Are sneaker retailers setting a negative precedent with paid loyalty program memberships offering increased raffle odds and exclusive access to drops?
As the hobby of buying and collecting sneakers has grown from a micro niche into a global phenomenon that carries with it billions of dollars from the primary and secondary market, sneakers have become harder and harder to secure. Brands like Nike and adidas have taken notice of this explosive growth and have begun to switch from the traditional method of offering their products in brick-and-mortar retailers like Foot Locker or local mom-and-pop shops to offering releases directly to consumers through their own websites or apps. With this, retailers are being offered less of the “hype” items while in return being inundated with pairs that aren’t moving off the shelves. In what seems like a move to combat this, select retailers have begun offering paid membership loyalty programs that provide subscribers benefits like boosted raffle entries and “early access” to select releases, though is this truly fair and are the big brands okay with it?
Retailers’ Loyalty Programs In The Sneaker World
Rewarding customers who spend their hard-earned money with you is commonplace across the entire retail industry as companies like Kohls or Gap will offer customers points to earn that can eventually be redeemed for rewards like cash back or free items. This same method is employed when it comes to sneakers, most notably through JD Sports/Finish Line which offers users redeemable rewards through points earned on purchases like free shipping, coupons, and access to giveaways. Their method of offering “Exclusive Access” to random Status members rewards those who spend money with the company while keeping customers coming back for more - all free of charge. Other big-box retailers like Hibbett use similar rewards programs to JD/FNL, as they give customers 1 point for every dollar spent, translating to a $10 coupon for every $200 spent.
When it comes to smaller boutiques that primarily focus on sneakers and streetwear, imprints like Aime Leon Dore, KITH, and Concepts have long offered VIP access to select drops (usually in-house collaborations with larger brands) for customers who have a purchase history with them. Just recently we saw ALD offer first access to a raffle for their latest New Balance 550 collab, KITH offer their Asics EX98 collab, and Concepts give first dibs on the New Balance 9060 “Workwear & Indigo” pack to customers.
Pay-To-Play Loyalty Programs In The Sneaker World
All of this makes sense for both the customer and the business, as those who spend money are given rewards, thereby creating a feedback loop where customers are incentivized to continue to give retailers their money. Contrasting this heavily are the methods recently employed by two Florida-based retailers, SoleFly and DriftHouse Skate, who have just announced paid loyalty memberships that act similarly to rewards programs other retailers currently offer for free.
A notable example of a retailer who has offered this for some time, CCS, has had their “CCS+” membership since 2020 which gives benefits to those who pay the yearly $20 membership fee. This includes free shipping options, member-only events, priority access to sales, and what most purchase it for - early access to raffles coupled with 3 entries for each one entered.
Drift House, the Cocoa Beach-based skate shop, is just beginning the rollout of its paid loyalty program membership program with its launch set to go down on November 11th, 2022. Being dubbed the “House Membership,” they offer free shipping nationwide, automatic raffle access (plus 2x every entry), giveaways, and more. As for SoleFly, the full details of what their membership offers aren’t fully advertised, though an Instagram notification sent to followers indicated they would offer exclusive access to select drops in the near future.
While on the surface this may seem like a way to help support a small business, offering boosted entries for raffles on sneakers that are super limited (most skate shops barely get one full-size run per Nike SB release while boutiques like SoleFly don’t have thousands of pairs per release) is crossing the line of pay-to-play. Your odds may seem to be increasing with boosted entries, though when you really think about it, there are thousands of non-paying customers entering the same raffle. Realistically, your odds may only increase by a small fraction of a percentage.
From these smaller businesses’ perspectives, however, they are offered fewer and fewer pairs that will actually bring in customers, yet at the same time, needing to order a certain number of standard products from brands like Nike or adidas in order to maintain their store’s account with each brand. As inventory builds up and takes over shelf space, some shops are finding it harder and harder to get by every month, so offering paid loyalty program memberships may be their method of adapting to ever-changing consumer preference and brands’ unit requirements.
Ultimately, most sneaker retailers don’t utilize these hyped drops as a means to sell pay-to-play loyalty program memberships to their customers, but rather leverage them as a marketing mechanic to grow their social followings, email lists, or simply get people in the door. It remains to be seen if other stores adopt these pay-to-play methods, if they ultimately succeed, and if Nike and adidas condone this activity. Stay tuned for this and other sneaker news.
- Retailer pay-to-play loyalty programs may introduce a dangerous precedent in the sneaker world. Stores that utilize them could be forcing consumers to pay in order to have benefits and/or opportunities that other retailers currently offer for no charge.
- Loyalty programs typically don’t require a customer to pay a monthly fee in order to benefit and are often centered around the frequency of purchases or the amount of money spent during a particular time period