An assessment of Rustan's Men's Footwear Technology / Charlotte P. Armero

Year : 2006

Number of Pages : 76 leaves

Adviser : Prof. Glen A. Imbang

Executive Summary

Rustan's showcases the best and most renowned international footwear brands. In line with the company's goal to be the luxury shopping destination in the country, men's footwear private brands strive to meet the international standards by addressing the needs and wants not only of their local clients but the tourists as well. The study is based, to a great extent, on the assessment of the various existing technologies in Rustan's men's footwear category. These technologies were divided into three phases to illustrate the numerous activities involved in bringing footwear products/services from concept to customer. These three phases are the following : Phase 1 is Product Research and Development, Phase 2 is Operations, and Phase 3 is Sales and After-Sale Service. Product Research and Development include : a) product research and development, b) raw materials sourcing, and c) technology application. Operations include : a) manufacturing process, b) shoes parts and components, c) sizing scheme, d) merchandise fit, e) quality control and f) footwear care and maintenance. Sales and After-Sale Service contain the following : a) sales people competency, and b) vendor relations. Prior to these activities, environmental scanning was also performed to gain additional knowledge on footwear technology at industry level. Rustan's caters to high-end market, which is also known as the "A Market". This market segment can afford luxury items and keep extravagant lifestyles. Furthermore, A market is willing to pay for anything that is worth the price. Thus, requires quality leather and right fit. They purchase mainly imported branded shoes, specifically Italian and some American brands, but, occasionally, they purchase locally made and branded footwear from selected boutiques, as well. Moreover, this market prefers exclusivity of design-e.g. for Shoe Gallery, 1 size per color per design so there is only one person wearing a particular design in that size and color. The findings of the study revealed the following : 1. The impact of globalization has paved way for quality but affordable imported shoes on the local market. For these kinds of shoes, Rustan's buys its merchandise from China and other Asian countries, not only because of their lower price but also because of the better leather raw materials. 2. In the footwear value-chain (please refer to Appendix A), the biggest problem being faced by the footwear industry is the sourcing of high-quality raw materials. The supply for local leathers continue to be insufficient and the cost is much higher when compared with the imported leathers. Imported leathers are cheaper by 30 percent. These may be the reasons (high cost and raw materials limitation) why some Footwear Retail Stores have already stopped manufacturing leather shoes (e.g. Girbaud) while others have opted to concentrate on the ladies shoes only (e.g. Le Donne). Other production-related problems are the use of outdated machines and the use of wooden lasts. Most of the shoe suppliers of Rustan's invest in second-hand machines. Some are still using manual processes, while others use semi-mechanized processes in their manufacturing operations.

3. At present, there is no Filipino footwear sizing scheme developed. Rustan's is dependent on American and European sizing guides. Thus, manifest the absence of research on anatomical features of Asian feet specifically the Filipinos who are petite in sizing when compared to Americans and Europeans. 4. The manner of technology transfer, such as training and seminars, for sales people trainings are generalized. No specific training module is developed for footwear selling. Most of them, if not all, lack product knowledge and fitting skill. 5. The Human Resource Development (HRD) of Rustan's is not yet successful in developing its sales people competency. The HRD has low intervention in trainings and seminars. Boskin and Lau (1992) indicate that the three principal sources of nations' economic growth and enhanced capital, labor and technical progress (or equivalent, total factor productivity). Capital can be defined as the goods and services used to produce other goods and services. It includes the machines, buildings, tools and improvements to natural resources. Labor represents the productive contributions made by all people who work. This is the human resource or human capital. Improvement to labor occurs with education, training and acquisition of new skills. 6. The poor linkage of the industry with relevant organization. Both the Philippine Footwear Academy (PFA) and Philippine Footwear Federation, Inc. (PFFI) in Marikina are underutilized. On one hand, PFA have a CAD machine donated by Machinebanks, which technology is from Korea. Also, they have brand fully automated machineries procured by the Philippine government through soft loan from German development bank. But with a few number of people being trained by PFA, these machines are not fully maximize. On the other hand, PFFI have not engaged in full marketing of local footwear products.