PARIS, FRANCE – MARCH 02: Fashion detail of Versace pink sneakers, is seen in the streets of Paris before the Loewe show during Paris Fashion Week Womenswear Fall/Winter 2018/2019 on March 2, 2018 in Paris, France. (Photo by Claudio Lavenia/Getty Images)
International Luxury brands are going all in on America’s urban streetwear style. High end brands like Kering’s Gucci and Balenciaga are now increasing investments and marketing budgets to take a bigger stake of the sneaker market. These brands will face down the incumbents in the space like Nike and Adidas. How much is at stake in the sneaker race for the wider fashion industry as it changes its stance on hip-hop’s influence on the sector?
The Breakdown You Need to Know
Luxury groups and sports companies are looking to cash in on a booming market. Global sales of sneakers were up 10% to more than $4 billion last year. They outperformed the 7% increase handbags had during the same time period. Hip-hop is a powerful tool for reaching Generations Y and Z, who are expected to account for 45% of the global luxury spend by 2025, according to Bain & Co.
There has been a lot of resistance by the European fashion houses to embrace streetwear. “When I saw sneakers were going to be a thing, I fought it for a bit,” Salvatore Ferragamo’s designer Paul Andrew said at a conference. “We’re definitely now investing heavily in that category, getting in very specialized people.”
Accounting firm EY notes sneakers are the fashion industry’s fastest-growing area and a big driver of the luxury shoe business. CultureBanx research found premium sneakers can start at around $400 and limited editions can sell for well over $10,000.
Rappers are quickly becoming fashion’s new royalty. Sneaker collaborations include artists like 2 Chainz partnering with Italian fashion house Versace on the “Chain Reaction” shoes. Also, Pharrell worked with French powerhouse Chanel to create the Hu Race Trail sneaker. Young millennial buyers are also driving the sneaker shift. Bain & Co highlights they represent a third of the luxury market, which is important for brands trying to tap into street style as a way of refreshing their looks. A$AP Rocky told Business of Fashion, “It’s important for this generation and the next generation to see people that look like them or that inspire them, because fashion isn’t just for the elite any more.”
As luxury brands look to gain a stronger foothold in the so-called “sneakerisation” market, competition remains fierce. A pair of Nike’s black leather Air Jordan 5 Retro premium sneakers sell for more than $470, compared to a pair of Gucci’s ACE made with the GG logo canvas which cost $520. You can easily see how the sneaker competition has changed and where the clear overlap in the market is.
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