SUPREME- How it became a billion dollar brand empire by selling pointless products but smartly
How did Supreme manage to sell a 3-pack of Oreos, which usually costs less than 20 cents in the US, for $91k? A more interesting question is- why was someone willing to pay almost $100k for 3 cookies?
SUPREME. The saga of how a small New York based skateboarding store became the world’s most followed and sort after streetwear brand worth $1 Billion. Supreme is more than just a brand- its a culture and a lifestyle choice that its fans live by and some even life-off of it. Its more than just clothes- its a realm of life. Its more than just a business- its a way through which its fans express their individuality through clothes and identities as a part of diverse social groups.
In a more complex , albeit more accurate, description, Supreme is a cultural phenomenon built on hype. It’s like a social media trend, which usually has a shelf-life, but Supreme created a trend that is long-lived, much more sustainable and tremendously profitable. Hype is kind of a big excitement that has a deep emptiness at its core but has enormous energy to create demand for a particular product. Companies like Supreme thrive on such hype, their whole business model is built on it. And the reason why Supreme is so successful is that it uses a lot of interesting business tactics that fuel this hype. They majorly rely on social media websites to create awareness and demand for their products, with zero marketing expense of their own, which surprisingly is a marketing strategy used by a lot of companies lately, mostly by cash strapped start-ups though. Why? Its more cost effective, leads to more wider reach and most importantly, it causes others to act, spawning into a mini-social movement of its own. Nowadays, we are so heavily influenced by social media, its our go to source for a variety of things- latest trends in fashion, consumer tech, and even news.
What astonishes me is not the transition of a small skateboarding store to a billion dollar business or, how well the company’s founders were able to capture the trends in the fashion industry. Rather, all the business tactics and strategies that Supreme used to reach to that level of success.
It all started in 1994, by a person named James Jebbia, as a skateboarding store in Manhattan, New York. While he was working in his friend’s high-end boutique, he noticed a new upcoming culture of NYC skateboarding and realized that no one was really targeting them. So, following the rising popularity of skateboarding in the state, Jebbia opened his store and sold hoodies and sweatshirts to meet demand for the burgeoning skate scene in New York to these hippies and street kids. Throughout ‘90s and early 2000s, Supreme functioned as a skate brand, catering to both skaters and those interested in street wear. It sounds like an immediate success that Jebbia got the first movers advantage and he was doing something that no one had ever done. But that’s not the true reason for his brand’s popularity. The reason for his success was not only his business acumen or his superior ability to recognize trends in their infancy, rather the marketing gimmicks that he employed that actually led him to creating a billion-dollar brand and a crazy customer base.
When he opened his store in 274, LaFayette Street, Manhattan, he employed some unusual strategies that actually paid off. He hired actual skateboarders, who were well known and respected among the locals, as the store salesman. He opened his store to everyone regardless of whether they want to purchase anything or not. He put up a TV, put up hip-hop songs and even set up sofas so that people can come, hang out in this store for how much ever time they want and can leave without purchasing anything. Kind of a same tactic is used at Starbucks, where you can come and sit on their furniture, use free Wi-Fi and can leave. But after somedays, you’ll fell like ordering a cappuccino. With the same expectations, Jebbia introduced this sales practice and it actually bore fruit. His store started becoming extremely popular and soon it became a downtown meetup stop in the daytime and a party palace in the night.
Supreme has an extremely loyal customer base, but an even crazier fan base. Just like, we as customers, determine the equilibrium price for a particular product based on utility we derive from it and on the basis of our need for the product, similarly, its the crazy want for Supreme products and often its obsession that makes its products insanely expensive. The more we are exposed to a brand, the more likely we are going to develop an association with it, a familiarity and a sense of connection with it. All these reasons might argue that why a person buys Supreme products. Below are a few reasons why Supreme is so very successful:
Drop Culture- Supreme has adopted a drop culture, meaning that it launches a particular product in an extremely limited quantity. And when its gone, its actually over, they will never release it again nor manufacture it again. So, technically, some of Supreme’s products are actually very rare and hard to come by. And this is why people are willing to bid an unreasonable sums of money for something as simple as a printed t-shirt. This is so simple concept but executed to perfection. And this might be the primary reason why Supreme is so successful. People want things that other people can’t get and thus are wiling to pay more money for that. In other words, if everybody can get one nobody would want one. Supreme actually make their customers work to get to their products, its not as easy as you go to their store and buy the product. Consumers actually put in effort to buy their products, which makes it even more valuable because the more difficult it is to get something, the more valuable it becomes to the person and thus making the product more alluring to the consumer. On top of that, it has only 11 retail stores world wide and an e-commerce webstore, so that makes its products even scarce to get and therefore more valuable.
Supreme is the ultimate definition of Conspicuous Consumption- Conspicuous Consumption is when a person shows off by buying things that others can’t afford. These goods act as a display of the buyer’s wealth to the society. This term was coined in 1899 by Thorstein Veblen, an American economist, who also defined Veblen Goods. Conspicuous Consumption leads to creation of Veblen goods, which are defined as those goods that increase in demand as their price increases, something contrary to law of demand and thus have a upward sloping demand curve. Markets today are flooded with Veblen Goods today- Patek Philippe watches, Gucci handbags, Jimmy Choos and now Supreme. Today, with more than 45% of the world’s population actively using social media, all that matter is the number of likes and followers. The different virtual identities created by people on social media legitimize conspicuous consumption. It acts as a medium of pretension and people tend to show by sharing on social media that they are leading a glamorous life and all of this ids driven with the urge to legitimize their identity, through their consumption reflected on their social media handles, among their peers. Individuals create conspicuous consumption by using glamorous brands which are liked and favored by society and symbolize power, prestige and success. And this the reason why a lot of companies that sell Veblen goods have started professionally managing their social media accounts.
Past brand collaborations- Through the years, Supreme has partnered with a number of big and upcoming brands, fashion designers, celebrities and artists to create a unique Supreme products. It has collaborated with brands like Louis Vuitton, Vans, Nike, North Face, Budweiser, etc. The list is extremely long and more more info, you can visit this site. These collaborations make sure that Supreme products remain in fashion, they never lose hype and people keep paying hefty sums of money for it. Collaborations is a good way of not only increasing popularity of your products but at the same time leveraging from the expertise of the other company involved in the Collab. And Supreme has tremendously profited from such extravagant collaborations in the past.
Big Box Logo- Supreme’s iconic red coloured big box logo with white coloured text is simple but so eye catching and chic. Its so elegant and designed with finesse that it conveys that the brand is so full of poise and stylishness.
Here are a few weirdest items that Supreme has sold in the past:
Similarities of Starbucks and Supreme
While I was researching and writing about Supreme, I realized how Starbucks is so similar to Supreme in so many ways. For both the companies, their products are ridiculously and unjustly priced, secondly, even after such pricing, they are blessed with a crazy and extremely loyal customer base. Third, they have similar sales tactic wherein you can visit their store, hangout there and can leave anytime you want without actually buying anything, all they provide is an environment and a cool vibe. Forth, both of these companies got the first movers advantage. The founders of Starbucks realized the need for good quality coffee in US and perfectly caught the second wave of coffee culture in US and now becoming the world’s largest coffeehouse chain. On the other hand, as mentioned before, the founder of Supreme understood the trends in fashion industry and started catering to a completely untouched market and in an industry segment which was virtually competition free, thus becoming one of the largest and well-known streetwear brands in the world. Another point of similarity is that their products are extremely unique and tacky, but in a good way. People go “wow!” after seeing their products and their reaction is, “I want to try this”. Sure some of them are too funky or borderline senseless, but this they generate a lot of excitement among consumers and become insanely popular. The success of these two iconic brands is definitely not luck, rather perfectly thought and executed business tactics and marketing strategies for the 21st Century. These strategies and business gambits are simple and straightforward albeit tremendously powerful and effective. And because of these tactics, these brands are able to reach to level of success that they are currently at.
