Skims – Channel Footprint & Retail Strategy – 24 August
2021
Disclaimer
The information, material and content contained in this transcript (“Content”) is for information purposes only and
does not constitute advice of any type or a trade recommendation and should not form the basis of any investment
decision. This transcript has been edited by Third Bridge and may differ from the audio recording of the Interview.
Third Bridge Group Limited and its affiliates (together “Third Bridge”) make no representation and accept no liability
for the Content or for any errors, omissions or inaccuracies in respect of it. The views of the specialist expressed in the
Content are those of the specialist and they are not endorsed by, nor do they represent the opinion of, Third Bridge.
Third Bridge reserves all copyright, intellectual and other property rights in the Content. Any modification,
reformatting, copying, displaying, distributing, transmitting, publishing, licensing, creating derivative works from,
transferring or selling any Content is strictly prohibited.
Specialist:
Title:
Moderator: Nyree Hinton (NH), Third Bridge Sector Analyst
Susan Buchanan (SB)
Former VP, Marketing, America at Wacoal Holdings Corp
Agenda:
1. Skims’ portfolio overview, highlighting trends in shapewear and intimate apparel
2. Shapewear competitive landscape – Skims vs Savage X Fenty and others
3. Brand building and go-to-market strategies, highlighting D2C and online approaches
4. Skims’ expansion opportunities across categories and international markets
Contents
Q: Could you provide an overview of the shapewear and intimate apparel industries? How have the categories
3
or items evolved over the past 5-10 years?
Q: How have companies adapted to trends in this market? Where might the opportunity be in shapewear given
4
the trend towards less restrictive clothing?
Q: How does Kim Kardashian’s line Skims compare to that of competitors playing in the same categories
4
within shapewear or loungewear?
Q: Are there any weaknesses in Kim Kardashian’s portfolio?
5
Q: What are your thoughts on Skims’ colour selection and its importance? There are very calm, smooth
colourways such as sky blue or a greyish or dark colour. What colours are on-trend? How has that changed
5
before? How has the material changed?
Q: You mentioned the rise of Aerie and its physical presence as well as the drops that Kim Kardashian has
done to stoke demand. What do you think is the best strategy to maintain demand? Is it about a slow and
steady D2C approach, leveraging wholesale partners, but not getting too aggressive in flooding the market and
then slowly building out a retail presence? Alternatively, do you think Skims should be aggressively expanding
into a more physical retail environment and establishing more partnerships to scale up volume? Which do you
6
think is the better strategy?
Q: How has the proliferation of D2C, online-only brands impacted the intimate apparel industry? Has this
6
industry been an early adopter of D2C start-ups?
Q: What are your thoughts on the marketing aspect of building brand loyalty? Do you think there’s a lot of
7
variability between customers who are always willing to try new and different brands?
Q: What are the differences you’ve noticed between the way Skims and Fenty have really used their celebrity
7
influence to empower their brands?
Q: How important are collaborations in this industry? It is common in other industries, such as Canada Goose
in outerwear doing limited drops with a company such as Kith. How important is this for Kim’s brand?
Alternatively, do you consider it a nice-to-have in the intimate apparel industry rather than something crucial
8
to building brand recognition?
Q: Which other categories do you think Skims could enter?
8
Q: How important is engagement with consumers? Nike has an editorial line where it continues to post about
9
different topics or trends. How important is engagement to younger vs older consumers?
Q: What inventory management challenges did you experience while at Wacoal? What do you think are some
9
challenges ahead for Skims?
Q: How would you describe the retailer-manufacturer relationship and how it’s impacted intimate apparel?
What are the challenges associated with operating with large accounts such as Macy’s where it is heavily
promotional and can have a drag on margins? How willing are companies to deal with some of these accounts?
9
Q: How would you describe the international opportunity for intimate apparel in the loungewear and
shapewear categories? How have trends such as women’s empowerment and free-flowing fitting applied to
10
other markets where the culture is very different?
Q: Which categories do you think are typically accepted first by broader audiences as other countries start to
10
be more mindful about women’s empowerment? How can Skims take advantage of this?
Q: How fragmented is the intimate apparel industry? You mentioned it’s an USD 11bn-12bn industry.
Q: Is there anything you think investors commonly miss within intimate apparel?
10
11
Skims – Channel Footprint & Retail Strategy
Transcription begins at 00:00:04 of the recorded material
NH: Welcome to Third Bridge Forum’s Interview entitled Skims – Channel Footprint & Retail Strategy. I’m
Nyree Hinton and I will be facilitating today’s Interview with Mrs Susan Buchanan, former VP of Marketing,
America at Wacoal Holdings Corp.
Susan, before we get started with today’s Interview, please state I agree or I disagree to the following
statement: You understand the definition of material non-public information and agree not to disclose any
such information, or any other information which is confidential, during this Interview.
SB: Yes.
NH: Could you introduce yourself and your background?
SB: I have quite a bit of experience in intimate apparel. Most recently, I was at Wacoal, which is the leading
intimate apparel brand in the department store channel. It’s a global company. I was the Head of Marketing,
which encompassed everything from strategy, through programming, creative, both e-commerce, social
media, advertising. Launched a lot of products and took this particular company from old school to a fully
digitally proficient brand. Prior to that, I was at Maidenform, which is another leading brand, also global, and
prior to that, I was with Playtex, so I have a lot of deep intimate apparel experience.
[00:01:31]
Q: Could you provide an overview of the shapewear and intimate apparel industries? How have the categories
or items evolved over the past 5-10 years?
SB: Let’s just start and put shapewear, which was the initial jumping-off point of this discussion today, into
the larger intimate apparel business, so total intimate apparel in the United States is about an USD 11bn-12bn
sector and it’s divided into sub-sectors, bras being the largest. That’s about USD 5bn. Then you get the sport
bras, which is another USD 2.5bn. The panties sector is quite big. It’s USD 3.5bn, and then you have
shapewear that is about USD 500m, so in total, that would be considered the intimate apparel landscape.
There are other businesses that are tangential to it like sleepwear that’s another USD 6bn or so, loungewear, I
don’t know the size of that one. Quite large. All of these pieces are really part and parcel of what people think
of when they think of intimate apparel. If we want to talk a little bit about shapewear, and I think this is a good
jumping-off point, is that shapewear historically has been about creating an idealised shape, so in the past, in
18th century and 19th century, well into, say, the ’60s, shapewear was about corsetry and girdles, and merry
widows and waist cinchers. It was all about a constricting garment that was designed to make you look smaller
or to have this very idealised shape. As everything in our world has become more looser and freer, and so
forth, the intimate apparel industry and shapewear in particular has migrated away from that, so you’ve gone
from products that were constricting to now, products that are all about comfort, as an example. You go from
products that have very elaborate panelling to very modern stretch fabrics, and the whole purpose behind
shapewear and intimate apparel in general has really shifted.
Private and confidential 3
[00:04:30]
Q: How have companies adapted to trends in this market? Where might the opportunity be in shapewear
given the trend towards less restrictive clothing?
SB: It’s really been a very big shift and it’s been happening step by step now for, I would say, the last 25 years
or so. Back in the day, the whole psychology of why you were wearing shapewear and bras in general, but
shapewear in particular was to solve a problem. “I’m embarrassed. I’m going to be going to a wedding. I need
to look thinner. I need to look smaller,” and now, it’s moving well beyond that to a point where it’s about
empowerment. It’s about feeling good in your body. It’s about embracing curves, and so what you see now is a
real shift away from idealised marketing, for example. Back in the day, everything was airbrushed. You had
models wearing intimate apparel and shapewear that certainly didn’t even need anything to showing ethnically
diverse bodies, different sizes. It’s no longer about fitting into something that is constricting, but to really
embrace the curves and feel good about your size. A whole other part of it is the ethnic diversity now, skin
tones. In fact, you can’t even name colours skin tones any more. There was a point where a beige was called
nude. You can’t use that word any more. That’s nude for who? Now, you have companies that might have one
beige, one white, one black and now, there are six colours of nude, depending on what the skin tone is so that
the product blends in, so there’s been a big change, and I think the change started happening with Spanx.
Your listeners are probably familiar with Spanx. It was started by Sara Blakely, and it came from her
experience where she wanted to wear a pair of pantyhose and she didn’t want to have feet on them because she
wanted to wear an open sandal, and so she went and she found some pantyhose, cut the feet off and started
wearing them. That gave her the idea to begin a business making pantyhose without the feet, and that led her
to develop an entire shapewear business. The cool thing about what she did was that she took shapewear out
of the embarrassment pile and put it into something that people were happy to talk about that they were
wearing, so she would have celebrities on the red carpet patting their tummies and saying, “I’m wearing my
Spanx today.” This gave so many more women the permission to think about, “I’m going to wear Spanx. I’m
going to feel good about it,” and that’s opened the door to many more women embracing it as something that
was okay for them to try and use, not just people who were very embarrassed about maybe their shape. Today,
what you have, and you have this in Kim Kardashian’s line, Skims, is a whole embrace of my curves. “My
curves are great. I’m going to look for something that’s going to enhance them, that’s just going to smooth out
maybe some of the bumps and lumps, but in no way am I not proud of being a 2XL size because this is who I
am and I’m going to feel good about who I am.”
Kim herself is, I think, quite interesting because she came about this from her own experience. She wore
everything before she started her line. She cut things up, she stitched things together, she dyed garments in a
colour that more works with her skin tone and so forth, and that gave her the jumping-off point to say, “Wait a
minute, I’m an expert here,” and so she has put together, starting with shapewear, a collection that’s really
quite unique, and you see that in the products she has in her line. Nobody before Kim ever came up with a bike
short with one leg missing. Why did she do that? She wears dresses with a high slit and she was doing that
herself because walked the red carpet. She would cut off the leg, and she cut it off on the right side when she
needed it there and she cut it off on the left side when she needed it on the other side. She, in her line today,
has a bike short with only one leg. In fact, she has two garments, one with the right leg missing and one with
the left leg missing. She has garments that are designed to go with modern wardrobes, so she’s gone about this
very, very thoughtfully, and because of her reputation for having an extreme amount of curves, she can really
speak with authority about what’s needed, and I think that’s why people are embracing what she’s doing and
believing her, because she’s lived it.
[00:10:31]
Q: How does Kim Kardashian’s line Skims compare to that of competitors playing in the same categories
within shapewear or loungewear?
SB: There are a number of other players in the market now who are doing somewhat of what she’s doing. Size
inclusivity, you’ve got to be in the business today. When I was at Wacoal, we increased our sizes in bras, and in
Private and confidential 4
shapewear and everything well up beyond to G cups and 5XL, and so forth, and that particular business for
Macy’s online became well over 30% of the total business. Brands are seeing that there’s a lot of business to be
done in these outer ranges, and so there are a lot of brands that have adjusted their size ranges. There are a lot
of brands that have adjusted their colour ranges. You have people like Honeylove and Yummie Tummie, and
Miraclesuit and others who have embraced this inclusivity, embraced ethnic diversity and so forth. What’s
different about Kim is that she is really able to speak about clothing. She’s approaching it from a clothing
standpoint. “What do I want to wear, and what do I need underneath to work with it?” She’s taken the time.
The products are actually very, very good, and they’re not overpriced, and she’s gone beyond shapewear. As I
said earlier, the shapewear business is a really small piece of intimate apparel, so she is completely fully
assorted in bras for everyday and special occasions, panties, lots of panties and thongs, and every kind of piece
underneath. During the pandemic, she moved into loungewear, and loungewear has been a huge piece of their
business, and she recently launched a whole silk collection in shapewear, so she is growing an intimate apparel
empire at this point and she’s using all the modern tools. She has embraced video. She has embraced social
media. She has embraced influencers. She’s playing the game very, very well at a very high level, so I think she
has a great head start. I don’t think anybody’s able to catch her at this point because she’s so far ahead.
[00:13:29]
Q: Are there any weaknesses in Kim Kardashian’s portfolio?
SB: I would be interested to know how much profit they’re making now, because they’re doing things that are
difficult to do. They have bras and garments with nine colours. They have a T-shirt bra with nine colours. Very
hard to stay in stock in nine colours. One of their bestsellers comes in 16 colours, so how do you manage all of
those SKUs? How is that happening? One of the ways that they manage some of this is that they take a drop
mentality, and that’s where you let your followers know, your customers know that you’re coming out with
some new colours or some new styles and they’re going to be available on such-and-such a date, and when
they’re gone, they’re gone. You see them, in fact, just this week. They launched another loungewear collection
in cotton, and it was announced ahead of time and they were able to capture that demand upfront, meet the
demand and then they were out of stock until they can get back in stock again, but they have a huge line, and
so managing all of that, I’m wondering how that’s going to work longer term. In terms of weaknesses in the
business, it would be hard to say. I think there’s so much more opportunity. Her distribution strategy now is
mostly direct-to-consumer. They do have a couple of wholesale partners, Nordstrom is one, Net-a-Porter is
one, Selfridges is one, and that can go much wider than that whenever they’re ready, so there’s that piece, and
I would anticipate that they would be thinking about opening up some stores. If you take a look at the
American Eagle Aerie line, they’ve opened up stores and that has been on fire. They just opened up a store on
Greenwich Avenue, and there are many stores and they’re very, very popular, so I would think that she, with
her partners, and her partners know all about retail. I don’t know if you folks are familiar with Jens Grede who
started a fashion magazine, also had a very successful, still has a successful, marketing agency, is now the
founder of Frame, which is a jeans line, he knows about retail, and so I can anticipate, I do anticipate, that they
would begin to open up selectively some Skims stores.
[00:16:44]
Q: What are your thoughts on Skims’ colour selection and its importance? There are very calm, smooth
colourways such as sky blue or a greyish or dark colour. What colours are on-trend? How has that changed
before? How has the material changed?
SB: In the intimate apparel collection, she has some really wonderful fabrics that they took a lot of time to
create, 360-degree stretch, very comfortable, very forgiving, which I think is important when you have a D2C
business. The more forgiving and stretchy those fabrics are, the degree to which you’re going to satisfy the fit
requirements of the people on the other end and then hopefully, reduce the amount of returns, which is always
a big deal when you have an e-commerce business, is you don’t want to have too high a rate of returns, so she’s
developed some exceptional products in intimate apparel. When it comes to loungewear, they’ve developed
Private and confidential 5
some very soft, plushy fabrics that feel great, and Kim is out there in her videos showing you how to wear
them, giving you really a visceral sense of how soft and wonderful these things are, so the product itself that
she’s developed is really very, very good. From a colour standpoint, I think it is important to have a range of
body tones that go just beyond one beige and one cream. There’s a whole range of them. Whether they’re all
selling equally, whether there’ll be some sort of fallout to try to get to what is the basic core. I would imagine
that at Nordstrom, they’re not selling 16 colours. They’re probably not selling nine. They’re probably selling
the top three or the top five, and that’s okay. That’s really okay, but the mythology is that we are embracing all
skin tones, all ethnicities in our colour range, and I think it’s important at this point to really establish that as
part of their thinking.
[00:19:34]
Q: You mentioned the rise of Aerie and its physical presence as well as the drops that Kim Kardashian has
done to stoke demand. What do you think is the best strategy to maintain demand? Is it about a slow and
steady D2C approach, leveraging wholesale partners, but not getting too aggressive in flooding the market and
then slowly building out a retail presence? Alternatively, do you think Skims should be aggressively expanding
into a more physical retail environment and establishing more partnerships to scale up volume? Which do you
think is the better strategy?
SB: I think that there’s this whole way of establishing this sense of scarcity and this urgency to place your
order now, to be the first in line, to be part of Kim’s world, and I think they would be well-served not to get too
big too fast, and I don’t think they’re going to. I think that they are choosing carefully their partners, those that
are going to represent the brand properly both in-store and online, and I think that’s the right way to go. This
can keep up though. I think they have other categories that they can go into and I think Kim herself is going to
continue to push out, and keep her name front and centre, so that demand cycle, it should remain strong for a
long time. I don’t think they would be well-served to go big or go home. I don’t think they need to. When you
have an e-commerce business, everybody can go to your front door, and so it’s a matter of selectively opening
up some retail accounts, wholesale accounts, the ones that can really represent the brand, create the right
experience, give you the right shop exposure. She’s very, very particular about every piece of what is going on
and I think that’s great that she’s so involved, but she has great partners that understand retail and they are
taking a similar approach. Frame has been very successful and I think maybe they have 10 or 15 stores at this
point, and they’ll selectively open up a few more. They could go big or go home, but that isn’t necessarily good.
Sometimes, when brands get big, then, they get cautious because if you make a mistake, it’s a huge mistake, so
my opinion, it’s much better for them to take an approach that keeps demand high and grows organically from
where they are, taking each step in a very considered manner.
[00:22:51]
Q: How has the proliferation of D2C, online-only brands impacted the intimate apparel industry? Has this
industry been an early adopter of D2C start-ups?
SB: There have been in the last few years a lot of high-profile direct-to-consumer intimate apparel brands.
ThirdLove is one that jumps to mind and they were spending a ton of money, and they were very aggressive in
taking stances on social issues and other things to really have a very high profile in the industry. We watched
them a lot at Wacoal. There are other brands out there that have taken that approach, and today, according to
the statistics I’ve seen, is that intimate apparel online, about 30% of demand is being met with online. That’s a
high number. That’s a pretty high number, and so I think they’ve been quite successful in a short amount of
time to capture a strong demand in a direct-to-consumer manner, which is a surprise because in years past,
the shapewear business and even intimate apparel in general in a department store was on the top floor, back
by the elevators, next to the exit sign. It was not front and centre, so I think there’s been a real shift in the
visibility of underwear in general. There are people, there are brands that are doing period pants. That’s
completely new, so the idea that underwear and bras, and shapewear are a hidden away kind of thing, that’s all
wiped away. I think it’s out there. Women are embracing it. Every brand you can think of is on Instagram,
Private and confidential 6
they’re on Pinterest. It’s out there, and it’s big and it’s bold.
[00:25:21]
Q: What are your thoughts on the marketing aspect of building brand loyalty? Do you think there’s a lot of
variability between customers who are always willing to try new and different brands?
SB: I think historically, what you had is product loyalty. I wear this one bra from Maidenform and that’s my
favourite bra, and that’s my loyalty. I know the brand is out there. The brand is acceptable to me. Same thing
with Wacoal. A lot of strong product loyalty, but when a brand makes an effort to have a mythology, to have a
story and to speak to women in a way that speaks to their inner beauty, and their empowerment and their
strength in the world, I think you get a different feeling about it, and Kim has been great. If you take a look at
the social media exposure, I’m just looking at Instagram, for example, Spanx is doing very well on Instagram.
They have over 500,000 followers. Skims has three million. Shapermint, another brand that’s out there, over
300,000 followers. Very, very good. Victoria’s Secret is worth talking about. They’ve stumbled recently, but if
they make the right moves, they may be able to turn the corner, but they’re out there in a big way on
Instagram. They have 70 million followers, so you can see the scope that is possible. Another one we haven’t
talked about is Savage Fenty, Rihanna’s line. She’s out there. That’s another version of how to approach
intimate apparel. Hers is a very sexy, colourful, lacy, almost dangerous approach to intimate apparel. I don’t
Rihanna is doing anything that’s going to affect Kim because Kim’s whole story is about comfort and wearing it
every day, and smoothing your curves and enhancing your curves, whereas Rihanna is all about being super
sexy and really fierce, really savage, but she is using all the tools in social media. They’re on TikTok. They’re on
video. They’re on Instagram. They’re on Pinterest. They’re on Facebook. They’re using influencers. Influencers
are very, very important in intimate apparel because it’s a way for real women to see other real women wearing
the products, loving the products, endorsing the products, and that is giving so many more women the
confidence to go ahead and press that buy button online.
[00:28:38]
Q: What are the differences you’ve noticed between the way Skims and Fenty have really used their celebrity
influence to empower their brands?
SB: I think all the brands have turned a corner. At Wacoal, we turned a very big corner. When I joined there,
we were very much attuned to showing this idealised version of the perfect garment on the perfect women, and
we’ve walked away from that in a big way, and one of the largest efforts to reach women is by working with
influencers and we worked with hundreds of influencers, some micro-influencers who have maybe 10,000
followers and below, to larger ones. In fact today, there’s a lot of evidence that the smaller-sized influencers at
the micro level are the ones that create the sense of connection to their customers and the ones that have more
credibility, but I think in intimate apparel, one of the problems with intimate apparel is often times, if you take
the name off, you’re not sure what brand it is. I think that’s where Kim really can have a big impact because it
really has her fingerprints over the whole thing, and so many women are so embracing of what she does and I
think Kim is interesting too herself because she as a person has evolved. She came from having a sex tape I
don’t know how many years ago, to being a tabloid person with crazy marriages and so forth, to being a style
icon on the cover of Vogue, and now, here she is going off and attempting to become a lawyer, so she has
become a more serious person. She has become a person that has greater credibility. I can’t think of another
brand out there that has that kind of power behind her, and when you think about Kim also, she has a beauty
line and right now, that beauty line is being rebranded. I believe the old name was Kim Kardashian Beauty,
KKW or something, and the new name is going to be Skkns. It’s going to mirror Skims and the new beauty line
is Skkns, so that effort is going to help the Skims piece be even stronger.
Private and confidential 7
[00:31:54]
Q: How important are collaborations in this industry? It is common in other industries, such as Canada Goose
in outerwear doing limited drops with a company such as Kith. How important is this for Kim’s brand?
Alternatively, do you consider it a nice-to-have in the intimate apparel industry rather than something crucial
to building brand recognition?
SB: If we take Rihanna out of it and we take Kim out of it, there really haven’t been the high-profile
collaborations with other brands where you’ve linked someone who is good in the luxury sector or in just some
other area. Collaborations, I really haven’t seen them be that crucial. I think it’s much more important to have
a really credible product and more than anything, the most important thing to have is great reviews on your
website. That is so important. It’s important in every category, but in intimate apparel, if you have eight or 10
great reviews for a product and if you have one that isn’t great in there, that adds to the credibility, but having
excited people who love your product is the most important predictor of whether you’re going to be a success
going forward. Women really have to rely on that as a way to guide them. “Is this product going to be for me?”
and what you have is women will say, “I’m five feet five and I weigh such-and-such, and I wear size so-and-so,
and I loved this and it was just right for me,” or, “It was right for me for these products. I wore it with this
dress.” You have women now posting on social media of themselves wearing the product at a wedding in their
dress, and showing you even before and afters, so I think that influencers and reviews, and having a strong
mythology and purpose in your brand is far more important than having any collaborations.
[00:34:50]
Q: Which other categories do you think Skims could enter?
SB: I think she has done a great job in the basic intimate apparel space, and as new products get added, they
will be interesting. She’s now expanding her loungewear collection with different fabrications that are
seasonally appropriate, but other areas she could go into, I think there’s the whole swimwear category that
would make some sense for her, there’s men’s. There’s a whole men’s business out there that she could get into
which is very, very big, and I think that she could even transition from loungewear into some home categories.
Kim herself is also known for her palatial homes and her aesthetic is very minimal, and I could see her very
easily getting into some high-end bedding, maybe some furniture lines, other things that could extend out of
where she is, whether it’s called Skims or whether it just becomes another entry into the Kim empire that
grows her footprint as a person, which then comes back and reinforces some of the core lines. She’s entered
into sleepwear. That could much larger than it is today. I think what she’s going for is to try to capture the
millennial customer.
If you look at the demographics of intimate apparel, let’s say the categories. We’ve got Gen Z, which is women
up to the age of 23, then you have millennials, 24-39, then you’ve got Gen X, the next group, 40-55, and then
boomers. Boomers are actually the smallest segment in intimate apparel, whereas millennials are the largest.
36% of all sales are done by millennials, followed by Gen X at 23% and Gen Z at 22%, so pointing younger is
very good. Any brands that are looking older, not so good, so if you are a Miraclesuit, for example, that’s an
older brand. They’ve got to think about gearing up to reach a younger customer. Their stylings are older. Their
mythology, their messaging is older. Maidenform has been around a long time. It’s a pretty big powerhouse in
intimate apparel, but it doesn’t really have a young mythology, so you’ve got to think about that, and I think
Kim is good at that. What’s Victoria’s Secret going to do now? They’re digging out of a hole, but they have a lot
of power. They have a lot of stores. They have a great e-mail list. They’ve got a lot of social media followers.
Depends on whether they can really turn the corner and regain, let’s say, the trust of a lot of women who
rejected their mythology.
Private and confidential 8
[00:38:22]
Q: How important is engagement with consumers? Nike has an editorial line where it continues to post about
different topics or trends. How important is engagement to younger vs older consumers?
SB: It’s hard to overstate the importance of having an emotional connection with your consumer, for
consumers to feel that you are listening, for example. One of the things that Kim has done is she’s asked for
input. “What colours should I do? What should we do next? What are you looking for? Speak to me. Talk to
me.” It’s good business to do that because you’re going to get some insights that you might otherwise miss, but
it’s also very good in creating a connection to customers. There’s a bra brand out there called Lively. It was
also very, very active a few years ago in creating events around the country where their buyers would come
together and actually meet each other. It became a social event to come to a pop-up event in Austin or in
Nashville, to come and meet the founder and see what the next drops are going to be and have insider
information. You cannot overstate the importance of creating a connection, and today, with the right data
management, and the right platforms and the right personalisation, you can speak to someone and you know
what they bought last, you know what they might buy next, you’re giving them customised offers. All of those
things are currently bearing great fruit, and particularly for intimate apparel brands where, once you’re
finding something that works, it is a lot easier to keep that customer in your camp if you’re continuing to serve
them and listen to them, and let them know that you’re listening to what they want and responding to their
evolving needs, because needs are always evolving. You have to be listening. Companies that are just doing the
same thing over and over again, they’re going to slowly die off. That constantly looking for what’s that next
thing that’s going to be really right and taking the time to get that next thing really right, not just throwing
stuff out there, that’s no good, but finding that next fabric that’s going to meet a need, that’s going to be more
comfortable or more forgiving or more moisture-wicking or whatever the need is and taking the time to do it
right, I think, is really going to bear fruit going forward.
[00:41:52]
Q: What inventory management challenges did you experience while at Wacoal? What do you think are some
challenges ahead for Skims?
SB: I think the broader you go and the bigger you go, the more sizes you try to manage, the difficulty is
figuring out how to be sufficiently assorted and not over-assorted, so how do you stay in tock? It’s a little bit
easier with a direct-to-consumer business where you’re shipping from one central repository of inventory.
When you’re trying to keep Macy’s and Nordstrom’s, and Saks and others with their own inventories, that’s
where it becomes challenging, to keep that flowing. The ideal situation is that you have a great relationship
with each one of these customers. They’re constantly flowing information back and forth to you so that you’re
fulfilling the orders, you’re anticipating needs. You’re using some AI techniques to manage where you’re going.
It’s absolutely essential, but intimate apparel has a lot of sizes. It’s like shoes. Shoes are very difficult as well,
so there’s where it becomes difficult, and the more colours you assort and the more styles you add, that just
complicates your business. If you could sell one bra in beige all day long, you would have the most profitable
business in the world, but that’s not the reality.
[00:43:50]
Q: How would you describe the retailer-manufacturer relationship and how it’s impacted intimate apparel?
What are the challenges associated with operating with large accounts such as Macy’s where it is heavily
promotional and can have a drag on margins? How willing are companies to deal with some of these accounts?
SB: When we were at Wacoal, we turned a very big corner where we eliminated retailer discounting, aside
from end-of-season sales. If you’re stuck in a place where your brand is having to be price-matched,
Nordstrom is having its annual sale, and so everybody else puts those same styles on sale across the country,
that’s not great, and then you have Amazon. That’s another big behemoth here in every apparel category. I just
Private and confidential 9
read today that Amazon is larger than Walmart in total apparel, which is pretty amazing because they’re
relatively new to the game. When you have any price-matching going on, brands have to do their very best to
control that because if you lose control of the price of your brand, you’re going down a very bad path, so that’s
one of the things to control when you’re working with wholesalers. The part that is very hard is that even
though your business could be growing at a particular store, you might have your business on fire at Macy’s,
unless Macy’s is funding that business appropriately, you might not get the reorders to fill it. You could be held
back, so having a great relationship with your partners to understand what the growth trends of the brand are
and getting their commitment to fund the brand is extremely important. They’re the gatekeepers. They’re also
the gatekeepers for presentation in-store. They’re the gatekeepers for presentation online, and so if you’re
going to be wholesaling today, you need to be good at advising stores on how to present your product on their
websites. You need to give them many more photographs and many more videos, and a lot of content so that
they can present your brand in the most positive light. It’s a lot of work going in the wholesale side. It’s going
to be easier if you’re doing it just yourself because you control all the pieces.
[00:46:55]
Q: How would you describe the international opportunity for intimate apparel in the loungewear and
shapewear categories? How have trends such as women’s empowerment and free-flowing fitting applied to
other markets where the culture is very different?
SB: I guess it would be no surprise to say that in the US, we’ve taking the lead on the place of women in
society and the whole message of women as being leaders, and being entrepreneurs and being empowered in
their lives, but that message is slowly making its way around the globe and I think that’s not something you
can stop. There are going to be places it’ll be lagging to some extent, but that message is making its way across
the globe. When you think about Kim though, she has an enormous global footprint as a person. The entire
family does, all of her sisters, the mother, and so for her, I think she has enormous power. I would be very
interested to see what the international sales are coming into their website now and how that’s really trending.
I would think that it would be pretty significant and a lot of untapped opportunity. She’s just opened in
Selfridges. What about France? What about Germany? What about Japan? It’s a global business. It’s always
been a global business, intimate apparel, so there’s no reason why she can’t move anywhere she chooses to.
[00:49:12]
Q: Which categories do you think are typically accepted first by broader audiences as other countries start to
be more mindful about women’s empowerment? How can Skims take advantage of this?
SB: I would think that loungewear, because it’s a little bit more forgiving in terms of size, could be something
that moves more easily around the globe. In some places in South America, they only do bras in very few sizes,
so nothing fits terribly well in these places where they do that, and we were noticing at Wacoal, that we were
coming in and offering bras with back sizes, 32, 34, 36, 38 and cup sizes, B, C, D, E, F, G, H. They didn’t even
have that kind of assortment, so this was all new. Internationally, I don’t know. I don’t know that I can think of
any category that would not be something that could be considered. One of the things Kim is not really in now
is that athleisure or activewear. That’s a very busy category. I’m not sure what she would bring to the table, but
if she chose to get into it, I’m sure she would be successful, and that’s something that’s very global at this
point, that whole comfortable way of dressing Monday through Friday on the street, so again, I think Kim has
got so much opportunity at her fingertips.
[00:51:35]
Q: How fragmented is the intimate apparel industry? You mentioned it’s an USD 11bn-12bn industry.
Private and confidential 10
SB: One of the things you have to consider here in the United States and around the world, but if we look at
the United States here, is distribution strategy. The biggest players here have been mass merchants, Target,
Walmart and other players there. Kohl’s is very big in intimate apparel, and then you have the department
store channel. The department store channel has been shrinking now for many, many years. It’s probably
down to 20% or less of the total, and then you have independent stores and those used to be bigger, the mom-
and-pop corsetry shops. Those have been hurt in the pandemic. They’ve been shrinking more and more.
They’re down to probably a low double-digit percentage of the total market, so the big, big players now are
going to be Walmart, Target, Amazon. Very big. I’m not sure what the numbers are, but they could be well over
40-50% of the total market, but within that, there are so many brands. There is a lot of fragmentation. There’s
no question about it. Victoria’s Secret was the biggest. They had the biggest footprint because of their store
exposure and their very, very extensive catalogue. I’m not sure where they are now. I know they’ve dropped
down in terms of their market share, but it used to be mass merchants, Victoria’s Secret and then everybody
else.
[00:53:50]
Q: Is there anything you think investors commonly miss within intimate apparel?
SB: I would say from an investor standpoint, the intimate apparel industry is an excellent business. If you can
develop a good product line with a customer base, you can have years and years of loyalty, and a very steady
business. It isn’t the same as other fashion business. It’s not fashion, is the good thing. You could have bras
that could be successful for 20 years and when you think about the profitability that is inherent in that kind of
a business, it’s something to be considered. Spanx has been successful for a very long period of time and
they’re quite profitable, and they do so because they have a loyal following. You’re always introducing some
products. Some stick, some fail, but the ones that stick can last for years and for decades, and that’s the great,
great value of the intimate apparel business.
[00:55:42]
NH: I think that’s a good place to end the Interview. Let me close by saying thank you, Susan, for your time
today, and thank you clients for joining Third Bridge Forum’s Interview. If any clients would like to arrange a
private meeting or consultation, please contact your relationship managers.
SB: Thank you.
NH: Also, Susan, I’ve placed everyone in the wait room or exit room, but I just wanted to repeat the non-
material public information disclaimer because you said, “Yes,” but compliance always tells me to get an I
agree or I disagree, so If you don’t mind, I’ll just read it back to you and then, if you could just state I agree or I
disagree, that would save me from reaching out to you post-Interview. I’ll just read it here. You understand the
definition of material non-public information and agree not to disclose any such information, or any other
information which is confidential, during this Interview.
SB: I agree.
NH: Thank you, Susan. I really enjoyed the Interview. There’s a lot to learn here and I’m sure the transcript
will be plentiful in information. Please reach out should you have any questions, but other than that, please
enjoy the rest of your evening.
SB: Thanks a bunch. Have a great day.
Transcription ends at 00:56:53 of the recorded material
Private and confidential 11
Private and confidential 12