Kasi Kicks Business Plan — The Size Curve: Where Footwear Margin Is Lost
A pair arrives in a size the buyer did not choose. Broken size curves drive markdown, and markdown is where footwear retail margin disappears.
The Size Curve: Where Footwear Margin Is Lost
Jump to section
- Overview & contents
- i. Important Notice and Basis of Preparation
- 1. Allocation: What You Are Allowed to Sell
- 2. Executive Summary
- 3. The Size Curve: Where Footwear Margin Is Lost
- 4. The Store and the Channel
- 5. SWOT and Competitive Position
- 6. Organisation and Compliance
- 7. Financial Plan
- 8. Break-Even and Debt Service
- 9. Investment Analysis
- 10. Sensitivity and Scenario Analysis
- 11. Risk Analysis
- 12. Implementation Roadmap
- 13. Key Performance Indicators
- 14. Key Assumptions
- 15. Conclusion and Recommendation
- A. Appendix A: Consolidated Financial Summary
- B. Appendix B: Allocation, Size Curve and Store Schedules
- C. Appendix C: Funding, Debt and Stock Schedules
- D. Appendix D: Risk Register
- E. Appendix E: Glossary
- 3.1 Why footwear is different from apparel
- 3.2 What discipline is worth
- 3.3 The markdown cascade
3.1 Why footwear is different from apparel
A shirt comes in perhaps five sizes and most of the demand sits in three. A sneaker style comes in nine or more men’s sizes, and the buyer commits to the whole run months before the first pair sells. Industry planning benchmarks put roughly 60 to 70 per cent of units in four or five core sizes, and the consequence is that footwear turns stock only about 4.4 times a year against much faster rates in general fashion.
|
Size |
True demand |
Flat buy |
Weighted buy |
Residual on a flat buy |
|---|---|---|---|---|
|
UK 5 |
3.0% |
11.1% |
4.5% |
81 pairs |
|
UK 6 |
6.8% |
11.1% |
7.6% |
43 pairs |
|
UK 7 |
13.5% |
11.1% |
13.1% |
0 pairs |
|
UK 8 |
19.6% |
11.1% |
18.1% |
0 pairs |
|
UK 9 |
20.5% |
11.1% |
18.8% |
0 pairs |
|
UK 10 |
17.0% |
11.1% |
15.9% |
0 pairs |
|
UK 11 |
10.8% |
11.1% |
10.9% |
3 pairs |
|
UK 12 |
6.1% |
11.1% |
7.0% |
50 pairs |
|
UK 13 |
2.7% |
11.1% |
4.2% |
84 pairs |
The pattern is stark. On a flat buy, UK 5 and UK 13 together leave 165 pairs of unsellable stock, while the core sizes sell out and the sales that would have followed are simply lost. The style may look like it performed reasonably in total, and the margin has already gone.
3.2 What discipline is worth
|
On 1 000 units of one style |
Flat buy |
Weighted buy |
|---|---|---|
|
Sold at full price |
738 pairs |
953 pairs |
|
Full-price sell-through |
74% |
95% |
|
Marked down |
262 pairs |
48 pairs |
|
Sales lost to stockouts in core sizes |
262 pairs |
48 pairs |
|
Revenue at a 40% residual markdown |
R1 217 472 |
R1 335 248 |
|
Gross profit |
R569 472 |
R687 248 |
|
Gross margin |
46.8% |
51.5% |
3.3 The markdown cascade
|
Stage |
Discount |
Selling price |
Gross profit |
Gross margin |
|---|---|---|---|---|
|
Full price |
0% |
R1 360 |
R712 |
52.4% |
|
First markdown |
20% |
R1 088 |
R440 |
40.4% |
|
Second markdown |
40% |
R816 |
R168 |
20.6% |
|
Clearance |
55% |
R612 |
(R36) |
-5.9% |
|
Terminal |
70% |
R408 |
(R240) |
-58.8% |
Industry commentary notes that full-price sell-through across fashion has fallen from a norm of 70 to 75 per cent down to roughly 50 per cent at many retailers, turning markdown from a clean-up tool into half the business. This plan assumes a blended full-price rate of 73 per cent, which is above that degraded norm and is achievable only because of the size-curve discipline in Section 3.2. If the discipline fails, the assumption fails with it.