Portugal Set to Challenge Italy with €600 Million Footwear Investment

Portugal Set to Challenge Italy with €600 Million Footwear Investment

The Portuguese footwear industry is gearing up to expand its global footprint by investing a substantial €600 million in the coming years. According to EY Parthenon, a renowned international consultancy, Portugal is set to become a robust alternative to Italy in the luxury footwear sector. The consultancy’s report, titled “The Footwear Industry’s Path to Luxury,” outlines a strategic blueprint aimed at positioning Portugal as a key player in this high-value market.

EY Parthenon’s study emphasizes that the Portuguese footwear sector must either reduce costs or tap into new market segments to stay competitive.

Miguel Cardoso Pinto of EY Parthenon highlights that rising costs and intense competition necessitate a strategic repositioning of the sector. One primary approach to achieving financial sustainability involves scaling up operations by integrating various industry players.

Additionally, EY suggests enhancing productivity through advanced industrial processes and optimizing labor costs. Another significant recommendation is to innovate in product design to reduce raw material expenses.

From a broader strategic standpoint, the consultancy identifies three potential pathways for the industry’s future:

  1. Targeting high-value segments,
  2. Expanding into new geographical markets, and
  3. Optimizing supply chain stages.

These measures are crucial for Portugal to enhance its competitiveness in the global luxury footwear market.

EY Parthenon also points out that Portugal holds several advantages over Italy, such as lower production costs and fewer market intermediaries. Despite both countries offering high quality and strong reputations, Portugal’s cost-effective production gives it a competitive edge.

The global footwear market is predominantly led by Asian countries, with China accounting for nearly 55% of the world’s production. The total market is valued at $398 billion, with the luxury segment comprising 8% of this value. According to EY Parthenon, the luxury footwear segment is projected to grow at an annual rate of 4.1% until 2028. To capitalize on this growth, Portugal must focus on three key areas:

  • Production development,
  • Commercial expansion, and
  • Innovation.

To successfully reposition itself, Portugal needs to cultivate a reputation for luxury footwear by adhering to Environmental, Social, and Governance (ESG) standards, maintaining competitive pricing, and ensuring high agility and flexibility. Transparency, confidentiality, excellent customer service, and top-quality products are also essential components for establishing a strong market presence.

Luís Onofre, President of APICCAPS, underscores the industry’s commitment to the future with a €600 million investment aimed at making Portugal a “significant international reference in footwear”.

Every year, 24 billion pairs of shoes are produced, about 90% of them in Asia, which means that 9 out of 10 people wear Asian shoes. We don’t think this is sustainable, on the contrary, we think there is room in the market for players like Portugal

Luís Onofre, President of APICCAPS

The Strategic Plan for the Footwear Cluster 2030 outlines four priorities:

  1. Qualification of People and Companies,
  2. Sustainable Products and Processes,
  3. Flexibility and Rapid Response, and
  4. Active Presence in the Markets.

This plan includes 24 measures and 113 actions designed to elevate the industry on a global scale.

Two major projects, BioShoes4All and FAIST, are already in progress under the Portuguese Recovery and Resilience Plan (PRR). These initiatives, focusing on automation, digitalization, and sustainability, are expected to be completed by the end of 2025. Onofre envisions the Portuguese footwear industry soon becoming the most modern in the world.

With 1,500 companies and 40,000 employees, the Portuguese footwear sector is a formidable player, exporting 90% of its production to 173 countries. The €600 million investment and strategic initiatives underscore Portugal’s ambition to redefine its position in the global footwear market. By leveraging its cost advantages, focusing on innovation, and expanding into new markets, Portugal is set to become a key contender in the luxury footwear segment.

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Arshad

Arshad

He is an engineer specializing in Leather Technology, known for his keen interest in analyzing global leather, footwear, and leather goods markets & his ability to make complex information clear & accessible. 

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