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Price Analysis, Year End, 2010

Price inflation/deflation is a matter of fact for any retail sector. The UK has a general inflation target of 2% per annum. Therefore, you should expect the price of shoes to rise by 2% per year. However, things are not that straight forward. The general inflation target covers all products, and is averaged out. So, petrol may have risen by 15% per annum, whereas the price of shoes may have deflated by 5%.

In 2010, the UK has seen higher than average price inflation. Running at 3.1%. This has also impacted on the price of shoes. In 2009, there was no increase in average clothing prices. The decrease in VAT from 17.5% to 15% contributed to this low inflation level. Since the VAT rate was increased back to 17.5% in 2010, inflation also increased. The projection for 2010, indicates that clothes prices, which includes shoes, will increase by 0.9%. Which is still below the general inflation rate of 3.1%.

This price rise may unwittingly effect many shoppers. Although they may not have known it, the recent price trend for shoes has been one of deflation. From the year 2000-2006, the price of shoes was lowering by 2.4% every year. Some of you may be wondering how this was the case. The reason was production moving from the west to countries such as China, and the price of cotton remaining low. The problem for consumers, is that wages are now on the increase in China, and the price of cotton has shot up since 2009. Resulting in the 0.9% price increase we have seen this year.

In conclusion. The time to buy is now. Analysts predict that prices will only rise in 2011. VAT will increase from 17.5% to 20% at the start of 2011. Wages in China, and the cotton price, do not look like lowering in 2011. The price of children's shoes will not be effected so harshly, as the VAT hike will not apply to them. Many analysts believe that shoe prices will lower by 2012-2013, which could be below inflation.

How Cheap is 'Cheap' (2010)?

As prices fluctuate yearly, and vary wildly at seasonal sale periods, it may leave some of you confused as to how to discern a cheap pair of shoes. Well, it's not an easy term to define. Some shoes will only be sold by one retailer, therefore they will have a monopoly over how much they wish to charge. Therefore, a cheap price in that situation, is any knock down from the rrp (recommended retail price).

Luckily, most major manufacturers of footwear sell their products at multiple real world and online locations. This is ideal for the consumer, as hopefully, the retailers will fall over each other to claim a sale. This is more than often the case online. Where there are far more tools at the disposal of a consumer. The most lethal of which is the price comparison tool. Initially launched in the UK by websites such as pricerunner. This service is now offered by the likes of Google, via their 'Shopping' search tab.

Most price comparison engines earn their income through one of two ways. They collect a % of each sale through their site (2-5%) or they charge per click through their site (the retailer pays in both instances). Google on the other hand, do not, or did not charge retailers a penny for listing them. Therefore, their database of retailers can be more expansive, because, which retailer would not wish to submit their database feed, when its free and generates additional traffic. Therefore, it's recommended to make Google's shopping search a first port of call.

However, you may still be wondering, what kind of price would you expect to pay for a pair of shoes today? After conducting research into 52 footwear brands, totally 623 pairs, we can categorise shoes into two main price groups.

Below £40
£40 and Above

As a percentage, 34.3% of shoes were below £40. Whereas 65.7% were above £40. The 'mean' average price was in the region of £49.99. Only one pair of shoes was priced below £14.99.

In conclusion, and speaking generally. If you find a good quality pair of shoes you like, price compare to find the lowest seller, and they are below £49.99. It would be fair to say your purchase would represent a 'cheap' deal.