2016’s Biggest Losers in the Sneaker Industry

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OK, maybe New Balance didn’t have much to lose with sneakerheads. Their collaborations are few and far between gaining almost no hype, however they are the staple sneaker of yuppies and dads. After the 2016 election when New Balance weighed in on their favorable opinion on Donald Trump, they suffered serious backlash from social media.

While being declared the Official Shoe Of White People by a White Supremacist groupĀ is… well some sort of “award” it’s not really an honor. If your target audience is upper middle class Vermont, maybe you should keep your politics to yourself.

While sneaker sales surged in 2016 for Under Armour there’s storm clouds. Storm clouds everywhere. Sure the “sell-through on the Curry Two was like nothing weā€™d ever seen before” which gave UA a serious bump in the first quarter, they soon were slapped with the cold reality of a fickle sneaker industry. 2015 had the sportswear brand riding high onĀ Steph CurryĀ andĀ Cam Newton, two unstoppable superstars who rolled their way to the top, only to choke when it mattered most.

However stock prices for Under Armour tanked after the companyĀ announced they expect the growth to slow… significantly. Given waning support for UA’s top stars and their signature lines, it seems their sneaker brand may have peakedĀ a little early.

Kanye West turns everything he touches to gold, including his eyebrows!Ā A 600-800% markup was common for his sneakers. This made them both a fan favorite as well as resellers main source of income. Bots got better, backdoors blown wide open and it seems like every release we see the same few people with stacks of Yeezys.

But something changed in 2016. Retailers like SNS started openly complaining about the position these releases put them in. Production numbers went slightly up but resale prices have plummeted. As 2016 came to an end, Kanye had one more trick up his sleeve. A mental breakdown inspired political rant caused Ye to cut his shows short. Hospitalization followed by cancelation of half the Pablo tour soured fans but… Ye wasn’t done. As soon as he got out of the hospital he dyed his hair blonde and went on a date with Donald Trump. Waning fame and instability is a serious liability with a brand spokesperson. To top it all off, the Yeezy Sports Line never materialized and Yeezy Season 2 and 3 have all flopped.

Nike continues to report record profits and sales. Sounds like a winner right? Wrong. There’s a reason $NKE has continued to drop throughout 2016. The brand is shedding value and losing market share. You can blame market saturation but that doesn’t account for Adidas and Under Armour having record growth. You can blame lackluster interest in Nike’s signature Basketball lines but analysts have for years said their bread and butter are low cost trainers. So what do investors know that analysts don’t? Nike’s good news is actually terrible news.

Growth in 2016 was cut in half compared to 2015 and sales in North America are completely stagnant. Retail prices continue to soar while more and more of Nike’s biggest bread winners end up in outlets. The public is fickle and are moving away from the swoosh en masse. That doesn’t mean that every sportswear company in the world wouldn’t gladly change places with Nike, but it does mean that 2016 was a losing year for them.

And now for 2016’s biggest loser in the sneaker industry, the reseller! That’s right, in a year where even Kanye and Michael Jordan can’t gain any traction no one suffers more than the bottom feeding part time reseller. Sure there are plenty of them making serious bank but there’s even more that are starving from the dwindling secondary market. Even the casual sneakerhead who occasionally sells off stock to make way for new kicks is feeling the pinch. This change in market pricing isn’t just isolated to new releases either. Classic colorways, particularly Jordans are seeing resale cut in half and collaborations are barely collecting a retail price.

This price drop can also be attributed to a stronger, more centralized market for resellers. The emersion of consignment style markets such as StockX, GOATĀ and Stadium Goods are making the big picture of resale a little clearer and more competition from motivated “super-sellers” are driving prices down. Further complicate the issue by near perfect Yeezys and Retro 1’s coming from China. Fakes arriving in droves is diluting the market especially on eBay and Facebook.

Conclusion – Not many people would consider 2016 a good year. Most people feel like we all lost. With long term valueĀ of kicks dropping, we’re all feeling it when it comes to our personal collections.

It’s hard to assign blame on most of this year’s losers since the whole industry is feeling the pinch, there’s plenty of chances for them to course correct for next year. Then again if last year is any indication, we shouldn’t expect much from 2017. Signing bloated endorsement contracts while ignoring the economical “influencer” approach hasn’t paid off and likely never will. Marketing strategies have shifted in 2016 but the industries top brandsĀ are still stuck in 1985.

Honorable Mentions go to Meek Mill, Emily ObergĀ and Kevin DurantĀ for having all the cards stacked in their favor and still managing to fail terribly. Good job!


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