Department Store, Wearing Limited Edition Sneakers

Lotte Department Store Yeongdeungpo Branch Partners with Out of Stock
Sneaker Tech Platform Expands to Offline
40,000 Participants in Online Draw Event
Global Sneaker Resale Market Surges to 6 Trillion Won
"Growth Accelerated This Year Due to COVID-19"

On the 17th, the flagship store of the limited edition sneaker exchange 'Out of Stock' opened on the 1st floor of Lotte Department Store Yeongdeungpo Branch, which was renewed and reopened. The photo shows limited edition products displayed on the wall.

[Asia Economy Reporter Cha Min-young] The new original series "Tteotda#Sneakerhead" on the global streaming service Netflix features protagonists known as "sneakerheads" (sneakers enthusiasts). The TV program revolves around a male protagonist, a legend in the shoe industry, who, due to unavoidable circumstances, pursues the "legendary sneakers" to make money, leading to a series of events and episodes. Regardless of the show's popularity or entertainment value, the fact that a market composed of specific enthusiasts has grown this much is intriguing.

As sneaker mania has increased worldwide, the resale market has also expanded. This year, riding the wave of the novel coronavirus (COVID-19), the sneaker resale market, centered online, is expected to have rapidly grown to over 6 trillion won. Domestic department stores have also taken the bold step of opening limited-edition sneaker stores on the first floor?the "face of the department store"?to attract the emerging consumer base of customers in their 20s and 30s.

Sneakers Instead of Cosmetics on the First Floor of Department Stores

The so-called 'G-Dragon Sneakers,' made famous through the collaboration between the global fashionista and singer G-Dragon and Nike

On the 17th, the Seoul Lotte Department Store Yeongdeungpo branch reopened after renovation. The flagship store of the limited-edition sneaker exchange "Out of Stock," opened on the first floor with a size of about 30 pyeong (approximately 99 square meters), which is 1.5 to 2 times the average size of a regular store, saw visits from customers ranging in age from their 20s to 60s. Out of Stock is Korea's first online-based limited-edition sneaker resale platform, rapidly growing amid the "sneaker tech" (a portmanteau of sneakers and investment) craze, and this is its first offline channel. Among the displayed products, the priciest line was the "Jordan" line, an independent brand under Nike, priced around 5 million won. Relatively affordable products were priced around 200,000 to 300,000 won. Since these are limited-edition items, the stock was only about 3 to 4 pairs. The store also carries accessories and clothing from the "Supreme" brand, an icon of American border culture famous for limited-edition products. QR codes attached to the products link to the online site to provide product information, implementing an online-to-offline (O2O) system.

The reason sneaker tech is gaining popularity is simple. There is high demand for limited-edition items created through collaborations with famous celebrities. Since these sneakers are objects of taste consumption, many unworn sneakers are immediately put up for sale, increasing supply. As both demand and supply grow, transaction volume also rises. The famous sneaker "PEACEMINUSONE X Nike Air Force 1 Low Paranoise" with a red logo, created by global fashionista and singer G-Dragon, originally priced at 210,900 won, has become a rare item that is hard to find even at 2 to 3 million won. This represents an 800 to 1200% increase since its release in November 2019. Collaboration products ranked among the world's top 10 sneakers can fetch tens of millions of won per pair.

'Resale, Raffle'... "It's a Fun Game for Us"

Among the store's display products, the highest-priced line is Nike's 'Jordan' line, with each pair commanding around 5 million won.

Events like lucky draws and raffles are consistently successful for these reasons. To commemorate Out of Stock's entry into Lotte Department Store Yeongdeungpo, an online draw event called "Julseobwa-yeong" on Instagram attracted 40,000 participants competing for 55 spots?a probability of only 0.14%, less than 1%. The event offered a chance to purchase 10 limited-edition sneaker products priced between 219,000 and 299,000 won at retail price. Resale can yield 2 to 4 times the market price. In a large online community of sneaker enthusiasts, a user named Yoo Jin-ho (pseudonym) said, "I like owning limited-edition sneakers, and it feels like a fun game," adding, "Because of raffle events, I have lined up in front of stores for four hours from early morning."

Since last year, more platforms have entered the market by building their own sneaker resale platforms, mainly online. They are accumulating transaction data, seeing the market's potential. Three platforms have emerged just last year and this year: "XXBLUE" by Seoul Auction Blue, a subsidiary of auction specialist Seoul Auction (October 2019); "KREAM" operated by Snow, a subsidiary of Naver (March); and "SOLDOUT" by Musinsa, the largest online select shop in Korea (July).

The sneaker tech market is expected to continue growing. The stock research team at Cowen Group, a U.S. financial services company, estimated the global sneaker resale market size in 2019 to be $6 billion (approximately 6 trillion won). John Cernan, an analyst at Cowen, told Yahoo Finance in an interview, "The sneaker resale market accelerated this year due to the COVID-19 pandemic," adding, "With more sneakerheads entering, the number of new customers likely increased."