Shoe Pinch

“The price the consumer is asked to pay for shoes is high—very high; the immediate outlook is that it will be higher.” So said Edward C. Orr, president of the National Shoe Retailers Association, at the opening of the National Shoe Fair in Chicago last week. By the time the four-day fair ended, his gloomy prediction was on the way to coming true. Most of the 600-odd manufacturers who attended held out for price increases ranging from 10% to 15%. As a result, purchases by some 12,000 buyers were considerably smaller in physical volume, though not in dollar value. This meant that shoes this winter and spring would be scarcer and higher.

Manufacturers blamed the rise on “a cost-price squeeze.” Thus, they pointed out that between May and August hide and skin prices advanced 38 points on the Bureau of Labor Statistics wholesale index while shoe prices advanced less than 3 points. (But hide prices were still under the peak of last November while shoes were well up from then.) Said Lawrence B. Sheppard, president of the National Shoe Manufacturers Association: “In the shoe industry, replacement pricing [i.e., raising the price of previously manufactured shoes to cover replacement cost] must be substituted for wishful thinking.”

The manufacturers had gone for replacement pricing, all right, and they had done something else, too. Many of them began to cut back production long before last May, thereby shoring up prices—and profits. Shoe sales dropped about 20% in the first half of this year, more because of consumer resistance to prices than because of satisfied demand. Instead of lowering prices the industry in the first nine months of this year cut production nearly 60,000,000 pairs.

Angered by these tactics, J. O. Moore, president of the National Association of Shoe Chain Stores, said: “It is difficult for shoe chains to extend general sympathy to all requests for increases based on so-called replacement pricing. An examination of financial statements of certain segments of the industry employing replacement pricing shows that lavish reserves have been provided to cushion the same firms against prices on the downgrade.”