India’s New Asset-class: Evaluation of the Importance of Different Factors in Determining the "Value" of Sneakers in India

Author : Vasuman Vij
K.R Mangalam World School, Gk-2, New Delhi

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Abstract 
​Over the past decade, there has been a sharp spike in the demand for sneakers in India, also classifying it as the country’s new asset class. A $351 Billion industry worldwide and contributing to over 2 per cent of the country’s GDP the industry is growing at an exponential rate. Because of the high growth rate and lack of theoretical knowledge about investing in the new industry the sneaker reselling market in India has become volatile. People tend to succumb to irrationality and undervalue the sneakers, also known as undercutting, leading to an overall fall in the market value and less profit for the other retailers carrying out their operations in the market. This research study aimed to evaluate the importance of different factors that determine these sneakers’ market value. Out of the 5 factors examined, the study found stock numbers to be the highest-rated factor amongst all 4 categories of respondents- Sneakerhead, reseller, hype beast, plug - determining the value of sneakers. After stock numbers, a close second will be the influence of a famous personality and silhouette type with a mean of 8.4 which is not that far away from stock numbers with a solid mean of 8.9. All the data and rating provides rationale with the fact that basic economics does operate in the sneaker industry since the mean ratings are all above 8.2 showing significance of all 5 factors. Being a consumer good as well, the economic price (The price a consumer will be willing to pay according to the value consumer can find in the consumable good/service) needs to be taken into consideration. The data collected via the survey covered this dimension as well, by studying the tangible variables like colour and silhouette. Preferred by more than 5o per cent of the sample primary and dark colours like red, blue and black are preferred over the others with the preferred sneaker silhouette being Air Jordan 1 Highs. This stands to be statistically significant with a p-value of 0.001 and thus can be used in market operations by new investors in the industry and upcoming resellers who have recently started reselling. This will prevent any further volatility and the operations will be much easier in a competitive market with bigger margins

 

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India’s New Asset-class: Evaluation of the Importance of Different Factors in Determining the value of Sneakers in India
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