The Economic Development of Sneakers
OVERVIEW
Shoes prices have greatly increased over the years and no one is really questioning how certain shoe brands have done this. Certain shoes I have have been over $175 dollars and I usually have no problem with buying them. Shoe prices just keep increasing with the rapid increase of shoes coming out. With every new shoe that comes keeps the buyers more interested and a lot of people are willing to pay big dollars just to have the latest and greatest and shoes. Even prices on older shoes increase because of the value of the shoe.
Research Question
Why have certain companies been so successful and been able to raise the prices of shoes so drastically?
Supply and demand
The amount of a commodity, product, or service available and the desire of buyers for it, considered as factors regulating its price.
Source:National Post
The story of sneakers ¨ is a story of supply and demand, the basic fundamentals of microeconomics, ¨ as stated in the National Post article on ¨Sneakernomics.¨The economic development of sneakers all ties into the game of supply and demand, now typically the supply of Jordan´s and Nikes has been limited however the demand has always remained high causing the supply to gradually increase.In the article Melissa Davis states ¨ The [Air Jordan] 11s always sell out because it is an iconic shoe.”This is a present example of supply being lower than the demand, but you see the difference with sneaker supply and demand is unique. Sneaker creates and consumers want the supply to be more limited so the rarity of their shoes continues to stay the same which causes the value to increase more and more over time.
Capitalism
An economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state.
What a lot of big brands will do is they will put out a limited release or because the rarity of the colorway itself. Doing this makes the market for the shoe to be a high selling shoe. So these shoe companies are able to keep drawing in customers every month which allows them to control the market and keep them on top. Not only do big brands but big figures join these brands which also keeps costumers coming back.
https://medium.com/life-be-lifin/at-the-intersection-of-capitalism-and-self-indulgence-to-buy-some-jordan-3s-9e30645c6d71
Profit margins
the amount by which revenue from sales exceeds costs in a business
Source: Citizens Times
The Profit margin in the sneaker industry is HUGE. Citizens times writes, "a bit more than $16 a pair," Now this is a pretty reasonable price, I mean I would buy a shoe for 16 bucks, however the price these shoes are going for are outrageous. I continue to read and I found that, these shoes are found on " Amazon for $250 to $550 a pair."This means that consumers are paying 34 times the price that the shoe cost to create, however the sneaker audience could care less.
Conclusion
In conclusion, sneakers have a huge role in the economic sector today, from supply and demand to capitalism, all the way to profit margins.Sneaker prices are rising steadily and demand is also increasing rapidly , the sneaker industry seems to be very sustainable at the moment and looks to stay that way as long as people continue consumerism.
