Nike and Kim Kardashian Announce NikeSKIMS Subbrand

Nike has been in a rough place for a few years. Under former CEO John Donahoe, their retro sneakers lost their excitement, they lost the innovation race to upstars like On and Hoka — who also stole many of their customers — and they failed to make any inroads into new segments. “Athleisure” had become a vast market, but it was never a sales focus in Nike stores, and the product quality was pretty bad. Nike’s product was more expensive than competitors like Alo, Lululemon, Athleta, and Vuori, but the material felt worse, and the cuts were generally pretty bad. You shouldn’t feel uncomfortable in clothes meant for ultimate comfort. Meanwhile, the stock had fallen about 25% in a year.Thankfully, in October of last year, John Donahoe left the brand and was replaced by Nike veteran Elliot Hill, who has started turning the brand in the right direction. Nike’s footwear division is putting innovation over archive diving, and with their new collaborative brand with Kim Kardashian, NikeSKIMS, he’s trying to reach out to female customers.Ms. Kardashian has collaborated with many brands — from Fendi and North Face collaborating with Skims, to her tonal Apple headphones — but this isn’t an ordinary collaboration. Instead, this is a complete brand within Nike, much like Jordan. It will have its own team, directors, and product lines, releasing activewear and eventually broader apparel offerings, accessories, sneakers, and even menswear.It’s a brilliant idea, and the market agrees, rewarding Nike with an immediate 6.2% bump to its stock price. Skims is a goliath in underwear and shapewear, selling an empowering luxury image for relatively accessible prices, with inclusive sizing; and with NikeSKIMS, they now take that and add it to the performance and material prowess of Nike. As Kardashian wrote on Twitter, it’s a “new brand coming this spring for the body obsessed, designed to sculpt and engineered to perform.”Skeptics of Skims have long criticized the brand’s relatively subpar material quality for the price they are offering, and this should help with that, too, with Nike bringing their in-house textiles like Dri-Fit to Kardashian’s tonal brown palate. It could still flop — this will be a premium play in the space, but if prices are too high or the material underwhelms, women will buy their leggings elsewhere. But, given the money and attention they’ve put into this, I expect Nike to do everything possible to stop that from happening.The benefit to Nike of the collaboration is obvious. They’ve struggled both with cultural relevance and reaching female customers, and this significantly helps both with one announcement. It also makes them more appealing to female athletes at a time when they want to associate themselves with leagues like the WNBA more strongly.The benefit to Skims isn’t as strong though. For the NikeSKIMS product to work, it must look reminiscent of the classic Skims look — tight-fitting, tonal brown minimalist items. It’s a simple look; and if the NikeSKIMS product looks almost the same as the Skims product, at a similar price, but with Nike’s material and sales distribution, why would you buy from Skims? Skims could pull back from sports and move more towards lifestyle to differentiate themselves, but pivoting the brand would be a considerable risk. Alternatively, Nike’s endorsement of Skims helps its sports credibility, but moving the brand in a more athletic direction would put it in direct competition with itself.Time will tell; but there’s no question that this product will sell well.

Nike and Kim Kardashian Announce NikeSKIMS Subbrand

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