Supreme: A Business Myth

Posted on Posted in All Recent, All Trending, Companies, Trending Companies

Published: Sun 12th February 2017

Author: Andrew Koren

Read Time: 4 minutes

Supreme: A Business Myth

Brief Background Of Supreme


With an initial $12,000 investment in 1994, Supreme has become a notorious brand of clothing amongst a wide variety of people – large enough to render the initial investment worthless. From 1994 onwards, the owner James Jebbia has opened 10 stores worldwide, leading Supreme to its success – as it is now highly valued in the streetwear industry.

 

Originally, Supreme was supposed to be a skateboarding company, providing only skateboarding related apparel. However, after noticing the increasing demand for its goods, Jebbia expanded into the clothing sector. Since its opening, Supreme has emphasised its importance on providing only a limited amount of supply. Many streetwear brands still use this business ‘model’, as this is what they believe streetwear is all about (i.e. the concept of selling limited items, ranging from shoes to hats). By simply releasing a small number of items, these brands have managed to seize the attention of buyers worldwide.

 

Why Is Supreme So Different From Other Brands?

Supreme has gained its popularity from its simple and indistinguishable logo. The brand gained a lot of attraction after famous celebrities began wearing its apparel – such as artists like Drake and Chris Brown. Furthermore, the brand gained appeal when it began to collaborate with other retailers, such as The North Face, Vans, and now Louis Vuitton. This gave the company a broader spectrum of clients, as well as unique exclusiveness. In addition, the brand also featured some celebrities directly on its apparel. The two most iconic examples are a Mike Tyson tee and, incredibly, a Donald Trump tee sample (worth about $23,000 on eBay, after Trump was appointed as President of the United States).

 

Moreover, Jebbia has publicly stated that he cares about his brand image more than the money. Hence why he does not increase supply levels, despite knowing that this would lead to a significant increase in operating revenue.

 

Supreme, Profit For Everyone

Due to the fact that Supreme releases very limited quantities of apparel, many in-demand items are provided by third-party resellers – but of course, for a premium. This process has evolved over time, and created the so called myth of ‘hype’ – where a particular apparel (anything which is expected to sell out instantly) is perceived to be more demanded than a regular item. For this reason, third parties provide these goods for an incredible mark-up, ranging between 20-700%. One example would be the brands ‘holy grail’ (i.e. the Supreme Box Logo), which retailed for £138 last year (peach colourway hoodie), and was resold for an average of £1000 – giving resellers a massive 624% mark-up.

 

This limited supply has opened up a huge market, for any consumer that is lucky enough to purchase these hyped-goods - and is willing to resell them to Supreme enthusiasts.

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