It’s taken for granted that consumers buy products from brands and retailers to wear or use in daily life. From fashion to jewellery to furniture, the specific application might vary across products, but the fundamental principle remains the same. Or does it? New research from global resale site StockX suggests many consumers are now buying products with future returns in mind. According to a recent survey conducted by The Harris Poll on behalf of StockX, 37 per cent of American adults w
ults who have purchased or plan to purchase limited-edition sneakers in 2021 cited “investment opportunity” as a motivating factor. Among American adults who have purchased collectibles, 48 per cent said “future worth or investment value” was one of their top purchase considerations.
Based on the average price appreciation of some of the most popular product categories on StockX over the last 17 months, those purchases have probably paid off.
On average, an investor with 10 pairs of top-selling Air Jordan 4s would have seen a US$2,000 gain, while an investor with 10 pairs of top-selling Air Max 1s would have seen, on average, a US$800 gain. But that’s nothing compared to an investor with 10 top-selling PSA 10 basketball trading cards, who would have seen, on average, a US$13,000 gain.
StockX was founded on the idea that the stock market is one of the most efficient ways to price goods, but increasingly, it seems consumers are actually treating it like one.
“We have seen this coming for a long time, really since the inception of the company, but it’s absolutely taken off in the past year or two,” Jesse Einhorn, senior economist at StockX, told Inside Retail.
What’s driving this trend?
At the core of this trend are millennial and Gen Z consumers, who make up the bulk of StockX’s user base and bring a different approach to investing than their predecessors.
“This next-gen consumer and next-gen investor is interested in an investing strategy that is both culturally engaged and at the same time profitable,” Einhorn said.
Consider the meme stock craze that sent the share prices of GameStop and AMC through the roof earlier this year. By most accounts, these weren’t wise investments, but that’s not why people bought into the companies.
“Most traditional investing is fairly dry and unexciting,” Einhorn pointed out.
Meme stocks, and the hottest sneaker drops for that matter, are often trending topics online. By investing in them, consumers are joining the conversation in the same way as doing the latest TikTok dance.
“With these alternative asset classes, you get to participate in culture, while at the same time building wealth. You get to show off your investment on Instagram,” Einhorn said.
Compared to more traditional forms of investment, such as real estate, products like sneakers and collectibles are also far more affordable for younger consumers.
“Sneakers, trading cards, or t-shirts can be acquired for just a few hundred dollars and could potentially be worth thousands, making entry into the genre accessible,” Graham Wetzbarger, founder and CEO of Luxury Appraisals and Authentication, told Inside Retail.
What does it mean for brands?
As consumers increasingly view products as potential investments, more brands are starting to consider how they can benefit from this trend.
“We are absolutely seeing more brands pursuing the scarcity model to build hype,” Einhorn said.
In the past, this space was dominated by the likes of Nike, Adidas and Supreme, but now smaller brands like Crocs are getting in on it.
Trades of Crocs on StockX last year were up over 700 per cent, and the shoes routinely go for between twice and four times their retail price.
“This was a footwear brand that was not even on our radar three or four years ago, and it has quickly become one of the most hyped footwear brands on our marketplace,” Einhorn said.
At the same time, established brands are looking to tap into drop culture and the collectibles market through collaborations, as Gap is doing with Yeezy.
“Gap is hoping that the demand for the Yeezy Puffer jacket will have a halo effect on the rest of their offerings,” Wetzbarger said.
Similarly, Italian fashion house Emilio Pucci has partnered with streetwear icon Supreme in a bid to drive demand for its pastel scarves in the male-dominated streetwear market.
“Retailers, many of whom have been suffering, see drop culture and the collectibles market as a possible saving grace,” Wetzbarger said.
It could be a smart move in more ways than one. According to research released by the Columbia Business School, consumers are more loyal to brands and retailers they own shares of.