Tuesday, December 12, 2017

A Supreme Amount Of Profit

A Supreme Amount Of Profit
By: Ben Miller


The hype is incredibly real for the streetwear band of Supreme, now more than ever before. Supreme which sells graphic t-shirts to hyped-up teenagers along with other apparel and accessories, now is worth over a billion dollars according to the Wall Street Journal. If that’s not impressive enough, they’ve managed to do it in roughly 23 years, upon their opening in 1994 and not only that, but they have simply 11 store locations and a single exclusive online shop. Along with that, Supreme has managed to put together collaborations with other exclusive brands such as Louis Vuitton and Nike, with some of their pieces re-selling for as much as $75,000. Supreme has managed to completely revolutionize the entire streetwear industry, while still managing to maintain the exclusiveness of their products.

Supreme has a provocative business model for the kind of market in which their in, but it prives to be extremely successful for them due highly to the fact that the demand for their products is through the roof. Supreme drops new products every Thursday at 11:00 a.m. Eastern time within the weeks on their 2 specific seasons throughout the year, (Fall Winter, Summer Spring), which makes their products extremely exclusive. The demand as stated before is incredibly high and is so high in fact that their products have proven to be price inelastic, all selling out within just minutes, meaning that no matter how much Supreme retails their products, their consumers will always purchase it. For example to show the absolutely un-real hype, Supreme dropped a pair of chopsticks with their box logo on it, and it sold  out in nearly 30 seconds, leading to an incredible amount of profit off just one basic item.

With this said, in my opinion based off the facts, Supreme is in a position to only move up in value as a company, with the hype dieing out nowhere in site. The company recently sold a 50% stake in their business to the Carlyle Group for a whopping 500 millions dollars. This investment from the Carlyle Group shows alone that Supreme is promised for explosive group, a big firm like this doesn’t play games with potential profiting companies. The brand has never showed signs of doubt when it comes to the hype outside of the United States as well. According to executives at the company it takes simply one trip to the store in Soho, China to see that the supply completely outweighs the demand, thus working to create a prestigious label to anything the brand sells. Supreme also has very little competitors, as their products are viewed as a much more exclusive apparel brand than the majority of the stream-line brands such as Adidas, Gap, Polo, Tommy Hilfiger, and etc. This also provides Supreme with the opportunity to not have to differentiate their products as much as some of these other brands have to, and gives Supreme no price competition in consideration with other streetwear brands. Supreme is simply on track to becoming the new Louis Vitton, Michael Cors, Nike, and etc, with the hype backing the streetwear company seeming endless, and with it dominating a market that never seems to die out.



Works Cited
Cowen, Trace. “Supreme Just Became a Billion-Dollar Streetwear Brand.” Complex, Complex, 9 Oct. 2017, www.complex.com/style/2017/10/supreme-worth-billion-dollars.
Gorsler, Fabian. “Supreme Just Got Valuated to $1 Billion by The Carlyle Group.” Highsnobiety, Highsnobiety, 10 Oct. 2017, www.highsnobiety.com/2017/10/09/supreme-stocks-billion-carlyle-group/.
Safdar, Khadeeja. “Why Streetwear Brand Supreme Is Worth $1 Billion and Abercrombie Isn't.” The Wall Street Journal, Dow Jones & Company, 18 Oct. 2017, www.wsj.com/articles/why-streetwear-brand-supreme-is-worth-1-billion-and-abercrombie-isnt-1508331601.
“This Is Supreme Economics Broken Down and How to Retire off Reselling.” HYPEBEAST, hypebeast.com/2017/6/supreme-resell-economics-million-dollars.

Wolf, Cam. “Supreme Is Now a Billion-Dollar Streetwear Brand.” GQ, GQ, 9 Oct. 2017, www.gq.com/story/supreme-billion-dollar-valuation.

12 comments:

  1. I never really thought about Supreme in economic terms. It is interesting to look at what the company is doing. The demand is very high for them and I feel like it won't go down anytime soon. Now with NBA players wear supreme it will increase the demand. All of these will increase the price of it.

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  2. I agree that the demand for the Supreme brand is so high that the company is in a position where they can set a pretty high price because the consumers are willing to pay a very high price for the product. Although there are other similar brands, Supreme has established itself almost as a luxury brand, and is promoted a lot by celebrities making it stop most of its competitors.

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  3. Supreme is really revolutionizing the industry and setting themselves apart from other brands because they are different. It is a very hyped brand and gets a lot of public attention especially with NBA players where sleeves in games now. Overall this was a very relevant topic and I think you did a nice job tying it into econ.

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  4. What's really interesting is how Supreme got their name out there. Like I don't know how Supreme expresses such a high brand quality, because it is just a red rectangle with the word "Supreme" in it. It's shocking how high priced some of their items are. In fact, there was a backpack sold last week for over $9,000. Who in their right mind would spend $9,000 on a backpack?

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  5. Supreme is a very unique product in the sense that it could very well be considered a luxury item, however, the main demographic purchasing this item consists of high schoolers/teens without a large income. It is very interesting that Supreme has found a way to mark up their items but continue to sell out their products. The consumer desire for this product truly does matter more than any of the price changes being made to the products.

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  6. Given the fact that supremes items sell out so fast, I have heard about issues with people getting cards declines to try and stretch out the time their products are on the market do you think this is effective? I also know that resale at least doubles, what do you think they could do to prevent that.

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  7. The creators of Supreme definitely thought their business out right. The fact that they can charge such insane prices for products and still have customers purchase them is quite impressive. I think that really all it takes to develop some prestigious business such as Supreme is to gain the necessary followers. Once people start wearing the product then more and more people want to purchase the same clothing that is "in" at the time and Supreme has this large follower base. Additionally making their stores less common also makes their products seem more valuable and therefore people justify purchasing their clothing.

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  8. This is very interesting that Supreme was able to rise to stardom in such quick fashion. The continued demand for their products show that they will be a =powerhouse company with huge profit that will only grow. Overall, this business is so successful even with a dip in demand, they will have profits to outweigh and will be a huge successful brand.

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  9. I own several supreme products, and although their products are of high quality, I think the resell price has a lot to do with the scarcity of the product. If you compare a supreme product to a Nike product of similar price, Nike's product is of much higher quality. I think the reasoning for the high price for their products is because of the scarcity of the product which causes a great demand which is accompanied by a low supply. THis creates a big window for economic profit fir the consumer which then causes demand to increase because the consumer can resell the product for significantly more than they paid for it.

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  10. I would agree about Supreme being a really successful company. It's really impressive with how they come out with a new product every week. With the high prices alone, it's clear that this company is in high demand. Finally, the statistic from the Wall Street Journal isn't surprising with the popular brand name.

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    Replies
    1. I agree that supreme is a very successful company i didn't realize how expensive most of the product are. Makes you think about why you buy these things compared to stores you can shop at.

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  11. It's crazy how much people spend on simply buying a brand. Some high end brands cost a lot and are made of very cheap material. Others are worth the money spend. I have never owned a supreme product. Personally I do not like the logo. Therefore I wouldn't know if the clothes are worth the price. I am very surprised that they sell for up to $75,000 of street wear. I feel that mostly rappers and high school students wear this clothes. They most likely don't appeal to many adults.

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