Large sneaker companies are in the habit to manufacture their “LIMITED EDITION” sneakers and are habitual to release them into the market 1 – 3 times per month. Who wouldn’t want to get their hands on these? Rather it is for a collector’s item or even for re-selling them at a later stage for profit!
Today this article would cover my research on this agenda, and with your help we would be able to determine if SNEAKERS are the NEXT TULIP MANIA of the 21st century!
A bit of a history lesson?
You must be thinking, what is this TULIP MANIA? Back in the 1600s, Tulipmania was a period in the Dutch Golden Age in which the contractual prices for some of the recently introduced blubs of the TULIPS reached extraordinarily high levels and then suddenly and shockingly collapsed by the mid of the century. People started investing heavily in this first speculative bubble, and then when this market collapsed everyone who was part of this “game” took a massive hit. All right, enough with the history lessons. Let us now jump to the main article itself and begin our discussions down in the comment section below.
Over the past 5 years, this trend of limited edition sneakers being launched into the market at irregular intervals has picked up its pace. Companies such as Adidas, Nike.. And more; release these sneakers in a minimal number. With their launch, these sneakers are backed by famous artists, popular rappers, fashion designers and what not! And since the marketing and publicity behind these shoes are sky-high, and these companies create scarcity in the supply; these end up being sold for hundreds of dollars. Since people are in haste to pick up their pair they run out almost immediately if not instantly.
The trend of these sneakers is so high that people don’t mind paying $200 – $300 for each pair. Some would wear it and then re-sell it for higher-prices. Some would just buy it cheap, hoard on it and sell them for a higher price in the future. And then there are some, who would buy these shoes and hold onto them for longer periods and consider it as a long-term investment.
This is inclining towards the fact that this may very well become a pyramid scheme. Because not everyone is a big fan of sneakers. And so the general thumb rule of “SUPPLY AND DEMAND” is very much in play here. If there is no demand for sneakers there are going to be fewer companies who would manufacture these and bank hard. In order to keep the demand high, more and more people are being introduced into the sneakers world to keep both, the demand and prices high.
A better analogy to this would be the comic book mania back in the early ’90s. Speculators during that phase used to accumulate items that were deemed as “COLLECTIBLE” simply because they saw other people considering them as one. I recently saw a post somewhere out on the internet where a man sold 350,000 GBP worth of comics. Wouldn’t we all like this much stash of money hiding somewhere in our loft as well?
For example, sake, I am going to discuss the Limited edition N64 “AIR MAX” Sneakers by Nike. They have partnered up with Nintendo, a well-renowned gaming company; and are planning to launch the N64 sneaker into the market. Serious collectors will be pleased to know that the price tag speculated on this one is around 160 USD vs. the astronomical prices being charged for Adidas Yeezy by Kanye West that goes out for a whopping $400 or even the Anna Wintour’s Nike Air Jordan for approx. $220. The price tag of $160 is quite modest in my opinion as compared to the latter for something that is a limited edition and is a one-off thing.
Sneakers collection right now is in its evolving stage, if put it right. Tracing back to the 80s and the 90s, it’s an entirely different ballgame right now. It is running mostly on “exclusivity” and a perceived “status” gained from acquiring a limited-edition sneaker.
So to summarise this article, in a way this research qualifies for a YES towards the Tulip Mania idea and leans more towards the fact that the manufacturers indeed want this too. If there are lines being made, sleepers being deployed outside of a shoe-retailer who is to launch limited-edition footwear, then this is how the demand in the market is created. Generally the way to do that and be successful is to ensure that the demand is always higher than the supply. Hence then the secondary market benefits from it. I am inclined to believe that these giant companies hire smart economists to do so and quite deliberately, to be honest.
If you liked the article above, please free to leave your comment below replying what you think about it. I would love to engage with you.