Originally posted on Housakicks
The subtlety with which JB and Nike have been capitalizing on their latest products is loathsome. I was appalled for the nth time when I realized how the Air Jordan 11 low Columbia went from $115 in 2001 to $175 in 2017. When you look at the shoes, there are no upgrades that have been applied to them which leads me to ask the question: ” Why is there a $60 increase?”. This is more than a 50% mark up and JB has yet to justify the reasons for the sharp bump in the price.
Chris and I talked about Nike’s Futures and the advantage they give the brand in the retail market.Here is a brief definition for the term” Futures” I borrowed from the Motley Fool,
“Futures” or “futures contracts” is a term used when companies buy or sell commodities at a pre-determined price that comes due at a specific future date. Futures orders for commodities are usually a financial tool to hedge price volatility, and often the underlying commodity never actually changes hands.
So basically Nike is at the top of the food chain; even if stores like Finish Line or Foot Locker RTV ( return to vendor) their unsold inventory, they don’t receive their money back but a credit toward their next purchase. And what have you noticed from Nike lately? they have opened a lot of locations that are in direct competition with major retailers like Foot Locker, Champs, Finish Line. Not only that but Nike outlets are flooded with retro styles that are selling for a fraction of the initial retail price. And guess what? People like you and I see a Jordan retro like the Cigar 7 selling for $129, and we think: “That’s a heck of a deal” and we want to rush in there to scoop up a pair. But pause and think about the entire cycle for a minute: Nike-Retailers-RTV-Nike outlets/store. Who is the biggest winner? Nike, of course. They get to sell you a shoe originally priced at $115 in 2001 at the same price of $115 in 2017 in an outlet location ( meanwhile, you are thinking that you are saving $60, which you are technically, but in the grand scheme of things you’re still paying retail for the shoes). Nike outlets in my opinion are the biggest gimmick on the face of the earth.
$175 for a shoe that has received no upgrades and was originally priced in 2001 for $115 is too darn much.
UPDATES
I hadn’t considered the inflation, when you factor that in it makes a sense why Nike will increase their prices; but the increase in price isn’t quite proportional to the inflation. Considering the inflation, $115 in 2001 will be roughly equivalent to roughly $160 today- Nike still has a $15 bonus.
This is Chris And I “Live hangouts” where we brought up Nike and their “Future Contracts”
https://www.youtube.com/watch?v=U88KZMoelwQ
