Sneakers, once a symbol of athletics, have transcended their primary function. The sneaker market is now in the billions.
Sometime decades after the world began paying attention to what Michael Jordan wore to his basketball games, sneakers became a $79 billion industry and a fashion symbol of our time. From sportswear to couture houses, sneakers have not only made their mark as cultural products, but literal ones as well.
In July 2020, right at the height of the global pandemic, an online raffle was held to decide which lucky ones would win the privilege of spending US$2,000 on the latest Air Dior sneakers. A couture house was launching a pair of sneakers, the most expensive in the world at the time, during an economic “pause” caused by the cessation of world trade as a result of Covid-19.
The Air Jordan is considered the Rosetta Stone of athletic shoe history, capturing that momentous moment of athletic greatness in the 1980s fueled by Jordan’s gravity-defying acrobatics on the courts while featuring Nike’s “Air Sole” technology. Nike. Sure, they inspired amateur B-Baller players to choose His Airness athletic shoes, but they also inspired the luxury fashion industry. No one would have guessed it.
Suffice to say, the Air Dior hype was unexpected, not even from designer Kim Jones, who is an Air Jordan obsessive and owns more than 40 pairs. Then, July 1st came and went, and the “Wolf Grey” Air Jordans with Dior’s distinctive “slanted” logo superimposed on the iconic Swoosh, sold out in seconds.
The first luxury tie-in in Air Jordan’s 35-year history fundamentally altered the sneaker landscape, hitting highs of $28,000 on StockX. Although auction prices have fallen to more “manageable” levels, they are still above five figures. Augustman spoke to Richard Xia, CEO and co-founder of Novelship, a trading platform that solves problems (i.e. availability and authenticity) with the buying and selling of sneakers and streetwear, about a new development some have dubbed “Sneakernomics.”
Sneakers have become one of the most highly valued assets in the world, on a par with commodities like gold and coveted luxury goods like Hermès bags, how did this happen?
Sneakers as an investment asset are a global phenomenon and, in terms of the Asian market in particular, it is the fastest growing. Personally, I think this is due to the rise of Gen Z and millennial consumers who are also more fashion conscious and peaking in terms of purchasing power, allowing them to purchase exclusive products. Another thing that makes sneakers one of the most traded assets is that sneakers are wild cards: they have a great aesthetic, they are very comfortable to wear and flexible.
Something like a pair of Dior Jordans can sell for up to $10,000, up from $28,000 before. Is there a market rationale for these kinds of stratospheric valuations or is it purely consumer sentiment?
I think there are two ways to think about this. One, it always comes back to demand and supply. I feel that consumer sentiment plays a role in supply and demand, but the main source that drives the price is supply and demand. In this case, Dior and Nike are coveted brands and it’s not a common collaboration, meaning there are only a few thousand pairs released globally. Naturally, the repressed demand for this type of collaboration is very high. That is the fundamental market for which the resale price is higher. The reason the resale price is higher than others is because of the way it is made, for example the silhouette of the shoe is Nike but the material is Dior.
Celebrity collaborations usually involve superstar athletes, now it seems like anyone can get in the game and get “over the top.” What makes a collaboration successful? Are all collaborations safe things?
When collaborations happen, there’s usually a lot of work going on in the background. Previous market research would have been carried out to ensure that a basic level of success can be achieved with such collaboration. There are collaborations that are more prominent than others and this is due to higher budgets in resources and marketing to generate enthusiasm around the collaboration. Personally, I think as long as you have the right celebrity and the right brand working together, you’ll more or less reach a basic level of success.
Lil Nas’ “Satan” shoes weren’t even that cool, and eventually Nike asked him to stop wearing their shoes. What happened there?
In my opinion, attractiveness is subjective and depends on the preference of the individual. In fact, the shoes were very popular and became a big deal, I think from a PR perspective for Lil Nas, it was great. It blew up online and sold out in a short period of time. Obviously, Nike wasn’t that excited about this. And the main reason is the inherent incompatibility between the “satanic” and “dark” vibe of Lil Nas’ launch and Nike’s branding as a hip, youthful family brand.
Haute couture brands from Gucci to Balenciaga are setting the pace in the luxury sneaker market, when did you stop “selling” that? How has luxury managed to go out?
Over the years, luxury fashion houses have seen brands such as Supreme, Stüssy, or even Off-White find success in appropriating streetwear. These brands broke the boundaries between streetwear and luxury and presented huge potential and market growth. Once these luxury brands saw the popularity of such collaborations and partnerships, especially among the younger generations, they began to change their strategies and work with streetwear brands. A simple proof of this is to take a look at the outlets of the big luxury brands. Now everything is streetwear and sneakers.
What does a diversified sneaker portfolio look like? How do you build a winning portfolio?
Before we begin, it is important to understand sneakers as an investment and that it is different from common types of investments such as stocks, bonds, etc. where you would be advised to have a diversified and balanced portfolio to reduce the overall risk profile for you. you can can achieve more consistent returns over time. However, in my opinion, I would advise against a diversified sneaker portfolio as you would not be able to make any profit. If you want to make a big return on your sneaker investment, whether in the short or long term, you need to take a leap of faith and take a gamble.
How can you know which “drops” will work well or will have value?
The reality is that some shoes work great while others don’t. However, most shoes don’t fail completely, which means they are relatively safe as an asset. For your first time venturing into reselling or investing in sneakers, it’s best to opt for a classic pair like the Nike Air Jordan 1 Retro High OG. No matter the silhouette, colorway or model, the Air Jordan 1 High tends to hold its value very well and is more likely to increase in price.
Another type of sneaker worth investing in would be the Nike SB Dunk or a sneaker collaboration with a designer or celebrity. One of the most valuable releases we had last year was the Nike x G Dragon PeaceMinusOne 2.0, which was an Air Force One release with the Peace Minus One G Dragon.
Does he deserve the Supreme hype?
I’d say the hype is real, as it definitely did a few things right to leave such a lasting impression on consumers.
What are some of the common or unique fakes you have seen?
In my experience, the two common fakes are the Yeezy and the Air Jordan 1. As for the unique fakes, we have seen very realistic and good quality sneakers due to the materials used or that they were hand-sewn. However, these unique fakes are not that common as they would be expensive to produce and you could buy them at near retail price or even higher.
Some vintage watches accumulate value when there are misprints or errors. Is it a similar phenomenon with sneakers?
Absolutely, and it happens all the time. I think the important thing to determine value is based on demand and how rare it is. By nature, typos are discovered fairly quickly and the batch of typos would be the last of its kind, so the price will go up dramatically.
Can you have your cake and eat it? aka “what’s the point of cool sneakers if you can’t wear them”?
I think it is possible as this helps you become a better collector or even a reseller. You need to develop an eye for good shoes or get enough experience to know what would be popular. Otherwise it would be a challenge unless you are a sneaker fanatic or have a strong interest in sneakers.
As for what’s the point of cool sneakers if you can’t wear them? ‒ I would ask the same question to people who collect expensive art, how would they pay millions of dollars just to display it in their home. I think it’s the same logic. There are sneaker fans and collectors who would encase their collections in glass domes and display them like pieces of art. For them, they don’t see them as sneakers but as a way to express their creative freedom.
Main and Featured Image: Air Jordan 1 Retro High OG ‘University Blue’- Nike
This story first appeared in Augustman Singapore.