The success of Stadium Goods comes off the back of unprecedented consumer desire for sneakers and the need for a rich brand experience in which to buy them, says the platform’s co-founder and co-CEO, John McPheters, on the latest episode of the Innovators podcast.
“For me the light bulb was that demand had never been higher. It was continuously growing, there were more and more people that wanted to buy our products, but there wasn’t a rich experience that consumers could go to to buy that stuff that was trusted, where they knew what they were getting, where they could really hang their hat on the brand experience and the presentation.” he explains.
As a result he and his partner, Jed Stiller, set about creating a site that is focused on consignment – meaning it resells existing sneaker stock as well as broader streetwear – but it only does so with unworn and authentic styles. That focus on trust is the key, he says.
Only launched in 2015, the site was acquired by ecommerce marketplace Farfetch in 2018 for $250 million. Very few emerging businesses have seen such rapid growth. It’s now considered such a market leader, it recently announced a partnership with auction house Sotheby’s to sell 100 of the rarest, most coveted sneakers ever produced.
The site’s explosion aligns with the growth of sneaker culture worldwide. Expected to hit nearly $100bn in global sales by 2024, sneakers are outpacing much of the rest of the industry, including that of handbags. As a result, they have become the new ‘cash cow’ and awareness driver for all manner of brands, not least those in the luxury space, wheresuch products are used as entry to otherwise more aspirational price points.
In all parts of the market this has resulted in ‘cult’ or ‘it’ sneakers to own as a result. A rare pair of Nikes today can easily sell for as much as those from Gucci or Balenciaga as a result. This means it’s increasingly a race, with some limited edition styles going for $10,000 or more.
In this episode, recorded live at the British Fashion Council’s annual Fashion Forum, we chat to founder John McPheters about the cultural relevance of such products, the evolving role of exclusivity and desire in luxury today, and just how what he’s doing is really about teaching the industry to give up control.
From partnering with resale websites to facilitating consignment selling, brands are increasingly exploring ways to be more involved with their products as they continue through their lifecycles.
Part exercise in brand control and part push for more sustainable consumer habits, the move is of course also an enormous opportunity for extended revenue streams.
The secondhand market is projected to double in value over the next five years, skyrocketing from $24bn to $51bn, according to a report from resale site, thredUP.
We’re also seeing heavy investment in the resale space as a result. Foot Locker just put in $100m into GOAT, while Farfetch recently acquired Stadium Goods for $250 million. There’s also a round of funding coming up for sneaker marketplace StockX, which will turn the company into the first sneaker reseller valued at $1bn, according to Recode.
Here are three ways brands are otherwise experimenting with and promoting the resale market:
1. PARTNERING WITH RESALE WEBSITES
Starting this April, & Other Stories started selling pre-owned garments. The project was created in partnership with second-hand platform Sellpy, which manages and operates its sales. When clicking on the new “pre-loved” section on the & Other Stories’ website, clients are redirected to sellpy.se. For now, the service is only available in Sweden.
“We’re exploring different ideas on how our long-lasting designs can find their way to new owners. With that in mind, we decided to do a small second-hand test project with Sellpy,” explained Sanna Lindberg, managing director of & Other Stories.
Stella McCartney made history last year as the first luxury brand to promote the consignment of its products on The RealReal. Anyone selling Stella McCartney products on the platform receives a $100 voucher valid at any of the brand’s stores or via its website.
2. DRIVING RESALE SELLING AND BUYING THROUGH STORES
Neiman Marcus recently invested in Fashionphile, a high-end consignment boutique. It has plans to have Fashionphile drop-off locations inside select stores, allowing shoppers to get paid right away for their pre-owned items. For now, Fashionphile is offering an increased buyout price for those who opt to receive payment as a credit at Neiman Marcus.
Meanwhile, just last month, Galeries Lafayette introduced a second-hand fashion platform called Le Good Dressing, which combines online shopping with an in-store experience. Vendors on the site sell products and then drop them off in the store, where buyers can come in to get their purchases – with no commission charged. Sellers also receive a voucher that can be redeemed at any Galeries Lafayette store or its online shop. Attracting both buyers and sellers into the store, this initiative translates into a host of new sales opportunities.
Added to the list is the new Levi’s flagship in New York City’s Times Square, which has a section dedicated to selling pre-owned garments. Here, it’s possible to find not only newer styles, but also refurbished items from past decades, going as far back as the 1930s and 1940s.
3. FACILITATING THE CONSIGNMENT ITSELF
West coast brand, Reformation, is the first brand to partner with resale website thredUp on a project called UPcycle. When customers shop on the Reformation website throughout May 2019, they all automatically receive an UPcycle kit in their orders. These kits enable customers to shop the clothes they want to consign to thredUP, taking away the hassle of sorting out the inventory to do so.
But that’s not all, when a customer decides to consign any product from any brand via thredUp, they also have the option to get paid with a gift card for Reformation. This is a way to create more circularity, while also promoting Reformation’s brand. ThredUp expects to establish similar partnerships with 10 more companies this year.
How are you thinking about retail innovation? We’re all about finding you the perfect partners to do so. The Current Global is a consultancy transforming how fashion, beauty and consumer retail brands intersect with technology. We deliver innovative integrations and experiences, powered by a network of top technologies and startups. Get in touch to learn more.
Depop has opened a physical outpost in NYC that aims to strengthen its connection to the community by offering advice on how to sell.
The store features a photo studio where sellers, or the marketplace app’s trained professionals, can photograph their items against clean backgrounds, as well as receive hands-on advice on how to brand an online store and how to navigate the postal system.
“The whole purpose of the space is to strengthen our connection with our community, and to experience Depop in real life,” said Maria Raga, Depop’s CEO, to i-D magazine. “Different styles, different subcultures, and introducing different designers in a new light is really important to us. It’s fun for our community too because they get to be inspired by the possibilities of what they can do with their Depop shops.”
To reinforce that purpose, the store is not fully stocked, but rather currently carrying a curated selection dedicated to NYC called Depop Loves New York.
At the moment, shoppers can find items by the likes of seller Venus X, who recently closed a vintage store in the city, and Luke Fracher, who provides a selection of rare shirts from local sports teams like the Yankees and the Mets, by Fracher. Meanwhile NYC-based designer Sandy Liang reworked vintage pieces, while Queens-based artist Slumpy Kev painted on vintage Levi’s and Dickies garments.
“Our community is just a little sponge of very thirsty entrepreneurs, and creative entrepreneurs at that,” continues Raga. “I think it’s just getting that first taste of what it is to make your own wealth, while having fun and creating your own brand.”
This is Depop’s second physical outpost, with the first one opening in Los Angeles in March. The store holds a similar purpose to its newest iteration, and is also inviting top users to host their own pop-ups within the space.
Depop’s foray into brick-and-mortar, as well as its core purpose of giving its community the tools and exposure to succeed, serve to further emphasise how brands can enable the young shopper’s behaviour of having a ‘side hustle’, and increasingly seeing themselves as entrepreneurs.
Stores with little merchandise but a loud message are also an effective marketing strategy for making use of physical spaces that don’t need to sell, but act as gateways to online experiences. Last year, Nordstrom launched its Local concept tapping into service and convenience over merchandise per square foot.
How are you thinking about retail innovation? We’re all about finding you the perfect partners to do so. TheCurrent is a consultancy transforming how fashion, beauty and consumer retail brands intersect with technology. We deliver innovative integrations and experiences, powered by a network of top technologies and startups. Get in touch to learn more.
Chinese office worker Fan remembers when she carried both high heels and sneakers to work, how much her feet hurt after a long day of work on the heels and how her beloved sneakers saved the day.
Fan works as an HR Consultant in a tech firm in Beijing, she said she now wears sneakers in the office. “I can’t remember when it first started, but (wearing sneakers at work) definitely become more popular in recent years.”
Fan said fashion bloggers influence her choice of fashionable sneakers the most, and she shares the styles on her WeChat account. As she became more comfortable wearing sneakers inside and outside of work, Fan became more willing to spend upwards of $200 on each pair of shoes.
The stylish sneaker trend is starting to have an impact on the sales of footwear from traditional luxury brands. Analysts from investment bank RBC Europe wrote in a recent report that, “The casualization trend is benefiting categories like sneakers and down jackets at the expense of formal wear/formal shoes.” Last year Euromonitor pointed out that the high-end athleisure market is forecast to overtake China’s luxury market by 2020.
On luxury e-commerce platform OFashion, there is very little difference between the price of sneakers by luxury brands, and sneakers by traditional sportswear labels. For example, a pair of Adidas Yeezy Desert Rat 500 is marked at 3149 yuan ($492.8), Gucci’s Ace embroidered sneaker sells for 3880 yuan ($607.28), Air Vapormax Off White is 5090 yuan ($796.66), and Balenciaga’s Speed Signature Mesh Sock Sneaker can be purchased for 4980 yuan ($779.39).
Although this competition may not be good news for luxury brands, the impact it has brought on the sportswear industry is positive, allowing sneakers to be sold at a higher price and with a higher product margin than ever before. According to Erwan Rambourg from HSBC, this is, “the luxurization of sneakers”.
Gildo Zegna, CEO of Italian luxury fashion house Ermenegildo Zegna, attributed the rising price of sportswear sneakers to their rise in emotional value, “If there is one product today that is impulse driven and creates emotions among consumers, it is the sneaker (…) you are talking about people spending $100 to $700 on a single pair.”
Higher pricing has enabled sports brands to share the driving seat with luxury brands. Yet more alarming for luxury brands is a new culture of sneaker exchange – partially driven by emotions and impulse. Young consumers are viewing purchasing of limited edition sneakers in a similar way to that of a Birkin bag – many hold immediate investment value and can be auctioned for much higher prices.
Stock X, a trading platform designed to make sneaker exchange easier, allows buyers to put their sneakers up for auction, and others to buy in real time just like exchanging stocks. Users get their own sneaker portfolio, and track the value of their collection over time, comparing it to others. Two years since the platform was founded, Stock X regularly exceeds as high as $2 million sales a day – approximately 12,000 transactions. On Stock X, the option of shipping to China is now available, and as Fashion Network reported early this year, the company is moving towards further expansion in China.
It’s hard to say how much crossover there is between sneakerheads and luxury buyers, but the healthy growth of both industries are being heavily fueled by young millennials. As the growth of streetwear consumption in China surpasses other fashion industries, the increasing exposure to urban clothing will make consumers open to the option of investing in a pair of higher-priced sneakers.
Meanwhile, the changing structure has led brands to think twice about their production strategies. Paul Andrew, the creative director of Italian brand Salvatore Ferragamo, said in an interview with W magazine: “People wear sneakers so much now that the architecture of the foot has really changed. Italian shoemakers often use casts that are 30 years old, but feet today have become more spread out.” Now he adds a pad made out of memory foam to all of his shoes.