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Kanye West's secret to building a footwear empire to compete with Nike

Kanye West's secret to building a footwear empire to compete with Nike

Kayne West

Jonathan Leibson/Getty Images

Kayne West has partnered with Adidas since 2015.

  • Kayne West has been on a Twitter rampage this week coming out in support of Trump and making announcements about the success of his footwear and apparel brand Yeezy.
  • Analysts say that the statements he made about the growth of his brand may be overblown.
  • Despite this, Yeezy is now considered to be one of the most influential sneaker brands.

Kayne West has been on a Trump-style Twitter rampage this week coming out in support of the President, posting photos of himself in a "Make America Great Again" baseball cap, and waxing lyrical about his footwear and apparel brand Yeezy.

The Yeezy brand, which sells apparel and sneakers created in collaboration with Adidas, is facing a backlash online with customers threatening to burn or sell their Yeezy sneakers and celebrities including Rihanna and Drake reportedly have stopped following West on Twitter.

West's announcements about his brand's success have also gained attention after he claimed it is on track to "hit a billion dollars" this year and will be hiring 160 people.

"It is the 2nd fastest growing company in history," West wrote. "It is a unicorn on its way to becoming a decacorn," he said, using Silicon Valley buzz words which describe a business that is valued over $1 billion and over $10 billion.

West followed his announcement with a series of tweets, claiming that he is "currently the single highest paid person in footwear" and makes more money on shoes than Michael Jordan.

He then posted: "There's been a lot of fake news so I just wanted to give you the facts. Yeezy will become the biggest apparel company in human history."

Yeezy's real value is hard to determine

As the company does not release sales data and it is not split out by Adidas, it's almost impossible to determine whether his statements are correct. Adidas would not provide any financial specifics related to Yeezy to Business Insider.

GQ's Cam Wolf spoke to Cowen retail analyst John Kernan, who covers Adidas, to find out whether any of West's claims hold true.

"I find it hard to believe it's generating over a billion in sales," Kernan told GQ.

Wolf explained that Yeezy would need to pull in $3 billion in sales annually to reach this number, which works out as almost 8% of Adidas' entire global business.

According to Kernan, it's also unlikely that West is making more than Michael Jordan has with Nike.

"I'm not sure what the economics are for [Jordan] at Nike, and I don't know what Kanye's economics are but it's hard for me to believe it's anywhere near what Nike's on the hook for with Jordan," he told GQ.


Facebook/Adidas Yeezy

Yeezy Boost 350.

Yeezy is an influential sneaker brand

These potentially exaggerated claims shouldn't diminish the success of the brand, however. This week, it was ranked in ninth place in a list of the "hottest brands" created by the Business of Fashion and fashion search platform Lyst.

"Streetwear insiders believe the brand could enter the Top 3 Hottest Brands before the year is out," the index noted.

"Sneakers remain the most searched for Yeezy item worldwide. This quarter the Yeezy Blush 500 and the Yeezy Boost 700 were the most wanted styles" during the first quarter of 2018, Katy Lubin, a communications director at Lyst, told Business Insider.

West has also been credited with paving the way for some major trends in the sneaker industry. GQ deemed its Boost 350 shoes, which were first released in 2015, as the most influential sneakers of 2016 and claimed that smaller labels such as Allbirds seemed to take influence from them.

West has also been at the forefront of the ugly fashion trend, along with Balenciaga and Louis Vuitton. He's outsmarted industry leaders such as Adidas who have been slow to jump on this movement, announcing the launch of its new "dad shoe" this week. This is expected to hit stores in June 2017. 

Kanye is a marketing genius

One of West's biggest strengths is his method of rolling out products in limited numbers. These build hype and sell out quickly. One hour after the Boost 350 sneakers went on sale for $200, for example, they were sold out in stores and online.

"Kanye is a master of social media hype. He's used his personality, plus smart scarcity and exclusivity models to build a cult brand," Lubin said.

Because of this, his sneakers have also become an expensive commodity on the resale market. In 2015, the Yeezy Boost 750 in Triple Black was the highest selling sneaker in resale, selling on eBay for an average of $1,876, according to a survey done by fashion and sneaker blog High Snobiety and Campless, a database for sneaker resellers. In fact, Kanye and Adidas' Yeezy collection accounted for six of the top 20 most valuable sneaker spots.

Another of West's assets is his unique marketing strategy.

West's wife Kim Kardashian West was at the center of his most recent Yeezy 6 season campaign - she stepped out in the new collection and was photographed by the press.

Kayne West then recruited a series of social media influencers and celebrity Paris Hilton to dress in the same outfits as Kim and recreate the paparazzi images of her. These were then posted them to their own social media pages.

According to Lyst, the hype from his social media campaign provoked a 45% spike in search demand for Yeezy on its platform in the week after it appeared versus the week before.

"The Yeezy team is embedded into culture - art as well as pop - and are not afraid to play with those codes in their marketing efforts," Quynh Mai, Founder of digital agency Moving Image & Content, the branding agency behind the official films created for the launch of his Season 1, 2, and 3 collections, told Business Insider.

This direct to consumer advertising tactic not only saves marketing dollars, but is also a way to bring his products to the masses.

"Yeezy's marketing approach is effective because it balances exclusivity (art, celebrities) alongside mass (Instagram, movie theaters). His campaigns are creative artistic expressions while his distribution strategies are mass," Mai said.

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