Sneakers are becoming the first luxury item consumers own

The so-called entry-level items are no longer the entry point of the price dimension, but the entrance to try the luxury brand experience.

Expensive sneakers of luxury brands, which were once regarded as a bubble two years ago, have now become a normalized entry-level item.

According to the latest report released by Bain & Company and the Italian luxury goods association Altagamma, the diversified entry-level products of luxury brands can help attract new consumers, with 30% of new luxury consumers saying that they buy the first item Luxury is a sneaker that is worn every day. Claudia D’Arpizio, an analyst at Bain & Company, pointed out that this reflects the importance of luxury brand entry-level products to capture consumers and create a virtuous circle of sustainable traffic.

Since the expansion of luxury goods to the mass market, the development of entry-level items has long been a consensus, but the role of entry-level items is quietly shifting. If luxury brands used lipsticks, perfumes, accessories, silk scarves and small leather goods as entry-level items, now luxury sneakers are also among them.

After five years of development, top luxury brands have developed iconic sneakers, whose market recognition and importance to luxury sales are on a par with star handbags.

For example, Archlight launched by Louis Vuitton from the womenswear business and Trainer launched by Virgil Abloh for its menswear business, Dior and Jordan’s co-branded shoe king and Oblique printed canvas shoes, Gucci‘s Rhyton daddy shoes, Balenciaga‘s Triple S, Alexander McQueen‘s platform Little white shoes, Prada Cloudbust and more.

Top luxury brands have developed iconic sneakers

There are many factors behind the rapid development of luxury sneakers from emerging categories to highly popular items.

First of all, in recent years, the macro background of the transformation of consumers’ wearing habits to sports comfort has provided strong support for the continuous spread of Athleisure sports and leisure style, and the epidemic has further strengthened the inertia of consumers’ pursuit of comfortable clothing, making sneakers a necessity in daily life. The market for high-heeled shoes is gradually being eroded.

Although fashionable sneakers like dad shoes are usually not suitable for sports, the blurring line between work and life has created a new scene for this emerging category, making it suitable for most people in certain formal occasions and professional sports transition between scenarios. In the case of sneakers becoming just-in-demand, people’s natural demand for fashion trends and identity distinction has spawned expensive sneakers.

Fashion sneakers like dad shoes are usually not suitable for sports, but they meet new life scenarios

Josh Luber, co-founder and CEO of sneaker resale platform StockX, explained that people in almost all fields will need sneakers. People can’t follow Jay-Z to buy a jet or the same car, but they can wear his same style. shoe.

However, while expensive luxury sneakers are an emerging category, they fit a lot of the logic of today’s luxury industry.

For example, the competition in the luxury industry weakens the brand concept and focuses on the competition of popular items. And, today’s luxury industry is more focused on marketing than product process development. Another example is the luxury market, which no longer pursues a luxury experience with a sense of distance and a lifestyle of spending a lot of money, but often wears a popular coat. Moreover, luxury sneakers are changing faster than handbags, catering to the current business model of luxury brands that rapidly stimulate growth by constantly providing freshness.

In terms of development, luxury sneakers naturally have the genes to become popular items. Because from the perspective of styling, shoes are often the key highlight of styling, and the trend culture that profoundly affects today’s fashion market places sneakers at the core. Sneakers are far more recognizable than other gadgets, and are more suitable for the competition for attention in the luxury market.

Luxury sneakers are also more closely related to marketing, which satisfies the growth logic of today’s luxury brands leveraging sales through marketing.

Sneakers are the biggest young traffic entrance. Taking the launch of luxury sneakers as an opportunity, luxury brands are often able to plan marketing campaigns both online and offline, and introduce digital and artistic forms of interaction to build a comprehensive luxury experience. In this way, luxury brands continue to gain young purchasing power and introduce them into a more comprehensive and rich brand world.

As the core of trend culture, sneakers are rooted in young people, and are deeply influenced by celebrities and celebrities. It is also easier to extend new cultural phenomena and marketing inspiration. In fact, luxury brands have been inspired to a large extent by trendy brands. For example, the Drop form, which is not regularly sold in limited quantities, has been widely used for reference.

Luxury brands get a lot of marketing inspiration from trendy brands

At the same time, compared to handbags, luxury sneakers can better reflect the brand’s close-to-people attributes. This category removes the overly exaggerated and extravagant old-fashioned feeling of traditional luxury goods.

From the perspective of unit price, although the unit price of luxury sneakers with a price between several thousand and ten thousand yuan is far higher than that of traditional entry-level items, due to the higher frequency of use, it has become a cost-effective choice for young consumers. On the other hand, as head luxury handbags exceed 20,000 yuan, compared with luxury handbags that continue to rise in price, the price of luxury sneakers is more acceptable than handbags.

The pragmatism in luxury sneakers is also reflected in the fact that compared with the limited-edition shoes of popular sports brands that are too expensive and too scarce, the supply of luxury shoes is relatively sufficient, which is easier to buy and has a choice.

But luxury sneakers still maintain a very high profit margin in business. Luxury sneakers mainly rely on the brand premium generated by the added value of products. The raw materials and production costs of sneakers are lower than traditional leather goods such as handbags. Since luxury sneakers do not emphasize functionality, research and development costs are also compressed. Low cost and brand premium make sports shoes have a higher gross profit margin, which provides the possibility for luxury sports shoes to become “cash cows”.

Therefore, luxury sneakers, as a combination between branding and pragmatism, have actually become the epitome of a new type of luxury in the future.

The so-called entry-level items are no longer the entry point of the price dimension, but the entrance to try the luxury brand experience. That is to say, the first luxury product purchased by potential consumers in the future may not be the cheapest item in the pyramid. They do not always follow the linear path of buying from the pyramid upward, but start from trying sneakers and then buy handbags and ready-to-wear. Shop down for beauty accessories.

The new generation of consumers rely on interest to shop, and the randomness is very strong. Such changes will undoubtedly bring great inspiration to the idea of luxury goods. More and more luxury brands are starting to make a fuss about expanding product categories to increase the contact between brands and consumers. At the same time, existing categories can be reconstructed with the idea of luxury pragmatism.

Take Loro Piana as an example. This luxury cashmere brand, which was originally known for its low-key luxury, has been making frequent moves recently. It not only launched its first handbag series, but also launched a cooperation series with the godfather of the trend, Hiroshi Fujiwara. It is not difficult to speculate that the cooperation with Hiroshi Fujiwara may eventually pave the way for the launch of luxury sneakers by Loro Piana. Recently, Loro Piana also launched a new series of scented candles, which shows its coveting in the lifestyle field.

There are various indications that LVMH has “covered” the acquired Loro Piana for 8 years, and is finally going to start making money with it, and the first step in commercialization is to expand product categories. When joining the LVMH group, Loro Piana said that he would reduce the proportion of men’s clothing business to two-thirds of total revenue, develop more leather goods and accessories, and increase the proportion of other categories of business.

In addition to the more traditional horizontal expansion ideas, the virtual world has helped the luxury industry escape the increasingly saturated business framework and become a new continent for brand development entry-level products.

After world: The Age of Tomorrow, a video game Balenciaga created last December for the Fall 21 series, has become a forward-thinking prediction for this year’s metaverse. The cooperation between Louis Vuitton and “League of Legends” has also received positive market response. The brand not only touches the e-sports interest group, but also builds a bridge to the virtual market.

As the concept of NFT attracts more and more attention, Gucci and technology company Wanna have also launched the first AR virtual shoes before, with a total of 25 models. The price of Wanna’s filter is only $9, and the Gucci app is $13. All 25 AR sneakers can be tried on, and each design is virtual, and consumers cannot wear it in reality.

Although the unit price is much lower than the real clothing, as long as the price of virtual skins and NFT works is higher than the market average price, the brand can maintain the luxury attribute, and the uniqueness of the NFT code can increase the brand premium. According to research recently released by Statista, by the end of 2022, consumers will spend $50 billion on game “skins”, which invisibly reflects the fact that consumers are also pursuing fashion in the virtual world.

After unearthing perfumes, handbags and sneakers one after another, luxury goods will continue to dig for gold. Adding practicality to traditional luxury forms, or providing practical items with options that represent luxury quality, remains a tried-and-true methodology.

The new luxury concept is just constantly looking for a suitable form of expression, and luxury sneakers will obviously not be the last.

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