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Wednesday, August 22, 2012

SNEAKING PRICES X

“We are constantly looking at ways to enhance the product line with the new innovation and product attributes.”
-Nike Spokeswoman

LeBron X
One of the things that makes it hard to feel too awfully bad for inner city kids and their poverty is clothes. Gold chains and the shoes, especially the shoes, make it difficult to sense any real deep want on their part. Nike Air Jordans sold for $64.99 when they first came out in 1985, which translate to around $138.00 today. If you could blow that much money on a pair of shoes, you're really not in any sort of desperate situation.

And the latest version is the LeBron James shoe, which Nike is selling for $315. Now I'd like to believe kids would say "Man, f&*k that!" but they won't, they'll line up to get the new shoe with the golden swoosh on the side. Because the shoe is a status symbol, it demonstrates a proper understanding and place in their culture. It shows you're important, or at least relevant.

Why so expensive? Well here's the main reason:
Nike, based in Beaverton, Ore., is raising shoe and clothing prices by 5 to 10 percent, analysts told the newspaper, while labor, material and shipping costs increase. The jump in price comes after Nike’s gross margins dropped to 42.8 percent from 44.3 percent in its most recent quarter ending May 31, its sixth straight year-to-year quarterly decline, the Journal reports.
Nike is a business, and with a board of directors, if you don't show continually increasing profits, you're doing something wrong. Making slightly less or even the same amount means people get fired at the top and investors get angry. Always make more. Always grow. That's the mantra of the big business.

So instead of being driven by "making a good shoe and selling it at a fair price" they're motivated by raw capitalism and the greed of "make a tolerable shoe and sell it for as much as you can get away with."

Clearly the shoe, which probably takes about 50 bucks to make and another $50 in LeBron's pocket for using his name, is grossly overpriced in a raw cost sense. But since it will sell for this outrageous cost, in a market sense it's rightly priced. And really, Nike isn't the bad guy here. LeBron James isn't the bad guy.

The real bad guy is the kid who sells crack or robs a guy at a cash machine, or buys five half racks of Pepsi with food stamps and dumps them out in the parking lot for the deposit, or skips buying food for the baby so he can get a new pair of kicks. Its the sense of priorities that leads people to buy amazing shoes instead of saving up for college, or just a nicer place. The bad guy here is someone who can't afford $300 shoes buying them anyway.

Because a lot of these people are genuinely poor. Its just they aren't so incredibly poor that they cannot survive by shuffling around some spending priorities and buying ridiculously overpriced stuff. And if nobody bought the shoes at that price, Nike wouldn't charge that price.

I mean, if my shoe costs $300, it better hover and massage my feet while I wear them. It better last me until my grandkids die of old age. But they won't. They'll last about as long as it takes for Nike to come up with the next LeBron shoe.

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