyMr Salvador SamitierCalle Princesa 3,

Wrlitzer Platz 1; D-06844 DessauDirecci General de CalidadE-28008 Madrid

Postfach 1406AmbientalTel: +34 91 580 16 92 or

D-06813 DessauDepartamento de MedioTel: +34 91 420 67 00

tel: (+49) 340 2103 3025Ambiente y ViviendaFax: +34 91 580 54 18

fax: (+49) 340 2104 3025C/ Diagonal, 523-525carmen.jimenez.navarro@madrid.org

christian.loewe@uba.deE-08029 Barcelona

Mr Henning ScholtzRAL Deutsches Institut fur Gutesicherung und KennzeichnungTel: +34 93 444 51 08 orTel: +34 93 444 50 00Fax: +34 93 419 76 30wsamitier@gencat.netItalyMr SilvestriniComitato Ecolabel Ecoaudit

Siegburger Str. 39C/O APAT

D -53757 Sankt AugustinValenciaVia Vitaliano Brancati, 64

tel: (+49) 22 41 16 05 23Mr D. Joaquim NiclsI-00144 Roma

fax: (+49) 22 41 16 05 11Conselleria del Territorio y Viviendatel: (+39) 06 5007 2434

henning.scholtz@ral.deD.G. de Calidad Ambientalfax: (39) 06 5007 2439

Servicio de Control Integrado de laecocom@apat.it

United KingdomContaminacinParque Tecnolgico de PaternaMs Stefania Minestrini

The UK Ecolabelling CompetentCentro de Tecnologias LimpiasAPAT - Agenzia per la Protezione

BodyC/ Isaac Peral y Caballero, 5dell'Ambiente e per i Servizi Tecnici

Mr Charles Cox46980 Paterna (VALENCIA)Via Vitaliano Brancati, 48

Green Labelling UnitTel: +34 96 136 69 49 orI-00144 Roma

Defra (Department for Environment,Tel: +34 96 197 35 47tel: (+39-06) 5007 2231

Food and Rural Affairs)Fax: +34 96 131 84 95fax: (39-06) 5007 2078

Area 5D, Ergon HouseNiclos_joa@gva.es

c/o Nobel HouseCantabriaFrance

17 Smith Square, LONDONSW1P 3JRtel: + 44 (0)20 7238 4404charles.cox@defra.gsi.gov.ukSr. D. Miguel ngel Sastre Consejeria de Medio AmbienteD.G. de Medio Ambiente C/Lealtad, 2439002 SantanderTel: +34 94 220 23 30 orTel: +34 942 20 70 19Fax: +34 942 20 70 34Sastre_ma@gobcantabria.esMme Patricia Proia Association Franaise deNormalisation (AFNOR Certification) 11, avenue Francis de Pressens Saint-Denis La Plaine CedexF-93571 Paristel: (+33) 1 41 62 86 10fax: (+33) 1 49 17 90 37Patricia.proia@afaq.afnor.org

3 See the eco-label webpage for a complete overview: http://ec.europa.eu/environment/ecolabel/tools/competentbodies_en.htm.

3.1.4 The EU Eco-label Assessment and verification requirements

Applicants must show compliance with each of the criteria as laid down in the current valid criteria document 2002/231/EC. The specific assessment and verification requirements are indicated within each criterion within the document.

Where the applicant is required to provide declarations, documentation, analyses, test reports, or other evidence to show compliance with the criteria, it is understood that these may originate from the applicant and/or his supplier(s) and/or their supplier(s), etc., as appropriate. Where appropriate, test methods other than those indicated for each criterion may be used if their equivalence is accepted by the Competent Body assessing the application. Where possible, testing should be performed by appropriately accredited laboratories that meet the general requirements expressed in standard EN ISO 17025 (accreditation of test laboratories). Where appropriate, competent bodies may require supporting documentation and may carry out independent verifications. Tab. 9 gives an overview of selected assessment and verification requirements as an example for selected criteria.

Tab. 9: The EU Flower for leather footwear: selected assessment and verification requirements for selected criteria.

CriteriaAssessment and verification:

Residues in the final product(a) The average concentration of residues of Chromium (VI) in the final product shall not exceed 10 ppm and the residues of Arsenic, Cadmium and Lead shall not be detected in the final product (using the method specified below).(b) The amount of free and partially hydrolysable formaldehyde of the textile components of the footwear shall not exceed 75 ppm and of the leather components shall not exceed 150 ppm. Cr(VI): CEN TC 309 WI 065 4.2 or DS/EN 420 or DIN53314: 1996-04 (note: difficulties in measurement due to interferences may be encountered when analysing certain coloured leather); Cd, Pb, As: CEN TC 309 WI 065 4.3 Samplepreparation: (1) Separate the upper components from the bottom components. (2) Grind completely the upper components and the bottom components, keeping both separate. (3) Analyse a sample of each of these two preparations. (4) The substances in each of these two samples shall not be detectable. Textiles: CEN TC 309 WI 065 4.4; Leather: CEN TC 309 WI 065 - 4.4.

Emissions from the production of material(a) The waste water from leather tanning sites and from the textile industries shall be treated, either by an in-house or municipal waste water treatment plant/facility, so as to achieve a reduction of the COD content of at least 85 %.(b) Tannery waste water after treatment shall contain less than 5 mg Chromium (III)/l. Assessment and verification: the applicant shall provide a test report and complementary data, using the following test method: COD: ISO 6060 Water quality, determination of chemical oxygen demand. Assessment and verification: the applicant shall provide a test report and complementary data, using the following test methods: ISO 9174 or EN 1233 or EN ISO 11885 for Cr.

Energy ConsumptionThe applicant is requested on a voluntary basis to provide detailed information on the energy consumption per pair of footwear. Assessment and verification: the applicant is requested to provide the relevant information.

Source: compiled according to EU 2002

The selection of a test laboratory is up to the applicant; laboratories could be everywhere and must not be located within the European Union. However, it is recommended to involve reliable laboratories to avoid any troubles. The European Commission has published some laboratories on its eco-label webpage4 with several dealing with footwear testing. Here are some for the relevant countries.

ItalySCAM s.r.l. Via Enaudi 43662012 Civitanova MarcheTel.: +39 (0)733829108/09Fax: + 39 (0)733829110

INSTITUTO DI CERTIFICAZIONE s.r.l.Viale Europa 2822060 CabiateTel: +39 (0)31768403Fax: +39(0)756106

A.N.C.I. SERVIZI- SEZIONE CIMACCorso Brodolin 1927029 VigevanoTel: +39(0)38173393Fax: +39(0)28173393SpainINSTITUTO TECHNOLOGICO DEL CALZADO Y CONEXAS (INESCOP)Contact: Mr. Miguel Angel MartnezI Campo Alto Aptdo. 253 03600 Elda, AlicanteTel: +34(0)9655395213Fax: +34(0)965381045E-mail: miguelangel@inescop.es

Asociacin de Investigacin de las industrias del Curtido y Anexas (AIICA)Contact: Mr. X. Marginet Av. del Pla de la Massa 08700 IgualadaTel: +34(0)938055388Fax: +34(0)938050616E-mail: info@aiica.com

ENTIDAD DE CERTIFICACIN Y ASEGURAMIENTO, SAContact: Mr. Enric NEbotMoll de Barcelona, World Trade Center, Ed. Sud08039 BarcelonaTel: +34(0)932701160Fax: +34(0)933424582E-mail: central@ecacertification. com

Laboratori General dssaigs I Investigacions (LGAI)Contact: Mr. Ramon Capellades I FontCtra. dasss a la Facultat Medicina UAB08290 Cerdanyola del VallesTel: +34(0)935672000Fax: +34(0)935672001United KingdomSARTA Technology Certre Contact: Mr. John Hubbard Rockingham RoadNN169JH Kettering, NorthamptonshireTel: +44(0)1536410000Fax: +44(0)1536410626E-mail: admin@satra.co.uk

3.2 Customer policies successful placing of eco- labelled products on the European market

Establishing business relationships

The European footwear market can be seen as a mature, well developed market. It is a large and highly fragmented market with a diversified structure on Member State level. Competition among intra European and external suppliers is fierce. While internal suppliers operate in the medium and premium segment of the market, several external suppliers (Tunisia, India and China) China is the most important supplier for cheap, low quality

4 See http://ec.europa.eu/environment/ecolabel/how_to/testlabs_en.htm

November 2008page 41 of 56

synthetic shoes and high quality sport shoes cover low to medium price segments. However, there are several advantages for abroad suppliers operating in the EU market: strong competition and exposition to the latest developments in fashion, technology, governmental product policy and consumer trends will help suppliers professionalize the sector and sell products to less developed market.

In principle, there are two options for exports into the EU (Batelco Jordan: 46):

Direct selling Sub contracting

Direct selling has the advantage to control the business including marketing strategies, brand name creation and decision on markets to penetrate. Moreover, higher profits and a more international market surrounding are benefits. However, it will take a longer time and considerable efforts to establish as a direct seller in the European market.

Sub-contracting is a formal business relationship with chain stores, buying groups or department stores selling footwear products under another name. The exporter can be called a junior partner producing footwear products as a local licensee for an international brand. While it guarantees a credible sale in customer countries and includes quite often a transfer of technology, it also includes that control over profit margins is very limited. Fig. 26 outlines the most important footwear retailers and wholesalers in the most suitable European countries.

We recommend following a direct selling strategy, if producers offer unique and brand- oriented footwear products for the EU market. If producers offer products in the lower to mid quality range and are flexible to overtake sub contracting duties (e.g. design and price specifications) sub contracting is most promising.

and bring in eco-labelling advantages

Eco-labelling footwear bears considerable advantages for producers, consumers and retailers as identified by INESCOP (see: http://www.life-ecofoot.inescop.es/): For producers: Increase in customer loyalty and it is the best way to respond to growing consumer demand about environmental aspects, for more scientific and reliable information about the products they are buying. Reinforces the corporate identity as being a symbol of environmental excellence that is recognised on a European scale and will help to assure the customers of the companys environmental promise. Improve the image of the mark by guaranteeing environmental excellence and it is a symbol of additional quality for the products Useful promotion tool and for communication to the consumer about the product. Allows contact with environmental issues for future development. Beneficial buying and production habits, both for the company itself as well as

the environment. For retailers The image of environmental concern is acquired. It gives the customer as sense of confidence and security with the shop. Increases the variety of products of the shop, and improves the image by acquiring the latest products. For consumers Guaranteed product quality. It guarantees that the product is respectful towards the environment and health and it also assures that the quality of the product is at least as good as the equivalent products without environmental benefits. Easy to identify the products with more respect for the environment. Are not more expensive than the products without the European Eco-label. Low risk of allergies that come from certain chemical products.Bring in these advantages in your communication and marketing efforts towards new customers and business relation-ships.

Furthermore, it is important to establish strategic partnerships with NGOs willing to support and accompany the companys efforts towards eco-labelling both in domestic and target countries. Inform your local and national active NGOs on your eco-labelling intentions and efforts. A first step is to identify which NGO is cooperative and willing to work collectively on a companys and national eco-labelling strategy.

Fig. 27: Footwear retailers /wholesalers in suitable market countries

France

Footwear specialistsNon-specialists

Chain storesBuying GroupsSmall shopsDepartment storesSupermarketsSport shopsClothing shopsInternet/mail order

Groupe VivarteGalleries LafayetteCarrefourDcathlonC&APinault Printemps

Tel: + 33 1 44 72www.groupegalerieslwww.carrefour.comwww.decathlon.frTel: +33 1 44 88 79Redoute

30 01afayette.fr94Tel: +33 1 45 64 61

www.groupe-E. LeclercIntersportwww.c-et-a.fr/00

vivarte.comPrintempswww.e-leclerc.comwww.intersport.frwww.ppr.com/

www.printemps.com/H&M

Groupe EramAuchanSport 2000Tel: +33 1 53 20 71

www.eram.fr orTel: +33 3 20 81 68Tel: +33 1 69 26 2000

www.eram.eu0000www.hm.com/fr

www.groupe-www.sport2000.fr

auchan.comZara

Tel: + 33 1 55 78 88

88

www.zara.com

Germany

Footwear specialistsNon-specialists

Chain storesBuying GroupsSmall shopsDepartment storesSupermarketsSport shopsClothing shopsInternet/mail order

DeichmannGarant Schuh & Mode AGKarstadt (belongs toMetroIntersportC&AQuelle

Tel: +49Tel: +49 211 3386 01Arcandor AG)www.metrogroup.deTel: +49 7131 288 0Tel: +49 211 9872 0www.quelle.de

201867600www.garantschuh.deTel. +49 201 727 1www.intersport.dewww.cunda.de

www.deichmann.www.arcandor.comAldiNeckermann

deANWRwww.aldi.comSport 2000Peek&Cloppenburgwww.neckermann.de

Tel: +49 6182 928-0Kaufhof (belongs towww.sport2000-www.peek-

Renowww.anwr.deMetro)portal.decloppenburg.deOtto

www.reno.deTel: +49 01805/17 25www.Otto.de

17Runners PointH&M

Grtzwww. galeria-(belongs to Karstadt)Tel: +49 40 350 95

Tel: +49 40 333kaufhof.deTel: +49 23 61 3003050

000www.runnerspoint.dewww.hm.com/de

www.goertz.de

Scheer (IW)Roadmap leather footwear

November 2008page 44 of 56

Italy

Footwear specialistsNon-specialists

Chain storesBuying GroupsSmall shopsDepartment storesSupermarketsSport shopsClothing shopsInternet/mail order

BataTel: +39-49-8991130www.bata.itGruppo Coin SpATel: + 39 41 2398341www.gruppocoin.com

Gruppo RinascenteTel: +39 2 46 77 11www.rinascente.itGruppo RinascenteTel: +39 2 46 77 11www.rinascente.itIntersportTel: +39 51 6381151www.intersport.it

Giacomelli www.giacomellisport. com

Sergio TacchiniTel: +39 2 4982831www.sergiotacchini.c om

Spain

Footwear specialistsNon-specialists

Chain storesBuying GroupsSmall shopsDepartment storesSupermarketsSport shopsClothing shopsInternet/mail order

FoscoEl Corte inglesHipercor SAIntersportZara (belongs to

Tel: + 34 932 697www.elcorteingles.es(belongs to El Cortewww.intersport.esInditex Group)

700Ingles)Tel: +34 981 185 400

www.fosco.esTel: + 34 91 401 85www.zara.com

00

Mercalzadoswww.elcorteingles.esPull&Bear (belongs

(belongs toto Inditex Group)

Gruope Vivarte)AlcampoTel: +34 981 334 900

www.alcampo.eswww.pullbear.com

Camper

www.camper.comMassimo Dutti

(belongs to Inditex

Group)

Tel: +34 937 667 699

www.massimodutti.c

om

United Kingdom

Footwear specialistsNon-specialists

Chain storesBuying GroupsSmall shopsDepartment storesSupermarketsSport shopsClothing shopsInternet/mail order

C&J Clarks Ldt.Marks&SpencerJJB SportsDorothy Perkins

www.clarks.comwww.marksandspencwww.jjbsports.com(belongs to Arcadia

er.comGroup Ltd.)

Stylo Plc.JD Sportswww.dorothyperkins.

www.stylo.co.ukWoolworthwww.jdsports.co.ukcom

Tel: +44 (0) 20 7262

Stead& Simpson1222IntersportNext Plc.

Tel: +44 (0)116www.woolworthsgrouwww.intersport.co.ukTel: +44 (0) 844 844

269 1300pplc.com8333

www.steadandsiBlacksLeisurewww.next.co.uk

mpson.Group

comTel: +44 (0) 1604Arcadia Group Ltd.

441 111Tel:

www.blacksleisure.cowww.arcadiagroup.c

.uko.uk

and current clients of Mexican footwear exports

There are several clients currently importing Mexican footwear from the state of Guanajuato the main leather production area in Mexico. Tab. 10 gives an overview on the current European companies importing footwear, the corresponding country and type of shoes.

Tab. 10: European business clients of Mexican footwear exports

CompanyCountryProduct type

AlvadalejoSpainFormal mens footwear

FrauItaliaFormal mens footwear

BuffaloGermanyCasual boots

Baby BoteFranceChild shoes

FryeUSA (with outlets in GermanyCasual boots

Cuir CountryFranceWestern style products

Umbra EquitazioneItalyWestern style products

Sarl El AnofeFranceCasual boots

Rio GrandeFranceCasual boots

Jalisco DueItalyCasual boots

Living ColoursGermanyCasual boots

Source: personal communication from Mexican project partner

3.3 Networking business relationships strategic alliances and co-operationThis subchapter informs about suitable European and national markets' business organisations and about important national sector fairs. Use the opportunity to explore