Science of the Drop

NEW YORK — On an unseasonably warm April day in New York, a young man practically skipped down Lafayette Street with friends while shouting into the screen of his smartphone, “We don’t stand in lines!”

Proudly clutching a Supreme bag, he was taunting the crowd of people gathered outside of the streetwear brand’s SoHo store for the release of its latest product. For this shopper, who was presumably filming a video of himself for Snapchat or Instagram, procuring something from the cult skater brand and not having to queue for it was an accomplishment.

Such boasting rights reflect that the frenzy around drops of coveted sneakers and limited-edition apparel has intensified — along with their frequency.

“If you looked at our product flow during the Nineties, early Aughts or even five years ago, from a quarterly standpoint, 85 percent of our drops happened in the first week of the quarter on Friday and Saturday,” said Erik Fagerlind, the cofounder of Sneakersnstuff, a Stockholm-based sneaker boutique that also operates locations in London, Paris and Berlin. “Today we have about 40 to 45 product drops weekly that are spread out over Wednesday, Thursday, Friday and Saturday. These brands need social media mentions every five minutes and the best way for them to do this is by dropping product all the time.”

Because this market is growing and the demand is heightened, more players — resellers, brands, luxury department stores and specialty sneaker boutiques — are entering the product drop fray.

Yet it is still difficult for many would-be customers to actually purchase anything. As a result, brands and retailers are striving to make the chase as fair, convenient and engaging as possible.

Apps, games, temporary stores and even scavenger hunts are among the new tactics.

“The industry as a whole is trying to make sure that the experience the consumer has when they retrieve the product is just as premium as the product they are purchasing,” said Patrick Walsh, vice president of marketing at Champs Sports, which, along with Nike and Adidas, has launched an app that allows shoppers to purchase just-released sneakers without having to wait in line.

Many of these apps, which have been introduced over the past two years, provide the same function. Customers can enter for a chance to purchase a pair of sneakers. If they prevail, shoppers can procure them at the nearest store. Nike’s SNKRS app also ships product directly to the customer, and with Champs’ Reserve app, high-spending VIP customers have a better chance of obtaining the latest covetable shoes.

Adidas Confirmed App

Adidas Confirmed App 

For its Confirmed app, Adidas has turned the purchasing process into a game of sorts by prompting the customer to repeatedly tap on their smartphone screen once the sneaker has been released. YouTube is filled with tutorials on the tapping strategy that yields the most success.

While this mechanism has received barbs from some shoppers, Simon Atkins, vice president of brand activations at Adidas, asserted that the tapping helps provide a secure and fair experience that’s first-come, first-served.

“We want the users of the Confirmed app to be the final wearers of that product,” he said.

Offering a secure shopping experience online is a priority for most companies, but it’s particularly important for sneaker and streetwear sites due to bots — software that people create to infiltrate sites once product is released.

For example, during the release of the Yeezy 350 V2 last September, Sneakersnstuff blocked 40,000 bots from its e-commerce site. Many shopping apps help prevent bots, which can add product to a cart and complete a transaction faster than a human can. Sneaker heads can also pay a bot service to purchase items for them.

Another barrier for customers is the resale market, which is steadily growing and attracting investment. Stadium Goods, a sneaker and apparel resale marketplace with a New York store, raised over $4.6 million in equity funding this past January, and GOAT, an app dedicated to reselling sneakers, raised $25 million in funding in February.

“I love resellers,” said Keith Tran, co-owner of Black Market, a men’s streetwear and sneaker boutique with locations in Texas and California. “With bigger releases we do raffles to give everyone a fair chance, but if a reseller comes in and wants to buy a bunch of product from a release that’s not hype, I’m a business person and I want to move inventory.”

Many consumers feel differently about resellers, and that divide is most apparent among those who camp out for product releases.

“There is like this mafia of resellers who gang up on these kids and take over the lines,” said Mike Camargo, a sneaker influencer who used to work in sales for brands including Tackma and Billionaire Boys Club before starting Upscale Vandal Group, a consulting firm. “If a store has 700 items to sell, the first 250 pieces are going to go to resellers.”

For the opening of Palace’s first U.S. store last May, resellers began lining up in SoHo the night before the shop opened on Friday morning. Shortly after store associates began letting groups of customers inside, chaos ensued — so much so that the New York City Police Department had to close down the shop and turn away customers, who aired their grievances on Instagram.

“Palaceskateboards should have had a system in place for something like this. [It] could have taken people’s names down or something. [I] waited in the rain since 4 a.m. and didn’t get anything,” commented @noraasofficial. “Police shut it down — Palace didn’t have enough security, couldn’t handle cutters or bullies, and people were fighting and got arrested,” commented @theskiftesvik.

“In the beginning these launches were fun. Kids camped out and we bought them pizza. But now you have hundreds of people showing up and some are armed,” said Sneakersnstuff’s Fagerlind, who added that despite advancements in apps and e-commerce, the number of people who wait in line outside of his shops keeps growing. “We have security, but if we get allocated 200 pairs of sneakers, we don’t make more money by hiring more security guards. We want to make things safe, but we have to think about profitability and people don’t understand that.”

Unruly lines have been an issue for Supreme, which is set to open a Brooklyn store on Grand Street later this year. The company, which also operates nine international shops, has tried to alleviate security problems in Manhattan with a new release system. Every Monday before a Thursday drop, Supreme e-mails customers a meeting location in New York, which is usually a park, where security guards hand out tickets that dictate when they can enter the store, thus eliminating the need for a line or sleepovers on the sidewalk. Supreme has also dabbled in online-only releases to avoid crowds and disorderly conduct.

Although Supreme has practically mastered these weekly product drops, this summer it will work with Louis Vuitton to manage one of its largest and most anticipated launches. The strategy is to create a moment and make the product available at multiple venues around the world. The collection will be released via six pop-ups in six cities that are set to be open from June 28 to July 2. The assortment will also be released at Supreme stores and select Louis Vuitton flagships.

According to Michael Burke, chairman and chief executive officer of Louis Vuitton, the pop-ups, which will be located in unexpected locations, are a way to target the Millennial consumer.

“They serve a function to disrupt and make us look at things differently,” said Burke, who added that Vuitton plans to disclose the confirmed locations only one day before the release. “There will be no marketing and no press release. We won’t be pandering to the customer. It’s all about peer-to-peer communication. We provide a very minimum amount of information and let the people judge us from there.”

This approach has worked for the luxury firm, which is no stranger to pop-ups. For its second collaboration with Japanese brand Fragments, which was released earlier this year, Louis Vuitton opened a pop-up at Tokyo’s Mass and Ba-tsu Art Gallery that was outfitted with a vinyl record store and a repurposed subway car. Burke said Vuitton sold $2 million worth of product on the first day and ran out of merchandise after a week. The temporary store was meant to be open for two weeks.

Shoppers at the Vetements x Maxfield Dry Cleaning event.  Katie Jones/WWD/REX/Shutterstock

More and more luxury retailers are embracing spaces dedicated to streetwear and sneaker assortments. And to attract the customer who shops these collections, department stores such as Bergdorf Goodman and Maxfield are beginning to adopt the distribution plan that was pioneered by brands including Supreme and Nike.

Maxfield started its pop-up series last year and has worked with brands including Off-White, Vetements, Fear of God and Amiri on temporary shops located across the street from the Los Angeles boutique in a 2,500-square-foot space. Brands are tasked with creating an immersive store along with exclusive product that’s released over the course of the store’s lifespan. Maxfield announces the pop-ups a week before they launch and grants its VIP shoppers access to the pop-up the night before it opens to the public. Then it serves customers in line on a first-come, first-served basis and limits each person to one to two pieces per stockkeeping unit. These pieces are only available in stores.

“We were determined to create a unique pop-up experience and felt that we needed a space separate from our primary retail location in order to achieve this,” said Peter Utz, Maxfield’s chief branding officer. “The pop-up store is a great way of introducing our main store to a younger clientele, therefore increasing cross-selling. The results have been extremely positive.”

Daishin Sugano, GOAT’s cofounder and head of product design, predicts more brands will concentrate on engaging the customer in new ways with product drops.

“With this last wave of updates by the brands, their raffle systems have resulted in a more fair and safe experience to purchase a pair of sneakers,” said Sugano. “In the next wave, we expect that releases will live in a variety of forms, will touch on more experiential solutions and look to push more unique experiences to consumers.”

Many companies are already trying this out. For the release day of the KAWS x Air Jordan 4, Union Los Angeles — which received 13 pairs of the shoes — put together a scavenger hunt for its customers; those eager to cop ran around the city looking for a ticket to purchase the sneakers.

Nike recently updated its SNKRS app with a Stash feature, which sends notifications to customers in specific cities and presents clues to help users identify a mystery location or Stash Spot where they can then purchase sneakers with their phone. Nike is also trying out surprise drops with its Shock Drop feature that’s been added to the app.

Frenzy, a sneaker-purchasing app from Shopify, has become a tool for independent stores including Kith and Social Status. This past March, Frenzy launched Dropzones, a geo-fenced area in a specific location where customers can purchase shoes via the Frenzy app.

Overall retailers believe the increase in drops and the innovation around them has been good for business. Fagerlind said Sneakersnstuff’s business has grown between 40 and 75 percent each year over the past five years.

But such success can have its downside.

“It’s like having a final exam every week. There is always new product to promote,” said Black Market’s Tran. “But I’ve recently started to notice that we are losing the customer who would come in and shop with us regularly on a weekly basis. These kids only have a finite amount of money so they probably say, ‘I won’t go into the store this week. I will just wait until this drop.’ But I don’t want to be the Hypebeast store. I don’t want to be open just to have lines. The point of having a physical store is so people can come in and take part in a community.”

Fagerlind said he’s encouraged by brands’ attempts to enhance product drops, but believes they aren’t addressing the primary problem: scarce merchandise. In an Instagram post, he detailed his issues with the release of the Yeezy 350 sneaker last year, which drew 5.5 million visitors to Sneakernstuff’s e-commerce site. Fagerlind said he gets nowhere near the quantity to cover even 1 percent of the demand.

“I see a lot of people angry, frustrated and sad. And I share their frustration. We do all that we can for a fair and smooth release, but since we get nowhere near the quantity to cover even one percent of the demand, people still mistrust us. I think there is a lesson to be learned here @adidasoriginals. If you continue to undercut the market this hard, people will get tired of trying,” Fagerlind wrote.

On the other hand, Camargo believes the demand for sneakers and streetwear is too high for annoyed customers to have a big impact.

“Yes, there are more kids complaining about it and they are more vocal, but for every kid that’s willing to be like, ‘I’m done dealing with this,’ there are five other kids who just turned 16 and say, ‘Yeah, I’m willing to deal with this,'” said the consultant Camargo. “This has been going on since I was a kid and it’s not going to stop.”

EDITOR’S NOTE: Street Signs is a recurring feature dedicated to sneaker culture and the vibrant streetwear scene.

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