Streetwear:
the new
exclusivity
Five ways how
fashion brands
can win in this
growing market
Contacts
Austria
Harald Dutzler
Partner, PwC Strategy&
Austria
+43-664-515-2904
harald.dutzler
@strategyand.at.pwc.com
Willibald Koer
Partner, PwC Strategy&
Austria
+43-664-515-2906
willibald.koer
@strategyand.at.pwc.com
Laura Leeb
Director, PwC Strategy&
Austria
+49-151-1593-1338
laura.leeb
@strategyand.at.pwc.com
Germany
Dr. Axel Nitschke
Director, PwC Strategy&
Germany
+49-170-7051-288
axel.nitschke
@strategyand.de.pwc.com
About the authors
Laura Leeb advises clients across Europe in the
retail and consumer sector. She specializes in
helping clients in the food and fashion industry
rene their portfolios and strategies, as well
as in supporting to make their supply chains
more integrated and sustainable. Laura is a
Director with PwC Strategy& Austria, based
in Vienna and London.
Enrique Menendez was formerly the senior
features editor at HYPEBEAST, dedicated to
maintaining the quality content ow of original
editorial features and overseeing digital
covers. He is based in New York.
Dr. Axel Nitschke advises clients in the retail
and consumer goods sector, focusing on
fashion and sportswear. His key areas of
expertise are strategy development, digital
retailing, customer experience and value-chain
transformation. He is a Director with PwC
Strategy& Germany, based in Düsseldorf.
Philipp Hallegger, Katharina Schaper, Sarah Nolte, Nick Reiff, Christina Laake, Daniel Magar (Strategy&),
Jeremy Grant (PwC), Emily Jensen, and Jake Silbert (HYPEBEAST) also contributed to this report.
Please visit https://strategyand.hypebeast.com/streetwear-report for full streetwear impact report.
Streetwear is one of the most striking retail and fashion trends to have
emerged in recent years, involving the production, promotion, sale and
resale of casual fashion – mainly footwear, T-shirts and other items – in
ways that bypass traditional retail channels.
Customers are often rallied via social media to be the rst to buy products that are only
available directly from the brand, either in-store or online. The anticipation of a time-limited
chance to buy, helps create a tight-knit and almost cult-like relationship between streetwear
brands and their consumers.
This has helped propel streetwear from being an eye-catching fashion phenomenon that
drew its inspiration from the counter-cultures of the 1980s and 1990s – including grafti,
hip-hop, skate and surf – into a multi-billion dollar retail market. We estimate the size of
the global streetwear market at $185 billion by sales
1
, making it by some estimates about
10 percent
2
of the entire global apparel and footwear market.
Streetwear’s impact – both on retail culture and the numbers involved – has caught the
attention of some of the most iconic, established brands in the retail and luxury goods
sectors and fashion industry generally. Streetwear players come from various parts of the
fashion industry. There are pure streetwear brands such as Supreme and Stüssy, while
sportswear names such as Nike are developing their traditional portfolio of sports equipment
into a growing streetwear portfolio of cool, hip sneakers and hoodies. In addition, luxury brands
are working to gain a signicant stake in the streetwear market (see Exhibit 1, next page).
1. Estimate based on US Streetwear Market Report data (2015) which has been extrapolated with Euromonitor (2019) fashion market
growth rates.
2. Based on data from Euromonitor (2019).
EXECUTIVE SUMMARY
I wasn’t intending to bring street fashion to Japan, I was
simply just introducing the things I liked. That includes
items from Tiffany, documentary lms from Japan, and
various other things. It just so happened one of those
things was skateboarding – that’s all it was.”
HIROSHI FUJIWARA, FRAGMENT DESIGN FOUNDER
Strategy& | Streetwear: the new exclusivity 1
Strategy& | Streetwear: the new exclusivity2
That’s in large part because it is opening up a whole new target market of younger consumers.
Streetwear’s audience is very young: mostly under 25.
A second reason for the interest from established brands is that streetwear has subverted the
way fashion trends have taken off. The fashion industry has typically operated a top-down
model, with insiders acting as gatekeepers to the newest styles and trends. Streetwear has
turned this on its head. Customers have the power to determine what’s cool as much as
industry insiders. Exclusivity and desirability are conferred by scarcity and insider knowledge
rather than high prices. In short, streetwear has redened how “cool” is made protable.
Third, streetwear’s democratic values are increasingly shared by all consumers, for whom
the opinion of peers is an ever-more inuential part of decision-making: 32 percent of
respondents to PwC’s recent Global Consumer Insights Survey (GCIS) said positive reviews
on social-media inuence what products they buy.
Small wonder, therefore, that fashion brands have been buying into the streetwear trend in recent
years. Among the highest prole examples are Louis Vuitton’s collaboration with leading
streetwear brand Supreme, and the luxury giant’s decision to hire Virgil Abloh, founder of
streetwear brand Off-White, as artistic director of Louis Vuitton menswear last year.
EXHIBIT 1
Top streetwear brands
Supreme
78.3%
Off-White
65.2%
adidas
44.5%
BAPE
36.6%
Stüssy
33.2%
Carhartt WIP
22.1%
Balenciaga
19.4%
Vetements
21.9%
Palace
27.3%
Nike
68.6%
Which brand represents streetwear to you the most? (consumer)
Source: Streetwear Impact Report – percentage of records from consumer survey
Strategy& | Streetwear: the new exclusivity 3
Strategy& and Hypebeast, a leading online media platform for contemporary fashion and
streetwear, recently conducted two surveys to show how fashion brands can best succeed
in streetwear: one covering more than 40,000 consumers worldwide and another involving
around 700 people working in the industry. The results showed that:
Growth expectations for streetwear are robust, even as there are some clouds gathering over
the retail industry amid fears of a global economic slowdown: as many as 76 percent of
industry respondents in our survey expected the market to continue to grow signicantly
over the next ve years.
With this landscape in mind, we have explored how brands can play – and win – in the
streetwear market. Five factors should be borne in mind for success: authenticity; scarcity;
democracy; affordability; and seamlessly linked online and ofine activity.
< 25 years old
Streetwear consumers are young:
more than 60 percent of consumers
surveyed were under 25.
84%
Social media is their top source
(84 percent) of influence, followed
by the other young, urban people
they see around them.
65%
Successful brands have strong
links to the cultures out of which
streetwear grew: musicians have the
most credibility among consumers
in our survey (65 percent), some
way ahead of social-media
influencers (32 percent).
70%
Streetwear’s young fans think of themselves
as being socially conscious, a trend that is
spreading to all consumers: 70 percent said
social awareness and brand activism were
important to them, while 29 percent of PwC’s
GCIS participants said they buy brands that
promote sustainable practices.
But they have money to spend on their favorite
brands: 56 percent reported spending anaverage
of $100–$300 on a single item. Asian consumers
spend more, with 32 percent of Japanese
respondents spending an average of $500 or
more per product.
They connect directly with brands both offline and
online: 53 percent are most likely to buy streetwear
products in the brand’s own store; 42 percent from
its website.
$100 – $300
53%
42%
≤ $40,000
They aren’t all that wealthy, either:
about 70 percent of respondents
reported an annual income of
$40,000 or less.
Strategy& | Streetwear: the new exclusivity4
FIVE WAYS TO WIN IN STREETWEAR
1. Authenticity
3. Wallpaper (2019) – adidas launches rst fully recycable sneakers; https://www.wallpaper.com/fashion/adidas-rst-fully-recyclable-sneaker
The challenge for most fashion labels is to stay relevant by redening themselves every few
years. Streetwear succeeds by staying true to its origins: 62 percent of consumers in our
survey said streetwear products are always in style, surviving fashion’s traditional cycles due
to their versatility.
Yet to achieve this timeless appeal, brands must live up to the very high standards set by
streetwear’s young and discerning customers – and demonstrate authenticity.
A majority (70 percent) of survey respondents said campaigning on social issues and brand
activism were important to them. Almost half (47 percent) of respondents reported they were
likely to stop buying items from a brand if it was seen as behaving inappropriately.
How can brands, particularly those with no historic links to any of the cultural inuences of
streetwear, offer authenticity?
• Dene your brand by emphasizing your heritage, telling your story, building on what you
really stand for and investing in differentiating capabilities. Establishing an authentic brand
purpose is a crucial way to reach audiences in a crowded digital eld: “If you can use
technology to gain entry, and then tell a story that is engaging to consumers, then there
is a good chance of success,” former Saks Fifth Avenue chief executive Stephen Sadove
said in an interview for PwC’s GCIS.
• Listen to your consumers, react quickly and continually assess how new products and
promotions t with consumers’ expectations of your brand’s image and roots.
• Build relationships with true innovators and creators in the worlds of music, art, fashion
and sustainability to innovate together. Streetwear is still very strongly linked to its
cultural roots in hip-hop and grafti. Musicians, industry insiders and contemporary
artists were all viewed as more credible sources than social media inuencers, celebrities
or athletes, according to our survey. Therefore, brands should build meaningful links with
true innovators and creators in these elds, rather than seek supercial promotion via
professional inuencers (see Exhibit 2, next page).
• Provide proof of commitment to issues such as sustainability and the circular economy to
show that your actions live up to your words. Adidas, for example, brought out the rst
fully recyclable running shoe earlier in 2019, saying the sneakers were “a statement of our
intent to take responsibility for the entire life of our product.”
3
5
Source: Streetwear Impact Report – percentage of records from consumer survey
EXHIBIT 2
Measuring inuence
Product quality/design
81.4%
Musicians
64.8%
Social-media
influencers
31.7%
Celebrities
29.6%
Athletes
22.6%
Industry insiders
51.8%
Contemporary artists
44.5%
Couter-culture
image
32.7%
Social-
media
presence
30.9%
E-commerce
experience
10.3%
Resale
value
25.3%
Brick &
mortar
8.0%
Brand legacy
62.9%
Creative director
48.5%
Which factors are the most important
for brands? (consumer)
Which figures do you consider most
credible in streetwear? (consumer)
5
The art world has a tendency to feel a little bit hard to enter
from the outside if you’ve never been or you just didn’t grow
up in that kind of culture. And part of it is because artwork
takes a lot of effort and a lot of time to create and there’s a
respect that needs to be given to that. My involvement with
the projects that I’ve done with adidas and the sneakers I
have created, allowed me to bridge those audiences.”
DANIEL ARSHAM, CONTEMPORARY ARTIST
Strategy& | Streetwear: the new exclusivity
2. Scarcity
4. The Economist 1843 magazine (2017) – The hype economy; https://www.1843magazine.com/style/the-hype-economy
While exclusivity in the luxury sector is mostly driven by premium prices, exclusivity in
streetwear is mostly driven by scarce supply. To succeed in this market, brands must
understand and master the dynamic of limited availability, starting with the drops model.
Traditionally, high fashion products or collections are rst shown to the public in runway
shows; new mainstream fashion collections are often not announced at all beyond the
retailer’s regular advertising. However, streetwear introduced a new way of bringing
products to the market, known as drops. Customers queue outside the brand’s store on
the appointed day and are allowed in, in batches. Individuals may only have 15 minutes
in the shop and can buy a maximum of six items.
4
Brands also build demand ahead of a drop by giving products to high-prole gures to wear.
For Virgil Abloh’s “The Ten” sneaker collection by Off-White and Nike, personalized versions
were given to celebrities including basketball star Michael Jordan, musician Drake and the
model Naomi Campbell ahead of the ofcial release.
As soon as supply is greater than demand, that product’s not
scarce anymore. So it’s not cool to a certain group who wants
that totally unique self-expression. They don’t want to possibly
wear something that any person off the street can just walk in
and buy. That cool 17-year-old kid doesn’t want to wear the
same shoes that my mother wears.”
JOSH LUBER, CEO AND CO-FOUNDER STOCKX
Strategy& | Streetwear: the new exclusivity6
Strategy& | Streetwear: the new exclusivity 7
In an earlier innovation by Nike, in 2015 the company introduced a lottery called SNKRS
that picked at random from those who signed up for a new drop and allocated them a slot
that allowed them to purchase the shoe. By making the new product scarce, increasing its
desirability and only available from Nike directly, the company was able to have the kind
of direct communication with its customers that all fashion brands crave, both for brand
awareness and sales reasons.
Done correctly, drops enable brands to build momentum and to actively steer demand to
exceed supply. Creating scarcity in this way increases the hype and demand for certain
products even further. Companies that are new to the drops model can invest in predictive
analytics to simulate demand and supply, in order to drive scarcity without risking producing
too little of a sought-after product.
Scarcity also drives another unique feature of streetwear – a booming resale market.
Supreme box-logo crewnecks, originally sold for $158, resell for a minimum of $500 in
summer 2019, for example. Resale value is a key metric of a brand’s success: the more
limited the availability, the higher the demand and the resale price tag.
So how can players actively manage scarcity?
• Perfect the direct-to-consumer model that the wider fashion industry has been desperate
to crack for both communication and sales. Adopt drops because they have proven to
be an effective tool to drive demand.
• Understand the dynamics of resale and how this might affect your pricing model and
supply level.
• Invest in both consumer-facing and back-ofce technology and data analytics to predict
demand and actively steer supply.
Strategy& | Streetwear: the new exclusivity8
3. Democracy
The democratization of inuence is a key feature of streetwear, with brands and industry
insiders taking direction directly from consumers – mostly those under 25. Streetwear’s
regular supply of new products, relative affordability, and an aesthetic based on the real
world rather than the runway also make it a perfect match for social media.
In the early 2000s, before sites such as Facebook existed, streetwear fans started online
forums to discuss styles and brands that were not covered by mainstream fashion
magazines. Now, Instagram is the dominant channel, with 96 percent of consumers in
our survey using it to gather information on streetwear (see Exhibit 3).
Source: Streetwear Impact Report – percentage of records from consumer survey
EXHIBIT 3
Top sources of inspiration
Social media
84.0%
Digital fashion
publications
48.6%
Physical stores
27.2%
Print fashion
publications
20.5%
Forums
16.0%
Friends/word of mouth
30.0%
On the street
55.9%
Where do you get inspiration for new stretwear styles and products? (consumer)
Across the fashion industry, consumers are canvassing the opinions of peers via their own
social-media accounts, no longer having to rely on what brands or magazines tell them to
wear. Positive reviews on social-media inuence the purchases of 32 percent of respondents to
PwC’s GCIS, and when it comes to fashion, the impact is greater: 54 percent of respondents
said social-media inuences their purchase decisions.
However, for fashion brands new to streetwear, gaining acceptance from its consumer-led “in
crowd” is the highest barrier to entry. Brands with no streetwear heritage struggle to connect,
no matter how stylish their product, because consumers possess a deep appreciation for the
history of the market and brands.
In streetwear, the crowd’s support determines who will succeed. So what can brands do to
win them over?
• Move away from the traditional, top-down approach of telling your consumers what they
should be wearing and instead involve them in co-creation. For example, as part of a New
York event called “Off Campus” to launch Abloh and Nike’s “The Ten” collection, attendees
could cut up and customize pairs of sneakers at a pop-up store.
5
• Use new and established ways to interact with consumers – both online and ofine – to
ensure a constant dialogue.
• Either leverage your brand’s history to prove your right to play and win in the streetwear
space (Balenciaga, for example, has successfully grown a streetwear business from its
luxury roots) – or partner with an authentic streetwear player to gain acceptance, gradually
move into the market, offer existing customers a new type of “cool” and establish your
own credibility. The rst collaboration between Supreme and Louis Vuitton in the summer
of 2017 marked a turning point for luxury fashion’s awareness of streetwear.
5. Highsnobiety (2017) – Here’s What Went Down at Virgil Abloh’s Nike “OFF-CAMPUS” Installation; https://www.highsnobiety.com/2017/09/06/
virgil-abloh-nike-off-campus-new-york/
I think it’s very sad to see that when people line up in front of
stores, 30 percent of everybody lining up is just a reseller so
it prevents real customers from buying the products rsthand.
They can always buy secondhand but sometimes it’s too
expensive for them. It is just part of the market now, I think.”
ALEXANDRE ARNAULT, CEO RIMOWA
Strategy& | Streetwear: the new exclusivity 9
Strategy& | Streetwear: the new exclusivity10
Strategy& | Streetwear: the new exclusivity 11
4. Affordability
Scarcity may be what gives streetwear its cachet, but it is affordability that has turned a
group of niche brands making cool T-shirts into a multi-billion dollar industry.
Young consumers with limited funds prioritize the brands they love. Just over half of consumers
in our survey reported spending $100 to $500 a month on streetwear. There are geographical
differences in spending – our data indicates that 60 percent of consumers in Japan spend
more than $300 per item, while 61 percent of consumers in Europe and North America spend
$100 to $300.
Another element of affordability is versatility. Footwear drives streetwear sales, with 62 percent
of consumers saying it is the product they are most likely to buy. These days sneakers can
be worn in almost all situations and with a variety of different clothes, and like the other
streetwear staples, T-shirts and hoodies, they have a far longer lifespan than other fashion
items and can be worn year-round.
For brands to succeed, it is key that products are not just perceived as affordable
commodities, but as art that is loved by the owner. So how do they go about this?
• Understand the spending patterns and geographical differences between your customers
to dene pricing.
• Reward your loyal target market instead of targeting those with deep pockets. Using drops,
rather than charging high prices, helps put streetwear in the hands of people who love it.
If customers perceive prices to be fair, it cements their bond with the brand, encouraging
future sales and also making it more likely they will buy direct rather than on resale sites.
• Offer versatile products including shoes, T-shirts and hoodies. There is no need to offer a
wide range of styles. A simple portfolio will help you to manage costs and increase speed.
Successful streetwear lines do not need a wide range of products, but a versatile collection
of sneakers, T-shirts and hoodies that fans want to wear for more than one fashion season.
Include a small number of “big bang” designs to grab attention, as well as those designed
to be staples.
Strategy& | Streetwear: the new exclusivity12
5. Seamlessly linked online and ofine activity
Streetwear and social media have grown up hand-in-hand. However, a unique feature of
streetwear is the mismatch between the importance of an online presence for marketing
purposes, and actually completing a purchase. Consumers want to buy streetwear directly
from the brand, preferably a physical brand store (56 percent) or a brand’s e-commerce site
(42 percent).
Anything else is considered “Plan B”: only 28 percent of survey respondents said they
were likely to buy from resale sites (although the resale market is a growing phenomenon);
32 percent from multi-brand retailers; 26 percent from multi-brand e-commerce sites;
and 13 percent via social-media sites.
The desire to shop in the brand’s bricks-and-mortar store is driven by streetwear’s model of
making products available for a limited time in certain places. It may appear to run counter
to the broader trend for shopping online; the percentage of PwC GCIS respondents who buy
something online daily or weekly, rose ve percentage points year-on-year, to 31 percent in
2019, for example.
However, what successful streetwear brands offer is a seamless interaction between their
ofine and online channels. Customers want to enjoy the buzz of waiting outside the brand’s
agship store for a drop, or co-creating their own sneakers at a pop-up store. But they learn
when these events are happening by engaging online with the brand and third-party sites.
If brands get the interaction right between their online information and ofine sales channels,
they can cut the amount they spend on traditional top-down marketing activities. Instead,
they can focus on increasing the number of organic followers they have as a credible
streetwear player.
So how can brands ensure the seamless link?
• Invest in the right front-end IT and data solutions so you not only “broadcast” to consumers,
but use data to be able to respond and stay relevant.
• Drive customer-centricity online and ofine: establish personal connections online, primarily
for information, communication and inspiration and use it as a two-way bridge to experience
in the physical space. Establish personal connections ofine, primarily for experience,
relationship building and purchases. Branded physical stores are the primary place to
complete sales.
• Rethink your design and store approach regarding range, timing and volumes for desirability,
less mark-downs and a more sustainable concept due to minimized waste.
• Rethink the way your marketing organization operates, how you interact with target groups
and other internal functions, and how marketing budgets are spent.
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