The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
At first, Kim Kardashian’s office, nestled in the hills of Calabasas, Calif., just outside of Los Angeles, appears unassuming. Featuring double-digit-high ceilings and stark concrete floors, the space is sparse but meticulously designed, with sculptures cast in various metal and stone and gallery-worthy canvases depicting the female form placed throughout.
The cavernous office is big enough to fit Skims’ lofty ambitions. The brand’s latest venture comes in the form of swimwear, a new category that Kardashian, Skims co-founder and product maven, has been teasing on social media for weeks.
“I even had to stop tagging [Skims], I do want there to be a nice element of surprise for it,” Kardashian told BoF of the content she’s shared with her 291 million Instagram followers. “I’ve really wanted swim for a really long time.”
So have Skims’ customers: Swim is the most-searched category on Skims’ site — more than the categories it already carries. Kardashian describes the swimwear she’s tested and designed like “legos,” the goal to let customers build their own sets according to the parts of their body they want to accentuate or cover up. The initial swim launch includes 19 styles — long-sleeved crop tops, bike-short unitards, classic triangle tops among them — available in seven solid colours, including the skin-toned offerings that Skims customers have come to expect as well as cobalt and periwinkle. In conjunction with the line’s e-commerce launch, the team has a Miami pop-up planned — its first in the city following pop-ups in Los Angeles, Japan and Dubai.
Kardashian and Skims co-founder and CEO Jens Grede expect swim to be a win for Skims. If those expectations are met, it’ll be another win for a brand that, by many measures, has already proven successful. In a Series B funding round, completed in January and led by hedge fund Lone Pine Capital, Skims raised $240 million at a $3.2 billion pre-money valuation. A sold-out Fendi collaboration helped lay the foundation for international expansion, building upon an existing US-based retail partnership with Nordstrom to include Selfridges in the UK and Galeries Lafayette in Paris. Skims grew sales 90 percent year-over-year in 2021 to roughly $275 million and expects to hit $400 million in 2022.
But plenty of businesses have discovered that runaway success in one category doesn’t automatically translate into dominating another. Despite the advantages that Skims has so far enjoyed — fortuitously launching loungewear at the height of the pandemic, for example — long-term success is far from guaranteed. Every decision Kardashian and Grede make from now on is more critical than the last.
“Why do you raise money in a highly profitable company?” Grede asked, seated in front of a tack board with Skims swim fabric swatches and SKUs attached to it. “To make sure that the company has all options available and is able to take this opportunity ... We don’t have the luxury of failing.”
Skims (the brand’s original name, Kimono, was changed in July 2019 after consumer backlash) first launched in September 2019. Its initial offering, shapewear, distinguished itself from the market with a visual identity that was equal parts sexy (with styles that could be worn outside of clothes), aspirational (taking cues from luxury branding) and inclusive (colours reflected a variety of skin tones at an affordable price). Kardashian worked as the brains behind the product design and overall brand, while Grede assumed the role of operator.
About a month after the initial launch, Skims announced its first loungewear collection, which would grow into a broader offering of lifestyle products including bras, underwear and other basics.
Before Skims, Spanx was arguably the only household name in the shapewear market. Other brands, like Hanes’ Maidenform, bordered on matronly. The entire category was shrouded in whatever the opposite of aspiration or sex appeal is.
Fast forward to today, shapewear has ballooned to become a multi-billion dollar market. Competitors have crowded the space, many taking cues from Skims — Jockey, an underwear brand with stores in outlet malls even trademarked the word “Skimmies” for its shapewear.
“You cannot advertise your way to success ... Advertising is certainly important as a part of it, but sales-driven marketing has never built brands.”
Two-and-a-half years after launch, however, Skims is looking far beyond the product with which it’s become synonymous.
“One of the misconceptions [about Skims] is perhaps that we’re more of a shapewear brand. We’re a solutions-oriented company and shapewear happens to be one of them,” Grede said, indicating a bigger strategy shift: For Skims today, underwear makes up a higher percentage of sales than shapewear.
Focusing on a broader ethos rather than a singular product has allowed Skims to evolve. Signalling aspiration — by working with globally-renowned creatives like photographer Donna Trope, who has produced imagery for Chanel and Tom Ford — and inclusivity — by way of models like American Paralympian Scout Bassett — helped put Skims ahead of the snoozy department store shapewear section.
To be sure, those endeavours are not cheap nor easily replicable. Skims spends more than half of its marketing budget on brand-building efforts — commissioning in-demand photographers and creatives, marquee billboards and headline-making collaborations with the likes of Fendi or the US Olympic team. Kardashian frequently tags Skims on her Instagram, usually walking viewers through a new product line in her home closet. (That kind of influencer marketing would cost another brand tens of thousands of dollars, at least.) Skims’ brand work, plus Kardashian’s promotion on social media, have made performance marketing all but unnecessary.
In the fourth quarter of 2021, Skims added 400,000 new customers and is on track to add two million by the end of 2022, Grede said. According to retail intelligence platform Edited, Skims operates at a 32 percent sell-out and 68 percent replenishment rate — higher than any of its competitors. (Savage X Fenty, Rihanna’s lingerie brand, replenishes stock at a rate of 15 percent, while Aerie replenishes stock at a rate of 43 percent.)
“[Performance marketing] would be very ineffective for us because we’re always running out of stock,” Grede said. Besides, he doesn’t believe it suits Skim’s long-term goals.
“You cannot advertise your way to success,” he added. “Advertising is certainly important as a part of it, but sales-driven marketing has never built brands.”
Few other young DTC brands — especially those without a celebrity founder — are in a position to eschew performance marketing. In fact, due to its high cost, many have to wean themselves off of it as their primary method of driving customer acquisition.
The hope is that these brand-building efforts will allow Skims to stand on its own, with or without Kardashian at the centre of every new campaign — though Kardashian is an active co-founder with no plans to step back. The quality of the product — one customers admit to loving, sometimes begrudgingly — helps in this endeavour.
“Anyone that might view this as a celebrity brand, that orders products because they’re curious, instantly realises that this is a very serious brand and our quality is so top-notch and everything about it is so thought out,” she said.
A Trusted Partner
Although much attention has been paid to how Kardashian helps Skims stay relevant, Grede has spent years building fashion businesses, cementing himself squarely as a go-to celebrity brand operator.
A tall, 44-year-old Swedish Californian transplant, Grede first made a name for himself with the luxury marketing firm Wednesday Agency Group, co-founded with Erik Torstensson in 2003, of which he sold a majority stake to Omnicom’s BBDO in 2016. In 2012, Grede and Torstensson launched Frame denim; the brand surpassed $100 million in sales by 2018.
Around that time, Grede began building Skims in the shadows with Kardashian ahead of its 2019 launch. His wife, Emma, had already teamed up with Kardashian’s sister Khloé Kardashian to co-found apparel brand Good American, and in 2021, the pair helped Kardashian-Jenner matriarch Kris Jenner and Chrissy Teigen launch cleaning supply brand Safely. In 2022, Grede stepped outside of the Kardashian-Jenner industrial complex to co-found Tom Brady’s eponymous brand alongside Public School co-founder Dao-Yi Chow.
“[Jens is] great at transferring knowledge and experience from his other businesses to help lay the vision for what we’re trying to accomplish at Brady,” Chow told BoF in an email. “He has this rare gift of left-side, right-side thinking and can see the creative and business side of things equally with great perspective and insight.”
Despite his work in fashion, Grede finds inspiration for Skims outside of the industry, looking to Nike’s pursuit of performance-driven products; Amazon’s logistical prowess; and Apple’s high-minded design.
“I will trust in Jens for all of the distribution and a lot of the business side, and so I think we work really well that way where he completely trusts me [with design,]” Kardashian said. “There’s magic in having partners that you just trust to do their job the best way and they trust me to do my job the best way and we don’t get in each other’s way.”
Still, Skims is not exempt from the challenges any young company faces, let alone problems borne out of a supply chain crisis and an inflationary environment not experienced in half a century.
Unrelenting demand and disrupted delivery schedules have made it difficult for Skims to keep its best-selling products in stock for even half the year. The loungewear inventory that had been planned for fall 2020, for example, didn’t arrive until spring 2021.
“We don’t want to be disappointing customers and it definitely leads to customer frustration,” Grede said. “We’ve had to live with really long delays … they ended up trickling in towards April and May when no one wants to wear pyjamas. That was just a reality and it was a really stubborn problem.”
Skims’ doesn’t have the option to ease on the gas; Scaling up is the only path forward to maintain Skims’ brand equity with customers and earn its investors multiples on their initial investment.
For most apparel businesses to scale, they must make bigger inventory buys, which already comes with a six-month lag time for many brands according to the usual supply chain dynamics, said Sam Kaplan, partner at Iris Ventures and formerly Burch Creative Capital. (Kaplan was not involved in Skims’ fundraising.)
“The supply chain is terrifying right now, period, end of story,” Kaplan said. “The truth is, no one really knows when these supply chain issues are going to relent or if they’re going to … fundamentally alter the supply chain landscape.”
Skims is evolving accordingly. It moved much of its manufacturing out of China during the pandemic, although it still relies on a global network of partners based in Turkey, Sri Lanka and Italy in addition to what it produces in the US. Even amid struggles to keep product in stock, just last week it announced the launch of two-hour delivery in Los Angeles, despite not having any physical retail locations to fulfil orders.
“We’re building a company very fast in the public eye and we want to meet everyone’s expectations.”
Both category and international expansion — two of Skims’ goals — further put the brand at risk if they are unable to fulfil orders or meet customer expectations. Another topical threat looms in inflation. Skims, unlike other fashion brands, has not yet raised prices, despite increases in the price of raw materials and shipping costs.
“As a whole, we probably want to get cheaper, not more expensive,” Grede said. If Skims can continue to scale, their costs will be less, of course. The brand is focused on delivering value to its customers while also ensuring its manufacturing partners are able to pay fair wages, he added.
Despite the challenges, both Kardashian and Grede — who together maintained a majority stake in the brand after the latest funding round, with Kardashian as the largest individual shareholder — are embracing Skims’ fast-paced growth.
“I see the fundraise as a continuation of Skims’ evolution into a category-defining, global lifestyle brand,” said Nick Brown, co-founder and managing partner at Imaginary Ventures, a Skims backer. “This has been Kim and Jens’ vision and goal for the brand since day one and this fundraise is another step towards achieving it.”
Grede said there’s no pressure to enter new categories, although Skims’ legal team has filed a handful of patents for various products, including menswear (hats, leggings, shapewear, boxers and more) and laundry care (detergent, dryer sheets, fabric softeners and the like). Permanent Skims retail stores are “absolutely a goal sooner rather than later,” Kardashian said, while an IPO “at some point in the future probably would make sense,” according to Grede.
“It took Nike 12 years to reach $100 million; It took us six months,” Grede said. “We’re building a company very fast in the public eye and we want to meet everyone’s expectations.”