Luxury Sneaker Markets Are a Preview of Capitalist Dystopia

The multibillion-dollar luxury sneaker market increasingly seems like something out of a sci-fi novel. But for all its bizarre quirks, there’s no better illustration of the way modern capitalism works, and the direction that it’s going.

Nike sneakers are seen on display at the Nike flagship store on Fifth Avenue, on December 20, 2019 in New York City. (Stephanie Keith / Getty Images)

PLUS, a new pop-up store in Toronto’s Yorkdale mall, looks like any other high-end shoe boutique from the outside. Pop-up sneaker stores are easy to overlook, but they’re proliferating in malls across North America where an array of mom-and-pop stores, with names like HypeFetish, Heat Vault, and Hype Store, trade in the same kind of shoes as PLUS. Many shoppers will encounter these stores while looking for a new pair of runners, balk at the prices, and never think of them again.

These low-key shops, however, are part of an enormous, burgeoning sneaker resale industry. It fuels a vast economic machine generating buyers and sellers, investors and authenticators, culture and journalism. Sneaker markets show us the current state of capitalism in microcosm — and give us an excellent idea of where it’s headed.

There’s Gold in Them Thar Shoes

The popularity of sneaker collecting dates back to the launch of the coveted Air Jordan 1 in 1985. For many young people — especially young African Americans — it seemed to offer an accessible, obtainable version of luxury and status. Sneakers even came to embody black expression in an era when the fashion industry was hostile to black culture.

In the nascent sneaker culture, Air Jordan 1s were a statement against white authority made at the highest levels of black-dominated sports like basketball. Initially banned by the NBA, they resulted in fines for Michael Jordan whenever he wore them on the court. Sneakers also became an essential part of hip-hop culture, athleticism, and black metropolitanism: Nike’s white Air Force 1 shoe is colloquially known as the Uptown, for example, because of its popularity in Harlem.

The ongoing commodification of black culture made sneakers into a powerful cultural totem. Major shoe brands have spun their kicks off into popular collaborations with giant figures in the worlds of sport, fashion, music, and art.

Sneakers, more than any other article of clothing, have come to define and dominate streetwear. This was a subculture that developed out of attainably priced, smartly branded skate clothing in the 1990s. It increasingly moved out of the confines of department stores and skate shops to find a place in luxury boutiques and fashion runways.

Accumulate Sneakers! That Is Moses and the Prophets!

The growing demand for sneakers globally has given rise to an international resale market, with rare collaborations or colorways bought, bid on, and sold for prices well above their standard retail value — sometimes by a margin of thousands or even tens of thousands of dollars.

Buyers now use bots to automate sneaker purchasing to ensure they’ll get as many pairs as possible to resell on online sneaker marketplaces like StockX and GOAT. Retailers, meanwhile, have sought to guard against such bots through raffles, leading to a proliferation of raffle bots. Raffle bots will automate hundreds, if not thousands of entries. Bots themselves are sold and resold for thousands and created in limited supply to ensure they remain effective in an ever-more competitive purchasing arms race.

Consignment and resale stores are the result of side hustles becoming a primary business — one that’s now profitable enough to exist in retail space. Successful buyers market their own guides on sneaker investing. News articles hold forth on the value of kicks in investment portfolios. Enthusiastic YouTubers giddily sound off on whether or not you should “sit or sell,” claiming to possess insight on the potential long-term value of sneakers.

If you can master the tricks of the trade, it’s highly lucrative. Effective resellers can pocket hundreds of thousands of dollars. The terminology of sneaker resale markets offers a more urban version of the language used by Wall Street banks and investment firms.

Mark of the Hypebeast

With auction houses like Christie’s now embracing the sneaker market, its operators and commentators increasingly present it as a more accessible variation on the art market. In a recent Netflix documentary on famed sneaker designer Tinker Hatfield, one interviewee triumphantly described sneakers as “art you can wear.” However, the world of sneakers is just as unpredictable as that of art, curated by the same kind of fickle and wealthy tastemakers and celebrities.

Consumers of rare sneakers range from collectors who will display their trophies and keep them as “deadstock” — industry lingo for shoes that are never worn — all the way to simple enthusiasts and those disparagingly referred to as “hypebeasts” — people who covet, wear, and obsess over every new release as a display of wealth.

The global sneaker resale market is valued at $2 billion and expected to triple in the next few years, reaching $30 billion by the end of the decade. This fall, StockX opened its first Canadian warehouse, another expansionary step for a global corporation already valued at $1 billion.

The provision of services and even basic goods is rapidly shifting to a more profitable subscription model. With closed digital ecosystems proliferating, people can lose access to albums or movies simply by moving from one country to another. In this context, bespoke, physical luxury goods like sneakers are becoming much more distinctive, valuable, and sought-after as commodities.

It’s easy to present sneaker riots as a classic example of unthinking consumerism, with ordinary people surrendering to the diktats of the culture industry. But these tumults are the product of artificial scarcity. Companies like Nike, who rely on the maintenance of such scarcity, release their products on a limited weekly basis to maintain profits and brand value.

Rich people have no problem paying the price demanded by the resale market and are perfectly content to let the plebs wait in line for days on their behalf. From viral videos of low-income shoppers mobbing stores on Black Friday to sneaker riots, the demand for simple luxury has become a spectator blood sport for those who are privileged enough to laugh at the disenfranchised for wanting nice things.

Exploitation has always been part of Nike’s modus operandi, of course. But now it is spreading into new parts of their supply chain, moving from labor inputs and the environmental cost of sneaker construction into the cutthroat resale world.

A Sneak Glimpse of the Future

Sneaker reselling is probably a good indication of the way luxury goods will be distributed in the future. Luxury goods such as gaming consoles are starting to receive the sneaker-bot treatment. The initial runs of PlayStation 5s and Xbox Series Xs consoles were snapped up largely by bots, and are now selling for jacked-up prices on sites like StockX.

Although they can’t fall back on fake consoles (yet), consumers left wanting can always turn to fake sneakers, a key element of the $451 billion global counterfeit market. Most “good” fakes are barely distinguishable from real sneakers, and often made with materials from the same factory — which doesn’t stop other sneakerheads from disparaging those who wear them.

Authenticators make good money examining sneakers, and Instagram accounts that expose people who wear fakes garner hundreds of thousands of followers. It’s not uncommon for fake-wearing sneakerheads to experience feelings of deep distress, knowing that their outward expression of worth through conspicuous consumption is based on a lie. In a world where younger people increasingly own nothing and make nothing, there is a premium on authenticity.

Capitalism relies on the idea of competition as a prerequisite to success, which, in turn, rests on the assumption — or lie — that resources are limited. Writers like Aaron Bastani have described the ways in which technology could rapidly move us to a post-scarcity world. For now, however, such technology is increasing competition for people at ground level. The tech deployed within sneaker markets conforms to their logic: it is designed to facilitate the snapping up, reselling, and purchasing of goods, while those at the very top, unsurprisingly, profit the most.

It’s not just Nike and Adidas who are making money: StockX charges seller fees totaling 12.5 percent. But even if tech allows small and midsize operators to take small bites from the pie, it also exposes them to the hazards of capitalism. Facebook marketplaces for sneakers are full of people who have gone broke due to the pandemic, who are now selling their coveted shoes at rock-bottom prices. Stores like PLUS buy low and sell high, taking advantage of credulity and fear to make the kind of sales that individuals who lack the cache or resources can’t manage.

The idea that platform sellers capitalizing on scarcity can serve as a viable alternative to exploitative gig work is becoming increasingly prevalent. If the pursuit of fleeting, high-risk profit becomes more common, it would be disastrous — not only because it offers a false panacea for wannabe hustlers and the tenuously employed, but also because it is an inefficient form of supply. Those who actually want sneakers to wear, but are unwilling to go through the hassle of using bots or paying hundreds more on the resale market, are now the least likely people to get them.

Boiler-plate critiques of consumerism are beside the point when it comes to sneaker culture. Scarcity creates desirability. Without artificial scarcity and the potential economic windfall it brings, fewer people would have such a keen interest in sneakers, or luxury goods in general.

The answer is not to deny ourselves such goods — goods that improve our lives, make us feel better about ourselves, or simply give us enjoyment — but to reduce or eliminate the barriers to access, all the way down the chain from production to distribution. Sneakerheads of the world, unite — you have nothing to lose but your bots.