What’s the Hype?
On November 18, 2017, Kanye West in collaboration with Adidas released the Yeezy Boost 350 V2 in Semi Frozen Yellow. Upon release, the $220 shoe sold out in 15 to 30 seconds. How do you rationalise such an irrational occurrence? This phenomenon is prompted by a sales tactic employed by popular streetwear brands known as “the drop”. Streetwear brands create “hype” on various social media platforms and within the online sphere to spark interest among consumers; this strategy accelerates the supply and demand model in an unprecedented way. Just a simple post on instagram promoting a new pair of sneakers is enough to generate “hype” for a certain item. When the product finally “drops”, there are only a limited number available which sell out within seconds. This encourages buyers to be online in time to get a hold of it before it goes out of stock. This has revolutionised marketing and created an entire online resale business.
“Hype” brands such as Supreme have recognised the power of product scarcity and harnessed this potential to engender a frenzy around its products. Its humble beginnings as a small skate shop in downtown New York City in 1994 are a a stark contrast to the cult following they have garnered with an estimated worth of a billion dollars today. The Wall Street Journal disclosed that the Carlyle Group, a private-equity firm, had acquired a 50% stake in Supreme worth about $500m. What distinguishes brands like Supreme is that their marketability is derived from a reputation developed through limited releases, product scarcity, high-profile endorsements, and collaborations with other equally creditable designers. The Supreme brand has become so popular that any association with the logo can generate hype and profit. An example of this phenomena is when the infamous Supreme brick, a literal brick with the Supreme logo plastered on it, sold out within minutes of its release. The fact that this product had no practical use corroborates the notion that Supreme derives value from its branding and not the quality or practical application of its products.
This is not a novel business model; the Birikin bag is representative of how a product in the past has worked from the business hype model within the luxury fashion industry. The Birkin bag was introduced by Hermès, a French fashion label, and considered to be one of the most rare yet in-demand bags in fashion. To be seen with a Birkin bag was a statement and a symbol of class, and superiority. The Birkin bag was priced at $10,900 at its lowest however the market price of the Birkin has increased by 14% per year over the span of 35 years. The bag is a more advantageous investment than gold. Moreover, getting your hands on a Birkin bag is a close to impossible feat, achieved by few. “Obtaining a Birkin directly from Hermès requires a long purchase history, patience, and luck. In addition, the majority of people who are offered a Birkin at a Hermès boutique have no guarantee of receiving their preferred colour, material or hardware,” says Fox. “This has led to a thriving secondary market which allows people to purchase their preferred Birkin bag immediately without a long wait.”
This hype model stems from what Norwegian-American economist and sociologist Thorstein Veblen, in his book “The Theory of the Leisure Class”, termed “conspicuous consumption”. This term refers to the notion that consumers spend money on obtaining luxury goods and services in order to exhibit their economic power to either gain or sustain a certain social status. While products delivered by “hype” brands are not as exclusive as the Birkin bag, their business model is based on the same principles of creating a desire for conspicuous consumers. They sell what Veblen termed “Veblen goods” which are luxury goods that are more desirable due to their scarcity. While the classic supply and demand model which puts forth that an increase in supply would lead to an increase in demand, conspicuous consumption correlates to a different supply and demand model. In this model, the demand curve displays how an increase in supply results in a decrease in demand. This is attributed to the idea that what makes Veblen goods profitable is their exclusivity. A prime example of this model is in the disappointing sales of the Yeezy 350 V2 “Cream White” which were mass-produced and did not sell out as the other colours ways and models did.
The subculture built around the cult following of streetwear brands has been termed “hype culture” and consumers have been labelled “hype beasts”. The culture revolves around exclusivity and managing to bag goods through keeping up-to-date with the latest “drops” and newest releases as well as building a knowledge base of what is and isn’t cool. It’s difficult to acquire hype products without being in tune with the subculture. Investment into hype products is an investment into your social status and image within this particular community. These brands are marketed to a specific audience that pays close attention to the various collaborations and designers that they engage with. For example, the founder and designer of Fear-of-God, a hype clothing line, understands that the fanbase is attracted to unique and trendy collaborations; this understanding of their consumer base inspired their collaboration with Nike, which was promoted by a short instagram post captioned “no more vans. swoosh for ’18”. Founder of Fear of God, Jerry Lorenzo, “The younger customer is already well tuned into it. They have a unique eye, they know what they can resell, and they know many brands. I think they are very discerning customers in a way, which is fascinating.“You can’t fake your way into being a sought-after brand.”
Moreover, people identify with streetwear brands that give them a sense of identity and belonging that high fashion brands may not be able to cultivate within all consumers. Given that streetwear has its roots in hip-hop, its consumers come from diverse backgrounds. The association of streetwear brands such as Supreme and Palace with a variety of artists, and celebrities such as Kate Moss, Tyler the Creator and Kermit the Frog as well as aspects of skate culture make them appealing to different groups. Comparatively, the high fashion world has historically been dominated by the white community; streetwear gave the non-white youth a platform to express themselves through brands that showcased products that they could relate to. However, with the increasingly prominent collaborations between luxury brands and streetwear, the consumer base for these goods is diversifying and expanding.
Hype Meets Luxury
An iconic and groundbreaking moment in fashion was when a Louis Vuitton model stepped on the runway sporting the big bold Supreme logo on her crossbody bag. It was the first collaboration in high-fashion with a renowned streetwear band and a symbol of the amalgamation between the two worlds. Luxury brands such as Raf Simmons, Givenchy, and Vetements have been displaying streetwear staples such as sneakers, hoodies, printed T-shirts and tracksuit pants as part of their collections to appeal to this consumer base. With the success of streetwear, luxury brands are also recognising the importance of honing the mentality of belonging. Going forward, streetwear and luxury brands are expected to continue working in conjunction as demand for products that have integrated the two styles continues to grow.
Revolution of Sneaker Reseller Business
The sneaker industry has been so successful that it has prompted the development of a booming resale market where an entire stock market has been established in order to strengthen it. Many “sneaker heads” also sell a large number of the sneakers they buy on online apps such as StockX a where over 20,000 pairs of sneakers have been listed from Nike, Jordan and Adidas along with luxury handbags and watches. This platform guarantees customers that they will receive original and authentic products and allows them to bid and negotiate prices with sellers. This is revolutionary given that sites such as eBay cannot provide quality assurance in the same way that StockX can. The sneaker resale market is highly profitable as it is valued at $6B globally. With limited number of sneakers, many consumers of hype products rely on sites such as StockX to buy their desired shoes or other luxury items.
The Future of “Drop” Culture
How do “hype” products sell out in a matter of seconds? How do they garner this level of popularity among their consumers? The answer is “drop” culture. The sales tactic known as the “drop” is highly effective among consumers of streetwear brands that have been employing this tactic, which creates a sense of importance and the impression that the products are scarce. Brands such as Gucci, Adidas, Nike, Louis Vuitton and Alexander Wang have used “the drop”; in fact, the strategy was so popular that The New York Times called 2017 “the year of the drop”. Following in the footsteps of these brands, Burberry also announced a series of drops that would take place every month and unveiled on social media apps like Instagram where consumers would have a limited amount of time to buy them before they were taken off the market.
What elements are involved in the success of “the drop”? One of the central components of the drop strategy is social media. There is a good reason why the drop is popular among the younger generation that is heavily involved with social media and seek forms of instant gratification. “We are living in an ‘on demand’ society where we expect instant gratification, constant novelty and brands to cater to our demands with urgency and immediacy. Pair that with a growing desire of exclusivity and access to something unique and we have the ideal scenario for such a trend to occur”, Ana Roncha, Course Leader of the master’s degree in Strategic Fashion Marketing at London College of Fashion, reiterates this point.
Due to the fact that brands have to find increasingly more creative ways to market themselves, they use social media to create excitement around new products and gain followers within the online sphere. Drops are essential to precipitating a buzz around a certain brand or new release. Social media platforms such as instagram also allow for the formation of online communities that share common values and interests which make consumers feel more connected or loyal to certain brands. However, while the drop is an effective marketing strategy with regards to young consumers, it may not have the same effect with an older consumer base that is not as in tune with social media or concerned with hype. These customers may value sustainability, practicality and tradition over popularity and trendiness. There is the risk of losing this consumer base if luxury brands that have established themselves with a certain clientele stray from their conventional marketing tactics.