By Joe Palumbo
No doubt about it, after a difficult 2002, businesses are bracing for what looks to be a tough 2003 encompassed by a shaky economy and an existing war. It has always been believed that it is the food business that will always do well because people must eat.
But there is another key business that appears to be at least somewhat recession-proof. It’s the shoe business. People can go without that extra jacket, hat, sweater or pair of jeans, but they must have shoes. Shoes face quite a bit more wear and tear than a seasonal winter jacket or hat.
The fewer pairs you have, the faster they wear out. And it’s women who contribute most to the success of shoe sales. Women buy shoes for the added purpose of updating their wardrobes or for a good match to a handbag, which actually serves as a supplement to buying that additional outfit.
But necessity or not — and just like anything else, food included — people search daily for bargains to reduce the family budget. Discount shoe outlets such as Payless ShoeSource appear quite astute in this consumer climate. The company has targeted New York City, with Queens as a key focus.
Payless already has multiple locations within the five boroughs. But what about the local neighborhood shoe stores? I spoke with Morty Kay of Dave’s Shoes at 34-19 Broadway in Astoria. Dave’s Shoes is quite diversified, serving as an authorized dealer for well-known brands such as Florsheim, Hush Puppies, Soft Spots and SAS.
Kay said that shoe sales were better last year. The present trend is one in which people are not as free-spending as they were and just not going for that extra item. Whereas last year customers would have bought a brown pair and a black pair of shoes, they now settle for the one pair of black.
Kay said his observation is that people are hurting. They are either out of work or feel they may be soon. Not so much worried about the discount competition, Kay said his clientele continues to seek quality with the right fit at moderate prices. Discount buyers are price buyers only.
When asked about pending profit margins, Kay responded: “We know our niche customer and order our inventory accordingly in order to maximize profit margins.” So how’s business for the local shoe store? Kay said as long as people need shoes the business will sustain itself, and as times get better it will demonstrate growth.
Joe Palumbo is the fund manager for The Palco Group, Inc. and can be reached at palcogroup@aol.com or 718-461-8317.
