Updated: Sep 23, 2020
You don't have to be a sneakerhead to notice that the prices of sneakers have been increasing dramatically over the years. No doubt the growth of the sneaker industry and the emergence of 'hypebeasts' on social media platforms is partially the reason why. But the question is are we getting what we pay for?
Production Cost - Materials & Markup Prices
Something plenty of us overlook when we buy a new pair of sneakers. As a customer, the last thing you're thinking about is how much it cost to make. It's also essentially what plenty of brands want us to overlook but unfortunately, we won't be doing that today.
When you compare the production cost to the retail price you can see an increase of at least 50-60% with tax excluded, some sneakers even have a markup price of over 100%. Courtesy of Highsnobiety we can see that the retail cost for the Yeezy Boost 750 Grey Gum was $350 (£265) and the production cost $76 (£57). The markup price is just over four times the production cost. The Nike Air Max 2016 presents a similar story, the markup price will throw you for such a basic sneaker. The production cost sits at only $33 (£25), whereas the retail price is $190 (£144), with a markup price close to 600 percent. So we ask again, are we getting what we pay for?
Let's look at the two brands leading the sneaker market, Nike and Adidas. They can be compared to the likes of Apple vs Samsung, one is the clear leader and the other disregarded. In 2017 Nike's revenue was $34.350 billion dollars and the revenue for Adidas in 2017 was $26.309 billion dollars. So what is the cause of this separation between these two brands? Are Adidas not producing the sneakers we want or have Nike finessed both their market and customer research to identify their unique selling point to know exactly what customers want?
All you have to do is look at Nike's releases over the last six months to see what sets these two powerhouses apart. The sudden demand for the re-emergence of the Air Max 98, new Air Max 97 and Air Max Plus colourways, the Hybrids - Air VaporMax Plus, Air Max Plus 97, Air Max 97 Plus and many more contributing factors. Don't get us wrong we love a Stan Smith, an NMD, an Ultra Boost, a Superstar and a Yeezy. But, what is stopping Adidas from keeping up with Nike? Could it be their lower prices and the amount that they sell or how the brand is being presented? How can Adidas catch up?
Influence - Sponsorships
Celebrities, influencers, and athletes all over the globe and on social media will eventually end up representing a brand or being sponsored by them. Take LeBron James for example, a basketball player sponsored by Nike. His popularity and how well LeBron plays may push someone to cop a pair of LeBron's to ball in because they feel like they'll be able to emulate his level of performance in them.
The LeBron 15 costs $185 (£140) and that's no coincidence because we have Paul George a less popular and talented player than LeBron James with his very own PG 2 priced at $126 (£95). The whole point of sponsorships is to bring more profit to any brand, more traffic to their website to help them stay ahead and continue to bridge a gap between them & their competitors.
Collaborations also contribute to the inflation of sneaker prices, and what brand have been snatching up the hottest collabs over the last six months? Nike. When one premium brand collaborates with another, you should automatically expect high prices. From Supreme, Off-White, Kith all the way to the Comme des Garcons. These collaborations are usually exclusive and a limited amount of products are available, but due to the hype surrounding news of the release we all swallow it up and rush to cop them without glancing at the price or taking a detailed look at the sneakers. Do we actually like these sneakers and want them or just want them for reselling purposes?
As consumers, we understand that brands want & have to make a profit to continue to be successful, which is gained through pricing. So, if they're going to try to 'finesse' and make a profit from consumers give us; quality, durability, a reason why we should buy from you instead of another brand. Simple justification for why we should spend X amount on your products. Whether it be in the form of materials that are being used or designs that are released. Help us find a reason that justifies your prices.
We'd love to hear your thoughts and opinions on this, have we missed any key points? Let us know below!
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