All manufacturers have traditionally utilized independent footwear retailers as their primary distribution
channel for selling branded footwear. Manufacturers have built a network of retailers to handle their brand
in all geographic areas where they market. Retailers are recruited by small teams of company-employed
sales representatives working out of regional sales offices in each geographic region; the role of the sales
reps is to call on retailers, convince them of the merits of carrying the company's brand, solicit orders, and
provide assistance with merchandising and in-store displays. Retailers typically carry anywhere from 1-3
brands of athletic footwear (depending on store size and location) and usually stock only certain
models/styles of the brands they do carry (since manufacturers have anywhere from 50 to 500
models/styles in their product lines). Retail markups over the wholesale prices of footwear manufacturers
can run anywhere from 40% at discount chains to as high as 100% at premium retailers. Thus, a pair of
shoes wholesaling for $50 usually retails for between $70 and $100.
However, mounting use of the Internet by shoppers has prompted all footwear manufacturers to launch a
Web site displaying their models and styles and giving consumers the option to purchase footwear online.
Sales have been growing steadily at the company’s Web site, partly because selling online gives the
company access to consumers located in areas where there are no retailers carrying the company’s brand
and partly because some consumers like the convenience of online buying. As indicated earlier, online
sales to individuals are projected to grow from 5% to 15% of total branded sales in each geographic region
by Year 20. Whether companies will gradually de-emphasize selling through retailers and shift their
marketing emphasis to promoting online sales remains to be seen.