It’s been a year of big deals for sneaker retailers.
Sneakersnstuff, a specialty sneaker retailer that was founded in 1999 by Erik Fagerlind and Peter Jansson in Stockholm, was acquired by FSN Capital, which will enable the company to expand its store-opening plan to two to three stores a year as opposed to one. Concepts, which opened its first unit in Boston in 1996, finalized an investment deal with Zappos.com, allowing it to open more stores.
On the resale side, Goat, a resale sneaker app, and Flight Club, a sneaker consignment store with locations in New York and Los Angeles, merged, and Farfetch purchased 100 percent of Stadium Goods in a deal with an enterprise value of $250 million.
But these deals have brought up questions about how big the sneaker industry can get and if growth will slow.
According to Karim Wazani, who is leading Zen, an online sneaker retailer that’s powered by Zappos and made its debut at ComplexCon, the business and people’s interest in sneakers will only continue to increase.
“The sneaker business is growing, there’s just a split between online and brick-and-mortar,” Wazani said. “People said the bubble burst in the Nineties with [Michael] Jordan retiring, but nothing changed. I think vendors are doing a better job of telling stories and we want to bring that to our site.”
The strategies sneaker brands pursue could determine their success, and different brands are taking different approaches. It’s rumored that Nike’s collaboration with Virgil Abloh on “The 10” is ending, while Adidas increased production — the brand reportedly released 1 million pairs — on Kanye West’s Yeezy Boost 350 V2 in an all-white colorway. Customers were only able to purchase the sneakers directly through adidas.com and the Yeezy Supply web site.
Finding the balance between making sneakers more accessible but maintaining exclusivity is a challenge, but Bernie Gross of Extra Butter believes the move by Adidas makes sense.
“Maybe this is an exit strategy for this style. Maybe they are trying to capitalize on this style, generate revenue and be done with it,” Gross said. “The sneaker community has grown so much. It’s great for Adidas and it speaks volumes on the power of Kanye. I think in today’s age it’s all about inclusivity and transparency. There’s no point of using someone like Kanye to only make 5,000 pairs of shoes. You want to use that asset and captivate a huge audience.”
Fagerlind said sneaker sales continue to grow and he’s not seeing a slowdown in Yeezy sales — the retailer still only fulfills 5 percent to 10 percent of the orders submitted via raffle, but he is noticing demand starting to plateau.
The solution to grow the business without saturating the market could be in the sportswear apparel realm — a focus for Nike, which is partnering with different influencers and personalities on new silhouettes. Nike recently partnered with Jerry Lorenzo on two new performance styles under the Nike Air Fear of God label. Lorenzo has also worked on a 10-piece apparel collection for the brand. Nike has also worked with Martine Rose and Matthew Williams of Alyx on a sneaker and clothing collection.
Whether or not the bubble will burst is yet to be seen, but José Neves, founder, chief executive officer and co-chairman of Farfetch, believes it’s a viable space — the premium sportswear market is worth $70 billion — and worthy of investment.
“I think Stadium Goods has huge, huge potential as a global brand, as a global destination for streetwear,” Neves said in a joint telephone interview with John McPheters, Stadium Goods’ ceo and cofounder. “[It’s] a super strong brand with a great community. Look at the engagement that they have on Instagram, at the store on Howard Street and at the quality of the content that they create. I think this is an incredible opportunity in a growing market inside and outside the U.S. We’re just scratching the surface, really.”