The famous princess, Cinderella’s tale teaches many significant morals. From teaching wealth isn’t everything in the world to kindness conquers, but most importantly her story teaches us never to underestimate the power of footwear. Though these days, it’s not heels that are winning consumers’ hearts — it’s sneakers. Sneakers have been a large part of pop culture ever since Converse induced into the market Chuck Taylor’s canvas basketball sneakers in 1921. The sneaker market is a wide and vast cultural playground wherein sports, hip-hop, and luxury come together and amalgamate. This is a market that has grown substantially over the last five years, progressing at a compound annual growth rate (CAGR) of 5.1%. While the footwear industry as a whole grew only 13%, sports footwear grew by an astonishing 46% according to data from Euromonitor International. This growth covers performance-based, outdoor and sports-inspired footwear, and all of those categories are poised to continue growing in the years to come.
Why the rave?
The epic tale of this rise began when ‘streetwear’ – a trend encrusted all around the expression of the mindset and the respective attitude of the wearer, came into play. Now, ever since “athleisure” became more than just a trend in the market , sneaker culture has become a phenomenon that is recognised worldwide and a full-fledged mainstream business with a lot of opportunity to bank on. Fueled by millennials and Gen-Zers, the sneaker business is projected to be worth a whopping $95.14 billion dollar industry by 2025, nearly doubling from its valuation of $55 million in 2016. It was only recently that this sneaker culture became prevalent in India but the country has been seeing a growing population of sneakerheads every passing day. This rapid increase in the craze of sneakers has fed an even quicker-moving market i.e. the much talked about resale market. The growth of this segment has been so massive that some sneakers may have a better return on investment than gold! It might sound a little absurd but it is true! For example, the original Nike Air Mag, worn by Marty McFly in the 1989 film ‘Back To The Future Part II’ was auctioned off on eBay for an unbelievable season amount of $92,100!
Even though athletic brands like Nike , Adidas and Reebok have been around in India for a very long time, it was only in recent years that sneaker culture became prevalent in India. In the summer of 2015, the first Yeezys made its way to the Indian stores. Approximately around the same time, Nike’s Air Max Day was launched in India making it the first-ever sneaker event in the entire country. Since then, this culture has only grown and never looked back. India has since seen launches of many coveted styles like Air Jordan and Yeezy Boost 350. In recent years, India has caught onto the subculture of collecting limited-edition sneakers or getting into raffles to win the latest pair of kicks, and occasionally resorting to the darknet for a sought-after limited edition pair. But it is not just brands like Nike or Adidas Originals that are getting this traction but even luxury sneakers like Balenciagas and Guccis are widely popular among the affluent crowd in India. When a celebrity gets involved with a particular line of limited-edition sneakers, many consumers want to get a hold of them, and they will buy them at any cost. Social media helps to further fuel their desires. Private collectors generate a lot of buzz among the audience that they command by posting pictures of their latest kicks on social media. The resale market also fuels the demand for these sneakers. Resellers typically wait in line outside brick-and-mortar stores for limited editions, so they can resell them online and they bank major profits by doing so.
What makes the sneakers worth so much?
This sneaker culture works on the model of scarcity. It’s about supply and demand. People want things that other people can’t get and they’re willing to pay more money for that. Again, if everybody can get one, nobody wants one. So it’s necessary to have a high level of rejection rate , which is accomplished by keeping things scarce. It’s like a small private college versus a huge public school. This model works on conspicuous consumption- when people show off by buying things other people can’t afford. This leads to something that economists call veblen goods. Usually when the price of goods goes up , their demand goes down. But for veblen goods when the price goes up , their demand also goes up and that is how hype works.
Take the example of triple white yeezys , they were a limited run. Then it came out that they were going to make a million pairs of the triple white Yeezys. This caused the retail price to tank!
And now they sell around in retail and no one cares about them. Do you think people would want Off White – Air Jordan 1s if there were a million of them? No! Fans are fickle and hype is fragile. Hype has to have some value to it , right? As soon as this curtain of hype falls down the consumers are already lining up for the next big thing because hype has a shelf life. Consumers find something that is equally attractive to them extremely quickly. You can’t take hype to the bank. People buy these limited edition sneakers to stunt , to stand out from the crowd and to command attention.
Consistent throughout human history, an imbalance between supply and demand of goods has always been one of the main force-drivers of an object’s desirability – the very existence of the diamond industry is just the most dazzling proof of this. The idea that an object is in short supply hooks onto the innate human desire to own something exclusive – to be one of the chosen few, and to be the object of envy of one’s peers. In 2016 the reselling industry made an estimated $1 billion in sales, and according to market research group NPD’s latest study of the global market, it could easily be as high as $3 billion in the present day scenario. The power of collaborations is exceedingly beyond what we could have ever imagined. Since the resale market is largely unregulated as of this moment, the trajectory of this industry can be seen as a case study in human psychology: How far will someone go to own the most exclusive collaboration sneaker? As the enormous mark-ups show, very far indeed.