2/3/20 - Kim Kardashian’s Expansion Into Nordstrom Is A Sign Of The Changing DTC Times

From the Simplr studios in San Francisco, this is your daily briefing.  

Introduction

This is Today in Five, for today, Monday, February 3rd. Here are today’s headlines in digital disruption.

Is Kim Kardashian’s move into wholesale with Nordstrom a sign of the changing DTC times? In this episode, we explore how Kim, who has an impressive social media following and online presence, still needed Nordstrom to expand and grow her SKIMS brand.

First, here are the latest headlines.

Forever 21 Receives Bid

Months after filing for bankruptcy, Forever 21 has a new bid from Authentic Brands and mall operators Simon Property and Brookfield. The $81 million dollar bid would serve as a baseline for an auction for Forever 21 and includes a breakup fee of $4.7 million dollars and expense reimbursement of $1 million dollars if the retailer accepts an alternate deal. The retailer proposed to the court a bid deadline of February 7th and an auction, if necessary, by February 10th.  

Macy's Opening a New Concept Store

According to a press release, Macy’s will open what it calls a flexible retail store format in Southlake, Texas. The 20,000-foot store will be called Market by Macy’s. The new store’s space will host, “community-driven programming from cooking tutorials and book signings to crafting and fitness classes.” The new location will also debut two new exclusive Macy’s brands. The move indicates the retailer is taking new steps to develop store concepts, and to learn from the process, as it considers doing business on a much smaller scale.  

Facebook Reports Increased Growth and Revenue

Facebook reported a growing userbase and increasing quarterly revenue, capping a year of strength in its core advertising business even as expenses climbed. The social media giant’s revenue rose 25 percent to $21.1 billion dollars for the quarter, beating analyst expectations. Revenue for 2019 rose by nearly 27 percent. Profit for the fourth quarter also topped expectations, rising 7 percent to $7.35 billion dollars. The latest report extends a strong performance typical for the company even in the midst of social questions and government scrutiny.  

Kim Kardashian’s Expansion Into Nordstrom Is A Sign Of The Changing DTC Times  

Is Kim Kardashian’s move into Nordstrom a sign of the digitally-native times? When Kim launched SKIMS, her shapewear brand featuring a variety of diversified products in a broad range of sizes, early products sold out. Kim continued to promote the brand using her immense social presence, and the products continued to sell out as the brand restocked. SKIMS had the potential to be the defining brand for Kim, having more promise than her previous brands KKW Beauty and Fragrance, which were more opportunistic than unique.

Earlier this year, Kim announced that the SKIMS brand would be expanding into 25 Nordstrom stores across America starting in early February, and would also be available online at Nordstrom.com. The move raises the question that if Kim Kardashian, who has a large social presence and earned media followings need Nordstrom, what about all the other digitally-native brands?  

This isn’t the first time she or one of her family members has expanded into wholesale after hitting the online-only growth ceiling. Her sister Kylie was the first to move into Ulta after three years with Kylie Cosmetics, and Kim soon followed suit with KKW Beauty. Then after Kylie launched Kylie Skin, she moved into Ulta only five months after the brand’s debut. Now, five months after launching SKIMS, Kim is entering Nordstrom.

The reasons she’d make the move toward wholesale are simple. An apparel brand that offers such a broad range of sizing means that customers are going to return a lot of items as they try to find their fit. Kim’s social media followers are also potentially saturated by the marketing of Kardashian products, while the Nordstrom audience is likely wealthier and older than most of Kim’s following. Not to mention that digitally-native brands can only get so big before they have to expand into other channels to avoid high digital marketing spend.  

If Kim Kardashian needs Nordstrom to grow her business, there’s a good chance that every consumer brand could benefit from the strategy.  

Closing

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