Is Having a Sneaker Collection Worth Your Investment? Here’s What You Need to Know

                     

Sneakers have been worn by people religiously for the past forty years ever since Michael Jordan stepped into court wearing the first-ever Air Jordan 1s.  Thus grew the culture of wearing sneakers as a fashion statement or as an expression of one’s style.

The question that now arises is whether old sneakers or sneakers in general really be considered a form of legitimate investment? Many online resellers and even one of the oldest and biggest auction houses in the world nod their heads in agreement with us.

Investors get creative when it comes to investing money. Some investors invest in vintage or classic cars, some in luxurious properties, old or modern art, or even fine wines. Many look for traditional deals in stocks and bonds. 

However. interestingly current high inflation and shaky stock markets are pushing investors into investing in more niche markets. And now, this has led to more and more people buying and selling old sneakers. And, recent astronomical resale prices prove us right.

It's important for us to understand how in the world this craze started. We can confidently say that hip-hop music videos turned sneakers into status symbols. Suddenly celebrities, and later social media influencers were seen wearing brand-name sneakers everywhere. 

The collecting sneakers trend started to take off in the late 70s… early 80s, with the birth of hip hop culture. The most influential rappers of that era were always showing off fresh new shoes and styles. When the Air Jordans were released in 1985, they took the western world by storm.

People that are crazy about sneakers are called Sneakerheads. Sneakerheads have avidly driven this movement, making sneaker collecting a mainstream investment. But these days, even non-sneaker enthusiasts are hooked on it. 

Many investors have been able to generate income as a result of the creation of a special market for sneakers. Over the last four years, the sneaker reselling culture has grown significantly in India and is considered an emerging alternative investment avenue, especially among the millennials and Gen Z.

This trend is here to stay as it is clearly demonstrated by the fact that the global sneaker market is worth more than USD 60 billion in 2019 and is expected to rise at a CAGR of more than 7% between 2021 and 2026.

Athletic sports brands such as Adidas, Nike, Puma, Vans, Converse, and others are major players in this market. And seeing an opportunity in this growing market, many major luxury designers’ brands, such as Balenciaga and Louis Vuitton, entered this space by launching their own lines of premium and luxurious sneaker collections. In some circumstances, they also form successful collaborations with major sporting brands.

The sneakers that are resold or used as a form of investment usually have certain characteristics that distinguish them such as limited quantity, area-specific release, collaborations with legendary and famous figures, and so on. Rarity is the most important aspect in the sneaker resale market.

A reseller typically purchases a sneaker at a retail point and resells it at a higher price. In addition, when the price of the sneaker increases, the reseller may purchase it from another reseller and resell it even at a higher price.

Mind-bogglingly this incident sped up this trend. What happened was that one year, an auction recorded a sale for $1.47 million for a pair of Nike Air Ships worn by Michael Jordan. And a few months before that, the Nike Air Yeezy 1 prototypes worn by Kanye West at the Grammys sold for $1.8 million in a private sale.

More specialized online platforms have also stepped in since shark tank and we also saw many startups in this space who made their debut with the onset of this ever popular show.

One should never forget that like other investments, there is always an element of risk involved, and prices can fluctuate for a number of reasons as nothing is guaranteed.

In simple words, investors need to do their homework before taking a plunge into the world of sneakers.

It is possible to lose money just as quickly as you can make it. Investing in sneakers might be risky, but it’s virtually impossible to lose more than 40% of your initial investment. However, the downside of the sneaker resale industry, such as market instability, and an increase in counterfeit sneakers, should not be overlooked while making investment decisions.

Written by: Varima Tandon