Arbesko is a Sweden-based family business dedicated to safety footwear. It all started five generations ago, in 1839, with what was one of the country’s first shoe wholesalers.

A company with a current annual turnover of 220 million SEK (25 million euros), Arbesko’s is a market leader with sales both in and outside the Nordic countries and with production coming from Sweden’s only shoe factory.

We spoke to Peter Geisler, Managing Director of the company, from the fifth generation of the family in charge of Arbesko. A conversation about the state of the footwear industry in Sweden, the performance of the industry in 2014 and its future expectations for the sector’s development.

Tell us a bit about your experience in the footwear industry?
I have been engaged with the footwear business for over 42 years. I am the fifth generation in the same family making shoes. We started making shoes in 1839 and have been focusing on safety footwear and technical footwear.

What have been your biggest challenges in the industry so far?
To go from 200 shoe factories in Sweden to one (ours) have been the most difficult issue. Always needing to be on your toes with cheaper competition.

Tell us a bit about the performance of Arbesko in 2014? What have been the main challenges?
2014 was the last bad year in the recession starting 2009. Volumes, Asian imports and cash flow risks have been challenging.
 
In your view what have been the main driving forces of Arbesko’s business through the years?
Innovation, innovation and innovation has been the necessary main task. We now hold 4 patents incorporated in our footwear. And more to come.

What about the future? What is in the pipeline for Arbesko, in terms of new markets and new products?
As per above, innovation productivity, lean production and very careful delocalication. The north American market with the same climate as Scandinavia is very interesting as also trade agreement comes much more into changing the market situation towards Europe.

What are the main challenges of operating in the safety footwear business?
For safety footwear the problem is Asia flooding the market with low cost, low quality shoes. The customer is blinded with sporty design that does not work. It takes time for the customer to change back to quality as sales is mostly done through distributors.

2014 was characterized by very slow growth in Swedish imports (+0.9%). What explains this performance?
On the safety footwear, imports have gone down. For consumer footwear the picture is unpredictable as it goes up and down with the weather, and we were faced with a warm winter, but I would say the impact was pretty much nil.

Swedish footwear exports were frozen (+0.3%). What explains this?
Arbesko is the only company producing in Sweden and exporting and we had a weak export performance as we export to Scandinavia and North Europe and these markets were characterized by slow growth economy.

In general, what’s your appreciation of the worldwide footwear industry in 2014?
I think focus is on Asia and the American market. Also Brazil. The rest has had a tuff year. One stunning exemption is Portugal, a very interesting case.

How do you see the industry performing in the next few years? Should we expect significant changes? Will increasing costs in China have an impact on footwear production map? What other factors might impact the distribution of production and its main players?
A million dollar question. The market will go up for sure but where and from where? Asia will go on expanding and it will be an increase in general too but it will be a slow recovery in many markets outside Asia. The labor costs in China has already been shown in Indonesia, Myamar, Vietnam, Cambodia and the Filipinas. Will it go on? Yes, but domestic consumption in China will keep the industry up, I think. For the rest I think big distributors will look more on Asia than they have until now. But then they have to cooperate with companies in Asia more. That we maybe will see.

What do you expect from 2015?
2015 already sees a recovery, however it moves slow but steady. We see again that customers come back for quality and added values. It looks as we are on track again. This would also be seen in sales of European made consumption.

Image credits: Arbesko