Last week I shared with y’all my learnings from the meeting with my mentor, Coach Seth Berger, the co-founder of And One, and talked about how I can apply his ideas of how to identify a target market to my own sneaker business. But that was just a part of what I have learned from talking with him. As promised, this week I am going to take y’all back to the sneaker industry and take a look at its progress in this brand new calendar year. Without further ado, let’s get right into it!
2015 was a good year for most of the major sneaker brands. Nike, with the help of the Jordan Brand, kept its domination in the athletic sneaker industry. Under Armour has made a lot of progress, as it quietly surpassed Adidas to become the second largest sports brand right behind Nike. Adidas, however, reached a contract with Kanye West, arguably the most influential rapper/music producer/celebrity in the United States, and took a very solid step in its pursuit of dominance in the fashion industry. 2015 had not been a good year for us resellers, as Nike kept raising the retail price of sneakers, which resulted in a smaller and smaller profit margin for resellers. However, the “Kanye effect” by the end of the year again gave us some hopes, as “Yeezys,” the collaboration between Kanye West and Adidas, has become a sign of fashion and sneakerheads’ favorite. People are willing to pay over $1000 for a pair of them – now you know how influential Kanye can be while it all comes down to fashion.
The 2016 sneaker world started with a blast, as Kanye West, who had surprisingly decided to run the presidential election of the United States in 2020, dropped a new hip-hop track on Dec. 31st called “Facts.” In this track, Kanye West openly attacks Nike and Jordan Brand with an arrogant claim, “Yeezy Yeezy Yeezy just jumped over Jumpman (referring to Air Jordan).” In this track which entertained millions of sports/sneakers/hip-hop fans all over the world, Kanye also pulls out other aggressive lyrics such as “if Nike ain’t have Drizzy (referring to Nike’s contract with arguably the most popular rapper in the world, Drake) they would have nothing” and “Nike treated its employees like slaves.” As many sneakerheads know, Kanye, who used to have a contract and achieved great success with Nike, broke the contract with Nike due to “Nike’s unreasonable requests” and went with Adidas in 2015. Therefore, a duel between Nike and Adidas, something many of us have expected for a long time, finally comes with Kanye West’s new track in 2016.
In the first two months of 2016, Nike is doing what it is supposed to do – keep releasing new sneakers and advertise themselves just like before. While Nike keeps developing new colorways of Air Jordan Retros, they also bring back some classics that have been very popular when they were released tens of years ago. For example, Nike’s release of Air Jordan 4 Retro White Cement 1999 has turned out to be a huge success. This specific pair of sneakers, released in 1999 last time, has received lots of compliments from sneaker collectors, as it reminded many people of the memories of Michael Jordan’s successful basketball career. Two weeks ago, Nike also announced that Air Jordan III Retro True Blue, another legendary pair of sneakers, last released in 2011, will also hit the market later this year.
Besides that, Nike’s success also comes from its smart strategy regarding one of its most popular star celebrities, Kobe Bryant. As many basketball fans know, Kobe, regarded by many as the possible greatest basketball player of all time, announced retirement at the end of this NBA season. Kobe’s retirement has brought tons of reminiscence and emotional turbulence to his fans. Nike, actively taking this opportunity, produced a unique sneaker collection exclusively for Kobe Bryant, including Air Jordan 1 to Air Jordan 30, a total of 30 pairs of sneakers with specially designed Kobe Bryant colorway. The collection was auctioned off on eBay, and ended up selling for over $240k. Just like what Adidas has done with Kanye West, Nike uses Kobe Bryant to broadcast for themselves, and it is smart.
Even though it seems like Nike is not influenced too much by Kanye West’s open attack, Adidas has not slowed down its progress either. Again, with Kanye West’s help, Adidas brought in a huge amount of revenues through a restock of Yeezy Boost 350s. Moreover, Adidas has become more and more favorable for certain groups of people, such as us resellers, due to its selling strategy. Different from Nike who raised the retail price of the sneakers to bring in more revenue, Adidas did not raise the retail price for Yeezys, thus leaving us reseller a huge profit margin to pursue. Right now the retail price of Yeezy Boost 350s is $200, and this specific pair of sneakers can easily go up to $800 in the resell market. In theory, if Adidas raised the retail price to $500, the Yeezys are still going to be sold out; however, they choose not to do it, simply to attract more customers through a relatively lower price. I personally prefer such a selling strategy, as I feel that Nike is simply too greedy for revenues. What’s more, “Kanye effect” does not only apply to the Yeezy Series. As Kanye West wears some other Adidas sneakers such as NMDs and Ultra Boosts (two of Adidas’ major sneaker series besides Yeezys), these sneakers also receive tons of attention from sneaker collectors. The resell price of these sneakers also goes up, and Adidas has now become a label of fashion, just like Kanye West himself.
While Coach Seth, my mentor for the independent research project, does not like what Adidas is doing in the athletic sneakers industry, I actually appreciate their switch of focus to fashion. The “three-stripe” has been gradually replaced by the “trefoil,” as Adidas keeps exploring the fashion world thanks to the help from Kanye West and many other celebrities who are highly praised for their fashion tastes. I understand why Coach Seth is disappointed with Adidas – as one of the most preeminent sports brands in the industry a couple years ago, how can Adidas get bodied so easily by Nike, and even Under Armour? However, I believe that since Nike has already dominated the industry, it is smart for Adidas to take a different direction and explore something new. As someone who follows fashion, I think Adidas is doing a quite good job, not only in sneakers, but also in clothing items, to attract lots of customers who are not only athletes but also fashion maniacs.
And that wraps up this week’s blog post. Next month I am leaving Westtown for my senior project, as I will be appreciating and producing hip-hop music. My independent research project in entrepreneurship and the sneaker industry will resume in April, as I will head back to the exploration of different components of a successful entrepreneurship experience and my study in marketing. Stay tuned, peace out!