Foot Locker Invests $100 Million In Goat
The investment numbers flooding into the sneaker resale sector have long felt outrageous. Almost exactly a year ago, Goat got $60 million. Then StockX raised $44 million. Stadium Goods, not to be outdone, was acquired by FarFetch for $250 million in December. It’s not just the resale platforms, either: there’s a touch of the surreal when an Air Yeezy sells for $9,000. So the latest transaction—Foot Locker investing $100 million into Goat—just sounds like another Monopoly-money style deal.
But as these sneaker reselling apps take on money at unbelievable rates, it’s starting to feel like the who is much more interesting than the how much. Foot Locker, after all, is a massive in-every-mall sneaker retailer with a value of $6.4 billion. But even as ref-jersey-wearing salespeople send Nike Tanjuns flying off the shelves, Foot Locker execs are making a $100 million bet that won’t be good enough for much longer.
Over the past couple months, investors have started taking strategic positions, pushing chips to one side of the table. Stadium Goods wasn’t just acquired by anyone—Farfetch is a hugely valuable company that caters to a clientele that can drop $1,300 on Rick Owen dropcrotch pants without calculating how long that means they’re eating ramen noodles. In the likely future in which sneakers continue to be a very hot luxury commodity, that’s a sound investment. When I spoke to Farfetch CEO José Neves after the deal was struck, his emphasis was on bringing a luxury experience to the resale market. Instead of asking customers to wade through offers or wait for shoes to be authenticated, Farfetch and Stadium Goods want to handle a limited sneaker like they do any of its many luxury items.
Foot Locker and Goat are envisioning a very different sort of future: one where sneaker reselling isn’t contained to the clout corridor or Manhattan penthouses, but rather spread to every city where one of the mall brand’s 3,000 different locations are set up. At the moment, the new partners are tight lipped about what exactly they’ll do together, but it’s not hard to map out some different possibilities. Maybe Foot Locker stores will double as hubs for Goat, with kiosks where shoes can be dropped off, picked up, or authenticated. Maybe Goat’s rare, vacuum-sealed kicks will pop up, mixed in with Foot Locker’s collection of general release sneakers.
Foot Locker’s vision of the future isn’t that far off from how sneaker brands have operated over the past few decades: mass releases may fuel large chunks of the profit, but limited-edition, hyped-up shoes are what really captivates customers. Plus, tech companies, whether they want you to friend, tweet, snap, or sell and buy fire shoes, are all after the same thing: a super-engaged and passionate user. From another angle, Foot Locker’s partnership with Goat feels like a way for the retailer to Amazon-proof itself. In Amazon’s quest to sell everything, it’s felled corporations that, like Foot Locker, once seemed untouchable. Nike finally relented and started selling its shoes on Amazon in the summer of 2017. Adidas was already onboard. If all Foot Locker has are the same Huaraches, 270s, and Superstars as Amazon, it stands to suffer the same fate sooner rather than later.
Now, though, Foot Locker is investing in businesses that will give customers reasons to come into stores. The retailer recently put money into Pensole, a school run by a former Jordan Brand designer that teaches people how to make sneakers. But Foot Locker’s crown jewel is undoubtedly Goat. The $100 million investment is both the largest sum handed out by Foot Locker and in the secondary sneaker market in general. Ultimately, Foot Locker is betting on the core sneakerhead—the one who wants to make sneakers, or maybe just trade the rare ones already in existence.
“At Foot Locker we are constantly looking at new ways to elevate our customer experience and bring sneaker and youth culture to people around the world,” Richard Johnson, Foot Locker’s chairman and CEO, said via a press release. Those customers existed long before these apps did, and will still be there once the luxury sneaker fad probably, inevitably passes.
The race to crown the supreme sneaker reseller is ramping up, and won’t end any time soon. But now, Foot Locker has the biggest ticket at the track—and it’s all-in on Goat.