PARIS — Thanks to the long-distance stamina of the ath-leisure movement, the sneaker boom has longevity.
That’s the consensus of a number of sneaker industry veterans forecasting continued organic growth for the sector and a further cross-pollination of the fashion and sneaker worlds. As the athletic categories in both footwear and apparel continue to outpace fashion, brands are looking to leverage the potential in these worlds colliding, they say.
The global market for sports footwear in 2019 is expected to generate $146.09 billion versus $134.31 billion in 2018, according to market research firm Euromonitor International, with growth for 2020 expected to remain constant, climbing to an estimated $158.95 billion.
Intensified interest from the industry in sneaker and streetwear resale players generating a healthy chunk of the activity, like Stadium Goods, which was recently acquired by Farfetch, indicates there’s still plenty room for opportunity.
StockX, meanwhile, is beefing up its activity in Europe, including the opening of its first authentication center in London in November, with others planned for Europe. Since launching in early 2016, the fast-growing company recently surpassed the $1 billion mark in gross merchandise value. The company’s top three global best-sellers for 2018 were the Adidas Yeezy Boost 350 V2 in butter; the Adidas Yeezy 500 in blush, and the Adidas Yeezy Wave Runner 700 in solid gray.
For Josh Luber, StockX’s cofounder and chief executive officer, the sneaker market is still in its infancy. “We’ll look back in four or five years and think: ‘Wow, at that point it was just a fraction of what it is [now].’ We’ve a long way to go before the resale market is saturated because it’s only a small piece of the overall retail market,” he said.
For Luber, the resale market started flourishing in late 2011/early 2012, on the back of Instagram — “and Instagram going through its own growth after Facebook bought it, and all the sneaker heads now having access to seeing what all the other sneaker heads in the world are wearing.”
From that point, the retail and resale markets started to blur, he added. “The global retail market is [worth] about $100 billion; the global resale market today is worth $5 billion to $6 billion, so we’ve a long way to go before they’re fully blended together.”
For Matt Powell, vice president, senior industry adviser for sports at NPD, “We’re in a permanent state of ath-leisure.” Since the “big boom” year for the ath-leisure sector in 2015, the market, while maybe not as robust as years past, with a patchy performance from certain players in 2018, continues to develop nicely, he said.
According to Powell’s year-end 2018 blog, athletic footwear sales in the U.S. last year grew in the mid-single digits, exceeding expectations due to strong fourth-quarter results. But with sales on performance footwear categories like running, training, and basketball “negative for the third year running” as the ath-leisure trend fully usurps athletic footwear, he sees “opportunity” in athletic-inspired sneakers with a performance-based heritage — a plan of attack tooted by Adidas chief Kasper Rorsted during the presentation of the brand’s fourth-quarter 2018 results earlier this month, even if sales of the Stan Smith and Superstar business have slowed significantly.
When it comes to the main drivers of the business, however, hype releases and cult fashion sneakers like the Balenciaga Triple S — despite their powerful marketing value — are “irrelevant” in terms of dollar sales and quantities, according to Powell. Compared to an estimated 400 million pairs of sneakers produced yearly by the sector’s kings, Nike and Adidas, designer shoes are made in the thousands of pairs, he explained.
Cue one of the reigning sneakers for the U.S. market over the past few years: the Nike Tanjun, a basic sold through “more moderate retail chains” and priced around $65. The biggest selling sneaker in history, meanwhile, is likely to be the democratic Converse Chuck Taylor All Star, released in 1917.
From long-running collaborations with Adidas by designers including Yohji Yamamoto, Rick Owens and Alexander Wang, to recent buzzy sneaker hook-ups by brands including Vetements and Fendi — with Swear and Fila, respectively — fashion has long had a foot in the sneaker world. But the hot sneaker trend was happening “way before these designers started getting into the business,” Powell pointed out. Ditto for the ath-leisure phenomenon: “The athletic more mainstream brands were on that trend way before the designers thought about it,” he said.
Even in terms of styles, the fashion world is more of a follower than trendsetter, according to Powell, who sees fashion sneakers as being very derivative. “The ‘ugly’ dad shoe trend: that came from the street. It did not come from a brand saying, ‘Oh, we’re going to make dad shoes.’ It was all consumer created,” he said.
Once characterized by pockets of sneaker activity around the globe, as StockX’s Luber observed, sneaker culture’s growth and popular appeal has spread on the wings of the Internet, and the ease of buying and selling online. Today anyone, at any age, can be a sneaker head, and as social media and communication has sped up, so too has the excitement around the products.
In terms of generational shifts, people in the 50-plus age bracket likely still wore dress shoes to school and work. Then for the generation just under that, said industry expert Paul Ruffles, former managing director of Size? and Footpatrol, “you tried to wear sneakers to school, you lived through that progression of bars and clubs changing their code to accept sneakers.”
Today they’re ubiquitous.
“Everyone wears sneakers, you’ve got this growing mass being fed by younger generations entering the sneaker-wearing populous,” continued Ruffles, who plans to grow old wearing his. “I’m not going to stop wearing sneakers now; if I turn 60, a switch doesn’t suddenly turn on and I’m wearing golf slacks and shoes. It doesn’t happen any more. I find it quite amusing, the idea of being 75 years old and listening to Ice Cube and wearing Jordans still, but it’s a reality that could happen.”
That the digital age has also facilitated the proliferation of fakes and untrustworthy sellers has also contributed to the success of the resale market as trusted platforms, meanwhile. Consignment stores and marketplaces including the sneaker resale app Goat and Fight Club are driving not only volume but also awareness, educating the customer about products and sneaker culture.
“Really smart thinking is betting on the fact that [the resale market] is going to grow in scale,” said Stadium Goods co-founder and co-ceo John McPheters. “We’re at the tip of the spear in terms of hype and consumer interest. We see movement in terms of brand preferences, places to shop, and the selection held by retailers, but in no way, shape, or form is the market slowing down,” he said.
The timing of the company’s opening three years ago was risky, he conceded, with Jordan, “the backbone of the aftermarket,” on the precipice of a huge slowdown due to a tremendous oversupply in the market.
But players including Adidas and Nike “came in overnight and picked up the slack, driving continued growth through that period even with one of the marquee brands having a hard time,” he said, concluding, “And that just speaks to consumer interest that is ever evolving and changing. The growth continued through that period, it continued long before then and it will continue going into the future.”
For McPheters, the resale market has blossomed in part “due to the demand and desirability of shoes being underestimated by brands.” In turn, “Brands have tried to manufacture that sort of demand and heat through limited editions and drops and the reselling heat,” to varying degrees of success.
Jordi Chris, general manager of Amsterdam-based concept store Four Amsterdam, which recently received a surprise visit from Kanye West, said the frenzy around Balenciaga’s Triple S shoe had calmed since being made more widely available.
The hype around the Adidas Yeezy Boost has gone the same way, he asserted. “We still sell them on the day that they drop, but you don’t see 200 or 300 kids in front of the store anymore. The camping style is not there anymore. That’s something that’s changing,” said Chris. Via his more exclusive Off-White hook-up with Nike, “Virgil [Abloh] is now doing what the Yeezy business did three or four years ago,” he said.
Feedback provided by Adidas’ Rorsted at the presentation of the brand’s third-quarter results last November, however, would suggest otherwise. The media mentions and search interests for the Yeezy Boost 350 V2 (launched last September, with an estimated one million pairs released), he said, “surpassed any previous Yeezy release, which helped us drive e-commerce traffic, generating millions of visitors to the site.”
Though the “democratization” of Adidas’s Yeezy franchise led to unexpected gains, NPD’s Powell warned of a saturation point on collaborations. “There’s a collaboration announced every 10 seconds. They’ve started to just become noise, nothing stands out now, and there are so many of them, they’re hard to keep track of,” he said. “Collaborations were originally about an emotional contact between the collaborator and the brand or the shoe, there was an authenticity to it, and now it’s just about who’s getting paid to wear what. We’ve lost a lot of luster here.”
One of the ramifications of the democratization of sneaker drops in the digital age, according to Ruffles, is that kids are now using the value of goods to stand out from their peers. Prices have increased as demand has increased. “It’s no longer about having the latest Jordans and a Supreme T-shirt, because all their friends have got that now. They need to go the next stage,” he said.
At the extreme end of the scale, Stadium Goods recently sold a limited-edition version of the Nike Mag from “Back to the Future Part II” by auction for $60,000.
“Money changed the game,” echoed Enson Malbranche, creative director of Paris-based concept store Nous, which recently opened a second store geared to streetwear, located bang opposite its existing store on Rue Cambon. Some “major” sneaker collaborations are in the works, said Malbranche, who for 18 years worked alongside Sarah Andelman as a buyer at Colette, specializing in sneakers and T-shirts. He cited Luka Sabbat among rising influencers.
Amongst other high-impact influencers, for Stadium Goods’ McPheters, obviously, “you can’t understate the sphere of influence of both Kanye West and Supreme’s James Jebbia.” Sean Wotherspoon and Yoon Ambush “have emerged as important voices,” while from a design perspective, “Virgil Abloh is still on his incredible run.”
Marking possibly the largest single person collaboration in the history of the brand, Abloh’s “The Ten” collaboration with Nike for his Off-White brand in 2017, where 10 styles launched in quick succession, for McPheters represented a much more built-out, thoughtful way of making a big play.
“There’s going to be a continued cadence of releases, there’s going to be new talent to continue to drive the hype,” McPheters predicted.
Regarding the most relevant brands, sneaker specialist Ruffles said that Adidas has led the way in terms of aligning with entertainers, “where a lot of the young energy sits,” as opposed to sports talents. “With the first Yeezys, then the Pharrell Williams pieces, it became an undeniable fact that musicians, rappers, had more cultural value than sportsmen,” he said.
Classic influencer marketing, however, is in for a “cleansing period,” he asserted. “People are starting to see through it,” he said. “People are sick of shallow images of people pouting in the mirror with a pair of sneakers they got for free.”
NPD’s Powell also flagged the dynamic growth of Adidas versus a flattish performance in 2018 from market leader Nike. But the “real energy,” he finds, is coming from smaller brands like Puma, Fila, Vans and Reebok. Ultimately, though, it’s the consumer that’s shaping the trends.
“Ten years ago, I would have told you brands shaped the trends, and I don’t think they do that anymore. I think the consumer is going to continue to drive what’s next in the market,” he said. “It’s more challenging for brands to understand that, and be a part of it, but I don’t think they have any choice but to accept it.”