I will soon start making my first ever regular shoe display at Art & Sole on NE Alberta Street, here in Portland. You will be able walk in to check out the ExIT Cycle shoes, and if you’d like to buy a pair, Art & Sole will fix you up and I will make them to order. Stay tuned for details!
I have finally returned to business after a very interesting and successful tour of Europe this spring. I was searching for shoe materials, tools and techniques. I met some great shoemakers and found more than I could have hoped for. I posted pictures and little news bits about my trip on Twitter. Many of my posts are about food, travel and friends, but there is shoe stuff in there too!
I often get asked about the pricing of my shoes. Some are amazed at how expensive they are, others are amazed at what a great deal they are. Many people have no experience assessing the value of the basic materials used or any idea how much work is involved in making them. In this series of articles I’ll go over the economics of shoe production to help develop an understanding of the way shoes are priced. This will help you understand how shoes are priced in general, and eventually, to understand how my shoes are priced.
In this article, I will cover the general economics of shoes most of us find in stores. It is from seeing the price of shoes in stores, after all, that we develop a familiarity with the price of shoes.
Mark up and Mark down
In the world of retail, the price of a shoes will typically double each time it changes hands. The number of hands a pair of shoes passes through on their way to your feet has a big impact on the price you pay. Let’s say a finished pair of shoes cost a factory $10 to produce, they will need to make some money on them, so they deliver them to the contractor for $20. From there they go to distribution where distributors will pay $40 for the pair. When the stores pick them up for inventory at $80, of course they will want to sell them for more than they paid. Prices may vary, but this is the game. You can see there is some room to mark the price up or down and still make some money.
Effects of Mass Production on Pricing
To have shoes produced in a factory, minimum orders are required. A footwear brand may have good relationships with the contractors who manage manufacturing contracts, or they might have a good relationship with the factory itself, which might allow them to start with smaller orders or spread them out over time, but a simple way to understand the most common type of shoe contract is to consider it in terms of 100,000 pairs of shoes.
The logic behind this kind of production is to accept the fact that a large number of those 100,000 pairs will not sell, but the ones that do should generate enough profit to make it worthwhile enough to go through the cycle again. They won’t sell because they don’t fit – too big, or small, or too wide or narrow. They may not sell because they don’t look good to the buyer.
100,000 pairs of shoes is a big commitment, so companies become conservative about the kinds of shoes they would produce in that number. 100,000 pairs of shoes requires a lot of material, and in most cases uniformity of the material is the highest priority. In attempt to lower the risk of this kind of purchase, a lot of effort is made to make sure the cost of materials and labor are as low as possible.
The trade off for such large orders is leverage on the price of any individual component. The cost of individual components is orders of magnitude less on a large order than they would be for a small order. Some materials simply can not be procured in small quantities – just try to get an injection mold made for your one-off custom trainers…
Currency Policy and Pricing
From the perspective of the average American shoe consumer, most shoes are made overseas. Of those shoes, the majority are made in China. China has made itself the premier manufacturer of shoes by keeping material and labor costs low. One way this is achieved is by producing the materials needed to make shoes in China, and near the shoe factories themselves. Tanneries, plastic component manufacturers, rubber soling manufacturers, etc. are all conveniently located near the factories. A tight local supply chain provides many efficiency gains that result in a low cost of basic materials. Another way is through currency policy.
The US Dollar has declined significantly against major world currencies, especially since the Fall of 2008. China has adopted a policy of matching the dollar’s decline by lowering the value of their own currency. That means, for instance, as an American buying from Europe, the prices have been getting more expensive as the dollar buys less, but buying from China prices remains the same. See Paul Krugman’s article in the New York Times: http://www.nytimes.com/2010/01/01/opinion/01krugman.html and James Fallows: http://jamesfallows.theatlantic.com/archives/2010/01/krugman_protectionism_and_the.php
On the one hand this would appear good for American shoe brands who can continue to bring in their products at the same prices and keep their profits up, but it artificially keeps the price of shoes low. It allows Chinese manufactured goods to avoid charges of “dumping” – selling them at less than cost, because the currency policy is set at a national level. Indeed, it’s difficult to see that anyone other than the body setting the exchange rate could be held accountable for this price disparity.
Where the Rubber meets the Road
My good friend Matt Menely at Mountain Soles has long maintained that there is a conspicuous disparity between the price of materials required to repair shoes and the price of new shoes. In the case of repair, we can experience the direct effect of the leverage of the 100,000 pair contract on an individual pair of shoes. To buy a replacement rubber sole from a distributor here in the US to be used in repair can costs more than the shoe originally cost to produce in China. Add to that the labor cost of removing the old sole and putting on a new one and mark it up so there’s some profit and the consumer is faced with a big dilemma. For the low cost and low quality shoes, repair is simply not economically viable. Toss the old shoes in the landfill and feed the cycle by buying new shoes or pay more for a quality shoe that can be repaired. Not and easy choice.
I provide some information here on my site to understand how shoes are made, but it takes a very keen eye to spot a quality pair of shoes. It’s a skill most shoe consumers don’t yet possess. Currency manipulation and leveraging large contracts also distorts our standard benchmark for quality – price. It is often repeated that consumers demand higher quality and lower prices, there are reasons that these don’t go together well in the world of leather shoes, as you will see in part two.
I had a great time at the SF Bike Expo. I’d like to thank Phil Segura and Gwen Lutz for making it a great place to show ExIT Shoes. I’d like to give a special thanks to Mia from Momentum who helped me out of the dark corner of the Cow Palace.
Cyclelicious has some great photos (like this one on the right) and comments about the Bike Style fashion show in their Cat Calls section.
I received a lot of positive feedback about the ExIT Cycle shoes. There was some interest in getting the shoes in larger sizes (like from the guy from Xtracycle who wears size 50 shoes).
There was strong interest having custom shoes made both for cycling and for general use.
Finally, the ladies 2″ heel version of the ExIT Cycle shoes was probably the biggest hit.
ExIT Shoes will have a booth at the November 21 2009 SF Bike Expo. ExIT Cycle™ shoes will be on display in the Bike Style Fashion show as well. Stop by to see some of the components used to make shoes, try on a pair of ExIT Cycle shoes and have your feet measured for custom fit!
ExIT Shoes will be in the South Hall of the Cow Palace near the Fashion Stage in Booth #39. (The Opposite end of the hall from the Cross Mud Pit – think about it…) Come say hello!
ExIT Shoes was featured in Momentum Magazine’s Ready to Roll fashion show as part of Portland’s Fashion Week 2009. I made two pairs of shoes for the show with the model name ExIT Cycle™. There’s a story about the show on bikeportland.org. A video will be out shortly from Momentum. Onscreen Imaging (OSI) has an online gallery of the full show. They have some great images of my shoes in brown and red.
If you missed the show you will get another chance to see them on November 21 in Momentum’s show at the SF Bike Expo.
I first met Steph when she sent me an email in August of 2008 about her 8th grade senior project due before graduation in June of 2009 – she wanted to make a pair of shoes. I was first impressed that she was thinking 9 months ahead and contacting me before the school year had even begun.
At the end of September I met her and her parents in person at an open house we had in the ActivSpace building where my shop is located. All the studios were open so people could come in and see what we all do in there. Steph was clearly interested and seemed very motivated, so I agreed to take her on.
To figure out how much time we’d need to spend on her project. I did a rough calculation based on how long it takes to make a pair of shoes, which is about 40 hours. No problem. We would only need to meet one hour a week every week and we’ll have time to spare. Hmm. Oh yeah. 8 months, 4 weeks, that’s only 32 hours. Ok, for some of those weeks, we’d need to meet for more than an hour.
As if making shoes was not enough, she also wrote a book. I had a great time learning from her about her research into fashion and shoes. I love her book!
I knew she finally understood what it takes to make shoes when she brought her bag of supplies to the shop one day, and there was a fabric pattern attached to one of the lasts. She was reproducing a design she had seen. I’ve now heard her tell people how shoes are made. She says it with confidence and it makes me proud.
Steph became interested in stingray leather after I showed her a piece that I had and the pictures of the custom stingray shoes I made with red stingray. Here is Steph’s first pair of shoes. They were made with black stingray leather for the vamp and kangaroo leather quarters. Lined with veg tanned calf. They are certainly nicer than my first pair of shoes!
I owed a saddle to Marty Krogh of Art & Sole from way back. When I first moved to Portland I burned up a lot of his time discussing ideas with him. He also did some of his cool multicolor spraypaint work on a giant multi-spring Brooks saddle frame that I’ve been playing with.
When I received an e-vite the other day, I realized it was high time to finish the saddle I promised him. I’m not done with frame development so I got out my only other vertical spring Brooks frame and set it up for him. I never reply to e-vites, but sometimes go anyway. When I showed up unexpectedly at his party carrying a little red gift bag, the first words out of his mouth were “Is that my saddle?” Ok, so he clearly hadn’t forgotten. So much for the surprise.
It was a great party, with music by Trashcan Joe. Featured in the band was none other than shoemaker Bill Crary’s brother Mike Danner! And he was not the only shoemaker there beside me. It was like a shoemaker extravaganza.
Marty’s seat will go on his Lucky Bike, which is also red. Happy birthday Marty!
In this video we present how to make a pad for an Xtracycle. It’s basically a fabric slip or box cushion, wtih elastic straps to hold it to the Xtracycle Snap-Deck. I got the idea from a pad I tested from Clever Cycles. The first run of those had some room for improvement in the padding. I believe the maker of those pads may incorporate my suggestion for some more robust padding.
Whether you want to buy one or make your own, you may be interested to see how we made ours. There are a lot of design possibilities here. Let us know what you think.
Materials: Fabric and or leather for top, bottom and sidewall. Elastic, closed cell foam, contact cement and (optional) zipper. You can recycle jackets for good outdoor fabric and camping pads for closed cell foam.
Tools: Single edge razor blade or box knife, rotary cutters or scissors. Sewing machine.
This assumes some basic sewing skills and if you want to put in a zipper, it does not contain all the info really needed to face the zipper to match the material. We left that as an excercise for the viewer!
[qt:/exit/wp-content/uploads/2008/07/make-xtracycle-pad.mov 320 240]
Click on the picture to start the download of the movie. It’s 15MB and about 10 minutes. The video can be slow to load with no visible progress until it’s done, but hang in there. I don’t have the friendliest player interface, but it’s late on Friday and I just wanted to get it out there so people could make some pads on the weekend if they had time.
I think this will be one of the hottest movies of the summer! We’ll get a copy of this on Matt’s Mountain Soles site ASAP.
Make an Xtracycle Pad by Jeff Mandel and Matt Menely is licensed under a
Creative Commons Attribution-Share Alike 3.0 United States License.
I recently added an Xtracycle Free Radical to my old GT Transit Express. I got it specifically to carry an adult passenger after consulting with the mechanics and other nice folks at Clever Cycles. Clever Cycles did the installation and let me test one of their pads. The pad had a beautiful floral pattern, but the padding was totally inadequate.
I decided to make my own pad and after some research chose closed cell foam for the padding. I found a great piece of outdoor fabric with a floral pattern at the Mill End fabric store and some elastic from my friend Matt Menely at Mountain Soles. After I finished my pad, I had plenty of foam left over for Matt. We thought it would be fun to make a video showing how you can make your own.
I spent quite some time editing it down. It is still slightly longer than Lord of the Rings, so I’m still working on it. Stay tuned and we’ll have it posted for you. There are probably some better designs out there, but this one will work.