In May of last year, I asked, “Can Kanye West save Adidas?” Eighteen months later, it appears the answer was yes—if you ask so-called “sneakerheads,” that is, the devoted shoe collectors whose interests carry so much sway in the footwear business.
But Adidas executives, and some analysts, are more hesitant to put the company’s recent success on West’s shoulders.
Among sports apparel brands, Adidas took the crown in 2016. The German sports giant clawed back market share in the US athletic footwear market, where it had struggled for five years; it regained favor among sneaker obsessives; its stock leapt more than 50% while shares of competitors Nike and Under Armour fell.
In short, Adidas made the three stripes cool again in America. It’s why Yahoo Finance named the company our Sports Business of the Year for 2016.
And sneakerheads insist Kanye West is to thank for all of it.
Debating the Kanye Effect
Adidas first signed Kanye West to a limited design partnership in 2013; he had originally been under contract with Nike. The signing alone brought buzz to the brand, but after he signed with Adidas, West also publicly trashed Nike, complaining that the company stifled his creativity; that was additional good press for Adidas. At a free concert to kick off NBA All-Star Weekend last year, West shouted to the crowd, “We ain’t wearing that other company no more, right?”
In early February 2015, Adidas released the first fruit of its union with West: the Yeezy Boost 750, retailing for $350. It put out just 9,000 pairs, available only in New York and only through the Adidas sneaker app; they sold out in under 10 minutes. Later in the month, the company released more of them, but not many more.
Since then, it has released the Yeezy Boost 350 and a number of other shoes, always in extremely small supply. Many of them end up on eBay, listed at over $1,000.
Adidas has never said exactly how many pairs of Yeezy Boost sneakers it has made available, but it has steadfastly kept the supply limited to stoke demand. And it’s worked.
Collaborations between fashion brands and celebrities are typically tiny in terms of product volume. Think of it this way: Adidas sold more than 300 million pairs of shoes last year. Of those, “I’d be surprised if they made 50,000 pairs of Kanye West shoes,” says NPD Group retail analyst Matt Powell.
If you ask Powell, the supply has been so limited that West cannot be credited with sparking Adidas’s comeback in the States. In fact, Powell gives the West partnership very little weight.
Powell attributes the brand’s success this year far more to its product pipeline: non-Yeezy sneakers like the UltraBoost, Flux, and NMDs, (all launched in the past three years) and the refresh of classic Originals like the Superstars and Stan Smiths. He also points to a major reorganization at Adidas Group that involved moving hundreds of employees from the Germany headquarters to the US headquarters in Portland, Ore.
“They signed West at about the same time they moved all those people from Europe to the US. And the business didn’t turn around for two years,” says Powell. “So I’ve got to believe his influence is relatively limited. If he had the kind of influence people want to bestow on him, why did it take two years?”
Powell adds that celebrity endorsements rarely move the needle for a brand, beyond temporary buzz. The only example where he believes it had a major impact was Puma signing Rihanna: “Their business turned around literally overnight.”
Bloomberg, too, discounts the Kanye Effect: “Adidas is being saved by Pharrell, not Kanye,” it wrote this year. Its basis for the conclusion was that the Yeezy supply is extremely small, and that Adidas sold 15 million pairs of Superstars last year, the shoe it relaunched in 50 new color designs with Pharrell Williams. But that was last year.
Yeezy hype on the secondary market
Sneaker enthusiasts beg to differ with Kanye doubters. They argue that you cannot only look at the West-designed products to get a sense of West’s influence.
“Think of it this way: Stan Smith, UltraBoost, these shoes have been around and available for a few years,” says Alan Vinogradov, who co-founded the sneaker re-sale expo SneakerCon, which has expanded to 13 cities. “They’ve always had a healthy line of products and they haven’t pivoted that much in terms of their brand. But Adidas was never able to create buzz around their own products as much as Nike has. What Kanye has done for them is make people pay attention to what is coming out. His endorsements, when it comes to fashion, are very limited—he has limited himself to Adidas. And so [Adidas’s success] all falls under the hype the Yeezy line has generated.”
Adidas does not break out sales numbers for its Yeezy shoes, and even if it did, they would be extremely small, since the supply is extremely small.
Vinogradov uses the sneakers he sees on display at his own convention as an anecdotal indicator. “A year ago when you walked in [to SneakerCon], 99% of the event was Nike Jordans. This year, we saw a huge influx in vendors selling Adidas. Boost, NMDs, Pharrell NMDs, Yeezys.” Another measure he uses is what SneakerCon attendees are wearing on their own feet. “At one point it was 100% Nikes and Jordans,” he says. At events this year, he noticed more people in Adidas than ever before.
Josh Luber, founder of sneaker resale market StockX, told Yahoo Finance this year that the Yeezy 350 is “by far the hottest shoe and is selling for the largest premium above retail… Kanye drives demand.”
Of course, the secondary market isn’t a priority to the companies themselves. Sneakerheads generate buzz, and the retail industry has begun to cater to them more than ever before with sneaker reservation apps, but what matters most is primary sales. And again, the Yeezy line is tiny, so there’s no real way to prove (or disprove) West’s influence using sales numbers.
“You can’t credit him only for selling Yeezys,” argues Brian Quarles, executive creative director at the agency Revolution. He points to the fact that West now often wears other Adidas sneakers, not just his own Yeezys, and that puts his stamp on them. “If you see a photo of Kanye wearing UltraBoost, I think it’s a no-brainer why that has become another sought-after shoe. And when you look at Kanye’s fashion line, he has really affected fashion across the board. Adidas is in Urban Outfitters in a more prevalent way than ever before.”
Jonathan Komp, an apparel and footwear analyst at Baird & Co., sees a halo effect as well. “Adidas has been brilliant in drafting off of the [Yeezy] success,” he told the blog Sole Collector. “You can see it in the Tubular and NMD, there’s a halo effect created.”
Adidas US CEO Mark King is reluctant to attribute this year’s sales success all to West. “I think Kanye definitely helped make the brand cool again,” he acknowledges. “But I think, had it only been Kanye, it would have gone up and gone down very quickly. So we, as a company, were able to take what he helped ignite, and now make it into a much bigger thing.”
Of course, Adidas would not want to put it all on West. Doing so would suggest that the company, which has made structural changes and technological innovations to its manufacturing, isn’t to credit for its great 2016.
Since the Kanye Effect can’t be proven or disproven using sales numbers, it comes down to speculation—and people on both sides of the argument are passionate. Sneaker obsessives sound off on Twitter. They reply to every story about Adidas sales by beating the Kanye drum: “Easy answer: Kanye,” said one, in response to our story about the brand’s big year. “It’s Yeezy’s world,” said another.
But Powell, one of the leading analysts and expert commentators in the space, is holding strong on his view. Adidas extended West to a much larger contract this year. The company had reportedly paid him $10 million when it initially partnered with him.
“They paid $10 million for nothing,” Powell tweeted on Tuesday.
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Daniel Roberts is a writer at Yahoo Finance, covering sports business and technology. Follow him on Twitter at @readDanwrite.
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