The Business of Hype

by Liam Dwyer

In 2017, Supreme was announced to be a billion dollar company. But how do streetwear brands go from small skate shops to the brand of choice for millions of teenagers and the creators of street style as we know it? One word: scarcity. To anyone who doesn’t know much about how these brands work, fasten your seatbelt, because it’s a wild road ahead.

The Birth of Streetwear

Most streetwear brands today come from two communities: skating or ura-harajuku. Brands like Supreme or Palace opened their doors as small skate shops in SoHo and London, while brands like A Bathing Ape or Neighborhood first became popular as brands from the Harajuku neighborhood, a center of Japanese street style.

Supreme’s founder, James Jebbia, found a way to embed himself into youth culture and skate culture, becoming a cult designer especially when he got a cease and desist letter from Louis Vuitton for using their logo on his classic ‘box logo’ design. This is ironic considering that in 2017, they collaborated on a coveted collaboration, hailed by some to be one of the most iconic Supreme collaborations ever.

Nigo, the founder of A Bathing Ape, found fame a different way: by using connections to become close to popular American rappers like Pharrell Williams and Kanye West. Where Jebbia used underground culture, Nigo used popular and mainstream culture to make A Bathing Ape, or BAPE, one of the most talked about streetwear brands in the US in its height of popularity.

How to Sell Hype

Walking into any regular store like Nordstrom, Macy’s, or even H&M, you can expect to find all of their season products available for purchase and stocked to be available. You won’t find this at Supreme, Palace, or BAPE. Hype streetwear brands employ a specific business model called the “drop method.” Unlike a regular clothing retailer, the coolness of the items comes neither from their quality (even if it’s good) or from their price, but rather from their scarcity. “Drops” of a season or a weeks collection sell out in seconds, and this causes items to be highly coveted.

What’s so fascinating about this is that it didn’t come from brands realizing that this was a good way to sell their clothing, but rather from their inability to produce large amounts. Nigo and James Jebbia could only make about 50 shirts a week when they first began producing them, and found that by creating that scarcity, their brands were actually growing rather than shrinking. You could even say that it’s scarcity that shapes hype. Interestingly enough, speaking with Interview Magazine, Jebbia says that, “I hate things when they’re too precious. That’s why we never, ever classify our stuff as limited. Ever. In an ideal world for us, I look at it like the product sold out within two weeks. Ideally, we have it and it’s gone in two weeks and then it’s done.” This shows that it’s possible he wants Supreme to be available, but just wants to bring a unique energy to his promotion style.

I remember waiting outside the BAPE store last time I was in New York, and at three or four separate moments adults would walk by, dumbfounded by the fact that teens were waiting so long for “just some clothes.” It’s something that people outside the community don’t understand, which isn’t surprising. Exclusivity to older generations is frequently that of price, not of availability.

Flipping Clothes

But here’s where it gets interesting. Due to this high demand for a “low stocked” item, some buyers of hype brands commit themselves to buying items not for themselves, but for others. These people are called resellers, and now a large portion of the items being sold by these brands are actually being flipped for bigger profits.

Even startups are getting in on it. StockX, GOAT, and Grailed are all websites that are established as marketplaces for expensive shoes, clothes, and accessories. They profit through authentication and shipping fees, which when you think about it is quite clever. They’re the middleman of the middleman, something which sounds crazy to anyone outside of the streetwear bubble.

Rarity and reselling aren’t a new idea, necessarily. They’ve just never been used on such a large scale or had such a cultural influence. For example: vintage fashion. Vintage boutiques have existed for longer than I’ve been alive, but they don’t have quite the reach as streetwear, most likely because there’s no face of a brand, but rather a genre of style.

However, Kate Dwyer, a fashion stylist in New York, says that, “There may be some small trace to vintage, but I think it’s mostly about tapping into people’s need to have something not everyone else not everyone else can get.” In the end, streetwear is something new altogether, and there’s no denying it hasn’t had a large influence: putting itself on everything from mainstream news, like when Supreme’s box logo was featured on a New York Post’s cover, to high fashion, like the aforementioned Supreme x Louis Vuitton collaboration.

The way we shop has changed greatly over time, and clothing being sold this way is just the new iteration. We first sold things through trade, eventually selling them with currency, advertising in paper and on television, but now we sell them online, through influencers on our favorite social medias, and create a culture around exclusivity. Is this the future of retail business? Will exclusivity control all market or will it change? Let us know what you think in the comments below.