The Drop: a lesson in artificial scarcity and cool

A few months ago, one Thursday at about 10.30am, I was walking down Peter Street in Soho and noticed a queue of young people outside a fairly anonymous looking building. I looked up and saw the name Supreme, put two and two together, and worked out that it was the London store of the now iconic skate brand.  I came back to the office and did some research. The queues were for the latest ‘drop’ of new items, and they almost never fail to sell out.  I made my way back the following day and the store was practically empty. I have since learnt that their devoted customers, predominantly men and teenage boys, queue en-masse overnight every Wednesday, waiting with fevered anticipation for the next release.

Like dubstep, Supreme’s retail model is all about the drop. The concept is fairly simple; unlike the traditional fashion houses, whose seasonal collections are released in one go around six times a year, smaller fashion companies like Supreme tease out the sale of their collections, dropping a few items to be put on sale each week – the ‘drop’.  However, Supreme doesn’t declare which items are going to be dropped – true believers must check blogs and closed Facebook groups for news on the latest offerings.

The drop doesn’t just work for the physical stores either. Supreme releases new items on its website every Thursday at 11am throughout each collection’s season, with most items selling out in less than a minute. Website traffic can spike by as much as 16,800%. We may not be able to see them, but there are virtual queues around the block as well.

The calm before the storm

Tied to this weekly release cycle is the other pillar of the model: scarcity. Supreme, the granddaddy of the model having been founded in 1994, and newer brands like Palace, established in 2009, do not produce to meet absolute demand. They’re small-batch companies, with limited stock for each item.

The effect of this intentional scarcity and drip-feed release schedule is hype. This isn’t just young men queueing around street corners for hours (although it is that); it’s Facebook groups with tens of thousands of members speculating on the contents of new releases; it’s websites and blogs whose sole purpose it is to find out, publicise, and talk about the latest Palace or Supreme piece; it is, in short, a cottage industry of expectation and excitement. Palace’s New York store needs metal police barriers to fence the customers who queue for the next drop.

However, this isn’t the only foundation of Palace and Supreme’s success. They connect this highly effective business model with a powerful skater aesthetic which has only grown in popularity over the last few years. Palace’s first store in New York played on its exclusivity, acting as a clubhouse for the influential graffiti crew Irak and underground artists such as Harmony Korine. Skateboards are designed by Jeff Koons. Clothes are worn not just by mainstream royalty – Kanye, Bieber, and Rihanna, amongst others – but also by celebrities for the consumer who likes to consider themselves more discerning such as painter Lucien Smith, musician Lou Reed, and model Chloe Sevigny.

Palace’s ‘Tri-ferg’ logo was created by British designer Fergus Purcell

Palace, founded by skater Lev Tanju, films all its promotional shoots in a gritty style that evokes the brand’s street origins. Supreme work only in VHS. These are brands big enough to have tacit celebrity endorsements, and small enough to appear authentic.

While high street and high fashion debates the buy now see now model, have Palace, Supreme and their ilk found a model that can be replicated? The answer, unsurprisingly, is that it depends.

For larger fashion companies who operate across multiple brands, the vertically integrated model producing small production runs may be hard to emulate. Supreme and Palace succeed in part because they are not committed to constant full-throttle growth. James Jebbia, founder of Supreme, noted in an interview with Business of Fashion that while they’re ‘a world brand’, their emphasis is on organic growth. Keeping the brand authentic requires an emphasis on hiring the right people in the right places which means ‘you can’t just click your fingers and have some decks’ – in fact, ‘we haven’t done a lot of stores simply because of manpower’.

They’re relatively small companies whose allure is created by their smallness, by unavailability and very selective collaboration. Larger fashion retailers would struggle to meet the imperative of maximising profit while at the same time intentionally under-producing so that supply never meets demand. Similarly, piece-meal delivery of collections may be difficult for multi-brand retailers.

Perhaps, however, there are lessons to be learned, both in terms of branding and delivery. Firstly, Palace and Supreme stay close to their aesthetic and their roots; they are ruthless in their commitment to consistent, coherent branding which sells a specific way of life, and they structure their growth around that commitment.

The collection will be released in July

One possible route to access some of this counterculture branding gold dust is through collaborations with these smaller brands, as evidenced by Louis Vuitton’s work with Supreme.  There is the possibility that Supreme could be seen as ‘selling out’ by its diehard fans, but its consistent emphasis on the authenticity of its brand insulates it from these accusations while at the same time making it an attractive prospect for prominent fashion houses.

Secondly, companies need not exactly replicate the drop model in order to reap some of its benefits. The broader lesson, that demand can be driven by creating systems of consistent limited releases, can be utilised by companies looking to expand or experiment away from their core brands. Small-batch craft beer, limited fashion collections, one-off collaborations on new designs can all use the model to their benefit. For instance, Nike’s limited release of 46 basketball shoes endorsed by basketball player LeBron James.

Larger companies with established identities and massive production runs can use the strategy to reinforce their core brands while also appearing new, cool, and unavailable.

Authenticity and hype can be manufactured; ‘cool’ can be produced, and the businesses of Supreme and Palace show one way to do it. | @MoiraBenigson | @TheMBSGroup