Are We On The Verge Of Hitting Peak Shoe?
Are we on the verge of hitting peak shoe?
The meaning of peak is that production has met its maximum rate and at that point production will gradually decline. I don’t think that is the case. What I actually think is happening is that we are on the verge of peaking out the consumer, meaning that they can’t keep up with the current rate of production.
Right now there is multiple releases every week. For the month of February, and we are only two weeks in; we have seen the release of three Jordan 1’s, the Reebok Kamikaze II release in five colors, the Nike Basketball Black History Month Pack that contains seven shoes, the Air Jordan 3 ’88 retro, the year of the snake Kobe 8, the KD V in ice blue, the Adidas Rose 3.5 in multiple colorways, the Air Jordan 13 squadron blue, the Air Jordan Year Of The Snake pack containing two shoes, the Nike Air Foamposite One “Fighter Jet”, the Jordan Brand Black History Month pack containing three shoes, the Lebron X home edition, the birch KD V, the Nike Basketball All-Star pack containing eight shoes, the Jordan Brand All-Star pack containing five shoes and then the release of the Jordan XX8. That’s 43 shoes in fifteen days and I know I am missing pairs. I am generalizing here, but that is 43 shoes that are all relevant to the exact same consumer. 43! FORTY-THREE!
The lowest price in the shoes I listed is the $100 Reebok Kamikaze II and I believe the highest is the Kobe 8 in the Nike Basketball All-Star pack at a staggering $280.
I am all for profit and all for corporate greed. If you can make a dollar and the consumer is allowing you to then go for it but you better have a plan for when that consumer is not there. At some point this market is going to kick back. Not in a revolt in prices or in product but in a way that says the product isn’t relevant anymore. By many standards the footwear industry didn’t lose a step during the Great Recession of the past five years. While other commodity based companies faltered and filed for bankruptcy or just simply went out of business the shoe industry kept pushing. I believe that is because in itself a high priced shoe is an obtainable luxury. Something that you can afford occasionally but not always and gives the consumer a way to treat themselves and up their self esteem for a limited time.
In my eyes athletic shoes and in particular basketball shoes; are oozing the form of excess that once plagued many companies, most notably the American auto industry. For decades the auto industry was seeing their sales decline but their profits increase. Car sales were terrible but SUV and Truck sales were thriving. Then the cost of oil skyrocketed and the consumer stopped buying them and when it was time for small cars the American auto industry didn’t have any to offer. In an industry that isn’t built on being nimble that left them scrambling while their consumers went looking for other brands. There is no secret as to what the outcome would become for the American auto industry and it is just now starting to rebound for taking profits over lower unit sales.
The average car price in America in 2012 was $30,000 and the average shoe price for the whole industry, not just basketball and the “sneakerhead” market, was $59. The average basketball shoe price was $88. I will admit that it is hard to compare these two commodities as they have such a vast difference in their cost for the consumer. But to me there is a similarity. While the auto industry relied on SUV & Truck sales to make their profits the sneaker industry is now relying on limited edition retro product and special packs to continually raise their profits. Take for instance four of the top ten best sellers last year were the Nike Air Force 1 Low, the Air Jordan 11 Black/Red retro, Air Jordan 4 Black/Red retro and the Air Force 1 mid. All shoes that are retro and in particular, the Jordan 11 and Jordan 4, are highly touted releases that cause more than just demand.
I am a sneakerhead and I love the current state of the industry in the amount of options that it presents. I do think it is highly over saturated and could use some seriously streamlining. What I think the main issue is that all of these packs; the China Year Of The (insert name) pack, the Christmas Day pack, the Black History Month pack, the All-Star Game Pack, the Valentines Day pack, the Easter pack and the Elite pack, all while being sprinkled in with the other general releases leads to some product being irrelevant. It is inevitable, when you have a shoe like a KD V or Lebron X that has ten plus colorways, it is a great challenge for them all to stand out in the market place. It is also clear these packs are a part of the line planning now for the companies. It is no longer a unique play on a high visibility event that could add some extra revenue based off of the excitement. It is now a part of expected revenue.
The reality is all things come to an end. It may not be this year, it may not be next year and it may not be in the next decade but at some point the consumer will stop buying every release. Whether it is from the buyer simply running out of money or it is from the trend dying, it will end. What I am concerned with is, what happens next? Parts of the automotive industry are calling themselves “enablers of mobility”; essentially saying they are working on creative ways to keep you moving. It may not be a car but they will be a part of your transportation. To an extent athletic companies have moved on, in particular Nike with their + line. It’s fitting that they were named, “The No. 1 Most Innovative Company Of 2013” by Fast Company. And it’s not because of all the themed packs of shoes they are releasing.
One last thing I would like to point out that in 2012, the athletic footwear industry actually sold less units then it did in the previous year but it profited more. Sounds similar to selling less vehicles in a year but having record profits. Just a thought.
Let me know your thoughts in the comments below!
I definitely agree with the whole article, you make a lot of critical points, as a fellow sneakerhead, i like where the industry is today, but as I’m sure you do I find myself looking months ahead and creating calendars of what I want to pick up next. This being said, do you think that companies are designing SO many colorways of the same shoe that it creates in two seperate markets almost? What I mean is..say the LeBron X “All-Star” for example compared to the LeBron X “Home,” are they separating the “basketball shoe” market into 1) performance for on court (like the “Home”), and 2) off court/lifestyle (“All-Star”)?
Thanks for jumping in on the conversation!
I would say yes companies are trying to create to specific markets, especially Nike. You made a good example with the Lebron X but I would compare the Lebron X “Home” to the up and coming Lebron X “Cork”. While I am sure it will be seen on the court at some point the Lebron X is a Nike Sportswear play on the performance version of the X. I think the All-Star definitely has more of a court/lifestyle play like you mentioned but it still features all of the performance cues necessary to play while the Cork doesn’t.
I think in the end this is the consumers fault so to speak. We wanted more and more and more and now we have it and there is too much. I feel like they should keep certain things, like say the All-Stars; to a place like Nike ID.
Just my thought.
It just occurred to me when you said about creating specific markets and the consumers creating them how good of a deal that the companies are getting, pretty much getting a win-win with the consumer buying a coveted sneaker, but then getting the ones who missed out on the next ones because they’re probably just as sought over. You’re definitely right saying that the only way for it to stop/slow-down is for us sneakerheads to put a stop to it. But the truth of the matter is it’s so fun to collect.
To your point about the corks and Nike ID, for me personally, I’d like to see more things such as PE’s released to the general public, because I play in my shoes, and have NIke ID for more creative colorways and personal inspirations coupled with special edition patterns and or textures kind of like what they did with the KD IV and the YOTD option. Then that way the consumer can decide exactly what they want whether it be performance or lifestyle shoe.
But at the same time I think that every sneakerhead has a different view of what should be done.
I would absolutely agree with you in how the Nike ID should be played. It is much more an expression of personal inspiration and should stay that way.
Its obvious that companies are hoping for the people that missed out on the limited shoe to buy the next one or the one that is already on the shelf but I think at some point that mentality will die.
I have absolutely know problem with collecting. I love it. I don’t necessarily have a problem with the way companies are releasing product now, I just think at some point it will die. The consumer can’t maintain this rapid fire pace of releases. My question is what will they do next?
This is a great post. I am an adult sneakerhead who is coming to grips with the reality that I can’t blow my money on all these sneaker releases when I have a mortage to pay off.
Ha! I am nearly in the same boat as you sir! I would have to say that choices in my shoe purchases over the years have changed though. I now buy shoes that impress me from a material and processes standpoint. I really love when a shoe is executed properly and therefore I will pay for it. But I’m not going to wait in line for something that is dubbed cool just because it is limited.
Thanks for checking out the article!
the concept of peak shoe, is interesting but i don’t know if it even matters? especially if companies are making more money by raising their prices than by offering more shoes? inundating consumers w/ product is prolly the least efficient way to make $$$, so maybe it is a wanted/welcome change for sneaker companies. i believe labor & materials (the cost & availability of both) could also be factor (and the increased pricepoints that come w/them), along with likely environmental concerns & maybe the emergence of custom product to maybe seeing less product @ retail. @the height of the financial crisis, the footwear industry had, i believe, it’s biggest year to that point & has continued to grow, for the reason you stated. footwear can be/is a symbol of status, an (somewhat) affordable signal to those in your group of where you stand/how you fit in with/stand apart from the group, adornments like footwear (sneakers as much as i am loathe to admit, are now more accessory than functional item these days) amongst the easiest way to do this. peak shoe, seems to suggest that footwear will decrease in value or availability; for the former, prices are actually going up (but not as a response to competition or scarcity, but in spite of the lack of them) & the the latter is being artificially/purposely manipulated. in case of the automobile/energy/oil business, there is the implication there is a change on the horizon, that demand will outstrip/put stress distribution and/or production thus causing some distress. it is good to remember that retailers are the customer in this scenario, a nike wields the hammer, in that they can dictate in some respect, what they will make available to them. so my response to the suggestion of ‘peak shoe’ is how does this really change anything?
also useful to remember that for all these packs, on packs, on packs, that they are for the most part (very in most cases) limited quantities; almost ensuring that they don’t sit on the shelf for long. another point to be made as far as basketball shoes go (& may in fact answer why there are so many packs to begin with), is that as a category (taking out retro product) doesn’t do all that well; especially if the shoe isn’t a lebron or kobe. better stated, there may not be all that much room for growth in bball, because while the basketball silhouette may still be the de facto choice for youth as casual wear, that seems to be changing; basketball isn’t the juggernaut it once was and there is much more competition. so these packs serve the purpose to infuse the category w/some life through the LONG season.
the reality may be that there are too many sneakers out in the marketplace, but the fragmentation of consumers (and therefore the product targeted to these fragments) may prevent most from coming to that conclusion. most people don’t nerd out & obsess over sneakers they way people in the industry or truly involved in sneaker culture do. (and we don’t obsess over all sneakers equally). if you wanted a pair of the(______insert whatever limited or hyped sneaker, for example the bred xis) & couldn’t get them, you might think there aren’t enough shoes in the marketplace, because you prolly would only be concerned about those sneakers that you want! if you are just a fan of sneakers, the choices are overwhelming (honestly i think some of this accounts for nike’s dominance, not discounting they do great work, but much easier to be loyal to a brand than actually have to wander through the footwear landscape’ & ‘decide’ on what to pay attention to), and if you are even half-way discerning you realize that it is a buyers market; indeed many shoes seem to go immediately on sale.
while certain consumers have been fragmented, genrally product seems to be have been consolidated @ retail. you walk in to most footwear retailers, any region in the 48, and the product selection is likely to be EXACTLY the same. that’s why i was a bit confused at the consensus on the podcast around the (paraphrasing) “if you are not shopping outside of your local area” commentary about collectors. outside of what hits boutiques, why would any one need to travel or build outside of where the city they live (maybe if you live far from a metro area?), and given the ubiquitousness of ‘sneaker culture’ these days, everyone seems to qualify as a collector(i am just old enough to remember a time when buying sneakers didn’t necessarily mean you were into sneakers)…this is prolly a critique of culture at large, global is pushing the regionality, and the flavor that came with it, that use to make things interesting by the way side.
maybe people will ‘smarten up’ & cut back, but if it didn’t happen in a recession (where the avg. selling price went up in these lean years) what could change the trajectory? nike has been pretty smart, thus far they have been shrewd in how they speak to (different types of)consumers, & figuring out how to appeal to (all of) them. undoubtedly things will change, as they always do, the benefit that the footwear industry has over its parallel the auto industry is the product cycle (product turns over MUCH more than in transport and much cheaper obviously) and ultimately that is why i think the comparison may not be a fair one.