When one thinks about investments, sneakers are definitely not the first thing that comes to mind. Shares, equity, gold, and property are mainstream in the arena of investments. But over the years with an increase in the relevance of pop culture and globalization turning athletes, singers, actors, and artists into “celebrities”, the sneaker industry has become a booming business. 

We all have seen people obsess over Air Jordans or Yeezys or the latest celebrity collab. Some have special display cases or shoe closets for their sneakers, while others have boxes on boxes stacked with them. Have you ever wondered why people collect and even do business with these sneakers? This article will explain why sneakers are a new, innovative, and profitable investment. 

What started as a passion and a simple collectible for someone, has now turned into a multi-billion-dollar industry. Do sneakers have a resale value? Yes. Do their prices increase over time? Yes. Are these prices volatile? Yes. Is there a discrepancy in supply and demand? Yes. Then why not invest in some.  

Why are Sneakers so popular?

The last few decades have seen an impressive rise in the sneaker industry. This could be contributed to the popularisation of fast fashion and the accessibility that the internet has provided. Fashion catalogues and magazines are not the sole sources to consume trends anymore, rather the World Wide Web has given a wider reach and a massive platform to sneaker brands like Adidas and Nike among others adding to their demand. 

The sneakers’ business is driven by passion. The reason for their prices to be so jacked up is because people are passionate about not only buying them but also collecting. It’s the same psychology as collecting any other commodity, be it coins, stamps, or even Birkin bags. 

However, not all sneakers are sought after. There is some unique factor that makes certain pairs more valuable than others. Brands bring in this uniqueness by celebrity collaboration, personalized pairs, limited collection drops, or even a country or continent specific collection. For example, Michael Jordan signed a deal with Nike in 1984 to launch a line of shoes designed by him. And today the Air Jordan brand brings in nearly $3 billion to Nike. The rarer the piece the higher its value will be. 

But the most important factor is that sneakers come with bragging rights. Even if a person is not buying to sell and make a profit off of a pair of shoes, they are an asset still. Besides being a tangible asset, they also have an intangible sense of pride attached to that. 

Why Invest in Sneakers?

A UK based website, MyVoucherCodes analyzed the sale of 50 pairs of sneakers that had been released over time and found out that all of those pairs had more value than gold and their price appreciated over 60 times than the original retail price. 

An important factor while investing is the Return of Investment, which in this case is the resale value. The resale value of some sneakers never goes down and keeps appreciating over time. Resale value, however, also depends on demand and supply in the market. Higher demand for a limited collection piece will surely result in a price hike. 

Investing is a tricky business and not every sneaker is going to give high returns, but carrying the knowledge and knowing what the right picks are has created a huge community of sneakerhead investors. The industry is valued at almost $2 billion a year and has the potential to grow to a $6 billion market by 2025.

StockX a website for sneaker trading started in 2015, became a unicorn company in 2019, valuing at $1 billion. And it’s not only sneakers that are a good investment. Street wear items overall have a huge demand all over the world. Brands like Supreme, Off White, and Anti Social Social Club have some of the most traded commodities. 

What Sneakers to Invest in?

Not all sneakers have a profitable resale value. Brands often have a basic line of sneakers that are available for sale throughout the year and are produced in larger quantities. These products are not investment-worthy. Higher supply directly equals to lower price. But some of the following factors make a pair of sneakers an investment. 

Celebrity collaborations have come to be a very successful line of sneakers that collectors and resellers always look to invest in. For example, Kanye West’s Yeezys line with Adidas. The celebrity factor adds a huge value to a simple pair of shoes. Such pieces are iconic and one of a kind. Sneakerheads always look forward to investing in some unique and even already worn-out sneakers. A pair of pre-worn Apple sneakers from the 1990s got sold for nearly $10,000. 

Limited Collections or Country-Specific collections also have a sense of rareness attached to them. They are the real steal. People race on the internet to be able to buy a pair as soon as the collections drop. Many times, these sneakers get sold out in minutes, which ultimately also adds to its value. 

First Releases of any brand or collection are also highly sought after. For example, the first pair of Converses or the ones from older collections that were usually worn by tennis players will fetch a higher price than those that are released in more recent times. 

Buying an entire collection or set of sneakers being sold in a particular collection is also a profitable investment. Having every single color of the shoe in a particular design or every single pair being sold under a series adds value to the investment. Complete collections are worth much more than the pieces being sold individually are. 

Any investment is worth only if the sneakers are “hyped” about. If a sneaker is being talked about and has been in the spotlight of the market, it will surely reap a greater profit. The value of a sneaker lasts as long as it remains relevant and sought after. But even if the hype dies down, the owner probably still has one of the very few pieces of sneakers ever created. 

REFERENCES:

https://www.shoehero.com/why-sneakers-are-a-great-investment/

https://my.asiatatler.com/style/sneaker-collecting-investment

https://business.inquirer.net/304931/investing-in-stocks-why-not-sneakers

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