The sneaker drop model may have a fun, streetwear-themed reputation—but the reality is the distribution method, which ditches seasons for regular but flexible releases, is growing in clout among more than just sneakerheads.
To understand the sneaker drop is to understand niche retail. The benefits of exclusivity are well-known, Nike and Adidas already carefully control the size of each of their releases to ensure the biggest drops always sell out, which then generates a second wave of excitement.
But, according to Matt Falcinelli, founder of niche marketplace The Drop, the true value of the drop model may be in its enduring flexibility.
“The world is changing, at least in the fashion world, quickly. And I often think to compare it to the music industry, when everything went from CDs to MP3,” Falcinelli told Sourcing Journal. “Not only did the format of the product change dramatically, but the retail side of buying that product changed overnight along with it.”
Falcinelli was on the ground floor of the SEO and analytics industry at its outset in the early 2000s and has since used his digital expertise to work with brands to improve their e-commerce operations. In 2017, he founded The Drop, a niche marketplace catering to streetwear consumers with informed tastes.
In the past, retailers rarely questioned the process of sending buyers to trade shows to pick from a brand’s entire selection, repeating the process three or four times a year. In that way, the “retailer’s owned the customer relationship” and, in Falcinelli’s opinion, played a part in defeating trends that might have otherwise been profitable.
Much like the music industry prior to the digital music revolution, being slow to react to this change may be a matter of life and death for some businesses.
“We have a super tech-savvy consumer, on their phone 24/7, and we have these industries in fashion verticals—still trying to do the seasonal drop, still trying to work wholesale,” Falcinelli said. “Meanwhile, the big wholesale guys that drove the industry are closing doors, going bankrupt.”
To further illustrate the point, look to the multiple retailers and brands that blamed the weather for weak quarters throughout the year. IBM and NPD are both currently working on technology that can prevent a poor forecast from wreaking so much havoc on share prices.
From The Drop’s perspective, however, this was an easy hurdle to avoid.
“Summer didn’t really hit till like mid-June,” Falcinelli explained. “And the funny thing was the big retailers were stocking up on shorts, T-shirts and tank tops as early as mid-March. But, yet, on our site we were still selling hoodies.”
Beth Goldstein, executive director covering accessories and footwear for NPD, agreed that the drop model holds promise for brands and retailers if they choose to use it.
“I think that fashion brands should use the drop model a bit more to create excitement,” Goldstein told Sourcing Journal. “Start-up brands have done this—like Allbirds…brands with large DTC business—like Cole Haan, UGG, etc.”
However, it may also be the case that this kind of trend-spotting speed is only possible at the very bottom or the very top of the apparel industry. Small, niche brands like those found on The Drop have no choice but to be flexible and often work with very small orders and short production cycles.
On the other end, brands with massive influence, like prominent sneaker-droppers Nike and Adidas, can afford to pay close attention to specific markets—dropping just the right sneaker at just the right time.
It’s the middle path, the wholesalers and retailers that produce the footwear and apparel that gets worn but that doesn’t quite inspire the same level of enthusiasm as streetwear and sneakers.
“Hard to do this with the wholesale model,” Goldstein lamented. “…seasons have less meaning than they used to due to variable weather, ‘buy-now-wear-now’ mentality, and the fact that consumers want more versatility and all-year-round wear from their footwear.”
Falcinelli acknowledged the challenges associated with the drop model, too.
“A challenge is obviously shorter production cycles, design cycles. And then also the fact that we have a multi-brand consumer,” Falcinelli said. “So, how do you accommodate that multi-brand consumer, when you as a brand are, by necessity, trying to be more DTC and digitally focused.”
He offered a hypothetical situation in which a notable celebrity or influencer was spotted wearing a niche item. Many large brands and wholesalers, even those that have invested heavily in speed-to-market and executing shorter design cycles, will still have to take time to capitalize on the inevitable interest in this hypothetical fashion item.
Instead, a niche marketplace like The Drop, Falcinelli explained, might have 10 small brands that could offer that product immediately. All it would take is a small change to the products the marketplace featured on the day, week or month that consumers would be looking for it—no small feat, but surely easier than predicting something like that months in advance.
Caleres, in its most recent earnings conference call, credited its investments in “freshness,” pop-ups with local artists and direct-to-consumer innovations as some of the many reasons that it produced exceptional quarterly results in a time where its competitors were faltering.
“We have…built flexibility into our model, which is allowing us to meet increasing consumer demand for newness in an environment where retailers have become even more focused on inventory discipline,” Diane Sullivan, the president, CEO and chairman of Caleres told an audience of journalists and investors on the call. “We are well-positioned to deliver on these changes in consumer and retail preferences given the investments we have made in the speed to market and in our improved direct-to-consumer fulfillment capabilities.”
For brands and retailers that don’t make those kinds of investments, Falcinelli had a dire warning for marketing and producing products for today’s consumers.
“The industry is still trying to put a square peg in a round hole,” he cautioned. “We have a consumer who is years ahead of us.”