The news that Nike was marketing high-tech, $315 sneakers with basketball star LeBron James’s name attached to them turned out to be, well, not quite true. This is a probably a good thing for Nike, since research shows that not many people today are willing to part with that kind of cash for a pair of sneakers.
Only a day or so after reports of the $315 LeBron X sneaker swept the Internet and kicked off a firestorm of controversy, reports began trickling out that the shoes won’t cost quite that much. ESPN quoted a Nike spokesperson saying that $315 was an “inaccurate” price. The basketball shoes, which are equipped with performance-measuring technology, would cost “only” around $290, according to an analyst cited by ESPN. The low-tech version of the sneakers, which function merely as something to wear on your feet on the basketball court, or perhaps at the mall, will reportedly have a suggested retail price of $180.
Okay, so that’s better than $300-plus. But are Americans still going to be whipping out their credit cards in droves to pay almost $200 for a shoe whose entire purpose is to get scuffed, dirty and sweated-in?
“While there are certainly some sneaker enthusiasts who will pay the full amount in order to have the most coveted shoes and the status that comes along with ownership, this represents a small percentage of overall footwear buyers,” says Ali Lipson, a senior retail and apparel analyst at market research firm Mintel.
“It’s not likely that an average footwear buyer will spend more than $300 on a pair of shoes.” (Lipson responded to the question before Nike clarified that the sneakers would cost less than originally reported.)
Although LeBron’s name lends the basketball shoes some cachet, athletic shoes just generally aren’t a product most of us splurge on, she says. In a recent study, Mintel found that 65% of us only buy shoes when they’re on sale, compared to 25% of consumers who are willing to pay full price.
When you start looking at the numbers specifically for sneakers, the data skews even more heavily toward function and price over fashion. Mintel found that 72% of people buying athletic shoes are only purchasing in order to replace old or worn-out sneakers. Just 17% say they buy their sneakers for fashion or because they like the look.
This preference to dig in our heels and just buy sneakers when they’re on sale and when ours have gotten too ratty to wear is going to present a challenge to manufacturers. In its article about the LeBron sneakers, the Wall Street Journal said Nike was raising most prices between 5% and 10% to make up for higher labor costs and more expensive materials. Adidas also raised the price of its best-known model by 8%.
The Journal cites market research firm NPD, which found that basketball shoe prices are up about 9% from a year ago; running shoes cost about 5% more.
All of this adds up to higher prices for shoppers before you even count the fame factor, which is the main reason behind the high price tag of the LeBron shoes. “There has been some price inflation in the recent months due to higher labor and raw material cost, but this is not what is really driving” the cost of those shoes, says Nancy Liu, a retail strategist at consulting firm Kurt Salmon. Nike has a long history of creating an absurdly hot market for certain in-demand sneakers. Remember the fights in stores and $1,000 resale prices for Air Jordan XI Concords that occurred at the end of last year?
In addition to having LeBron and early buzz on its side, Nike might be able to get people to buy the spendy sneakers by appealing to our love of all things digital, Liu says. She points out that Americans are willing to drop big bucks on high-tech toys like smartphones and tablets. Nike might have been trying to push the price envelope, she says, by focusing on elements like motion sensors and digital performance measurement in the new shoe.
After all, if Nike can convince people they’re buying cutting-edge technology rather than just a shoe, the company’s already got one big foot in the door.