SUNDAY, DECEMBER 26, 2010


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Kick-started by Air Jordans, sneaker addiction endures


BY JONATHAN STARKEY Special to The Washington Post Of the many thousands of people who watched the Lakers game on Christmas Day, some


didn’t tune in to admire Kobe Bryant’s prowess; they swooned over his sneakers—even if they might have been inspired by the Grinch (designed, perhaps, to steal attention). The shoes, the Christmas Day edition of the Nike Zoom Kobe VI, are a spectacle in lime-


green, detailed with red trim and polyurethane nodules that look like a snake’s skin. Leveraging an athlete’s superstardom and calling to mind a much-loved children’s story,


they stitch together status and nostalgia and are the sort of thing that kids and adults alike might hope for as they bound out of bed and race for the Christmas tree. With this release, Nike has built on its own tradition of creating shoes that inspire a


cult following. Indeed, kids happy to sport cool kicks at school sometimes grow into devoted collectors — or sneakerheads — who dish out thousands of dollars for a closet full of shoes they might never dare wear on a court.


Nike’s black-and-red Air Jordan I, released in


1985, catapulted the collectible-sneaker trade into big business.Now in its 25th year, the Jordan brand is a $1 billion-a-year franchise that operates inde- pendently from Nike’s broader basketball business. Mike Rios, who was raised in Ashburn, remem-


bers where his obsession began: a black-and-white pair of Nike’s Air Jordan XII. Michael Jordan wore the shoes during the 1997 NBA playoffs. “I was maybe 7 or 8 years old,” Rios said. “My dad


bought me that pair. I was obsessed with Jordan back then.” Shoes that Jordan wore during Rios’s childhood


retain a certain appeal today. Rios, who studies finance at theUniversity of Virginia, isupto 45 pairs, which he stores in closets at home and at school.He admits to sometimes selling a pair to cover the rent orbookbills; he recentlymadea $135 profithawking iconic Air Jordan XI’s online.He says he sometimes sells shoes to buy the next pair. “But I always buy two pairs of the shoes I like,”


Rios said, before correcting himself. “I love all of the shoes I buy.” America’s love of specialty shoes


trac-


es its roots to the late ’70s and early ’80s, when a subculture emerged, drawing its influence from hip- hop music and basketball. Think of Julius “Dr. J.” Erving


sporting red-and-white Converse high-tops to match his Philadel- phia 76ers uniform. Or the Run DMC song “My Adidas,” which the group rapped while wearing black-and-white shell-topped Adi- das low-tops. (“I walkdownthe street and I bop to the beat” / ”With Lee on my legs and Adidas onmy feet.”) The kids took notice. In certain urban neighborhoods — and some not-so-urban ones — a fresh pair of sneakers brought street cred. It said you had enough cash to pick up a pair of the same shoes that Erving or the Lakers’ Magic Johnson wore on the court. Plus, it proved you had the courage to walk down the street, confident they wouldn’t be stolen. “It says something about how brave you are,


how much clout you have, how much nerve you have,” said Elijah Anderson, a Yale sociologist who wrote about the street value of sneakers in his book “Code of the Street: Decency, Violence and the Moral Life of the Inner City.”


Creativity adds to allure Originality, of course, increases a shoe’s value


and reputation. Elusive sneakers — often just popular originals offered in a new color scheme, known in the industry as “colorway ” — can have the same effect. Consider the limited-edition skateboarding shoe


Nike designed with the hip-hop group De La Soul. It fetches more than $400 at premium sneaker stores such as Flight Club in Los Angeles. The shoe — turned out in a riot of color, mostly


shades of yellow, green and brown, and released in high-top and low-top models—is a prize. “That’s not something you


would normally see. That’s why it’s so sought-after,” said Othello Banaci, a 21-year-old from Silver Spring who bought the high-tops. “You see all this regular stuff, then you see this shoe that was put together with so much creativity.” Even as they have gained


a toehold in the mainstream, shoes such as those inspired by the Grinch are not for the masses, said Duk-ki Yu (pronounced “Ducky You”), owner of the Georgetown sneaker boutiqueMajor. “Anormal person is not going to buy that,”Yusaid.


“It tells the world that you love sneakers and you have the confidence and the style to wear them.” A self-professed sneakerhead, Yu stashes his own


2,000-pair collection in storage.He knows from the foot traffic at his store that a newrelease can cause a swarm, whether it’s for classic Nikes endorsed by Jordan or creative collaborations on skate- boarding shoes and casual designs from companies such as Vans and New Balance. Yu doesn’t plan to carry the new Bryant shoe, which reaches stores today. For its part, Nike doesn’t associate the design with the Dr. Seuss character, though the Grinch motif seems a mar- keting dream. In- dustry analysts and bloggers seized on the story line imme- diately. Nike says the colorway was inspired


by a traffic light. (Think: traffic in the lane.) Some eager sneaker-


heads were willing to pay a premium beyond the retail price of $130 to get the get theKobe shoe early. Online sneaker store Marquee- sole.com promoted the shoes—whichit saidwere the real thing — earlier this month. Each pair sold


NIKE Nike ZoomKobe VI


updates about the sneaker in- dustry’s performance, said run- ning shoes had 20 percent year- over-year sales gains in Novem- ber. Nike’s AirMax 1995, a sneak- erhead favorite, has been popu-


lar. Basketball designs were up 10 percent last month. “Given that we were facing an unseasonably warmNovember last year, the low teens increase in dollar sales this


year is quite impressive,” Powell wrote. Nike last week reported a 10 percent boost in


for $259.99, plus $30 for ship- ping. They sold out.


The Jordan name still dominates the collectible business. Retro releases of Air Jordans originally sold in the ’80s and ’90scommand$130 to $175.And people snap them up. Thursday’s limited release of a retro version of the


Air Jordan XI caused a mania in stores and online. The sneakers, with a Cool Grey colorway last released in 2001, retailed for $175 and appeared to sell out in most sizes at Nike’s online store. After the launch, the shoe commanded three of the top 20 searches on Google and trended on Twitter. Sneakerheads lined up for the midnight release


Wednesday at mall and boutique shops across the country, including Yu’s Georgetown store. Things even got a bit testy in some places. In


Humble, Tex., outsideHouston, an impatient crowd of sneakerheads wrecked an entrance to the Deer- brook Mall. In Concord, Calif., police were called after a crowd pounded on doors to try to force its way into a mall before midnight. The early opening was canceled in response to the ruckus. Shoemakers wait years before rereleasing a


sneaker. Once they sell out, resellers command hundreds of dollars for them. For instance, the Cool Greys were going for $325 at Flight Club’sWeb site. “What Jordan continues to represent is a designer


luxury brand, conspicuous consumption,” saidMatt Powell, a Maine-based sneakerologist (or industry analyst) at SportsOneSource.


Recession-proof shoes?


The sales prices might seem an extravagance, especially when consumers are still feeling the sting of recession. Yu, however, said sales have defied the downturn;


they’re as strong now as when his store opened in late 2006. He said shoe sales to sneakerheads account for 10 percent of the store’s dollar volume and the collectible business drives 50 percent of foot traffic.


“It’s just something people are willing JONATHAN DANIEL/ALLSPORT


Michael Jordan’s namesake shoe, the Air Jordan, kick-started the collectible-sneaker phenomenon 25 years ago. The Jordan name still dominates the collectible business.


to spend money on,” he said. Industry-wide, sneakers have posted


some unexpected gains recently, not just in boutiques but also in those old-fash- ioned suburban malls. Powell,whopublishes monthly e-mail


revenue and a 22 percent increase in earnings for its second quarter.Thecompany’s share price,however, took a hit because future orders fell short of analysts’ expectations. Meanwhile, Nike’s subsidiary Con- verse has reinvested in retail sneaker sales, opening its first speciality stores in the past two months in Boston andManhattan’s SoHo district. Matt Halfhill, publisher of the online magazine NiceKicks, which covers the collectible sneaker trade, said the “business is back.” “You can’t kill an addict’s addiction just because


they have less money to spend,” said Halfhill, who opened a sneaker boutique in Austin in February. He conceded, however, that the recession had


taken its toll. Consumers with only a passing interest in sneakers aren’t spending as they were before the recession, he said. Even devoted sneaker- heads have become more value-conscious, he said, seeking out comfort and durability as well as nostalgia and style. “The days of the dead-stock collector are long


gone,” said Halfhill, explaining that many are abandoning an old sneakerhead tradition of not wearing the shoes they buy. “People don’t care so much about the flair or the flash they might have cared about in ’06 or ’07. They are caring more about a shoe they can get a lot of use out of.” Analysts say that true collectible shoes — the


subjects of retro reissues and boutique releases — account for a small fraction of the athletic shoe market. Precise sales figures are difficult to nail down, however. That’s partly because the shoemak- ers operate behind a veil of secrecy. Nike doesn’t discuss numbers and bans its retail-


ers from revealing how many pairs they carry on a limited run of collectible shoes. There are insights available elsewhere. California


skater-shoemakerVans distributes fewer than 1,500 pairs of its collectible shoes, for example, compared with hundreds of thousands for its mass-market checkerboard slip-ons, a company spokesman said. (The Vans Vault collection, its premium line, recent- ly released a line of shoes produced with Pendleton, a Portland, Ore.-based designer of Native American blankets. Sneakerheads are fans of funky collabora- tions.) Marshal Cohen, a footwear analyst at market research firm NPD Group, estimates that collect- ibles constitute less than 1 percent of the athletic footwear market, which he values at $20 billion. “It’s barely something that hits the radar when it


comes to dollar volume,” Cohen said. “But for brand reputation and heritage, it’s huge.”


EZ EE


G5


MONEYBOX


Inflation tracking is faster than ever. Is that a good thing? A


BY ANNIE LOWREY


t 23,000 retailers and businesses in 90 U.S. cities, hundreds of government workers find and note prices on very precise products. And


I’mnot kidding when I say “very precise.” Say the worker is finding the price for a motel


room. Shemightwrite a report like this:Occupancy — two adults; Type of accommodation — deluxe room; Room classification/location — ocean view, room 306; Time of stay — weekend; Length of stay — one night; Bathroom facilities — one full bathroom; Kitchen facilities — none; Television — one, includes free movie channel; Telephone — one telephone, free local calls; Air-conditioned — yes; Meals in- cluded — breakfast; Parking — free self parking; Transportation — Transportation to airport, no charge; Recreation facilities — an indoor and an outdoor pool, a private beach, three tennis courts and an exercise room. Thismind-numbingly tedious process goes on for


a dizzying panoply of items: wine, takeaway meals, bedroom furniture, surgical procedures, pet dogs, college tuition, cigarettes, haircuts, funerals.When all of the prices are compiled, the workers submit forms that are collated, checked and input into massive spreadsheets. Then the government boils all those numbers


down to one. It weights certain prices, taking into account that consumers spend more on rent than cereal, for instance. It considers product improve- ments and changes in spending habits. Then it comes upwith amaster number showing howmuch a customer’s spending needed to increase to buy the


same goods,month-over-month.Thatnumber is the Consumer Price Index, the government’s main gauge of inflation. Each month, the Bureau of Labor Statistics goes


through all that hassle because knowing the rate of inflation is such an importantmeasure of economic health — and it’s important to the government’s own budget. High inflation? Savers panic as the spending power of their accounts erode. Deflation? Everyone saves, awaiting cheaper prices in a few months. And wildly changing inflation makes it difficult for businesses and consumers to make economic decisions. Moreover, the government needs to knowthe rate of inflation to index certain payments, like Social Security benefits or interest payments on TIPS bonds. Even though the government


expends so much energy deter- mining the rate of inflation, it may not be tallying it in the


smartest or most accurate way. The reigning methodology is, well, clunky. It costs Washington about $234million a year to get all those people to go and bear witness to a $1.57 price increase in a packet of tube socks and then to massage those individual data points down to a single number. Moreover, there is a weeks-long lag between the


tallying the numbers and the government’s an- nouncement of the changes: The inflationmeasure comes out 12 times a year, though prices fluctuate, sometimes dramatically, all the time. Plus, the methodology is archaic, given that we live in the Internet age. Prices are easily available online and a lot of shopping happens on theWeb rather than in stores. In recent few months, economists have come up with new methods for calculating inflation at


Internet speed — nimbler, cheaper, faster and perhaps evenmore accurate thanWashington’s.The first comes from the Massachusetts Institute of Technology. In 2007, economists Roberto Rigobon and Alberto Cavallo started tracking prices online and inputting them into a massive database. Then, lastmonth, they unveiled the Billion Prices Project, an inflation measure based on 5million items sold by 300 online retailers in 70 countries. TheBPP’s inflationmeasure ismarkedly different


from the government’s. The economists average all the prices culled online, meaning the basket of goods is whatever you can buy on the Web. (Some items, like books, are most often bought online. Others, like cats, are not.) Plus, the researchers do notweight certain items’ prices, even if they tend to make up a larger proportionofhousehold spending. Still, thus far, the BPP has tracked the CPI closely.


And the online-based measure has additional advantages. It comes out daily, giving a better sense of inflation’s direction. It also lets researchers examine minute, day-to-day price changes. For instance, thismonthRobertoRigobon and Eduardo Cavallo noted that Black Friday discounts “had a smaller effect on average prices in 2010 than in 2009,” contrary to reports of deeper discounting this year. And it has already produced some academic insights. For instance, Cavallo found that retailers changeprices less often, butmore,percent- age-wise, than economists previously thought. A second inflation measure comes from Web


behemoth Google and is a pet project of the company’s chief economist,Hal Varian. As reported by the Financial Times, earlier this year, Varian decided to use Google’s vast database ofWeb prices to construct the “Google Price Index,” a constantly updated measure of price changes and inflation. (The idea came to himwhen he was searching for a


pepper grinder online.) Google has not yet decided whether it will


publish the price index, and has not released its methodology. But Varian said that his preliminary index tracked CPI closely, though it did show periods of deflation — the worrisome incidence of prices actually falling—where the CPI did not. The new indices lead to the big question of


whether the government needs to update its methods to account for changes in the economy — taking new pricing trends into consideration, rejiggering its formula, updating more frequently. The answer might be yes. (Economists have re- formed CPI before.) But the CPI and its Stone Age method of calculation boasts one huge benefit: It’s a stable, tested measure, consistent over time, be- cause itsmethodology doesn’t changemuch.More- over, and somewhat remarkably, the Google and Billion Prices Project indices actually seem to confirm the accuracy of the old-fashioned CPI, tracking it closely rather than showing it to be off-base. Ultimately, there is a good argument for more


inflation measures, not just better or newer ones. The government calculates a number of rates of inflation to give a fuller picture of price changes, the value ofmoney, and the economy.Most notably, the BLS publishes a “core inflation” number, ameasure of inflation outside volatile food and energy prices. There are dozens of othermeasures, as well. The new Web-based yardsticks provide even


more alternatives and opportunities to examine the accuracy of the CPI — and to make new findings. That means, for now, those detective-like govern- ment workers painstakingly checking prices on clipboards get to stay on the job.


Lowrey reports on economics and business for Slate.


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