If you’ve been in the sneaker game long enough, you have heard this question or one similar – asked by friends and fellow sneakerheads alike. Maybe you yourself in a fit of frustration or nostalgia contemplated the same thing. It’s not just a sneaker thing, people tend to look to the past when the present doesn’t make sense or feels uncomfortable relative to their expectations. But unlike many things in the world, sneakers in particular have seen a tremendous surge in growth since the early 2000s – a trend that has shown little to no signs of tapering off.
This rapid growth has facilitated a thriving aftermarket, a whole new generation of sneaker fans and innovations that at one time only existed in Hollywood. On the downside, the pedestal now occupied by popular footwear comes at an elevated price leaving some buyers questioning the value proposition. Consumers have also expressed concern about manufacturing methods, perceived quality, shoe availability, shoe originality, and counterfeiting. But in just about each instance, the perception of consistently high sneaker prices holds firm as a core source of discontent. At this juncture it’s worth noting that the sneaker industry is tremendously large, with billions of dollars in value. This also means that the term sneaker is relatively broad – so for the purposes of this piece, the focus will be primarily on Jordan Brand, a few of Nike’s most popular other models and Adidas’s Yeezy line.
Taking the outlined concerns into consideration, I did a bit of digging and found some answers. Take a look below and hopefully some of the information also provides you with an answer that you may have been looking for.
Before digging too deeply, we can begin with an obvious question. In this case: How are sneaker prices decided? On the surface, this question may seem pretty straightforward but in reality, pricing a product can be extremely complex. For example, a large company like Nike would employ professional economists to analyze hundreds of variables in an effort to determine the best price for a given product. This means that tariffs, fees, production costs, the economy, inflation (a favorite discussion point), competitor prices and countless other variables are considered when setting a price. So while Nike for example may have a significant advantage given how much they know about the sneaker business, they too cannot afford to simply bet on historic performance when deciding what they should charge for a sneaker.
Manufacturing has always been a hot button issue. The topic is synonymous with outsourcing, politics, labor rights and of course the perception of quality. Undoubtedly, the production of sneakers is rife with controversy – but before diving too deeply into the darkness let’s take a look at how sneakers are actually made in today’s industry.
It is easy to underestimate how much work goes into the creation and production of your shoes. Get a few sneakerheads together and it won’t take long before someone comments on Jordan’s ability to make profit with their rinse and repeat approach. Of course there’s some truth to this but in fairness to the people who actually do the work, it’s not as simple as it sounds. Maybe in the early days a company like Nike truly had a major strategic advantage over small, unsophisticated Chinese factories. But in today’s world not only is China not the exclusive provider of affordable labor, China is a first rate nation with all the capabilities associated with a wealthy and educated population. This reality is not meant to analyze fairness or what challenges are faced by labor forces around the world. Instead, it’s simply a statement of fact. It is also a statement that’s meant to reflect the professionalism and generally good work done by people worthy of praise. The factories that Nike employees around the world are literally capable of producing volumes within time frames and for a price that is not possible elsewhere. This may change in the future but for now, that is the reality with respect to sneakers and many other manufactured goods.
With hard work comes rewards and in the case of China this has been especially true. By all accounts, the Chinese are relatively reasonable business people but they are also shrewd negotiators. So while the worker population might not be seen as wealthy, the factory owners certainly are. This increased prosperity is the result of smart investing and growing demand around the world. From there, economics takes over and the dynamics of supply and demand coalesce into a market that allows Chinese and other third-party produces to increase their prices. Major brands and retailers can certainly choose not to pass these costs on to consumers but I think we all know the probability of that happening is virtually zero.
Supply and demand will always play a key role in any free market but there’re also other causes that have had a direct effect on manufacturing prices over the years. Some of these things have also led to improvements and positive impacts for the Globe.
Nike is no stranger to controversial manufacturing and fell under scrutiny a few years ago. At first the company was dismissive but was soon made to realize that consumers cared about labor laws and the environment. As a result, Nike and many other major Brands change their marketing approaches to reflect consumer sentiment. The result is arguably an overall healthier approach to making sneakers but that compromise comes at cost. Workers are expected to be paid a higher wage, waste must be managed, and thoughtfulness must be factored in to production decisions.
Complaints with respect to quality seem to go hand in hand with the price complaint. In other words people don’t feel that the end product is reflective of the price paid for it. I have personally experienced this with Nike Pegasus running shoes and multiple Air Jordan models. In my case, both issues stemmed from visible defects and a lack of refinement seen on other models. Quality complaints also include shoe fitment and overall workmanship–with a specific emphasis on material choices.
Quality: the standard of something as measured against other things of a similar kind; the degree of excellence of something.
Even the very definition of quality is broad but it also provides some basic ground rules that can be applied in the determination of consumer value. Arguably, when compared across the broad spectrum that makes up footwear, it’s fair to say that Jordan Brand for example exceeds the minimums for shoe quality. To this day, Jordans are constructed to withstand the brutality of pro basketball while at the same time serving as off court accents to an individual’s style. So it’s accurate to say that, Air Jordans tend to exceed the definition of quality. That said, most people in the market for a pair of high-end shoes understand this already making their concerns more about materials and refinement. People who fall into this bucket have good taste and a discerning eye that has been calibrated through experience. In other words, they know what they are looking at. Further analysis of the manufacturing process reveals what the eye cannot easily see.
According to sneakerfactory.net:
Material sourcing can become complicated with demand and supplies for material fluctuating constantly. This means that shoe manufacturers are constantly balancing supplies, demands and costs to deliver a product and price consumers would be willing and able to pay. This juggling of resources and the resulting paradigm helps to explain the partial departure from difficult to source materials like leather – for example. In the case of Nike, material choices are also influenced by their “Green Initiative” which includes finding new and reusable materials in addition to creating synthetics that are environmentally friendly.
Pressures associated with material sourcing also point to the increase in demand – not just for shoes but for factory capacity as well. While it’s no excuse, the reality is, if you push any system to its limits, there will be breaks. The data concerning Nike’s detailed production metrics is not publicly available but the impacts of these factors on factories must be considered. It also stands to reason that producers don’t have the luxury to discard mountains of product, making the criteria for what passes final inspection potentially less stringent. There’s no evidence to support this beyond what has already been presented but the possibility cannot be ignored.
Availability vs. Originality
The mass-market approach has also given fuel to a more desirable limited release segment which tends to be more reflective of what people want from a sneaker. The low production, high end market space is also where originality still thrives. For example, Virgil Abloh’s “Off-White” x Air Jordan collaboration takes style risks that are unthinkable for general releases with hundreds of thousands of pairs at risk. So in many ways, it has become a weird game of chicken and the egg. Should we have less sneakers and higher quality with higher prices? Or should we have more sneakers with a fair finish and a price that most consumers are willing and able to pay? Those questions will be answered over time by market and consumer choices but for now, the game goes on.
Sneaker popularity has also caught the attention of another Group of crafty and creative individuals. High demand has unfortunately led to intellectual property theft and a surging market for counterfeit products. Brands like Nike are approaching the problem from unavailability perspective where the reasoning seems to be:
Provide more opportunities for customers to buy legitimate peers therefore reducing the demand for counterfeit products. There’s some decent logic here given that at least in the case and Jordan Brand, counterfeit pairs I’m not necessarily cheaper the legitimate pairs. Nike has also invested heavily in systems like their SNKRS App to combat automated forms of predatory buying like online bots.
So what’s the answer? Are we better off now? Or was there real glory in the so-called glory days? Based on what I found, in my opinion we are in a slightly better place. Given the information on pricing, is it accurate to say that “prices have skyrocketed uncontrollably?” It is more accurate to say the prices of risen relatively steadily overtime but for reasons that mostly make sense. Undoubtedly, major players like Nike certainly make a decent profit for that profit is not the guaranteed deluge of cash many are inclined to believe. Maybe that was the case when Air Jordan was in its very early days and when the air max was a new and radical concept but not today.
Instead, we are at an intersection with a mixture of options that accommodate just about every consumer. There are extremely high-quality options for those willing and able to buy them; relatively high volume general releases for those fans who are looking for something that is within their budget and more practical choices for those who simply need a good pair shoes for reasonable price.
We also have a much more wholesome, greener and overall healthy approach to sneaker manufacturing. This approach also employs millions of people while fostering innovation. The system is not perfect but it is no longer controlled but any singular entity and the people within the system have at least some power to change it. Finally, technology plays a major roll in today’s sneaker production. Self-lacing technology is real, athletic data is routinely utilized in sneaker production and with the Internet, even the largest corporations cannot avoid customer feedback.
Sneaker brands and corporations are in business to make money and will do their very best to maximize profit. However, as long as we are willing to question the value of what we’re getting for our hard earned money, we are almost guaranteed a good deal.