Note: When reselling reverts to only hyped and limited products, the sneaker market is trending down. A healthy general release market in third party sales is a good thing.
In a recent discussion with Matthew Kish of Business Insider I utilized resale data to show a slowdown in the sale of Nike footwear. While I gave Matthew Kish additional data on Crocs, adidas, and New Balance, those data sets weren’t included. This led to a stream of discussions by sneaker media pundits stating that without any input from Nike my data didn’t provide a clear picture. Over the years I’ve made a concerted effort to always compare my work as an analyst to the work of much larger, financially backed, industry standard companies like NPD Group who has access to Point of Sales data from vendors and credit card companies.
As an independent analyst I have to formulate my own methodology to ascertain the direction of a brand. This requires me to utilize my own sales data and reports from third party marketplaces as well as looking at the annual and quarterly reports of the brands. Once I consolidate this data, I make predictions. I’ve been right more often than not, but more important, my sales data has often aligned with the publicly available information on the top sneakers sold in the retail marketplace. In other words, I never speak without having evidence of any theory I develop. In this post I’m going to explain why resale information and how I utilize it, is a solid micro-data set which offers an alternative look at the marketplace. This is the information I’m utilizing in this discussion: Quarterly reports from Nike’s largest wholesale accounts and Nike’s quarterly reports. Why is this information important? Increased inventory should lead to a decline in margins at retail. If we look at resale as Pre StockX and Post StockX there are important factors that should be discussed. Pre StockX, resale consisted of high-end sneakers, but the ability for buyers to operate in concert with a retail location allowed for sales to mimic retail. Buyers could use a combination of discounts, military, VIP coupons, to capture margins on sneakers from brand wholesale accounts. The discounts varied in different regions and if a buyer could travel a 3–5-hour radius they could utilize retail arbitrage. In sneakers this meant there was enough room for the resell of general release sneakers. Buyers capitalized on the promotional cycle of sneaker sales.
Post StockX retail arbitrage has become less effective. StockX’s ease of use, and a lack of any MSRP guidelines have democratized the reselling process and removed risk from resale. When a buyer can see in real time what is selling, they are less likely to take on inventory. Post StockX invited everyone to become a reseller. When this is combined with Nike’s focus on Edit to Amplify and making more of the sneakers that are moving quickly, buyers pursued easy sales. Since the Dunk and Air Jordan 1 was the hot ticket, both buyers and sellers moved to those sneakers. This wasn’t solely a Nike phenomenon. adidas followed a similar path in North America. They initially innovated making cool products like UltraBoost and NMD, but when Yeezy arrived in the U.S. market their entire strategy seemed to hinge on the hype around Yeezy. The focus on YZY led to a lack of development and marketing for other aspects of the brand and stores were so laden with NMD inventory, adidas died outside of YZY:
I wrote the above post in 2017 and then followed it up in 2019. The following comment shows the effect of delivering too much inventory into the marketplace, and how resale reflects brand heat: “As adidas’ brand heat slid, I was buying the model for 34.99. In other words, this model shows up on promo for three years, which is amazing and also a problem as older NMDs are hindering sell through on new releases. adidas should have had vendors RTV the shoe, which again leads towards a different discussion.” Nike is becoming adidas in 2019, or it can be said they are repeating an issue that happened in 2014. The problem now is Nike is holding more inventory and using their influence to make their partners take on the excess product leading to an overabundance of kicks in the marketplace. Data from Nike’s biggest partners reflects this:
According to Foot Locker’s 2021 fourth quarter and full year report, as of January 29, 2022, the company’s merchandise inventories were $1.3 billion, 37.2% higher than at the end of the fourth quarter last year1.
According to JD Sports Fashion for 2022 report, the inventories increased by £ 95.5 million from £ 1,032.3 million in 2021 to £ 1,127.8 million in 20221.
According to their fourth quarter and fiscal 2022 results report, Hibbett Sports inventory at the end of the fourth quarter of Fiscal 2022 was $221.2 million, a 9.5% increase compared to the prior year fourth quarter1.
Nike’s inventory for 2022 was $8.42B, a 22.85% increase from 2021. The inventory for the quarter ending February 28, 2023 was $8.905B, a 15.65% increase year-over-year1.
When I begin to pull data from third party showing a decline in resale, it’s not to make an argument that Nike’s sales are slowing down. The information researched is to provide evidence that an influx of product is leading to Nike sitting on shelves. This doesn’t mean that Nike isn’t still moving pairs. The Swoosh is still the most popular brand, but there are entire segments/demographics no longer going with what is readily available. There are people who are all in on comfort, fit and functionality. Brooks Running, On-Running, and Hoka are showing considerable momentum, and even adidas has returned to running and is benefitting from a continuous stream of marathon championships. Nike, for the first time in years, isn’t showing a lot of innovation. They aren’t nabbing the greatest runners in the world anymore. Fred Kerley signed with ASICS, Noah Lyles is with adidas. Elaine Thompson-Herah left Nike and signed with Puma. Abby Steiner is with Puma. High Jumper Mutaz Essa Barshim left Nike for Puma, and retired Olympic champion and longtime Nike runner Allyson Felix started her own brand, Saysh. Nike remains the leader, but On-Running launched the On Athletics Club and immediately landed athletes in the World Championships. NOBULL has quietly moved into position via Crossfit and New Balance is now the only brand, via research on third party, that is increasing in resale value. They are also the only brand who recently gave a Black woman a signature sneaker when Nike has given two White women signature sneakers (that’s a discussion someone should take on immediately). New Balance is out Nike-ing Nike. Read my last report on Resale
More data:
Over the last year via third party research, using the keywords “Nike + Men’s Athletic Shoes” April 2022 showed:
- $143.79 Avg sold price
- 190,394 Total sold
- 56,020 Total sellers
- $27,376,753.26 Total sales
- $74.40 Avg sold price
- 468,239 Total sold
- 115,317 Total sellers
- $34,836,981.60 Total sales
The data from 2023 is inundated with apparel under the “shoes” tag. This happens when sellers are throwing everything against the wall to hopefully get page views and sales. This also indicates retail accounts are dumping product. The 2022 research shows far fewer apparel items, so a more specific breakdown is required, but the drop in Average Sold Price is stunning. A more refined search using the keyword “CW2288-111” which is the classic Uptown, or All White Air Force 1 delivers these numbers for April 2022:
- $107.53 Avg sold price
- 1,309 Total sold
- 429 Total sellers
- $140,756.77 Total sales
April 2023
- $85.01 Avg sold price
- 971 Total sold
- 434 Total sellers
- $82,544.71 Total sales
The Uptown retails at 110.00. On Amazon, where Nike implemented a temporary pilot program and gained control of the marketplace by brand gating and preventing new listings from non-Nike account holders, the resale of an Air Force 1 all white hovers between 110 and 140. eBay, where the above data was pulled, Nike is selling below retail on its best-selling product. Resale that mimics retail, not the hyped stuff, is hardly ever wrong.
