Fashion and sport brands clash in luxury sneakers race
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[May 24, 2018]
By Giulia Segreti
MILAN (Reuters) - What do you get when
luxury fashion meets sport? $10,000 sneakers.
High-end brands such as Kering's <PRTP.PA> Gucci, Prada <1913.HK> and
Balenciaga are increasingly looking to sneakers for growth, putting them
in direct competition with sportswear giants like Nike <NKE.N>, Puma <PMUG.DE>
and Adidas <ADSGn.DE>, and giving rise to ever-more striking and
expensive designs.
Luxury groups say they are now increasing investments and marketing
budgets to face down their new opponents.
"When I saw sneakers were going to be a thing, I fought it for a bit,"
Salvatore Ferragamo's <SFER.MI> designer Paul Andrew said at a
conference. "We're definitely now investing heavily in that category,
getting in very specialized people".
Global sales of sneakers - or trainers - rose 10 percent to 3.5 billion
euros last year, outperforming a 7 percent rise in handbags, according
to consultancy Bain & Co.
"It's not really even a trend anymore - it's become a category," said
Bruce Pas, Men's Fashion Director at U.S. department store Neiman
Marcus.
Both luxury groups and sports companies are looking to cash in on a
booming market. Premium sneakers can start at around $400 but can easily
rise as high as $3,000, for a pair of Christian Louboutin's leather,
crystal-embellished sneakers.

Limited editions can sell for well over $10,000, including the Chanel X
Pharrell Hu Race Trail or Nike's Air Jordan 3 Retro DJ Khaled Grateful.
Sneakers are a big driver of the luxury shoe business, which accountancy
firm EY says is the fashion industry's fastest-growing area.
The rise of luxury sneakers is part of the growing influence of casual
and streetwear in high-end fashion, where it is now acceptable to team
sneakers with a tailored suit.
Upmarket brands are tapping into street style to refresh their looks and
young buyers are driving the shift. "Millennials" - born between the
early 1980s and mid-90s - already represent a third of the luxury
market, according to Bain.
Several luxury group executives recently noted the importance of
sneakers for their business and the need to step up their game to face
the rising competition.
Emilio Macellari, finance chief of Italian luxury goods company Tod's <TOD.MI>
- a pioneer in the sector, having launched its first Hogan luxury
sneaker in 1986 - said "there is no brand that is not currently
considering its (sneaker) offer".
Pointing out how times are changing, he said luxury brands were now
"under attack" from sportswear companies, on top of the usual
competition from their luxury peers.
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A model presents a creation from the Alexander McQueen Autumn/Winter
2018 men collection during Paris Fashion Week in Paris, France,
January 19, 2018. Picture taken January 19, 2018. REUTERS/Alessandro
Garofalo

But so-called "sneakerisation" could steal market share from more traditional
and formal-looking footwear, industry operators say.
"After many seasons of comfortable shoes, it will be hard to bring women back on
heels," said Federica Montelli, head of fashion at Milan's renowned la
Rinascente department store.
BLUE SNAKE AND PROFIT MARGINS
In central Milan a pair of Nike's black leather, ankle-high Air Jordan 5 Retro
Premium sneakers sell for over 400 euros ($470). Only steps away, in one of the
city's most exclusive shopping areas, clients buy a pair of Gucci's ACE made
with the GG logo canvas, with a blue snake-leather detail for 450 euros.
"What has changed is competition, with a clear overlap," said Claudia D'Arpizio,
partner at Bain & Co. "Luxury consumers are buying Nike and Adidas and
vice-versa".
Ilaria, a young saleswoman in Milan streetwear shop One Block Down, said that
many customers walk in carrying shopping bags from the nearby luxury boutiques.
Sports groups say they are not worried by the competition.
"If (luxury groups) go the sports way... it is only positive," said Puma Chief
Executive Bjorn Gulden said. "If that is a trend that pulls the sneaker market
up, we can only be happy."
Analysts also say the intensifying competition is unlikely to erode profit
margins because the market is expanding.
"There is large space for prices moving up," said Erwan Rambourg from HSBC. "The
'luxurisation' of sneakers could possibly impact margins positively".
(Additional reporting by Melissa Fares in New York, Emma Thomasson in Berlin,
Sarah White in Venice, Claudia Cristoferi in Milan and Sonya Dowsett in Madrid;
Editing by Pravin Char)
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