This Is the Next Big Wave in the Sneaker Industry — and It Isn't ResaleAs the global sneaker resale market has catapulted into a $6 billion industry, investors have lined up to fund businesses commoditizing sneakers, but there's a flaw in the model: It works against the very consumers the industry was built to serve.
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Before marketplaces likeStockXand GOAT made it possible to find coveted kicks at a click, there were chat groups, in-store lineups and in-person meetups — wheresneakerheadswould get together to pick up a pair of the latest Jordans while bonding over theirshared passion.
The experience was personal — driven by people who took comfort in knowing who their shoes were going to and had an appreciation for where they came from. Whether it was through an overnight campout for a limited release or a meetup at the mall to make a trade, friendships were often made in the process.
当然, it wasn't all perfect. There were problems with the peer-to-peer model back then. Finding a size 11 shoe in the exact style or colorway you wanted, for instance, might take weeks. And shoes weren't promptly shipped to your door with certified authentication neatly attached. In fact, counterfeit shoes were commonplace on traditional online marketplaces.
But as the global sneaker resale market has catapulted into a$6 billion industry, the oncecommunity-drivenculture of buying and selling sneakers has changed from a social experience among like-minded collectors to one of faceless transactions that more often than not are driven by profit.
While investors have lined up to fund the businesses behind the sneaker resell boom, many fail to see a fundamental flaw in the model: Commoditizing sneakers works against the very consumers the industry was built to serve.
At the peak of the pandemic, resell prices rocketed as high as54% above retail, fueling a growing frustration among sneakerheads who were tired of taking "Ls" (losses) to resellers who'vemonopolizedthe market. And the nostalgia that once tied sneaker loyalists to the brands they covet can only go so far without a fair shot at buying them. That's why the next big boom in the sneaker industry isn't resale — it's customer experience.
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Commercialization can't thrive without culture
You may think it's the shoes, but people are the most important component in sneaker culture. For decades, the industry has thrived off sneakerheads feeling a sense of belonging in an inclusive community built on a mutual appreciation for sneakers and the rich history that surrounds them, and, of course, the trickle-down effect to everyone from high-fashion tastemakers to the everyday consumer who wants to feel on-trend.
The importance of community is not isolated to the sneaker industry. Businesses that put community first have been proven to reaptangible benefits— from online advocacy and brand loyalty to self-organized events. But it's theintangible benefitsstrong communities bring that brands shouldn't ignore.
Humans are wiredto fundamentally crave a sense of connectedness and belonging. As our worlds between social and commerce collide, increasingly consumers are expecting the businesses they support to provide a sense of community that connects them with like-minded peers.
But as sneakers have risen into their own unregulated asset class — one that often yields better returns than stocks or crypto — the people driving sneaker culture have taken a back seat to the profits of the resale industry.
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Sneaker brands risk losing touch with their loyalists
With resellers leveraging bots to automate bulk purchase of releases, it's become harder for retailers to put sneakers on the feet of those who actually want to wear and collect them.
It's the reason brands likeNikeare scoring marked lowsin perceived fairnessamong their consumers. Late last year in a leaked internal company address, Nike reported it was at risk of losing its most "sneaker-obsessed customer." With its fairness numbers in the 20s rather than the targeted 80s, the brand aimed to focus on shaping its marketplace to show equity and inclusion to the communities alienated by the resale market. But selling shoes to the most deserving shoppers in a hyped-up resale market is a challenge.
Take the example of Nike's FlyEase, a hands-free sneaker designed with adaptive athletes and accessibility in mind, which was released last February at $120 retail. The shoe sold out within minutes and wasreselling for upwards of $600shortly after on secondary marketplaces. While resellers were widely blamed for profiting off a shoe designed for people with disabilities, consumers also questioned why Nike would release a limited supply of what was meant to be an accessible shoe.
A void in consumer experience is spurring innovation
Whilelegacy brandslike Nike andadidasstrategize on how to serve consumers who feel pushed out of sneaker culture, a rise in independent brands, creators and smaller companies is spurring innovation in the space. Frustration has even helped lead to a rise in "bootleg" sneaker designs that mimic popular silhouettes and often retail for more than the authentic versions that inspired them.
Fromemerging sneaker brandsthat are pushing boundaries in experimentation and design to companies likeRares,KYX WorldandTradeblock, which are innovating on the consumer experience — the next wave in the sneaker industry will be birthed by businesses that put the interests of sneakerheads first. It is, after all, that group that is funding the resell market and being taken advantage of in the process.
And as new models in the sneaker space emerge, resell sites and the exorbitant prices they come with arelosing their luster. Not only do sneaker loyalists want fairness and inclusivity, but there's also a growing desire to build back the personal connections that once defined the culture, which has started to fade in the era offaceless transactions.
We're nearing a tipping point in consumer frustration in the sneaker world, but when a system is broken, innovation always emerges. It's an exciting period in the industry as players both old and new look to bring creative experience and connection back to the culture. Those who succeed in building community-first models will get the "W" (win) in the long run.
