Shoe SkinsCustomer-Driven Feasibility Study

Bristol, Cuozzo, Holz, Lyman, Patibandla, Sexton

• Research Performed and Customer Pain.• Shoe Skin System, Benefits, Target Market• Macro-Market information• Macro-Industry information• Key Learning’s and Conclusion

Executive Summary:Shoe Skins

Shoe Skins is a unique system that makes footwear fun by allowing children to easily change the look of

the their shoes any time they want.

“Being different makes me feel good.” Colin (age 8)

“At school, you don’t like to be the same. You want to stand out.” Vika (age 11)

“I like clothes and styles that nobody else has. “ Phoebe (Age 7)

“Shoes that could change colors would be cool.” Allison (Age 8)

Research Data

Child and parentinterviews Parent Survey

90% of parents said kidsInfluenced their shoe buying decision

80% of the timeparents will buy at a retail store

1) Sneakers

2) Sandals

3) Crocs4) CharactersSneakers the most

Popular shoe…

Customer Pain

Parents: Having to buy multiple shoes for kids.

Kids: More choices and styles with their shoes.

Benefits of the Shoe Skin Solution

Variety of colors

and styles

Offers individuality and

self-expression

Ability

to share,

collect, and

trade skins

Cost effective – less need for other shoe purchases.

Benefits

The Shoe Skin System

High “cool” factor

with something new

and innovativeGreen: less shoes,

recyclable skinsOnline socialnetworkFun online

games and activities

Related Offerings and Expansion Possibilities

Licensing potential Unique designs,

match with outfit

Accessories (matching

Laces, pins, jibbets even)

Color, and pattern options truly endless.

Limited Editions from artistsAdd-ons such

as noises, LEDs

Fitness tracking:

GPS, Pedometer

Potential Pricing

SECONDARY SOURCESPricing of existing novelty shoe

offerings:• Customizable Converse

sneakers: $58 - $95• Heelys: $43 - $80• Crocs: $20 - $40; Jibbitz

(clip-on decorations) $3 - $6• Sneakart stickers: $12-$14

PRIMARY SOURCES• All parents interviewed would

pay $30 for the shoe skin system.

• 40 parents surveyed on typical price paid for a pair of children's shoes:

• < $25 35.9%• $25-$35 43.6%• $35-$50 17.9%• > $50 2.6%

This data supports a pricing range of $20 to $30 for the Shoe Skins system.

• Target Market: 5-12 age group

• Two segments: <9/>9• US Census: Estimated

36M 5-12 YO in 2008• Composes 68% of the

total $6.2B children’s footwear market

• 5-12 YO market: $4.2B in 2009

Target Market• Accessory Market• Benchmark: Jibbitz

• Feb 06 sales: $212K• Aug 06 $2.2M • Oct 06 sold to Crocs

for $20M

Macro trends indicate a huge potential for Shoe Skins beyond Children’s Shoes

Market size in Volume Sales:• Growing at CAGR of 5.1% during year 2001-06 & expected to grow at 6.4% during

year 2006-11• Children’s market represents 22% of overall US footwear market• Volume sales are growing at a higher rate than value sales• Both Children’s and Women’s footwear market is expected to grow at a faster rate compared to Men’s market

Macro Market Size

Macro Market SizeV2Children’s Footwear

Market Size in Value Sales: $6.2 Billion in 2009

• Expected to grow at 1.9% during year 2006-11

• Children’s market represents 13% of overall US footwear market

• Both Children’s and Women’s footwear market is expected to grow at a faster rate compared to Men’s market

Children’s Shoe AccessoriesOverall accessory market $37

Billion in 2006 • Difficult to estimate kids’ shoe

accessory segment• Assume half of ratable adult market• Estimated Market Size in Value Sales:

$2.6B• Growing at roughly 3% per year

Trend Description Favorable Unfavorable

Political Regulatory Environment

√

Economical Economic Down Turn

____ _____

Social Going Green √Social Obesity √Technological Online Shopping √Technological Online Social

Networking√

Macro Trend Analysis Summary

Overall Assessment: Moderately Favorable • Footwear is a necessity• Must be replaced often• Large customer base• Slow but steady growth• Appetite for customization• Opportunity for effective/focused marketing • Favorable social trends to re-usable and

fitness related products

Macro Market Summary

SUPPLIERSLow

RIVALSHigh

BUYERSLarge Chains: HighSmall Retailers: ModerateOnline: Low

SUBSTITUTESModerate

NEW ENTRANTSModerate

BARRIERS TO ENTRYModerate

?

Industry Attractiveness

Summary Assessment: Low Attractiveness• US manufacturers outsourcing production to Asia• Consolidation among manufacturers and retailers• Discount stores surpassing specialty footwear outlets• Retailers beginning to bypass wholesalers• Rampant copycat activity

ImplicationsInnovative products can find success (e.g., Crocs, Heelys)

• Must be even more thoughtful about strategy• Design strategy (IP)• Channel strategy

Industry Trends

In summary…• Market is moderately attractive• Industry is unattractive• Will continue to research micro market to

strengthen our value proposition• Business model development will be crucial to

overcome industry unattractiveness

Conclusion

Appendix

Who are the customers?• Boys and Girls

– Ages 7-12 yrs– Friends important– Very active (sports, dance,

etc.)

• Grandparents/Aunts/Uncle• Want their kids to have something to

remember them by and like them.• Want their kids to have best, latest

things.

• Parents– Want durable shoes that are

comfortable for the kids– Want their kids to be happy– Save money on multiple shoe

purchases

• Companies• Access to a large target market

to extend their brands.

Who is seeking the benefit?

Who else would buy?

CROCJibbets

CustomConverse SNEAKART

• Strong word-of-mouth.• Loyal customer base

• Break easy• Warm weather only,

limited activities

• Many activities• Any season, any

weather.

• Established brand.

• Difficult online setup• Limited to colors.

• Many styles, accessories• Share and swap.• Online social network

• Cool styles, make your own styles.

• Use with any shoe.

• Hard to Adhere• Fall off easy

• Easy to attach, remove• Durable

PROS

CONS

SS B

ENBenefits over other solutions

• Other ideas that came up during interviews.– Shoes that click, make noise– Skins that match your outfit for the day.– Theme shoes (elf shoes, princess slippers, etc.)– Shoes that bounce– chameleon shoes– Track your swapped style on the web. What are your

shoes doing now?– Track fitness (How far you walked/ran today)– Others as well (see notes)

Other ideas we’re considering

• Do we want to take on the full shoe manufacturing? Should we just stick with skins for any shoe?

• Will it stay on with excessive activity?

Current Challenges

Shoe SkinsShoe Skins is a unique system that makes footwear fun by allowing children to easily change the look of the their shoes any time they want.

The Shoe Skin System Web site mock-up

The System• The Shoe Skins system comprises a base model casual shoe

(or line of shoes) plus a removable “skin,” such as those available for laptops and cell phones.

• The skin will affix to a special surface on the shoe.• Shoe Skins will be sold separately in many different colors and

patterns and contain robust potential for licensing opportunities.