Matthew Boreman explores the online revolution that the streetwear and trainers world has undergone over the past few years.
The world of trainers and street-wear has undergone a revolution over the past decade. The drivers of this upward trajectory have been technology, the Internet, and social media. They have altered the way in which brands interact with consumers, and how consumers purchase products. Perhaps the most significant development has been the growth of the secondary market for trainers and clothing. With brands limiting production in order to boost interest, demand has forged a market in which goods sell for far more than their retail price.
These markets have birthed several Facebook communities that now boast memberships equivalent to a large town. Groups such as Crepe City (40,000 members), SupTalk UK/EU (100,000), and The Basement (75,000) have all grown considerably. The last of these, The Basement, has grown to a point of such cultural significance that this year saw it release a shoe with Nike – a shoe then sold within its own secondary market. This is fairly remarkable for a group initially born out of another (SupTalk), simply created for discussion and inter-selling of clothes and trainers. This rise highlights the Internet and social media’s substantial impact.
The Art of Reselling
Groups like these were partly created to facilitate reselling – the selling of clothes and trainers above retail price. Reselling has grown to a point where becoming a ‘re-seller’ is now a legitimate career choice. The practice is in many ways akin to a trader, albeit on a smaller scale. This is reflected in the development of ‘value-added’ predictions, as witnessed on the self-pronounced ‘stock market of things’ – StockX. Values rise primarily due to demand exceeding supply. Fluctuations occur due to alterations in these two factors, predominantly demand changes, such as increased demand following a celebrity appearing in a model. Supply changes also have an effect, with firms restocking models, or releasing close substitutes that reduce market value. Interestingly, supply increases can have a double effect on price, as the increased supply reduces demand due to consumer’s desire for exclusivity. The significance of the resell industry is such that it has begun to influence the behavior of the industry that birthed it. It is now common for trainer companies to release a limited version of a model to create ‘hype’ and a high resell value, before a wider release of the same model.
The cynicism aimed at profiteering off street-wear culture is deteriorating, particularly amongst younger generations, causing pieces to increasingly be seen as investments rather than items to enjoy. This development is another illustration of the Internet’s impact. Previously, reselling required a significant time outlay, with dedicated forums being the prime point of exchange. This meant profits from reselling were rarely worth the effort. Social media and the growth of secure payment methods have reduced the time ‘cost’ significantly, causing sellers to flood into reselling.
The Perfect Economy of Trainers
An analysis of resell groups provides interesting economic insight. Groups such as SupTalk act as microcosms of perfectly competitive markets. There are many buyers and sellers, none of whom can hope to influence prices, whilst anyone can enter at any time. Thanks to the ease of price comparison, and verbal price regulation by members, the knowledge of members is near perfect. Though there are a variety of products, each has its own market value, above which it will likely not sell.
These groups highlight the significance of perfect information to perfect competition, primarily through what we witness outside of them. Whilst discerning members and ease of comparison leads to high levels of knowledge online, outside the bubble of Facebook this often isn’t the case. Contrasting Crepe City’s market at its London events with the market in its online group demonstrates this. Prices at events are higher than the market value online. Whilst it may be argued that seller’s costs are higher (petrol, accommodation, etc.), thus necessitating higher prices, this can be countered by savings on postage fees, and time, which are incurred online. It is clear that sellers are exploiting asymmetric information between themselves and buyers. A more naïve clientele are less likely to refuse a pair above market value, so sellers increase prices, knowing that bartering is possible with more knowledgeable buyers in any case.
With features in Forbes, GQ and the Financial Times, the once niche worlds of limited trainers, clothing, and reselling have undoubtedly hit the big time. What then is the future for this sector? For years, enthusiasts disgruntled with ever-higher prices and increasingly unattainable items have insisted the bubble will burst, allowing them to enjoy their subculture in quiet serenity once more. It is difficult to see this as anything other than wishful optimism. Whilst the overall trajectory has been constantly upward, fluctuations within the sector suggest a rise more sustainable than early adopters expected. The era of trainers and street-wear as an obscure subculture is gone – resell is here to stay.