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How to sell your sole: What retailers can learn from sneaker makers

  • Opinion
  • August 24, 2016
  • Luke Procter
How to sell your sole: What retailers can learn from sneaker makers

I recently found myself waiting outside Foot Locker at 7 am on a chilly winter’s day in Wellington. I was with one hundred other ‘sneakerheads’ waiting for a chance to purchase a limited release sneaker.

Sound weird? Not so weird for a sneakerhead. A sneakerhead is a person who collects, trades or admires sneakers as a hobby. It is a culture unto itself, but there are more than a few of us sneakerheads around – according to SportsOneSource.com the global sneaker business was estimated to be worth US$55 billion in 2015.

Back at Foot Locker we were all keenly awaiting the release of the Adidas UltraBoost Triple White 2.0, which is ‘sneaker de jour’ right now and credited as being responsible for the recent turnaround of the Adidas brand.

The Ultraboost, like many very desirable sneakers, is intentionally sold in limited quantities. Sneaker manufacturers like Adidas apply the scarcity principle to their special releases. The rareness of these products taps into the sneakerheads’ fundamental desire – to have a sneaker that nobody else has. It’s the scarcity of the product they wear on their feet that determines their social status.

This scarcity also means competition and tension among those wanting to purchase the shoe is high. Sneakerheads traditionally queue outside retailers, often for many days, to make sure they get a pair before they sell out. In the United States, some extremely limited sneaker releases have resulted in tantrums from famous rappers, riots and even murder.

Retailers are devising new approaches to cope with this buyer tension. Foot Locker uses a raffle system. In the lead up to the release day, sneakerheads go into a Foot Locker store, record their name and receive a raffle ticket. The sneakerhead then turns up on the day of release and if they’re lucky enough to have their name drawn out – they get to buy the shoe.

So, there I was, with my raffle ticket in hand, hoping for my name to be called out and it really got me thinking: why doesn’t Adidas simply sell the product at the highest price the market would allow? Surely it would reduce the tension, clear the market more quickly and make more money per sneaker. At first thought, it seems like a more rational strategy.  

But as I soaked up the atmosphere of the raffle, I realised Adidas (and Foot Locker) knew exactly what they were doing. They had created a sales event, a cultural event, a promotional event and an insights event, all wrapped in one.

Here’s how we think about a multi-event like this at TRA – the manufacturer and retailer were using this event to do the following:

  • Identify a highly engaged and influential brand audience – i.e. sneakerheads who invested valuable time and energy (as well as money) to attend the event and get the shoe
  • Using the power of an engaged audience to act as brand ambassadors to authentically market the category. The sneakerheads were posting on social media during the raffle and taking photos of their new sneakers – live
  • Lastly, creating an opportunity to generate insight into their target audience.

It’s the insight point I’d like to focus on, because the insight opportunities that could be extracted from an event like this are huge. Here are just three I identified while I was not so patiently waiting:

  • First, using observational techniques, it would be easy to capture cultural and behavioural insights into the sneakerhead community. How were sneakerheads interacting with each other and with the retailer? What sneakers were they wearing to the event? These insights would enable the brand to stay authentic and relevant, in turn propelling the category forward.
  • This event was also the perfect opportunity to utilise ‘in the moment’ research techniques. This is a methodology we employ at TRA that uses mobile technology to capture natural context and the behaviour of customers while they are ‘in the moment’. In this instance, sneakerheads at the raffle could take photos and video, capture audio, as well as answer questions on the fly. This approach enables brands to see and experience things through their customers’ eyes.
  • Third, this event would generate a load of data. For example, sales data – how many shoes were available versus the number of people wanting them? What’s the optimum ratio to retain the scarcity principle? It was also generating social media data through the online interactions the sneakerheads were undertaking. This social media data would allow the brands to extract further behavioural insights, but also the ‘influence network’ around their brand – how far does the sneakerhead community extend?

In other words, limited release sneaker events help brands like Adidas understand their customers, which in turn helps them market their products more effectively.

Strategic marketing approaches like this appear to be working extremely well. The market for sneakers is strong. Forbes.com recently reported that the global athletic footwear market is expected to reach US$220.2 billion by 2020. That’s a lot of new sneakerheads and brand ambassadors.

By the way, luckily for me I am now one of them: my name was called out in the raffle.

Luke Procter is head of Wellington TRA.
This story was originally published on StopPress.co.nz. 
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