Streetwear's Economic Bubble: How Long Can It Last?
What is a bubble, Wiktionary defines it as follows. A spherically contained volume of air or other gas, especially one made from soapy liquid. But what is a Economic bubble? An economic bubble or asset bubble (sometimes also referred to as a speculative bubble, a market bubble, a price bubble blah blah. Is trade in an asset at a price or price range that strongly exceeds the asset's intrinsic value. Let's remember that phrase, "intrinsic value".
We've seen “bubbles,” or boom and bust periods for some time now.From tulips back in historic ages to the American housing market. They are not a modern concept. How do they work, simply put item A hits the market and people love it. So much so that they form lines in the street, instantly buying out supplys. Repeat this everytine a new drop hits, eventually opportunistic suppliers or "Resellers" catch on and mark up prices for extra profit.
They see that no one seems to mind too much so they continue to raise prices, but Item A is hot so who cares? We'll pay what ever ur askin for em. This continues until the price asked for item A far exceeds the "intrinsic value" of the item it's self. Eventually people who lined up to spend there last on item A, doesn't quite think it's so cool anymore. And just like that what was once a boom has turned to bust.
In 1841, Scottish writer Charles Mackay published Extraordinary Popular Delusions and the Madness of Crowds. The book detailed examples of social epidemics, market speculation, and urban legends. In the 177 years since its publication, Mackay’s outline of how humans form social in-groups and endorse the absurd to their own detriment has only grown in relevance. Its insights are particularly relevant to the realm of streetwear today.
Streetwear has been definitive for the 21st-century youth, any major city you visit you're bound to see countless young people in name you fav streetwear brand. It is a bubble at least two decades in the making whose growth shows little sign of slowing. It has evolved from the uniform of skaters, punks, and hip-hop heads to a commercial fad powerful enough to upend the fashion industry itself.
One thing this new found hysteria has caused in streetwear’s mainstream success, is the rise of recognition and admonishment.
Now generations old fashion houses who previously scofed at the notion of streetwear, (check out our last video on high fashion and streetwear) have fully embraced the many of the things that made streetwear a thing. Streetwear OGs like Bobby Hundreds of famed The Hundreds, has gone on record in saying “After 14 years of building my own brand, The Hundreds, I saw the ‘streetwear’ label get twisted and turned by the media and mainstream… Today, streetwear is the hottest hashtag in style, youth culture, and music, but no one agrees on what it means or where it came from.”
Fear of God’s Jerry Lorenzo once defined streetwear in the following way: “No investors, no partners etc. The product is pure, as we’re not on the fashion calendar… I guess anything would be considered street that comes outside of the traditional fashion system.” The Irony is, Lorenzo's brand along with others are now deeply engrossed in the system. The majority have outside investment (including Supreme — even before the $500 million Carlyle Group deal) and the fashion industry as a whole has followed streetwear’s lead, forgoing seasonality more and more with each passing year.
But once apone a time streetwear did exist outside the established systems of mainstrem, the cross over happened around 2017.
In the earlier days there were hundreds if not thousands of small streetwear brands, everybody wanted to jump one off mainly because it was pretty cheap. Relying heavily on graphics and screenprinting rather than cut-and-sew, and it’s culturally viable. Often containing catchy parses, or relevant imagery.
Not to mention since it was largely based on sports wear, it is super comfortable. This was right up the ally of the larger fashion houses.
If you are Balenciaga, how could it not be party time when you are commanding $1000 for sneakers like the Triple S. Which was no doubt made in China for a micro fraction of that rack they expect you to pay.
Not to mention by tapping into the release methods of Supreme and the like, with a method referred to as the “drop” model, high-end brands can bypass seasonality for monthly or even weekly releases.
On the flip side, the embrace of luxury brands does allow street-level brands to upsell their own collaborations. The thought of Nike charging $1,000 for a Nike jacket, was unimaginable a decade ago, with the right colab they will sell out in minuets today.
Sounds great right, well yea but it has began to create an evolving reality in which items that should cost a few hundred dollars end up costing thousands at retail and then resold for even more.
The fear here is obviously market correction, StockX has stated fears that one day the demand for some of these items might not meet the supply? What you have is a huge set of products that are overinflated in price, bearing little relation to the intrinsic value of the garment its self because its value has been solely defined by hype. Much like those tulips back in the day.
The rise of streetwear coincides with a greater casualization and deconstruction of societal norms. Men no longer need to wear suits to work in most industries and women are no longer tied to high heels or traditional ideas of femininity. People have always taken style ques from there fav celebrity or movie star, but with the rise of the internet and more specifically social media this has taken on new legs. It all started in the mid 00s with Kanye West.
Like him or not, the impact Mr. West has had on the urban fashion game is undeniable. He helped turn brands like Raf Simons, Rick Owens, Alexander Wang, Balmain, and even Celine into household names.
He was the first rapper to truly get a sneaker deal, (although not really, RUN DMC got a deal form adadas back in the 80s but it was no where near as big) and by the time he moved operations over the the 3 stripes, everyone was coping his style choices.
In 2010, he launched the short-lived but politically charged “Rosewood” movement, named after the black Florida town that was burned down in 1923 during "race riots". But that's another story for a different channel. In this period, he wore only black suits. A year later, around the time Watch the Throne dropped, he started rocking leather kilts. For 2013’s Yeezus era, he took to the memorable bejeweled Margiela Yeezy masks.
Nowadays, he all on this dad look, but every look at Zara seems to reflect a different era of his personal style. Kim Jones can be credited for playing a huge role in marrying luxury and streetwear, by engineered a collaboration between Supreme and Louis Vuitton during his tenure as the house’s artistic director.
In his younger years , he worked for streetwear distributor Gimme Five in London, which doled out rare Supreme gear to a select retailers. Jones brought the same ethos to his debut men’s collection at Dior, enlisting the services of street artist KAWS for several installations and re imaginings of venerated Dior motifs.
Highend brands jumped on the band wagon because collaborations, graphic tees, sweatsuits, and sneakers were, safe bets. They saw that the younger crowd not only loved thes items, but were willing to spend top dollar. So they figured with our his toy and elderstemanship, milking kids would be a shoe in for them.
Meanwhile the original streetwear fans, you know from the olden day of streetwear, began to age and new kids came aboard ship. Only these kids weren't necessarily from the skateboard, gritty rap/punk scene. Rich suburban kids and new wealth in Russia, Dubai, and China all began coveting brands like OFF-WHITE, Supreme, and BAPE. So Others started reselling to them, which could also be looked as as fleecing them but hey, make ur money.
Streetwear has long battled for legitimacy in the fashion universe, but now that its coup d’état has succeeded, it’s left with little to give besides a hype-based business model and a penchant for styling, photography, and marketing that makes it all look a lot more exciting than it actually is. It’s in the best interest of all parties involved that their products continue to demand a high level of cultural credibility and cool. This is why previously ostracized resellers are now being heralded as champions of the industry, with brands such as Nike openly collaborating with Sean Wotherspoon of consignment resale store Round Two, and Nordstrom adding an in-store space in New York operated by reselling platform Stadium Goods.
A bit of searching sheds light on a disturbing fact, one of excess inventory, sinking profits, and vast discrepancies in pricing between the likes of StockX, Stadium Goods, and eBay, for example. What we have here is industry-wide speculation: the second telltale sign of a bubble.
Beyond the inflated value and rampant speculation in the streetwear industry today, there are other signs that we’re in a bubble. Traditionally, the stages of a bubble are as follows:
1. displacement, which occurs when a new paradigm is touted, wooing industry stakeholders (e.g. the drop model);
2. a boom, the at-first slow and then rapid increase in the price of a particular asset or assets (for example, T-shirts and sneakers);
3. euphoria, also known as the “greater fool” phase, wherein valuation reaches absurd levels (like the May 2018 Supreme auction in Paris nauseatingly titled “Cash Rules Everything Around Me,” which garnered around $1 million for what are essentially mass-produced tchotchkes with logos emblazoned on them);
4. profit-taking, the phase in which smart people grab their money and get out (like those who own and operate reselling operations), and finally;
5. panic, which is self-explanatory.
To argue that we’re currently in the fourth, profit-taking phase of a streetwear bubble isn’t outlandish. A basic characteristic of a bubble is the suspension of disbelief by the majority of participants involved. With this mindset, it’s almost impossible to imagine a world in which every metropolitan city isn’t bustling with kids obsessing over sneakers and drenched in designer logos. Yet bubbles are also usually only ever identified once they’ve burst.
The point of this analysis isn’t to predict what comes next, but rather to take a moment to look back at the beautiful, sometimes infuriating culture streetwear has evolved into — and to forewarn that it could be coming to a close in its current form. No one is arguing that sneakers are going away, they just might not always trade at the level they do today, wherein people are willing to spend thousands of dollars on them. Perhaps we’ll experience a return to minimalism, with affordable basics such as white Vans experiencing a surge in popularity.
Perhaps the next generation will consider comfort a crutch and return to hard-bottom shoes and tailored shirts (there are small pockets from London to Hong Kong already doing this). Perhaps Supreme, now beholden to its $1 billion valuation, will overextend itself, diluting the brand and the culture to such a degree that it ends up self-immolating. Or maybe Supreme will do everything it can to earn that capital and realize it simply isn’t the lifestyle brand we all thought it was, leading to a panic phase in which investors flee the sector entirely.
No matter what happens, we can’t keep up the charade. YEEZYs, once the holy grail of streetwear, are now available for days at a time online at retail price before selling out. Brands such as Vetements are rumored to be under performing from a financial perspective. ComplexCon, the ultimate celebration of the culture, has been on the end of a substantial backlash from consumers, oddly, for being too consumerist. The cycle might just be coming to a close. Like with the late-’90s dotcom bubble, the subprime mortgage crisis, and even bitcoin, warning signs abound.
Ultimatly, I don't think #streetwear will disappear for good, but it has to change as all things do. At some point it is inevitable that high end hype dies down and die hards take over once again. Until then, we have to put up with $1000 Gucci t shirts.