Sneakers as an Alternative Asset Class, Part II

Sneaker resale is creating new markets and services. Our proprietary data shows a rapidly growing addressable market. Growth in the digital ecosystem of sneakers suggests new opportunities. The sneaker category shifts to digital in both the primary and resale markets.
COVID-19 is accelerating digital transformation in both the primary and resale markets for sneakers and streetwear. Our estimates of third party data and interviews with channel participants suggest the sneaker and streetwear resale market is north of $2B in North America, growing by 20%+ y/y with potential to reach $30 billion globally by FY30E.
This market is important because of the dynamics of distribution of these mobile-led marketplaces:
Our proprietary survey data suggests 33% of 18-24 year olds and 33% of 25-34 year olds have purchased from resale sites in the past 30 days – up from 26% and 28% last year. This implies 20%+ growth in active users y/y. We note the fastest growing users in resale are the 35-44 year-old demographic, suggesting an expanding technology acceptance model (TAM) and user base.
While sneaker brands capture no direct revenue from resale, the market creates a powerful halo. In the primary market, we see limited edition drops, increasing hype around launches and rising average selling price (ASP) and gross margin due to the heat in resale marketplaces.
As the market for sneakers/streetwear scales digitally, the primary market will also increasingly shift to direct e-commerce channels. Unit economics, gross profit and EBIT growth accelerates and risk-related to wholesale channel penetration declines.
We are more confident in the idea that sneakers are now an emerging alternative asset class that can be bought and sold for both collection, price appreciation and investment. With a growing base of passionate investors, growing sources of supply and authentication, sneakers
The design and creative capabilities of brands are the driving force in the concept of sneakers as an alternative asset as the sneaker resale market scales.
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