How do you cultivate a “cool” brand when nobody cares about your product? As sneaker brands try to elbow their way into a market dominated by Nike, some suspect the answer is to get people to resell your shoes, even though that doesn’t directly earn the shoe-makers a single cent. You see, this lucrative industry relies on buzz to get consumers lusting after their product—a thriving resale market is not a scourge, but rather an organic marketing engine, powered by sneaker collectors and those who gather up the shoes just to flip them for a big profit. (For a relatively recent example recall the Yeezy 350 Boost, those sock-like shoes that sold for $200, got scooped up by sneaker heads and resellers and, once scarce, started selling for over $1000.)
A report in Racked details how brands like Diadora and Saucony have benefited from an indirect sales strategy: by creating small, sought-after, limited-edition collaborations with fancy sneaker boutiques that cater to obsessives; hoping people camp out in front of those boutiques (or, lately, fill their online carts) to stock up on rare sneakers; and then expecting them flip those sneakers for big profits on the billion-dollar sneaker resale market, thus driving up their visibility and desirability.
Presumably what follows is this: the boutiques will want to carry more of the brand (including the less pricey offerings), competing stores then follow suit, and consumers who can’t afford the top-shelf stuff but still want to feel part of the brand opt for the down-market shoes at terrestrial prices. While selling out a small luxury line of sneakers won’t significantly affect the sneaker company’s profits, it sets off a chain of selling and reselling that stokes the precious flames of hype under the brand itself, driving sales on down-market shoes, and even emboldening the company to price future lines more aggressively.
Adidas has benefited the most from this model with their outrageously sold-and-resold Yeezy line and are expected by some analysts to chip away at Nike’s domination of the resale market—although Nike shoes filled 96% of that market back in 2014, Adidas is expected to notch 30% this year.
The noticeable exception to this model appears to be Under Armour, which prefers courting celebrity endorsements over colluding with chic boutiques. Under Armour stumbled into a potential goldmine with Steph Curry—an endorsement Nike notoriously lost out on after a sloppy pitch meeting where they mispronounced the man’s name and left Kevin Durant’s name in the slideshow presentation. Steph’s ascension has spontaneously ratcheted up the desirability of their shoes. Even absent the aesthetic sensibility and unnerving marketing savvy of Nike, some suspect Under Armour—which recently passed Adidas as the second-largest sportswear vendor in the U.S.—can compete with the industry’s obvious titan. Still, it’s difficult to imagine anyone accruing hordes of sneaker disciples the way Jordan did, and some wonder if any single celebrity can fill the void he’ll leave after his relevance fades:
While Nike will be the biggest brand by virtue of a 20-year head start, their narrative softens a bit with each passing season. “A lot of kids who are buying Jordans today don’t actually know who he was or his games or how important he was,” [Stadium Goods owner John] McPheters says. “Every year that passes, the harder it is to tell that story and have it resonate.” In other words, Jordan isn’t gone, but he’s slowly being forgotten. And half a dozen sneaker companies are rushing to take advantage.
Then again, maybe this is some Crying Jordan-era doomsaying, and your grandchildren will still want that Jumpman logo on their sneaker a century from now.