Once a symbol of athletics, sneakers have truly transcended their primary function.
At some point, decades just after the world started paying attention to what Michael Jordan wore during his basketball games, sneakers became a $79 billion industry and a fashion symbol of our era. From sportswear to fashion houses, sneakers have not only established themselves as cultural products, but also as literal products.
In July 2020, at the height of a 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 fashion house was releasing a pair of sneakers, the most expensive in the world at the time, during an economic “pause” caused by the shutdown of global trade resulting from COVID-19.
The Air Jordan is considered the Rosetta Stone of sneaker history, capturing that transcendent moment of athletic greatness in the 1980s, boosted by Jordan’s gravity-defying stunts on the courts while making his technology debut. “Air Sole” by Nike. Sure, they inspired amateur B-Ballers in choosing His Airness’ athletic shoes, but they also inspired the luxury fashion industry? No one would have guessed.
Needless to say, the Air Dior hype was unexpected, not even by designer Kim Jones, who is an Air Jordan obsessive himself, owning over 40 pairs. Then, July 1st came and went, and “Wolf Grey” Air Jordans with Dior’s distinctive “oblique” logo superimposed over the iconic swoosh, sold out in seconds.
The first luxury link in Air Jordan’s 35-year history has fundamentally changed the sneaker landscape by hitting highs of US$28,000 on StockX. Although auction prices have fallen to more “manageable” levels, they are still north of five figures. Augustman spoke with Richard Xia, CEO and co-founder of novela commerce platform that solves the problems (namely availability and authenticity) with buying and selling sneakers and streetwear, on a new development some have dubbed “Sneakernomics”.
Sneakers have become one of the most traded assets in the world, on par with commodities like gold and coveted luxury goods like Hermès bags, how did that happen?
Sneakers as an investment asset are a global phenomenon, and when it comes to the Asian market in particular, it is the fastest growing one. Personally, I believe this is due to the rise of Gen Z and Gen Y consumers who are also more fashion-conscious and are reaching their peak in purchasing power, allowing them to afford exclusive products. Another thing that makes sneakers one of the most traded assets is that sneakers are a catch-all – they have great aesthetics, are very comfortable to wear, and are flexible.
Something like a pair of Dior Jordans can sell for up to US$10,000, and it used to be as high as $28,000. Are there market fundamentals for this kind of stratospheric valuations or is it just consumer sentiment?
I think there are two ways to think about this. First, it always comes back to demand and supply. I think consumer sentiment plays a role in demand and supply, but the primary source that determines price is demand and supply. In this case, Dior and Nike are both coveted brands, and it’s not a joint collaboration, which means there are only a few thousand pairs released worldwide. Naturally, the pent-up demand for such collaborations is very high. This is the fundamental market reason why the resale price is higher. The reason the resale price is higher than others is due to the way it is made, for example the silhouette of the sneaker is Nike but the material is Dior.
Celebrity collaborations usually involved superstar athletes, now it seems anyone can get in the game and be “hyped”. What makes a collaboration successful? Are all collaborations sure things?
When collaborations happen, there is usually a lot of work behind the scenes. Prior market research would have been carried out to ensure that a basic level of success could be achieved with said collaboration. Some collaborations are bigger than others and this is due to larger resource and marketing budgets to build the hype around the collaboration. Personally, I think as long as you have the right celebrity and the right brand working together, it will more or less reach a baseline level of success.
The Lil Nas “Satan” shoes weren’t even that appealing and eventually Nike asked him to stop using their shoes. What happened there?
In my opinion, attractive is subjective and depends on the preference of the individual. The shoes were indeed very popular and it became a big deal, I think from a PR standpoint for Lil Nas, it was great. It exploded online and sold out in no time. Obviously, Nike didn’t feel so hot about it. And the main reason is the inherent incompatibility between the “satanic” and “dark” vibe of Lil Nas’ release and Nike’s brand image as a hip, youthful brand for families.
Haute couture brands from Gucci to Balenciaga are setting the tone in the luxury sneaker market, when did it stop being ‘sold out’? How did luxury manage to impose itself on the street?
Over the years, luxury fashion houses have seen certain brands such as Supreme, Stüssy or even Off-White gain success by co-opting 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 these collaborations and partnerships, especially among younger generations, they started to pivot their strategies and worked with streetwear brands. A simple proof of this is a look at the outlets of major luxury brands. It’s all streetwear and sneakers now.
What does a diversified sneaker portfolio look like? How to build a winning portfolio?
Before you 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 so that you may 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 a profit. If you want to make big gains from your sneaker investment, whether short or long term, you need to take a leap of faith and make a bet.
How can you tell which “drops” will do well or which will have value?
The reality is that some sneakers work great while others don’t. However, most sneakers do not fail completely, which means they are relatively safe as an asset. For a first venture into reselling or investing in sneakers, it’s best to opt for a classic pair such as the Nike Air Jordan 1 Retro High OG. No matter the silhouette, colorway, or models, the Air Jordan 1 High tends to hold its value very well and its price is very likely to increase.
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 a version of Air Force One with Peace Minus One G Dragon.
Is Supreme’s hype deserved?
I would say the hype is real because it definitely did some things to leave such a lasting impression on consumers.
What are some of the common or unique counterfeits you’ve seen?
In my experience, the two common knockoffs are Yeezy and Air Jordan 1. As for the unique knockoffs, we’ve seen sneakers that are very realistic and of good quality due to the materials used or the fact that they were sewn to the hand. However, these unique counterfeits are not as common as it would be expensive to produce and you could buy it at almost retail price or even more.
Some vintage watches increase in 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 its scarcity. By nature, misprints are discovered quite quickly and the batch of misprints would be the last of its kind, so the price will increase significantly.
Can you have your cake and eat it? aka “what good are cool sneakers if you can’t wear them”?
I think it’s possible, because it helps you become a better collector or even a dealer. You need to develop a good eye to spot good sneakers or gain enough experience to know what would be popular. Otherwise, it would be difficult unless you are a sneakerhead or have a very strong interest in sneakers.
As for what good are cool sneakers if you can’t wear them? ‒ I would ask expensive art collectors the same question, how they would pay millions of dollars just to display it in their homes. I think it’s the same logic. There are sneakerheads and collectors who would enclose their collections in crystal domes and display them as works 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 on Augustman Singapore