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How Supreme Built A Billion Dollar Brand Empire - YouTube
Channel: CNBC Make It
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Let me go establish this, Supreme as
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the best. So I put Supreme on my shirt,
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its on my chest. You got ta have
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Supreme or you will be I hate r
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because, you know, Supreme is super
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elevated. This is Supreme.
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The street wear brand that's rapidly
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changing the retail industry.
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People have broken into fights, waited
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hours and entered lotteries just to get
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inside. While, clothing stores are
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shuttering all over the world.
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Supreme is expanding, and the main
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reason these guys, better known as
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hypebeasts. With its limited
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production, Supreme is known for
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creating scarcity with each release and
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with no paid marketing whatsoever.
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Supreme has grown from a small
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underground streetwear brand into a one
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billion dollar global phenomenon.
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My name's Joe Migraine. I've been a
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Supreme collector for the better part
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of eight years now.
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Joe's sprawling Supreme collection has
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been valued to be over one hundred
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thousand dollars, featuring dozens of
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skate decks and rare pieces of apparel.
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But his favorite-- accessories are
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always what is very interesting to me.
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They are always out of left field.
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They always surprise you.
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And there's just a very collectible and
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a very interesting aspect about all of
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them. From pinball machines to
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nunchucks crowbars, even a
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brick hypebeasts like Joe, who treat
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Supreme items like valuable artifacts,
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are why the brand has a seemingly
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unshakable reputation.
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But its most popular item will always
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be-- the box logo tee is probably the
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most iconic item. Box logo merchandise
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on Supreme tends to sell for four to
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five x what it retails for.
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What's great about the Supreme Logo is
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is its simplicity.
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It's simple, it's clean.
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It pops and in our ADD culture,
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that logo breaks through instantly.
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The fashion industry spends five
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hundred billion dollars on advertising
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each year, but you won't find Supreme
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on billboards or magazines.
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It doesn't spend money on marketing
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their products at all.
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Everyone wants attention.
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Everyone wants to do marketing.
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Everyone wants, you know, influencers
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wearing their product.
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And Supreme operates the exact opposite
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way. The magic lies in their ability to
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take the word of mouth marketing and
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turn the launches of their products
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into sort of micro experiential
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events. In 1994, founder
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James Jebbia opened its flagship store
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in Soho, New York City, on Lafayette
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Street. Since then, Supreme has used a
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combination of high profile of brand
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collaborations and incredibly small
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production quantities to its advantage.
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But choking the supply wasn't
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necessarily a strategic decision,
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according to Jebbia. They didn't want
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to get stuck with unwanted inventory.
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This method is core to the company's
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business model, making every launch of
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press-worthy event and each item a
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limited edition collector's piece with
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skyrocketing value on the resale
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market. What did this retail for $40,
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$50? $45 maybe.
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And then resale is probably two or
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three hundred black medium.
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I'll never wear it. The narrative is
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that Supreme sells a t shirt for $30.
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It sells out immediately at retail and
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then people are paying on the
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aftermarket. 3, 4, 5, 6 x what it cost
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in the store. It's kind of like
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investing in something that, you
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know, will retain its value that, you
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know, will rarely ever go below
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what you paid for it.
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And then there's always a good chance
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that you will make more money than you
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spent on it. Every
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drop creates a sort of mania,
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attracting a market of young resellers.
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Some collectors even self-identifying
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as addicts. Supreme -Yankees
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box logo T-shirt.
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It was forty four dollars.
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Highest bid is currently four hundred
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and seventy and the cheapest anyone's
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willing to let it go is six hundred and
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seventeen dollars.
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Leopard fanny pack.
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Retail was sixty eight dollars and you
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can purchase it for three hundred on
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StockX. Right now the classic black box
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logo hoodie. This retails for one forty
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eight. And now the cheapest on Stock X
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is eleven hundred dollars.
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What makes for a successful brand is
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when that brand becomes an
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extension of self.
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It becomes a personal statement for the
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people who are using it.
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And in the case of Supreme, it became a
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badge of cool.
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But getting that badge of cool can be
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incredibly difficult.
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Which gives opportunistic retailers a
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chance to make a killing during drops.
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I've been asking everyone walking out
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the store to sell me items, sell me
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items. No one wants to sell.
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It's so easy to do this.
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I just don't think enough people know.
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This summer, I mean about $10,000, it's
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a pretty good summer job for me. Like,
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everyone wants to hold their items and
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wait for market to rise to sell.
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It's almost like an addiction.
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Like you buy one thing, you really
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like it. And then every year there's
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new Supreme items.
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It has its highs and its lows.
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When you get something that you really
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want, that's really rare.
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You feel really good. But on the flip
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side of that is that there's something
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that you've kind of been waiting for
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all season, when you don't get it, it's
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really sour feeling and then the
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problem is that the price is like me
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two or three or four times what Supreme
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sold it for. Even this plastic bag has
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some resell to it. You have around 10,
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someone would be willing to buy it off
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of you. And when you can penetrate the
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day -to -day lifestyle of your target
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audience in that way, that's a home run
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for the brand.
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Increasingly crowded store fronts,
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launch day brawls and angry retail
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neighbors have led Supreme to implement
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a lottery system with each product
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launch to reduce overcrowding.
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Supreme is only open to the public
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during their seasonal drops and they
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only release new merchandise on
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Thursdays. To get in, you have to sign
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up by 11:00 a.m. on Tuesday before the
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drop. Registry fills up insanely fast.
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If you get in, you'll get a text the
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day of the launch. Then you'll get
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another one telling you what time you
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can come, and then you can possibly
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wait in line for up to three to four
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hours just to get inside.
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With increasingly publicized
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collaboration, Supreme notoriety has
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led to both wanted and unwanted
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attention. In 2017, Jebbia confirmed
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that half the company was sold for five
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hundred million dollars to the Carlyle
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Group, a private equity corporation.
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But the public doesn't seem to care--
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yet. How much is our outfit worth?
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Companies make investments in order to
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grow those investments, and so it's
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likely that the plan would be to expand
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the brand, sell more merchandise and
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profit further. But Supreme is managing
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to maintain its street cred.
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The evidence shows that they haven't
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stopped being who they are. Everything
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has been done exactly the same.
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You know, they've been fighting some
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big legal battles.
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A corporation like the Carlyle Group at
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your disposal to help fight those
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battles is something that they
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definitely need. Supreme has eleven
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stores in total with seven located
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outside of the U.S.. International
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fans, especially those in countries
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where Supreme doesn't have a footprint,
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pay just about any price to get their
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hands on authentic Supreme.
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The only way they can get their hands
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on this genuine apparel is on the
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secondary market. There's
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a lot of Chinese people here that have
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buyers overseas and they have these
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people here and they have lists of
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prices that they're willing to pay.
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They come up, they pay for it right
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away. They pull out thousands of
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dollars in cash. They'll pay anything.
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The Asian resale market, it's
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definitely, definitely big.
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If you live in a country that, you
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know, you can't buy online from, your
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only options are buying it from eBay,
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which you might be dealing with fakes.
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The other effect of product scarcity
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has been the rise in fakes.
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Biggest fake Supreme stone in the
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world. But it looks
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dead-ass identical man.
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That's mad, it's actually crazy. Which
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in March of 2019 resulted in a highly
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publicized lawsuit between Supreme and
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Supreme Italia, a brand with an
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identical logo that Supreme denounced
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as counterfeit. Since then, Supreme
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Italia has opened stores in Europe and
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Asia. In countries, Supreme has yet to
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reach. A lot of people who really know
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about Supreme, they're against it.
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Like, they would never buy that sh-t.
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They can compare every detail, from the
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stitching to the logo part, to the
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pattern, and to the label.
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But do people really care if the box
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logo on their tee is official supreme
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merchandise? When you buy street wear
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you're doing it to be part of a
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particular community. To circumvent the
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barriers to entry by buying a fake kind
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of misses the whole point.
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It's not about owning a Supreme tee
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shirt. It's about the concept of
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understanding the culture and putting
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yourself out there. I personally hate
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fakes. I'll never wear fakes.
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I don't want to own fakes. I don't want
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to look at fakes. I hate 'em.
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The legal battle also sparked a
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hypocracy debate with critics alleging
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that Supreme plagiarized their logo,
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whose design is nearly identical to the
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work of artist Barbara Kruger to begin
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with. Good artists, copy, great artists
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steal, like that's just kind of the
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name of the game with fashion.
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The red Futura bold is exactly like
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Barbara Kruger's artwork, but it is
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what it is. An irony that's not lost on
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Barbara Kruger. Supreme has continued
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their strong presence in the fashion
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industry, but the future of Supreme
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could be uncertain with private equity
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stakeholders involved. If the brand
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does go mass, it is, you
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know, contradictory to the way that it
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built its model with the limited
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edition releases, and that stands
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to potentially compromise its street
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cred. You can start to tell by what the
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public perception is and what people
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are writing on the Internet and talking
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about. But also you can tend to tell by
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resale value is declining or if the
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number of sales are declining.
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But Supreme seems to be getting bolder
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with their designs keeping hypebeasts
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loyal to the brand.
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Supreme is very self-aware and knows
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exactly what they're doing and they
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like, yeah, we're gonna do a brick and
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everyone is going to talk about it.
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I think they just continually push the
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boundary for like what's possible.
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The reason why people want to wear
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Supreme is because they want a piece of
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culture. A crowbar or a brick can, you
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know, it can last forever.
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Those things will be in museums in 50
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years.
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