The sneaker industry paradox
The trouble with marketing to those who love shoes the most
|May 18, 2020||15||3|
BY BEN ARONSON
Ben and his family all have Jordans now.
Growing up, my family was never like can’t-pay-the-light-bill broke, but we didn’t exactly have money. In 1992, my mother made about $65,000 a year working in human resources at a state-run, residential, mental/physical health facility. She was a single mom with two kids. She got two paychecks a month. One paid for our suburban New Jersey home, the other one had to pay for everything else.
That was the problem I had with Michael Jordan and his kicks. I loved him and I needed them. When I was a kid, Jordans were just about the only sneaker that mattered in an industry that was exploding. Putting on a pair of Js was a statement about your game, your style. And they were not hard to find. They were just expensive AF.
When the Nike “Hare” Jordans dropped, I was about ten years old. I had to have them. But the math was against me: I got two new pairs of sneakers each year. One pair was for “back-to-school.” The other was for a specific sport—if I grew out of soccer cleats that year, there went pair two.
But, when those 7s dropped I dragged my mom straight to this tiny mall near my house. Wayne Hills Mall was like a strip mall with a roof. It was anchored by a Burlington Coat Factory and had a McDonald’s, Sam Goody, an arcade, and one of those photo stores where you could get a family portrait all dressed in the same corny outfit. The mall was light on fashion, but it housed the only store that mattered for a 10-year-old Jordan fan: Footlocker. When we got to the mall that day, I blew past the arcade and ran straight up to the Jordan section. I put on the 7s and, like every kid did (at least I hope I’m not alone in this), I began to mime Jordan’s moves: crossing the ball between my legs, jab stepping, and hitting that fadeaway right in the defender’s face (even at 10 I knew I was never dunking).
At some point, my mom saw “$150” on the box. She had systems and rules, including a hard $80 cap on sneakers. One hundred fifty was NEVER happening. The sales guy tried to help lobby on my behalf. He was in a referee outfit, but she made the rules. She pointed to the sale wall, said “pick from here,” and that was that.
Every year my mom and I did that same dance, and every year I lost. I didn’t necessarily always understand that money was tight, but I did always know that Js were expensive. And, if I’m honest, 90 percent of the kids I knew weren’t getting the new Js either. Then and there, among mostly white kids in a mostly suburban school, new Jordans were like a status bonus. Not an essential.
But that’s not necessarily how it is or was growing up as a young black kid in Queens. “Looking fresh is just in our DNA. It’s part of who we are. Even if you didn’t have money, your family—older brothers or cousins or aunts/uncles—they kind of worked together to get you a new pair,” Wosny Lambre, NBA culture writer for the Athletic, explained to me. Sneakers, “Big Wos” says, helped him feel like he had something when maybe he didn’t have a lot. Shoes just mattered more in Wos’s world than they did in mine.
A giant industry exists in the difference between nice-to-have and perceived have-to-have. It runs on data and dollars. It craves authenticity, and it makes billions for Nike, Adidas, and the like. And it’s incredibly expensive. Decades after my mom wouldn’t buy me shoes that were too expensive for us, I sit in the meetings where these strategies unfold, thanks to my job as a media executive.
I have spent the past 20ish years working in marketing strategy for ad agencies. My job, and the job of marketing in general, is to efficiently and effectively drive growth. We develop strategies, execute, analyze, and optimize with the goal of helping brands grow. During the Jordan era, the commonly accepted strategy was to create a broad campaign to win as many people as possible. “Be Like Mike,” the famous Gatorade campaign, was aimed at making everyone believe they could be Jordan.
Now, for reasons we will explore, brands are less concerned with their marketing connecting with the masses. Instead, they are far more interested in targeting the influential niches that drive trends. For the sneaker industry, that’s young black and brown teens.
Style culture—especially sneaker culture—has taken over at schools. What you wear defines who you are for many kids today. It provides a sense of not just status, but also self-worth. Nowhere is this more apparent than in communities of color.
But whether it’s a $150 Jordan 7 in 1993 or a $250 Yeezy in 2018—the price to feel good about yourself is really steep. The average black American made $41,000 a year in 2020 before the pandemic. That’s $10,000 less than the average Hispanic American and almost $30,000 less per year than the average white American.
Source: Peter G. Peterson Foundation
That ends up being $2,500 per month after taxes. Subtract average rent of $800, utilities of $200, and the average black American has only $1,500 to eat, commute, and buy anything else they want or need. The math is rough. And yet, despite the seeming economic disconnect, this is the audience to whom sneaker brands target their most expensive products and their most sophisticated marketing efforts.
How do I know this? Because I’m in the room when these plans have been and are being developed. Marketing data drives this, because it works. Consumers have evolved, personalized messaging and authenticity in everything have replaced the mass marketing of “Be Like Mike.” The most efficient way to win the masses is not actually to market to the masses. It is, instead, to reach a certain subset of tastemakers. The trick is to identify them, and get in front of them. How does that work?
Here’s a clue: In 2013, when Adidas was trying to reshape their brand to make a run at Nike, they signed Kanye West and Pharrell first. Then, later, James Harden. Similarly, a few years later, when Puma wanted to start their brand resurgence, they immediately directed their focus on Rihanna and Jay-Z, plus a slew of young NBA talent. We call what’s happening here “targeted influence.”
Data from the last couple of decades shows that cultural trends tend to originate from young communities of color. SUVs in the late 1990s, bottle service in the early 2000s, or the coveting of collabs in the 10s—this is simply how most major trends move. They start in the communities of color, spread through music and celebrity until they land in “mainstream” culture, and finish with the important purchasing power of white suburban people. This is an adaptation of sociologist Everett Roger’s “Diffusion of Innovation” curve. And while many industries target the influence of young black and brown America, no industry has done it as overtly and egregiously as the sneaker industry. Follow the data and you’ll see the story:
Nike buyers over-index tremendously towards black (150 percent) and Hispanic (125 percent) customers. In fact, so do Adidas and Puma. Together, those three brands account for about 80 percent of total footwear market-share globally.
The most expensive talent/influencers that these brands sign are almost always people of color (LeBron, Kanye, Jay-Z, Odell Beckham Jr., etc.)
Despite the fact that the basketball shoe market is not even a fifth the size of the running shoe market, basketball is by far the biggest marketing category for these sneaker brands—which also skews massively towards people of color.
The most exclusive and expensive products are built at the fusion point between those influencers and black culture.
But, the majority of sales throughout the country come from cheaper, “in-line” products that happen to be purchased with greater frequency by white consumers.
The strategy is clear. Market the most expensive and most exclusive products to communities of color, and if they co-sign, the mainstream (white) audience will follow. But, despite their economic advantages, the majority of white America’s sales come from what we call “in-line” models—not the exclusives or expensive models that you find at shops like Undefeated, but instead the cheap models you find in stores like Dick’s or Footlocker. In some ways, it’s not new at all. Few people purchase haute couture fashion, but haute couture has a lot of influence over which labels move at Nordstrom or Marshall’s. In the case of sneakers, there is a paradoxical economic disparity between who is targeted with the high end fashion and who is targeted with the discount goods.
Now let me be clear, I think it’s amazing that the world has begun to value diverse audiences as meaningful and important. But there’s a side-effect to this marketing evolution, and it’s disturbing.
The sneaker side effect
“You know, I work at a school in a lower income area of Philly,” says John Jervay, a Philadelphia area teacher and contributor to the Black Opinions Matter podcast. “I see these young black and Hispanic kids at school every day and it’s sad. You’ll see a kid wearing literally the same exact clothes all week, and you can tell that they haven’t even been washed, because you can see the same yellow stain Monday through Thursday. But every day they’ll have on some fresh kicks. And I’m talking expensive collabs and even like Balenciaga type stuff. And it’s sad you know? Because I used to feel that way too.”
Marketing is an incredibly powerful force. We’ve seen how marketing and media have made women develop eating disorders at alarming rates. And now we’re seeing how it’s impacting young and economically disadvantaged communities, encouraging them to feel like their self-worth is tied up in securing expensive sneakers.
The $60 billion-plus sneaker business is about eight times as big as the NBA. So it’s not surprising that, as Ethan Strauss alluded to in “The Victory Machine,” the NBA player’s primary employer often isn’t the league at all. It’s the sneaker brand to whom they’re signed. The player’s value is, essentially, in preserving the idea that the right pair of shoes means everything. LeBron James reportedly has a net worth approaching $1 billion. He is arguably the most financially successful active athlete in the world. About 70 percent of his income is from off-court activities. From his long-standing deal with Nike to his savvy stock-backed partnership with Beats to his decade-long Kia deal, LeBron has demonstrated the ability to lift companies, and his own personal net worth, to new heights with his style and influence.
In fact, while most people track the growth of Nike to Jordan, there’s a strong argument to be made that LeBron has been the more important catalyst of Nike’s global domination. With LeBron, Nike transitioned from a brand built around Jordan, to becoming a brand built around culture.
LeBron, who calls himself “just a kid from Akron,” has done everything he can think of to give back. From donating gear to teams in need to literally building a school (the I Promise School) to taking strong political stands against social injustice, LeBron is more socially active than the vast majority of celebrities or athletes. It is easy to see he is a legitimately good dude. So it seems ironic that the overwhelming bulk of his income is derived from selling a $200 shoe to kids who can’t afford them.
A couple weeks ago I was watching the new Stephon Marbury documentary, “A Kid from Coney Island.” It reminded me how Steph tried to ditch the major sneaker brands in 2006 to develop a $15 sneaker. He wanted to make a shoe that he himself could have afforded as a poor kid growing up in the projects of Coney Island, NY. He saw what the sneaker game was doing and he wanted to try to disrupt the system to help his community. The quality of the shoe was rated quite well, and with Steph playing in them for the NY Knicks, they sold out in the early days, and seemed to be on a crazy promising trajectory.
The world was learning that it just doesn’t cost that much to manufacture basketball shoes.
Then an up-and-coming “Kid from Akron” put an end to all of that. Asked if he would ever cut the price of his shoes to meet the needs of his community, LeBron James told the New York Post: "No, I don't think so." Then he said, "Me being with Nike, we hold our standards high. And we do a great job of putting out great merchandise, great shoes. And it does come with a price that is pretty high. But at the same time, you're getting great quality for it."
What began as an effort to help young kids realize that price is just a number, was immediately invalidated by a guy who’s financial empire was built largely on the price of his shoe. This trend is something that other players have followed. In 2014, Kevin Durant told Nice Kicks. “As humbly as I can say it, I’m not a $88 player.” These players, often from poor backgrounds themselves, have become part of an ongoing tradition of predatory marketing.
Source: The Washington Post
Now I want to be clear about something, because again, I sit in these rooms. NONE of the sneaker brands, the athletes, or the agencies are consciously attempting to exploit young black culture. They aren’t hatching schemes to take from the poor to give to the rich. It’s not sinister or intentional. The reality is, the brands and agencies follow data and trends without thinking about the macro-economic context in which they are operating. These are the kinds of phrases that do appear in my line of work:
“Oohh, Iconoculture says that multicultural audiences are more influential.”
“MRI shows that NBA over-indexes for young multicultural audiences.”
“Wow, we tested a campaign with Rhianna and it sold out in minutes… AND people were buying the same products hours later on GOAT for two to three times the retail.”
There’s no reason to believe athletes and entertainers have any desire to pillage young black and brown kids of their ability to save. In their minds, they are just trying to put out the coolest products, with the best ads that will make their shoes sell the best. They are competitive, they want to do what will work. Who would do any different? Isn’t that exactly what white America has done for years?
The thing is, no one—outside of maybe Marbury—is stepping back and looking at the bigger picture.
“Financial freedom my only hope, Fuck livin rich and dyin broke” —Jay Z
So I can’t help but wonder: Could LeBron actually do more good by simply cutting the price of his sneaker than he does by funding charitable initiatives like the “I Promise School” with the royalties from those $200 shoes? Like what if he cut the price to $15?
Unlike literally any other athlete on the planet, LeBron has the power to flip the industry on its head. If LeBron demanded that his shoes be released at an affordable price, because he cared about the financial and emotional well-being of his community, Nike would be forced to follow suit. LeBron could force the type of change that could not only disrupt the entire sneaker industry, but also many of the institutions that facilitate the racial economic disparity in the first place.
This shouldn’t be LeBron’s cross to bear. It shouldn’t have to be the responsibility of the employee to correct the actions of the company. And it certainly shouldn’t be the job of the black community to yet again correct the institutional systems put in place by white executives. But as long as this country is a capitalist one, companies will optimize their strategies towards growth and profits. And right now those optimal strategies require the exploitation of the most economically and institutionally disadvantaged communities in the U.S. Changing those systems will either require the current strategies to fail, or a person with extreme leverage to force an evolution. In my opinion, LeBron might be the only person alive with the clout, social credibility, and financial leverage to make this happen.
As a kid, I couldn’t afford the shoes I wanted. But at least the game wasn’t stacked against me by the most clever minds in marketing.
In an industry that talks a great game about doing the right thing (pumping out important and necessary ad campaigns like Nike’s “Equality” campaign above), words ring hollow. I want us all to do better. I want us to give meaning to those campaigns, by empowering rather than exploiting our prime audience. A $15 sneaker won’t solve our country’s racial disparity—but it would bring a lot of authenticity to an industry that wants badly to connect with some very real people. Maybe it’ll even be good for business. Turns out, authenticity sells.
Ben Aronson is a marketing agency executive. He lives in Hoboken with his wife Prim Siripipat and son, Duke.