Sticker shock is on full display these days in the grocery aisle, at the gas pump, and even at the shoe store. Especially in the kids’ section, a place parents know all too well.
Shoe sellers have seen children’s footwear prices jump 11 percent from last March, according to the consumer price index. That’s twice as fast as adult shoes, and faster than overall inflation, which at 8.5 percent last month hit a four-decade high.
Why? So many reasons.
Like most economic concepts, “there are a lot of moving parts in a very complicated process” that collide to create inflation for any specific good, said Mark Cohen, the director of retail studies at Columbia Business School.
But in this case, shoes — which kids can wear out at an astonishing pace — gives a good window into the price hikes hitting everyone’s wallets lately.
It starts with the raw materials for footwear: rubber, polyester, leather, and cotton — all of which are largely produced in Asia or South America. (Some shoe brands also use synthetic leather and eva foam.)
From the get-go, costs are up. Cotton prices have basically doubled since before the pandemic, jumping from $0.71 per pound in January 2020 to $1.41 earlier this month, according to market data website Macrotrends. Data from the St. Louis Federal Reserve puts polyester prices higher than at any point in the last decade, too, up nearly 75 percent since the pandemic recession. (Leather, by contrast, saw a significant bump in mid-2021, then returned to pre-COVID levels.)
Manufacturers — almost exclusively overseas — use the materials to create the outsole, padding, logo, tongue, and laces.
Before the pandemic, shoe brands “could shop around factories overseas and choose ones with the cheapest workflow” to keep costs low, said Eric Michelson, the owner of Michelson’s shoes in Lexington and Needham.
But there’s less flexibility now — at least partly due to COVID.
Across the world, factories have shut down periodically amid spikes of the virus and strained labor availability. For example, Shanghai imposed a harsh two-week shutdown for 25 million residents in early April, gumming up global supply chains. Vietnamese manufacturers struggled to coax employees back to work last fall after a brutal COVID wave there, Cohen said. Brands like Adidas, Converse, Nike, and New Balance run factories there.
And when supply is tight, children’s shoes may get short shrift, said Daniel Swenson, co-owner of The Barn Family Shoe Store in Newton. They require similar amounts of labor as adult models, but fetch a lower price, and thus a lower profit.
“Kids’ pricing has always been challenging from a manufacturing point of view,” Cohen said. “You can’t charge the customer a similar price for a kid’s shoe, even though you’ve got a product that’s almost identical to the adult version.”
So supplies are tight, and prices are surging.
Then there’s getting the shoes here.
Brands are responsible for transporting footwear across the Pacific Ocean. But the cost of shipping has risen — doubling in some cases — during the pandemic, a cost that weighs on retailers and eventually customers.
A freight container for the journey now costs anywhere from $12,000 to $20,000, Swenson of The Barn Family Shoe Store said, compared to $6,000 in 2019. “It’s a nightmare,” he said. “It’s almost a license to steal. And when they implement all these things — these fees, these increases — you never go backward.”
Disruptions in the supply chain, including container shortages and a dearth of port and warehouse workers, push shipping costs even higher. And retailers who receive late shipments often cannot keep up with demand.
At Michelson’s Shoes, many spring-season children’s footwear will not arrive until June or July. The Easter stock came in just mere days before the holiday.
“Sometimes, we’re just waiting with half-empty shelves,” Michelson said.
Another factor, said Andy Polk, senior vice president of the Footwear Distributors and Retailers of America: tariffs. Shoe import fees are among the highest on any consumer goods, averaging 13 percent, with tariffs accounting for almost one-third of the retail price of some children’s shoes, according to the group.
Adult leather shoes, for instance, face an 8.5 percent tariff. But because of rules imposed in the 1930s, kids’ footwear rates can be up to four times that much: sneakers (20 percent), moccasins (37.5 percent), and girls’ flats (37.5 percent).
“Striking the tariffs would help working families immensely — and instantly,” Polk said.
“Rather than pay $3.4 billion in footwear duties in 2021, companies could have used those funds to innovate and hire new workers in the fields of design, marketing and retail as well as good paying blue collar jobs at ports, warehouses, and in trucking,” the distributors group website reads.
Cohen of the Columbia Business School called tariffs “a disincentive for importers — whether that’s retailers or brands — to be taking in kids’ shoes,” and ultimately another obstacle to supplying the market.
All of it results in a sometimes-shocking price tag on kids’ light-up sneakers, Crocs, and soccer cleats.
Retail prices have gone up $5 to $7 since COVID hit, Michelson said, on his inventory of children’s shoes and $5 to $10 higher for adult footwear — meaning kids’ pairs saw a larger percentage price increase than their full-size counterparts. Some Michelson’s pairs have seen three price hikes in the past 12 months.
The footwear distributors, a trade group that represents most of the US footwear industry, estimated in an October letter to President Biden that children’s shoes now cost more than they have in 70 years, even when adjusted for inflation.
Despite that, traffic at Michelson’s and The Barn has remained strong so far, though both owners are preparing for a shift.
“For shoes, I don’t think the bump in price has hit people yet,” Michelson said. “Eventually, they’ll realize.”
Even if they do, though, parents may need to keep buying. Kids wear out, or outgrow, shoes, so fast. Sales volume last year was 3 percent higher than 2019, according to Beth Goldstein, a footwear analyst at market research firm NPD. She doesn’t predict a slowdown — at almost any price.
“It’s a true necessity,” Goldstein said. “What are you going to do? Have kids go barefoot?”