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Perhaps no single sneaker model is more inextricably linked to the sneaker economy and to sneaker resale markets than the Air Jordan 1 High. The iconic model, first released in early 1985 as Michael Jordan’s first signature sneaker, was an instant hit that smashed sales expectations and instantly blurred the line between performance basketball sneaker and lifestyle shoe. Almost half a century later, it remains as relevant as ever, taking new forms and colorways to bridge generations of sneaker collectors.
Since sneaker resale became more prevalent in the mid 2010s with the arrival of StockX and GOAT, the Air Jordan 1 has been a mainstay on the featured pages of those apps. And when resale went stratospheric in 2020 and 2021, it was the Jordan 1 that could often be seen leading the charge. In those years and into early 2022, the sneaker was effectively impossible to procure on the SNKRS app in any colorway, whether it was actually “good” or not. Supply chain issues played some role in this phenomenon, constraining the volume of pairs coming to market, while on the demand side, easy monetary policy, fiscal stimulus, and a voracious speculative appetite meant there was no shortage of eager buyers.
Sneakers that sell out immediately and indiscriminately? Music to resellers’ ears.
For years, they feasted. Whether through backdooring, bots, connections, or otherwise, resellers secured significant quantities and foisted them onto resale marketplaces at handsome premiums. So long as the end demand was there - meaning the people that actually wanted to put them on their feet - the money machine would continue humming.
And then things started to change.
Supply chain issues began to clear, introducing more inventory of sneakers to the market overall. Inflation heated up in a hurry and stayed hot. In response, monetary policy got a lot tighter in a short period of time as the Fed raised rates. All the while, Nike had begun to acknowledge something publicly that seemed to be more hush-hush in years’ past: consumers perceived the sneaker drop process to be unfair, and there were concerns about the impact that might have on business. Translation: things were going to get more challenging for resellers.
What did all of that mean? Consumers were suddenly feeling the pinch of inflation, the pressure of higher interest rates, and the fear of recession. Discretionary purchases like their 15th pair of $180 sneakers? No longer as sensible. So, the urgency to purchase the next pair of Jordans off the SNKRS conveyor belt was waning, and that meant less pure consumer demand, and therefore lower resale interest. Resellers, already seeing their access curtailed to varying degrees of success, were forced to confront this lower margin environment. Smaller scale players with lesser access to resources were quickly crowded out as their economics began to falter. That, of course, further reduced the initial demand for the product.
The result of those changes?
Much lower resale premiums and, in some cases, resale discounts.
We looked at each Jordan 1 High release over the past four years and calculated the premium or discount that each pair sold for on StockX relative to its retail price just one week after release. Put another way, when opportunities to score a pair at retail were exhausted a week after release, what were people willing to pay on resale marketplaces to snag some? What was that initial post-release buzz like?
On average, 2019 releases sold at a 9% premium to retail. 2020 releases sold at a massive 61% premium. 2021 releases kept the frenzy going at a 50% premium. Then things started to head south. The 2022 average premium was 23%, and without the “Lost and Found” release, that average would have been just 12%. It would get worse, though…
Through almost half of 2023, Jordan 1 releases are averaging a 2% DISCOUNT to retail prices! That figure would be worse if not for the “Across the Spiderverse” release, which drew a 38% premium. 4 of the other 5 releases traded at an immediate discount.
Not only were current releases affected. Many of those pairs that garnered such massive premiums in 2020 and 2021? Suddenly they came crashing back to earth…or back to what might be considered reasonable prices for colorways lacking any real significance. Through June 22nd, 2020 releases are down 13% on average from their resale prices one week after release. 2021 releases have lost 25% of their value. 2022 releases aren’t far behind with an average decline of 21% from early resale prices.
The golden goose, for the moment, is in jeopardy. Well, to be more colorway specific, the Volt goose, or the Black and Gold goose, or the True Blue goose, or the Pine Green goose….they’ve all stopped laying golden eggs. Now - a quick reality check - Nike is still making plenty of money on the Jordan 1. The sneakers do sell out…eventually….and most of them for full retail price. Discounting on high-top Jordan 1s direct from Nike remains exceedingly rare.
Don’t confuse that to mean there’s no adverse affect on business though. First, to the extent sneakers aren’t selling out immediately, Nike isn’t realizing cash flows quite as quickly. They’re carrying more inventory on the books, and generally, the system isn’t running as efficiently as it did in better times, when the market was inarguably in a “pull” phase with rabid demand pulling product to market.
More importantly, the effects of sitting product can be cumulative and they can compound. When product sits, consumers feel a reduced urgency to buy, resellers withdraw from the market, and demand weakens. Optically, the product becomes less cool, losing heat, which in turn further reduces urgency to buy. With the combined withdrawal of pure consumer and reseller retail demand, the decline can be slippery and quick.
It will take some time - it's not a quick process - but eventually, Nike will right-size supply, restoring better balance to the equation to protect such an iconic and important property. The strength of the Jordan 1 brand must be dutifully preserved at all costs. That might mean fewer releases, or it might mean lower supply for each release. Either way, Nike has demonstrated a knack for striking the most favorable and beneficial balance between satiating demand and preserving brand heat.
Until that happens though, sneakerheads rejoice. Your Jordan 1s are on sale.
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