The Strategy Behind NikeSKIMS

Investors approved, but consumers are divided. Here's why I think it's smart business.

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I originally wrote today’s post as part of an ongoing collab with

Ana Andjelic

and her newsletter, The Sociology of Business. I hope you enjoy!

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It had already been a good couple of weeks for Nike.

Then, Tuesday’s NikeSkims announcement made things even better, sending the sportswear giant’s stock up more than 6 percent, a welcome boost after its share price had neared a five-year low at the beginning of February.

First reported by Puck’s Lauren Sherman, the surprise deal, which a small number of employees from each brand had been working on for over a year, has all the makings of a blockbuster partnership. For what is ostensibly the announcement of a fashion tie-up to have moved Nike’s share price so significantly, signalled investors' belief that the deal would have a material positive impact on the Swoosh’s turnaround under CEO Elliott Hill.

But it quickly became clear that NikeSkims would be much more than a standard collaboration. When discussing the deal with sneaker collaborations expert Bimma Williams, he described it to me as potentially the most disruptive partnership since Kanye West and Adidas created Yeezy. And I’m inclined to agree. Many people reached out to me in the aftermath of the announcement to express either their love or disgust at NikeSkims (though the overwhelming response was positive), and this divisive response signals that the brands are onto something with this new deal.

In my previous role as The Business of Fashion’s Sports Correspondent, I covered Nike consistently. In all my conversations with everyone at the brand from executives to athletes to interns, one thing always shone through: Nike knows it’s doing a good job when the products or campaigns it puts out are divisive. The best brand moments are designed to make consumers feel something.

“It’s one of those rare partnerships where it’s going to be really hard for them not to make it a massive success,” I told Vogue Business this week. “I think it could be a slam dunk.”

A Strategic Partnership

It’s not sexy, but the most effective brand partnerships solve genuine business needs for both parties.

Skims’ motivation was simple. The brand identified a long time ago that nothing could drive credibility for its product like an association with high-performance athletes and sports organisations (hence its partnerships with USA Basketball and the likes of Neymar Jr and Jude Bellingham). Nike, in that respect, is the ultimate co-sign.

One thing I noted instantly was that NikeSkims would have been conceived under John Donahoe, Nike’s previous CEO, who was ousted late last year after an unpopular four-year tenure. As a result, working with Kim Kardashian—the final boss of Hollywood influencers—seems at odds with new CEO Elliott Hill’s vision for Nike’s future, which hinges on rebuilding the brand’s connection to sports culture and centring the influence of its athletes.

Many people have already concluded that this partnership is a marriage of convenience. For Skims, it could present a fast track to a potential IPO or acquisition; for Nike, a shortcut to cultural cachet.

But NikeSkims can be neatly retrofitted to solve another core aspect of Nike’s turnaround plan: better serving its female consumers. This has been a priority under Hill’s regime, and the brand has released several women-focused products since the beginning of the year, like the Air Max Muse, Air Superfly and A’One, while promoting the prowess of its female athletes in marketing moments like the brand’s “So Win” Super Bowl ad.

But as I told Vogue Business, Nike has been doing more telling than showing in recent years. Buzzy collaborations with the likes of Bode, Jacquemus and Isamaya Ffrench have been good for marketing purposes but have not solved Nike’s issue in which it’s consistently lost market share in women’s apparel to fast-growing activewear rivals like Lululemon, Alo Yoga, Gymshark and Vuori.

NikeSkims will be the first mass-market solution proffered by Nike to address this issue: a dedicated brand which includes training apparel, footwear and accessories, designed to “disrupt the global fitness and activewear industry with best-in-class innovation in service to all women athletes,” Nike said.

An All-Star Duo

The positioning of this deal also struck me as unique for several reasons. NikeSkims is being positioned from the outset as a new brand altogether and will be treated as a separate business division of Nike, much like the Jordan brand. Skims co-founder Jens Grede even allowed himself to liken Kim Kardashian to Michael Jordan in an interview about the deal with the New York Times.

Nike rarely puts its collaborators on the same level as its own brand. But it's clear Nike sees Skims as a long-term, strategic business partner that will grow to become a key part of its future. It’s as if Nike view the impact that Skims could have on its women’s business as significant as the role played by Virgil Abloh and Off-White’s “The10” collaboration, which injected unprecedented hype into retro Nike silhouettes at the onset of peak sneakermania in the 2010s.

But the pair stand to gain a lot from teaming up. Many people have already concluded that this partnership is a marriage of convenience. For Skims, it could present a fast track to a potential IPO or acquisition; for Nike, a shortcut to cultural cachet.

As with all good partnerships, Nike will likely use learnings from Skims to inform how it approaches design and marketing for the rest of its women’s business, similar to how Adidas allowed Yeezy-inspired design to permeate its main line footwear and apparel collections over the years.

Nike and Skims will also benefit from unrivalled access across the converging worlds of professional sports and showbiz. Between them, there’s not a celebrity, influencer or athlete who wouldn’t pick up the phone to star in a campaign, wear the product or work on a collaboration (unless, of course, they’re already signed to Adidas).

The stock market certainly seems to think the brands are onto something with this deal. Consumers will decide for themselves when they get a first look at NikeSkims in the spring, before a wider release next year.

Folks at Nike HQ in Beaverton will certainly be hoping the Skims deal goes the way of Jordan, rather than how things ended for Adidas with Yeezy. Time will tell.

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That’s all for today, friends. Thanks for coming along for the ride.

Until next time!

DYM

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If you enjoyed this article, check out my other recent stories on similar topics:

• Inside Nike's Cultural Comeback

• Why Adidas Is Soaring and Puma Is Stalling

• How A'ja Wilson Built Her Signature Nike Deal