Retail’s Most Wanted is a new content series by Leap, the retail platform for modern brands. We research, feature, and engage with brands we believe have omnichannel potential. While we don't work with all the brands we mention, we do have a firsthand understanding of their category and millions of data points to understand what drives retail success.
The shapewear category is unique, and in many ways it serves as a litmus test for changing consumer preferences. As new consumers age up into the shapewear market, their expectations around product design, marketing, and the shopping experience reflect shifting standards. One of these changes is a greater desire for in-person shopping. Brick and mortar retail is picking up steam, and physical stores are a prime differentiator for changing categories like shapewear.
One brand we believe has incredible omnichannel potential is Skims. Their rapid ecommerce growth means they are well-positioned to expand beyond ecommerce and wholesale into their own retail stores.
With stores of their own, Skims and other shapewear brands can create unique experiences that allow shoppers to experience their product firsthand and build brand affinity. Brick and mortar doors also help defray the high cost of digital advertising and returns inherent to ecommerce.
Skims is a solutions-oriented shapewear, loungewear, and underwear brand founded in 2019 by Kim Kardashian. It’s hard to overstate this brand’s impact on the shapewear category since its inception.
Skims debuted with a two million-strong waitlist, and sold more than four million units in its first year with a retention rate of 30%. In 2021, the company generated $275 million in revenue and is predicted to hit $400 million in 2023. Valued at over $3 billion, Skims became a category frontrunner by following younger shoppers’ evolving tastes and preferences to fundamentally change the category.
All the more impressive is that Skims managed to generate such strong growth when shapewear sales were down 30% the year before their launch.
How did they do it? The answer is simple. Skims understand their customers. As a result, they lead in innovation. They create products for a range of skin tones and sizes, and explore new categories like eveningwear and sleepwear.
Their rise marks a transitional period for shapewear. Spanx has been the undisputed category leader for decades, but recently a number of ecommerce-first brands have arrived to create a more diverse DTC landscape—including Honeylove, Heist Studios, Shapermint, and Yitty.
From Leap’s perspective as the retail platform for modern brands, there are a number of factors we consider when deciding to underwrite brands’ decisions to move into physical retail. Nearly all of these factors are grounded in data, and Skims meets and exceeds our proprietary criteria—for example, they have a geographically dispersed customer base, sit in a high-growth category, have a broad product assortment, and have built strong customer lifetime value.
Skims offers a much-needed solution to a once stagnant segment. Namely, shapewear that is stylish, empowering, and suits a wide range of body types and complexions. Their repeat rates indicate they have incredible product-market fit and have built a bond with their ecommerce customers. That connection would deepen through in-person, brick and mortar retail experiences.
In fact, Leap helps digitally native brands leverage first-party customer data to find and open retail stores that rapidly generate new revenue streams. Digitally-native brands already know who buys their products, where they live, which products resonate, and where they need to reach new customers. They just need help to apply that knowledge to retail.
Skims translated this deep customer knowledge into a wholesale business with Nordstrom and Selfridges. Wholesale is another common denominator for many of the brands Leap works with, so there’s reason to believe they will also benefit from a dedicated retail experience.
With both ecommerce and wholesale penetration, Skims is ready for brick-and-mortar stores. After all, a rising tide raises all ships—at Leap we see +50% lift in local ecommerce traffic after brands deploy a store on our platform.
The shapewear and Intimates category is ready-made for retail. At its peak, Victoria’s Secret had nearly 1,200 retail stores and it’s no secret why. 73% of shoppers prefer to shop over multiple channels, and intimates brands in particular benefit from a high-touch, consultative in-store experience.
Take Hanky Panky, a legacy lingerie brand that opened their first Leap-powered store in New York this year. After just three months, their in-store conversion rate is 110% higher than the platform average.
There are a number of reasons for their retail success. One is that we worked together to craft an intentional approach to their first-ever in-store experience. The store includes a broad assortment–showcased within an immersive, rainbow colored wall of underwear–comfortable and private fitting rooms, and experienced staff.
It doesn’t hurt that Hanky Panky is on Bleecker Street, one of Leap’s densest clusters of retail stores. This makes it easy for our platform to drive brand discovery and cross-shop through word-of-mouth, email marketing, clienteling, and in-person events.
Skims offers a massive product range—bras, underwear, pajamas, t-shirts, gowns, bodysuits, maternity, children’s clothing, and much more—so massive that it needs to be experienced to be believed. Giving customers the chance to try on their offerings in-store will only benefit Skims. Research shows that trying on items in-store is 3X more influential than any other purchase factor, which is why 55% of online shoppers prefer to buy from retailers with a brick-and-mortar presence.
To deliver the most effective experience, Leap uses customer input to inform our store design, merchandising displays, fitting rooms, and hiring plans. Our in-house team hires experienced staff from relevant categories to ensure we provide a consultative shopping experience. As it relates to Skims, Leap operates in this vertical with Hanky Panky, Lively, Lunya and ThirdLove, and knows that Skims shoppers would benefit from a similar in-person sales experience offering personalized recommendations, fitting advice, and a 1-1 relationship with sales associates.
All of these factors are part of the reason that an in-store experience benefits the business just as much as the customer. Retail return rates are 50-60% lower than ecommerce. This has material business impact, as online returns can cost online retailers up to 21% of order value.
Leap has seen buzzy brands with big online followings like Social Tourist generate a huge impact when we translate their brand experience into physical retail—with lines wrapping around the block opening week. Skims knows their customer and what a modern ecommerce shopping and marketing experience looks like. They have every reason to enter into the world of retail—valuation, liquidity, and celebrity backing. They’ve even gotten their feet wet with a pop-up at The Grove last year. So why not just launch retail in-house?
Retail is a long term play, and requires fundamentals like intelligent, data-driven merchandising, marketing, staffing, and upkeep to be sustainable and profitable. There are many benefits to deploying retail stores through a platform like Leap, but in Skims’ case, two are top of mind.
One: fewer distractions. As we’ve covered, Skims is an expert at product design and marketing, and these strengths are at the heart of their success. Finding real estate, building stores, hiring and managing staff, and merchandising are not skills they have needed to acquire, and are expensive and difficult to do on your own. With a platform approach they won’t need to, and can focus on the core of their business instead.
Two: speed. There is no doubt that Skims has the product and audience to succeed in retail. But opening one successful store is a very different proposition from opening dozens. A platform approach means you have the insights and in-market support to scale at a faster pace. And as Leap has seen, the more stores you open, the lower the risk and the greater the net benefit for your brand.
Whatever they choose to do next, it’s clear to us that Skims is one of Retail’s Most Wanted brands of 2023.
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