Exclusivity at Scale: How Hibbett Leverages Sneaker Mania to Build Customer Loyalty

Limiting Supply While Meeting Demand

The term “exclusivity at scale” was coined by Nike CEO John Donahoe on the iconic brand’s September 2022 earnings call. His objective: maintain hype for highly-sought-after sneakers by limiting their supply… while also growing to serve more than 7% of demand. Donahoe’s strategy is to offer the “most deserving” users of Nike’s direct-to-consumer SNKRS app access to the most hyped limited-edition kicks. This way, Nike can spread out contest wins across the most consumers with the fewest pairs hitting reselling websites, thereby increasing the shoe’s resell rarity while directly serving more customers.

Sneakerheads, however, still face a great challenge in obtaining hyped shoes from a marketplace that’s dominated by professional sneaker resellers. Sneaker culture is driven by community, by the rush of hearing a stranger on the street ask “What are those?!” and by pride in a collection. Predatory resellers, who descend like a Biblical plague upon high-heat, first-come-first-serve sneaker releases, have been chasing legitimate sneaker-wearers away from increasingly unlikely wins on retailers' mobile apps and toward the resellers’ own ill-gotten but guaranteed pairs on apps like StockX and GOAT. This pain should be familiar to anyone who’s purchased event tickets from a third-party seller at wildly inflated prices.

Why the Perception of Fairness Is Key

Nothing is as important to scaling (the selling of more units, but also the acquisition of more launch participants) than the customer base’s perception of fairness. Hibbett knows the best way to appear fair is to be fair, so the first thing you’ll see in the launch section of their Heady-built apps are commitments to 1) completely random winner selection, 2) a one-contest-entry-per-person policy, and 3) extensive bot protection. These commitments are backed up by vigilant bot monitoring and constant technical improvements, because any bot protection system can only keep one step ahead of the people persistently trying to crack it.

Ron Faris, the Global VP of Nike’s SNKRS app, similarly frames their challenge of exclusivity at scale in terms of fairness. On presentation slides at an internal Nike meeting in October, Faris said the app is “at risk of losing our most sneaker-obsessed consumer.” He added that the sneaker “community is becoming disenfranchised by our low fairness numbers,” and that “high heat, hype is ‘killing the culture’ and consumers are migrating towards New Balance and smaller, independent brands.”

Hibbett, confident in their real fairness metrics, is also concerned with irrational perceptions. Perception can be hard to manage even when the system itself performs as designed. Too many customer losses, or ‘L’s, often convince users that the odds are stacked against them. This perception is a symptom of the exclusive part of exclusivity at scale. One of Hibbett’s solutions to this is engaging participants with targeted app experiences that demonstrate how the company values its customers.

Who “Deserves” to Win the Sneakers Everyone Wants?

A more dangerous strategy, in both Heady and Hibbett’s estimation, is directly targeting the losers of previous raffles with the opportunity to buy specific sneakers, or targeting users with the highest annual spend. During a September 2022 earnings call, Donahoe explained the strategy behind the SNKRS app’s controversial ‘Exclusive Access’ program: “The Off-White Dunk ended up in the hands of hundreds of thousands of our most deserving members,” adding, “We’ve seen that those who benefit from exclusive access on SNKRS spend more, fueled by the energy of their win.”

The exact calculus behind “most deserving” is Nike’s trade secret; Foot Locker and Finish Line simply privilege the highest spenders. Always in touch with the sneaker communities on social media (and their complaints), at Heady we’re not convinced that ‘exclusive access’ solves the perception problem, even if it does accomplish the technical goal of distributing shoes across more non-reseller users. So-called exclusive access doesn’t stop users from asking whether the system is picking winners fairly. Furthermore, there’s a direct conflict between ‘exclusive access’ and Hibbett’s commitment to honoring one entry per user. Unlike its competitors, Hibbett’s raffle doesn’t lessen anyone’s chances by increasing someone else’s: Every one of their (human) users is considered a “deserving” customer.

Nike is still innovating their direct-to-consumer strategies, but their need for competent partners like Hibbett will likely remain long-term. Many of Nike’s national retail partners, including Foot Locker, found themselves sweating their product pipelines in the wake of Nike’s announced decision to provide them less inventory in the coming years, while Hibbett strengthened its ties to the Oregon cobblers. Nike doesn’t need more brick-and-mortar or digital stores, it needs more experiences tailored to local markets, and Hibbett serves a unique small-town segment with its 1,100-plus stores mostly located in small to mid-sized markets. “Our brand partners recognize the importance of the small-town sneakerhead and our ability to serve them,” said Jared Briskin, Hibbett’s executive VP of Merchandising, during the retailer’s 2021 Investor Day presentation.

So is launching sneakers in completely unweighted raffles the best approach? In our opinion (and experience), yes and no. Firstly, the world of sneaker launches is still relatively new and still evolving rapidly: Raffles won’t reign forever. Hype is still driven by culture and community, and by ever-shifting opinions about individual retailers' fairness. For the time being, blocking bots should be the primary concern, and this can be done in numerous ways other than artificially picking the ‘most deserving’ winners. Monitoring raffle entrants' behavior and auditing raffle results to ensure no one’s won more than their fair share are two strategies the Hibbett | City Gear app has employed with good results.

Making Customers Feel Valued, Even When They Take an ‘L’

Another tool not to overlook: user targeting. Customers who are offered exclusive access understand that the brand is putting in extra effort to serve them, but so do customers who receive tailored messaging like alerts for sneakers they might be especially interested in, who can access raffle entry tracking (to ensure their chances of winning haven’t vanished into the ether), and who can interact with other targeted experiences in the apps around launch day. Hibbett’s award-winning omnichannel competence also combines with user targeting to provide a white-glove feel to the Hibbett | City Gear apps.

Lastly, a retailer hoping to keep a share of Nike’s distribution needs to have some special sauce, a unique differentiator to potential customers and a unique challenge to resellers. Hibbett’s special sauce lies largely in the small-town customer base they’ve cultivated with business strategies beyond just hyped product launches. Another differentiator for their customers is a unique attention to offering whole-outfit apparel options based on customer preferences, making Hibbett a one-stop shop for fashionable sneaker lovers.

At the end of the day, when hopeful sneakerheads gather on social media to brag about their wins and commiserate about their losses, nothing helps Hibbett’s reputation more than the frustration of resellers and the glee of winners who’d never spent enough to ‘hit’ on a competitor like Foot Locker. Build it and they will come; protect it like Fort Knox and word will get around that it's a place to stick around. By maintaining their loyal user base and keeping product off the reselling websites, Hibbett | City Gear looks forward to more inventory from its biggest brands and more hype demand served. From its experience on the front lines of the sneaker launch wars, Hibbett knows the secret to scale is to treat every potential customer with the same focused attention, and to treat bots with extreme prejudice.

Jack Hatchett is a Lead Product Manager at Heady with nearly a decade of experience building sneaker-release apps.