Are your sports shoes worth what you paid for them?
2 December 2015
Basketball star Stephon Marbury thinks shoe companies and their celebrity endorsers are ripping you off. With trainers - or sneakers as they are called in the US - costing upwards of PS100, it's not hard to see why he feels this way. Marbury now believes the market is ready to welcome his branded sneaker line Starbury that costs less than PS10. The former National Basketball Association (NBA) star now plays in China for the Beijing Ducks but he's still concerned about American kids hankering after expensive sports shoes. He argues that not only are his Starburys - which sell for $15 (PS9.70) - value for money, but that they will help bring down sneaker-related crime. Local authorities do not keep statistics on shoe-related crime, though $324m worth of clothing was reported stolen across the US in 2014. Finding news of sneaker crime, however, is not difficult. In February an Ohio teen was killed while attempting to steal a new pair of Air Jordans from a man in a car park. In April 2014 a 15-year-old boy shot a 14-year-old after he was accused of jumping the queue to buy the new Kanye West branded shoes. A year earlier, 15 men were caught on CCTV stealing sneakers from a FootLocker in Georgia after ramming a truck into the front window of the shop. Marbury released the line once before, but the company backing them went under in 2009, just a year after the shoe's release. In October he announced he was reviving the discount trainer line. But he's provoked some controversy over the way he's launched into his more expensive competitors on social media. In a series of recent tweets, Marbury accused former NBA star Michael Jordan and Nike, the company that produces his shoe - Air Jordans - of adding to this crisis of sneaker-related crime. On Twitter, Marbury accused Nike and Jordan of "robbing the hood". Nike did not respond to requests for comment, but has in the past condemned specific acts of violence sparked by its sneaker sales. While few ordinary customers would go so far as to blame the stars that advertise the shoes for street crime, they do often question whether the price they're paying is down to celebrity branding or the underlying value of the product. All the activities that go into creating a product - from its design and manufacturing to the shipping, branding and retailing - form part of the value chain. Often the physical assembly is done in low labour-cost locations and therefore a small fraction of the overall price. "The basic point is, assembly is only a small piece of the chain and not that much of a cost for the company," says Pietra Rivoli, a professor at Georgetown University in Washington DC. According to Steve Lamar from the America Apparel & Footwear Association shoes sold in the US get 70% of their value from work done in the US. This includes design, choosing the materials, hiring sponsors, spending on advertising and retail. "What goes into a lot of the value is the quality," he says. "[Customers] want to make sure when they buy shoes they have a guarantee of quality from the brand. That type of assurance has a price tag." In 2007 Marbury argued that his shoes would be the same quality and made from the same materials. Changing preferences and technological advance could make that harder today. More shoemakers are turning to high-quality materials such as kangaroo leather or mirror finishes that change colour which add to the cost. 3-D printing is also becoming popular as a way to produce the soles of trainers. "The materials are getting better and that means the costs go up and the cost of labour is going up too," says sneaker designer D'Wayne Edwards. Arguably the most expensive piece of the value chain is building the brand. Footwear companies have to spend money to make their shoes desirable, cool and fashionable. And the field is becoming more competitive and sophisticated as athlete endorsers are increasingly being joined by other trendsetters. "It used to be athlet-driven collaborations got the attention of kids, but the collaborations today are with artists, musicians, graffiti artists and people who just have a good sense of style," says Mr Edwards. Kanye West partnered with Adidas in 2015 to release Yeezy boots that sold for $200. Companies have to spend a lot to get celebrity endorsers like Kanye West or Michael Jordan. It's typically money well spent though. Consumers are far more likely to pay a lot for shoes worn by their idols. "Jordans are the most popular shoe on the planet because they are associated with winning," says Sean Williams, co-host of the show Obsessive Sneaker Disorder. Spending a few hundred pounds on a shoe can also build brand loyalty. "A poor person who wears Nike will wear Nike if they become a rich person," Mr Williams says. The design of the shoe is also a large part of its value. Brands that work with endorsers typically ask for their input on the look and performance of the shoe. "Sneakers are designed to solve problems for the athletes. If a player doesn't get involved in the design the shoe will fail," says Mr Williams Once the shoe solves a problem like arch support, increased speed or more slip resistance, companies have to protect their plans through patents. Billions of pounds are spent by apparel companies each year to protect against knock-off merchandise. That cost eventually gets tied into the price of a pair of shoes. And while manufacturing in Asia is much cheaper than producing shoes in Europe or the US, companies are increasingly spending more on materials and high priced factories. "There are a lot of myths about sneakers costing $10 to make in China, but sneakers that cost $200 at the store are more expensive to make," said D'Wayne Edwards. Then there are taxes to be paid when the shoes are imported. If Marbury is serious about getting his $15 shoes to shops he will have to figure out ways to radically limit the costs along the value chain. At least as a star himself  he won't need to hire celebrity endorsers. And he has already proved he can create a storm on social media to get the marketing ball rolling at no cost.
And while manufacturing in Asia is much cheaper than producing shoes in Europe or the US, companies are increasingly spending more on materials and high priced factories. "There are a lot of myths about sneakers costing $10 to make in China, but sneakers that cost $200 at the store are more expensive to make," said D'Wayne Edwards. Then there are taxes to be paid when the shoes are imported. If Marbury is serious about getting his $15 shoes to shops he will have to figure out ways to radically limit the costs along the value chain. At least as a star himself  he won't need to hire celebrity endorsers. And he has already proved he can create a storm on social media to get the marketing ball rolling at no cost.
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Can he do it?