There's Change In The Air For The Sneaker Business

It's time to stop ignoring the youth.

For nearly 15 years I’ve been writing about sneakers and for what seems like the first time since I started this journey, I feel like I don’t know what to write.

First off, thank you all for subscribing. I know your time is precious and I hope that I can provide value as you take the time to read my opinions. If you know me from the footwear business, or from social media, you know I’m incredibly passionate about the sneaker business. With that in mind, I will certainly end up using this platform to stand on my digital soapbox and ramble at times. I apologize in advance. For those that are just tuning in, consider yourself lovingly warned.

Before I get into things, here’s what you can expect from me here. I want to use this platform to open doors for others. I truly believe that success is measured by the amount of opportunities you create for others and this platform will allow me to do that in a way that no other will. My experience in the sneaker business has provided me with incredible opportunities and not only do I want to give back, but I want to support the next generation of leaders in refining their skills along the way. Selfishly too, the better this business does as a whole, the more opportunities I will have. With the number of important people already subscribed, I’m looking forward to seeing the connections that will inevitably come from the conversations had here.

My one request from those of you reading this is feedback. I want to know your opinions, I want to know if I said too much or too little about something, I want to know how you think I can improve, and last but not least, I want to know if I made any typos.

Let’s get into it…

Looking At The Footwear Business In 2020

This week I want to talk about the current state of the footwear business. Years back, I wrote about what the business of sneakers would look like in the future for Complex and I think I did pretty well. The topic of predictions recently came up in the Sneaker History Discord and it got me thinking about where we are headed as an industry. Before I get into that, I think it’s important we look at a few of the things that are going relatively unnoticed right now in the business.

This year has been challenging for countless reasons but somehow, the footwear business has come out in much better shape than most industries. While I doubt Kanye West was not the only one that scored a PPP loan, I still think there’s a handful of elements that are propped up in ways that aren’t exactly rock solid. That’s not something to be scared of, it’s just something to be aware of. Times of uncertainty can actually result in major growth for those willing to take risks.

For instance, Nike announced they would lay off 500 people back in July. In September, their stock price hit an all-time high. Earlier this month, they announced 200 more layoffs. As of right now, their stock price is less than a percentage off of an all-time high again, up about 20% in total for the year. 2020 might have been filled with challenges but the ebb and flow of the tide seems to be rising for investors and high-ranking executives.

It’s not just Nike who has found success this year. Brands like Crocs, Hoka, Merrell, Saucony, Under Armour, Vans (even before VF purchased Supreme), and a handful of others have all reported impressive earnings in the last few weeks. It is actually quite impressive considering the tariffs that are in place until you realize the tax breaks available from the outgoing administration likely offset any extra costs to import goods.

Retailers, on the other hand, have obviously struggled with much of the world experiencing lockdowns of some kind for a good portion of the year. JD Sports, owner of the mall retailer Finish Line and European boutique size?, sales have been grim as of about halfway through the year. Foot Locker Inc., who owns one of the most diverse groups of brands, including Champs, Eastbay, Footaction, as well as significant investments in GOAT, Pensole, Super Heroic, and others, won’t feel the hurt of traditional brick and mortar retailers because of their broad range of investments in the footwear business.

But what about the Mom & Pop shops? Frankly, they’ve been on their way out for years. If you’re a listener of the Sneaker History Podcast, you’ve heard us talk about the struggles of smaller sneaker stores to maintain accounts with Nike. Though I do think some store owners just naturally suck at doing business, the shift away from smaller retail partners is not going away. As the saying goes, adapt or die.

The one piece of the sneaker world that seems to be unbreakable is the resale consignment store. In Los Angeles, many of the boutique resale stores now have multiple locations, some even just down the street from each other, and some even expanding globally. Aside from traditional supply and demand of hyped releases, what makes them more successful than traditional retail? Curb appeal. Literally, curb appeal.

Even before Covid was keeping everyone inside, the young sneaker consumer has flipped the social aspect of sneakers into something much more powerful than what it used to be. Instead of lining up at the mall, or camping in front of a boutique for a chance to buy a limited pair of sneakers, they’ve made the game of flipping (buying to resell) a part of how they consume sneakers.

While the old folks are digging through bootleg sneakers on Amazon (according to a recent FDRA poll, 44% browse shoes on Amazon), the next generation is turning sneakers into an entrepreneurial lesson for anyone willing to take a closer look.

Sneakers have always been a young man’s game, but now more than ever, the youth are shaping and molding something that is slowly but surely taking the power (and money) away from the brands and retailers. The irony is that many of the people who watch the business of footwear, NPD, FDRA, etc. are not even paying attention to the changes happening right in front of them.

Footwear Business Market Size

In the above graph from Statista, you can see the projected growth of the footwear industry. Sure, 2020 has seen a dip of roughly $4 billion dollars but depending on whose numbers you look at, the secondary sneaker market is not too far off from that number and expected to grow tenfold in the next decade.

As the resale and retail lines continue to become one and the same, it’s time that data companies change their view of the business of footwear and start to include the secondary market. If the modern consumer doesn’t think about the difference between buying from a traditional retailer or a resale consignment shop, then why should the data?

Despite all of the chaos in 2020, this an exciting time for the footwear business to once again evolve to fit the wants and needs of the most important buyers, the youth. The next generation already has their finger on the pulse of the sneaker business, it’s time to learn from them instead of dismissing them.

The future is in their hands, the sooner the old guard embraces that, the better this business can be for everyone.