6 minute read
Unveiling the Investment Potential of Rare Sneakers
Sole Strategy
By Brooke Madden
Gone are the days when footwear was merely a utilitarian necessity. Today, it’s a thriving market where coveted kicks, beaters or grails can command prices that rival traditional investments like real estate, stocks or fine art. It’s easy to dismiss Jordan Ones or flashy Nikes as just “hype culture,” or a product of the early 2000s “swag generation.” This –albeit understandable – closed-mindedness has been thwarting the industry’s legitimacy as a true fiscal force for decades.
Diving into the complicated, underground, “hustle-centric” industry that is the sneaker trade might just surprise you. The sneaker resale market has morphed from a subculture into a behemoth industry, estimated to be worth billions globally.
What’s driving this meteoric rise? At heart, it’s been caused by a concoction of scarcity, brand prestige, and cultural cachet. Limited-edition releases, or exclusive collaborations between footwear giants and celebrities or designers, often spark frenzied demand, turning these shoes into coveted collector’s items.
SCARCITY
Scarce supply is the cornerstone of the sneaker investment game. Limited production runs to ensure that only a select few get their hands on these sought-after kicks, driving up their desirability and consequently, their market value. This means oftentimes sneakerheads are competing to win a chance at buying a pair of shoes. Think of it as the real estate equivalent of owning beachfront property: limited space and high demand drive prices skyward.
BRAND PRESTIGE
Brands like Nike, Adidas, and Jordan are the heavyweights of the sneaker world. Collaborations with A-list celebrities, star athletes, or renowned designers amplify the hype around certain releases, catapulting them into must-have status among sneaker aficionados. It’s akin to investing in blue-chip stocks – reliable, prestigious, and with a track record of delivering returns. However, in terms of actual buying process, the simplicity of a blue-chip pales in comparison to the complexity of a “grail.”
How might one jump the hurdles these brands intentionally set? If accessibility is seemingly not on the mind of the creators, how might one even begin their collection?
RESELLING: THE SECONDARY MARKET PHENOMENON
It’s important to note when considering sneakers as an investment that the real action in the commodity comes in the resale market. Online platforms like StockX, GOAT, and eBay have democratized sneaker trading, creating a bustling secondary market where buyers and sellers converge from across the globe. This accessibility has fuelled the market’s growth, providing a level of liquidity and transparency that mirrors traditional investment platforms.
Canadian entrepreneur Miles Nadal, someone who’d rightly be considered an investment expert as the founder of investment firm Peerage Capital, is familiar with this unconventional investment goldmine. In June of 2024, Nadal will be auctioning off his extensive sneaker collection, which totals about 750 pairs. The expected price tag? According to Jacob Gallagher’s exclusive in The Wall Street Journal, well over two million dollars.
CULTURAL CURRENCY
Nadal’s collection ranges from signed staples to cultural cornerstones, like Marty McFly’s oh-so-futuristic self-buckling sneakers. Sneakers have transcended their humble origins to become cultural icons – symbols of status, identity, and affiliation. They’re not just shoes; they’re artifacts imbued with the zeitgeist of our times. Sneakerheads aren’t merely collectors; they’re curators of cultural history, and owning a piece of that history holds immense value in today’s market.
LOVE, SWEET LOVE
A Toronto-based collector who goes by the moniker H might have even sweeter reasons for investing. Initially, H’s collection, which today amounts to hundreds of pairs, began as an homage to the ’90s. His flair for nostalgia and “the kinds of shoes I couldn’t afford growing up” fuelled his passion and commitment to curating an investment piece with a heart. And then, H met Madelyn.
“I used to love buying myself sneakers – I still love it – but now I enjoy buying her sneakers, more than I do myself,” he explains. “The fact that I respect the type of shoes she likes is a big deal, you know? Because you’re stepping out with the person. You want to look good together.” With stories like Nadal’s and H’s gaining more and more traction, eager entrepreneurs are seizing the opportunity to support the market.
Investor Interest Breeds Entrepreneurial Spirit
As the sneaker resale market gains mainstream recognition, investors are increasingly viewing rare sneakers as alternative assets worthy of inclusion in their portfolios. As such, entrepreneurs like Adrian Dragalin of ABC Shoes are forcefully finding their footing.
ABC Shoes is a brick-and-mortar spot in Burlington’s downtown core, that began, humbly, as a high school kid’s passion for collecting. With a client base focused in Burlington and Oakville, today Dragalin’s thriving business attracts clientele from a diverse group that ranges from collectors, to investors, to nostalgic types. Meanwhile, out of the suburbs and into downtown Toronto’s West Queen West neighbourhood sits ODTO, the first of its kind in this iconic shopping district. Drawing a remarkable crowd in a post-pandemic world, ODTO’s Kaleb Brown insists the underground sneaker market is an investor’s hidden secret.
RISK AND REWARD
Of course, like any investment venture, rare sneakers come with their own set of risks. Market volatility, authenticity concerns, and the concept of trends can all impact the value of your sneaker curation. However, for those willing to do their due diligence and buy from trusted resellers like ABC Shoes or ODTO, the rewards can be significant.
STEPPING INTO THE FUTURE
In a world dominated by traditional assets, rare sneakers represent a fresh and exciting opportunity for diversification. With their blend of scarcity, brand prestige, and cultural significance, they’re not just shoes; they’re a gateway to a whole new realm of investment possibilities. Whether you’re a seasoned investor or just dipping your toe into the market, consider stepping up your game with a pair of rare kicks. After all, in the world of investments, sometimes the most valuable opportunities are the ones you least expect.
