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In StockX’s Crystal Ball: The Future of the Sneaker Market

This week, StockX became the world’s first billion-dollar sneaker reseller. BoF looks into the crystal ball of the company’s transactions data to unearth five trends on the direction of the fast-growing market for sneakers.
Virgil Abloh's new take on the Nike Zoom Terra Kiger 5 for women are available on StockX, where women's styles are becoming more popular | Source: Courtesy
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  • BoF Team
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This week, StockX officially became the world’s first sneaker reseller to achieve ‘unicorn’ status, confirming a $110 million Series C funding round, first reported in April, that valued the company at $1 billion. The news, which came with the appointment of new Chief Executive Scott Cutler, certainly validated the power of sneakers and the growing importance of the secondary market, where carefully drip-fed, limited-edition pairs from sportswear giants Nike and Adidas can fetch as much as four or five times their original retail price.

Cutler and founder Josh Luber aim to extend the StockX platform — a kind of stock market for consumer goods, where a bidding system allows buyers and sellers to arrive at mutually agreeable prices — beyond the realm of sneakers. But for now, it’s the rise of rubber-soled shoes as powerful stylistic totems for millennial men (and increasingly women) that is the engine of the business. And, according to Luber and Cutler, the platform offers a rare representation of the true market value of myriad sneaker models.

Nike may have released the highly coveted Travis Scott x Air Jordan 1s for $175 at retail, but pairs changing hands on StockX suggest that the true market value is more than $800. “It’s the purest form of supply and demand,” Luber said in an interview with BoF.

But the platform’s transaction data reveals more than true market price. It’s something of a crystal ball for what’s going up and down on the sneaker market, the forces behind these fluctuations and what’s next for the category. BoF spoke to Luber, Cutler and StockX’s Data Content Director Jesse Einhorn to unearth five trends shaping the future of sneakers.

1. The rise of women's sneakers. While there has always been a serious contingent of female sneaker enthusiasts, their options have been limited by the lack of availability of shoes in their size, forcing them to scavenge the smaller end of the men's sizing spectrum. But StockX data suggests an evolution over the last six months with both increased consumer demand and availability for women's sneakers. In the first quarter of 2019, the Blue Chill UNC Patent Jordan 1's became the first women's model to break into the site's top 10 rank by sales. It's a good sign for Nike's lucrative Jordan division, which has been trying to grow its business with female consumers by making product specifically for women over the last several years. Meanwhile, Virgil Abloh released his first Nike women's track shoe this week, which is sure to bring more attention to the category as his collaboration with Nike's running division continues.

2. Yeezy 350s are showing signs of staying power. The only shoe model that has ever really rivaled Nike's Jordan 1's in popularity is returning to high demand. Last year, when Adidas started turning up the quantity volume on its the cult-favourite Kanye West-designed shoe, what was once one of the hardest sneakers to acquire was only trading for about 20 percent above retail price on StockX. But its most recent three releases this year — with distinctive style tweaks, some released exclusively in Europe — prove this Yeezy style has staying power: on StockX, prices jumped 80 percent above retail.

3. New Balance, new hype. Nike and Adidas dominate the sneaker market's most wanted styles, but smaller sportswear brands are finding their own ways to drive demand. New Balance, a brand long known for being downright nerdy (and briefly associated with American white supremacists in 2016), is cool again. There are several factors at play, but the Boston, Mass.-based company certainly made a smart choice in partnering with Toronto Raptors basketball player Kawhi Leonard last year. Sales of the resulting New Balance OMN1S shoes on StockX increased by more than 50 percent during the 2019 playoff season and spiked to as much as four times their pre-playoff average after the Raptors won the NBA finals.

4. The street is more powerful than the court. New Balance got lucky with Leonard but the success of blockbuster sneakers is less likely to be driven by a sports star than a cultural figure. Indeed, the most important figure in sneakers is no longer Michael Jordan but Virgil Abloh, whose Off-White Chicago Jordan I's were the most wanted sneakers of 2018. The shoe's prices have increased by over $1,000 over the past 12 months, trading for 15 times its original retail price on StockX. The Jordan 1 has long been the most classic silhouette in sneakers, but a new generation is lusting after it now thanks to Abloh. The bottom line: designers and musicians like Abloh, West and Travis Scott will continue to drive demand in a much more powerful way that NBA stars.

5. The integration of the primary and secondary markets. Like all resale marketplaces, StockX is banking on growing collaboration with the brands that create the shoes that drive their customers wild. It is possible that brands — long sceptical of participating directly in the resale market — are poised to play ball, if only because the customer is distinguishing less and less between primary and secondary sales, as they grow increasingly accustomed to shopping both on marketplaces like StockX.

THE NEWS IN BRIEF

FASHION, BUSINESS AND THE ECONOMY

The RealReal store in Soho, New York | Source: Shutterstock

The RealReal Raises $300 Million in IPO. The luxury reseller made its stock market debut selling 15 million shares for $20, though shares opened at $28 — well above the original $17 to $19 price. The IPO values the company at about $1.6 billion based on the outstanding shares listed in its filings. The RealReal makes it easier sell and buy used luxury items by providing a platform for transactions and verifying that the goods are authentic. Used clothing, footwear and accessories represent a $10 billion market in the US.

SMCP acquires French men's label De Fursac. The owner of Sandro, Maje and Claudie Pierlot said Tuesday it had acquired the French men's suiting label to strengthen its footprint in the men's market. SMCP CEO Daniel Lalonde said overlap between De Fursac and Sandro Men will be limited thanks to differing price points — the former's suits range from €850 to €1,150, higher than average prices at Sandro Men. Also, tailoring and casual wear at De Fursac represent 70 and 30 percent of revenue respectively; Sandro Men is the reverse.

Burberry sets emissions goals in bid to become carbon neutral. The British luxury house aims to cut greenhouse gas emissions from both its direct operations and extended supply chain in its bid to become carbon neutral in operational energy use by 2022. The company said it is already carbon neutral in the Americas region, EMEIA retail stores and its UK operations. Burberry announced plans last year to end the practice of destroying unsold items after shareholders objected to the disposal of millions of pounds worth of goods.

H&M shares jump as early summer sales shine. The Swedish fashion group said June sales were up 12 percent for the world's second-biggest fashion retailer, beating analyst forecasts. Second quarter sales were up 11 percent, beating rival Inditex's 10 percent. H&M also said it would open fewer stores this year than previously planned — about 130, down from 175 — as it invests more in its e-commerce offering. H&M shares traded around 10 percent higher by 07:35 GMT Thursday as a result.

Prada sets goal to phase out virgin nylon by 2021. The Italian luxury group started selling nylon bags in the 1980s and now wants to make one of its most iconic products green. Joining a spate of brands that have introduced similar initiatives, Prada is launching the "Re-Nylon" collection, a range of six classic bags made out of nylon reclaimed from ocean plastics, fishing nets and textile fibre waste. By 2021, the company is aiming to ensure that all 700,000 metres of nylon that it uses annually are recycled.

Adidas shares soar despite fears of trade war. While the market worries about a full-blown trade war, it hasn't harmed the stock of German sportswear giant Adidas this year. Shares are up 49 percent this year, beating peers worldwide and all Euro Stoxx 50 members with the exception of Airbus. The outperformance against arch-rival Nike, up a mere 13 percent, is even more striking. Nike and Adidas have approximately 15 percent and 11 percent market share of the worldwide sportswear market respectively.

Global Fashion Group postpones IPO and lowers offer price. Asia and Latin America-focused e-tailer GFG is postponing its initial public offering due to low investor demand, according to sources. The IPO offer period (when potential investors bid for shares), which had been scheduled to end on Tuesday, will be extended to June 28. After announcing the delay, GFG also cut its share price from a €6 to €8 range down to €4.50 in a last-ditch effort to salvage its listing.

THE BUSINESS OF BEAUTY

Karl Lagerfeld | Source: Courtesy

Karl Lagerfeld did a makeup collaboration with L'Oréal. The late designer initiated the partnership before his passing in February. The makeup line will "channel Karl Lagerfeld's iconic rock-chic style, fused with a sense of Parisian elegance" according to a press release, although little is known about the product so far. The L'Oréal Paris x Karl Lagerfeld collection will debut in September, on the eve of Paris Fashion Week.

Amazon's new beauty store poses threat to beauty retailers. The e-commerce giant has unveiled its online professional beauty store to sell supplies to licensed professional stylists, barbers and aestheticians. It will sell a range of brands from Wella Colour Charm and Rusk to OPI Professional, and other supplies typically found in salons and spas. Following Amazon's announcement, shares of beauty retailers Ulta Beauty Inc fell about 3 percent and those of Sally Beauty Holdings plummeted 9 percent.

PEOPLE

Stefano Tonchi at Milan Fashion Week in February 2019 | Source: Shutterstock

Ousted Editor Stefano Tonchi sues Condé Nast owner after W's acquisition. Condé Nast has finally found a buyer for Magazine, but long-time Editor-in-Chief Stefano Tonchi will not lead the title into its new era. W will join the arts and design magazine Surface in the newly formed Future Media Group. Marc Lotenberg, chief executive and chairman of Future Media Group, has named Style Director Sara Moonves editor-in-chief after acquiring the fashion magazine from Condé Nast. In a lawsuit filed Tuesday in New York State Supreme Court, Tonchi is suing Condé Nast owner Advance alleging that he was improperly denied severance pay as well as a bonus. He is asking for damages totalling nearly $1.1 million.

Koché Wins ANDAM Grand Prize. Christelle Kocher, the 40-year-old founder of the haute streetwear label Koché, has scooped up the ANDAM Grand Prize, thirty years after Martin Margiela, a member of this year's jury, won the inaugural award in 1989. The prize comes with a grant of €250,000 and a year of mentorship from Renzo Rosso, founder of OTB, the Italian fashion group that owns Diesel, Marni and Maison Margiela.

Marchesa co-founder departs. Keren Craig has left the company she co-founded with Georgina Chapman in 2004. She had explored looking for a job as early as 2014, BoF has learned. Craig and Chapman launched the eveningwear label and became a mainstay on the red carpet. Since allegations of sexual assault against Chapman's then-husband Harvey Weinstein came to light in October 2018, Marchesa has faced difficulties. After the Daily Beast uncovered ties between the brand and Weinstein, red carpet appearances shrunk and it canceled its New York Fashion Week show.

Naomi Campbell to receive BFC's Fashion Icon Award. The British Fashion Council is honouring the British supermodel with the Fashion Icon Award on December 2. Celebrating outstanding contributions to the fashion industry, the award recognises Campbell's 30-year career in fashion, her female empowerment efforts, philanthropic endeavours and efforts to increase diversity in fashion. Over the past three decades, Campbell has appeared on the covers of more than 500 magazines and often made history by being the first black model associated with luxury brands.

MEDIA AND TECHNOLOGY

Bustle Digital Group acquires Nylon. The group plans to bring back Nylon's print edition, which ceased operations in September 2017, but not on its previous monthly cycle. Former Nylon president Evan Luzzatto will stick around as part of the deal; the Bustle press release said the sale also includes Nylon's editorial and design teams, including editor-in-chief Gabrielle Korn.

Madame Figaro Launches Hong Kong Edition. French newspaper Le Figaro's weekly women's supplement Madame Figaro is launching in Hong Kong this September with ambitions to target the city's local affluent women as well as expats online. With its Japanese and Chinese editions slated to celebrate their 30th and 25th anniversaries next year, the magazine has inked a licensing deal with Hong Kong publisher New Media Group (NMG). The publication has tapped Joey Chan as its editor-in-chief.

Alibaba shows global ambition with new English site. In an important step toward fulfilling its global ambitions, Alibaba began offering an English-language portal on Tmall for the first time Wednesday to entice more merchants from around the world to sell to Chinese consumers. Alibaba is counting on the initiative to help double the number of foreign brands on Tmall Global to 40,000 in three years.

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