Stories produced by St. Peter's Journalism Students
By Reymond Cerda, Class of 2017
The alarm clock reads 5 a.m. while it buzzes. It’s still dark out and the frost still sits firmly on the leaves of trees. He brushes his teeth, takes a shower, gets his clothes on and heads out. The Uber awaits him outside of his home and heads to his destination. He arrives at ‘Cop vs Drop’ a retail clothing and sneaker store located at 218 East 5th St. in Manhattan.
He’s not the first to arrive in line to buy a newly released sneaker. He’s patiently waiting for the doors to open as he is making small talk with other people waiting. The line continues to grow and finally the doors open.
Chris Rodriguez , a resident of New York City is a sneaker re-seller and collector. He has been buying and reselling sneakers for two years and has had great success. There has been an increasing number of sneaker resellers in the past 2 years with the re-release of classic sneakers such as the Air Jordan 1 and the Bred (referring to the black, red and white color scheme) 11s. However, many local retailers have suffered at the increase of online retailers. This is because of how convenient sitting home and going online to buy the sneakers. There is no need to get up early or pay for an Uber or taxi to get to the store and wait in line.
People pay the extra money for the resell because not everyone has the time to get up early and sit in line. Some sneakerheads have jobs and maybe are busy when the shoe comes out so their only option is to get it from a reseller or they don’t get the sneaker.
“It’s an odd way to make money knowing that there are so many sneaker stores that the sell the items that I do,” said Leon “Despite that many people make a decent living reselling sneakers and clothing.”
According to Campless, the Kelley Blue Book of sneakers, resellers can sell sneakers for triple or quadruple of what they originally paid for them. A sneaker designed by Kanye West named the Air Yeezy 2 ‘Red October’ retailed for $250, but resellers sold them for an average cost of $2,958 and two other people bought them for $8,000. With numbers like this it is easy to see why getting into the market of selling sneaker has become so appealing and continues to be a big business.
“It’s amazing to see how the market works when it comes to sneakers but it’s ruining the sneaker culture,” said Jason Santiago, a freshman at Rutgers University “ Sneaker culture was never about money it was always about the hunt of getting the sneakers you loved and not just getting them to make a profit.”
In a study done by Campless,they found that only 5% of sneakerheads always resell their sneakers, while 95% rarely sell.
A sneakerhead is a person who collects, trades or admires sneakers as a hobby. A sneakerhead may also be highly experienced in distinguishing between real and fake replica sneakers.
“It’s nice to see that not everyone is reselling their sneakers, I think maybe trading or selling in moderation is the better way to go,” said Santiago.
The true winner here though are the actual creators of the sneakers, Nike. According to Nike, in the fourth quarter of 2016 Nike’s revenue is up 6 percent to $8.2 billion.
“Nike makes so much because they understand the cool factor and know how to stay cool,” said Mike Nickelson, an analyst from a brokerage firm in NYC. “They know that if you don’t keep it fashionable the market will die.”
It’s human nature to want things that we can’t have or hard to find. That’s why the sneaker culture really hasn’t lost its luster. So make the price of each sneaker around $200 – $350 depending on the sneaker and sneakerheads wanting the shoes make a ton of profit for Nike.
Nike often limits the number of pairs they send to each store knowing that the more exclusive they keep it the more money it means for the company. The retailers know this as well, if they saturate their local store with too much product it could kill the market.
“Nike also knows how to control how many sneakers to give to each store,” said Nickelson “By them controlling the inventory of each store and limiting pairs they keep the market under wraps.”
There has always been a question of whether or not Nike gives up too much profit to resellers, meaning if Nike sells a sneaker for $250 and someone resells it for $2000 that’s a gain of $1750 that Nike possibly could have made for themselves.
There is still no clear answer to whether this is the case or not because despite the fact that resellers can make a large profit off of one sneaker Nike is selling thousands of sneakers everyday. According to solecollector.com, it costs Nike to make a pair of sneakers that retail at $100 and sell to warehouses at $50 about $28.50 and Nike profits $21.50.
So Nike is selling approximately 25 pairs of sneaker a second according to Matt Powell, a sports industry analyst at The NPD Group. He divided Nike’s Q1 revenue of $9.1 billion into dividends resulting in $700 million a week, $4 million per hour, $66K a minute and $1K a minute.
Some wonder do the retailers like Foot Locker and even local stores lose out on the money that can be made by reselling. If just normal people are making so much money off of one pair why can’t the retailers do the same?
“The problem is the competition,” said Samuel Woodward, manager at Mario’s Sneakers in Jersey City. “If I overcharge for a sneaker other stores will have it for less and my customers will go there instead of my store.”
A problem is the introduction of new retailers, increasing competition. With so many new retailers across the country and the ability to purchase new sneakers online retailers can’t charge more than retail for sneakers. So retailers can’t charge what resellers charge due to the competition according to Soledout, a sneaker store in Jersey City.
“As a retailer I can never charge what a reseller charges for a sneakers no matter how rare or exclusive the sneaker is,” said Woodward “There is one popular store that does it because they don’t receive directly from Nike and that is Flight Club.”
Flight Club was originally vintagekicks.com and changed names and opened a brick and mortar store in 2005. They are known for having the most exclusive sneakers and also the hard to find ones , but not at retail cost; they sell for above market price. A special edition of Air Jordan 4s that were only released in 2010 sell for $10,000, they retailed for $350.
“Flight Club is probably a staple in the sneaker culture, they always have what you need no matter what it is but it doesn’t come cheap either,” said Leon “But if there was a reliable place to get sneakers it would be there.”
While Flight Club is the most popular, there are dozens of similar resell sites, but many of them are known by sneakerheads worldwide.
“I don’t think the culture will ever die as long as Nike and companies like Adidas and New Balance keep putting out sneakers the way they do,” said Leon.