Thursday, November 11, 2004

volume versus profit (and how it affects sneakerheads)

A little more insight about the push for expensive kicks by the sneaker industry.

The industry is trying to push prices up because profits have been constrained by the retro fashion trend that favors less-expensive shoes such as Nike's Converse high-tops, and flat-soled Keds and Vans. The average price of a pair of sneakers fell 1.7% to $31.84 last year, and is down 23% from a peak of $40.07 in 1998, according to market tracker NPD Group. Higher volume has helped offset the price declines, as sales climbed 4.5% to $16.4 billion last year.

You would think that higher volume would be good enough.

Don't they know that people are more likely to purchase shoes if they're cheaper? I know that when I was younger and bought $100.00 sneakers, I could only have one or two pairs at a time. Now that cool kicks can be had for less, I maximized my purchasing power and bought more shoes. Cheaper shoes set off the sneaker mania of the past couple of years. If that dies down, the industry is screwed.

Shouldn't selling the most shoes at a decent profit be more important that selling less at a higher profit?

It's like deja vu: when high-tops were al the rage in the late '80s, the industry got greedy and started producing less and less relevant designs at higher prices. It got to the point that the averege person was priced out of the market for cool shoes. That in part led to the acceptance of work boots and other forms of footwear as acceptable casual wear, which killed the industry back then and built up the market for Timberland boots, sandals and flip-flops.

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