BoF’s Top Stories of 2024

0:07Hello and welcome to The Debrief from the Business of Fashion, where each week we delve into our most popular BOF professional stories with the correspondents who created them. I'm executive editor Brian Baskin. And I'm senior correspondent Sheena Butler-Young. As 2024 comes to a close, we're reflecting on some of our favorite stories. Some you may have heard us discuss on the debrief. Others dominated broader industry conversation throughout the year, even if they didn't make it to the podcast. And a few have had compelling updates since they were published. So one of my favorite stories of the year is Dan's How Nike Ran, of course.

0:43It was provocative. It was agenda setting. And it brought to the fore a conversation that had been bubbling up across the industry, probably since John Donahoe was appointed CEO in early 2020. What do you remember about this story? Yes, if we are talking about the most interesting and important stories of 2024, then Nike has to be at the top of the list, just has to. The company had an absolutely miserable year. I was looking for when we ran our first story this year about Nike's problems, and I got all the way to January 8th when I found a story about Tiger Woods announcing he was leaving Nike after basically being the face of the brand for almost 30 years.

1:23And then after that, there were multiple rounds of layoffs and quarter after quarter of declining sales. And we could probably do an entire episode about the see-through baseball uniforms, which is something I'd somehow forgotten about, but it was a massive story six months ago. It's interesting that the layoffs always stuck out to me because one of the groups most affected were those Nike veterans, those marketing veterans that really helped shape Nike's image during the golden era. And so when Dan took this story on, I think that was one of the key drivers. Do you remember that? Yeah, that's something that's Daniel Yaw Miller, by the way, our sports correspondent.

2:03And he chronicled a lot of these Nike lifers, and there's quite a few of those, or there were, who left throughout John Donahoe's tenure as CEO. And when he would talk to employees who were still at the company about what was going on, the blame really piled onto Donahoe. Everyone pointed their finger at him. And there was an obvious culture clash from the start. I mean, he was a management consultant. He was the former CEO of eBay. People just said he was too focused on cutting costs, on endless restructuring, these technology side projects that didn't seem to have a lot to do with selling sneakers.

2:39And as a result, people said the marketing was starting to feel stale. And more importantly, so was the product. People were really excited for a long time about these new spins on Air Maxes and Air Force Ones. But there's only so many retreads people are going to buy. And you can read all about that in Dan's story and his reporting throughout the year. I remember the DTC push and also Nike trying to position itself as a tech company. Do you remember that at that time it was Apple was dominating, Apple still is dominating, but Nike was really on a push to become a tech company in its own right.

3:16And there was a lot of initial but short-lived excitement around John Donahoe's arrival. He would make it a tech company and that was really, that changed fairly quickly. And then every company, big or small, is subject to like business cycle ebb and flow. And even as large and as successful as Nike is, it is not immune to those things. But this wasn't a normal ebb and flow. At some point, it became obvious that Nike was truly running off course, to use Dan's headline. What were some of those moments that really crystallized that Nike had really lost its way. Sure. I think what made Nike this year's story, as opposed, because they had problems, you know, pretty much since the pandemic, there was that early active wear boom, and then all these companies, you know, sort of struggled to figure out what the next chapter was.

4:03But this was the year where it really crystallized that there were viable alternatives to Nike in the market. So Adidas, which had been struggling for years for a lot of reasons, they basically stole Nike's playbook out from under them in the retro market. And they introduced all these new, newly thought out Gazelles and Sambas, and those sort of replaced the Air Maxes in that niche. And consumers who were just disenchanted with Nike generally had their pick of all these new brands that had come up during the pandemic. So the Hoka's and An's and Salomon that promised innovative styles, high performance, all these things we used to associate with Nike.

4:39And toward the end of the year, some of Nike's older rivals that we just hadn't heard much from in years, like Puma and Asics, these companies that I just, I don't know when the last time we wrote about some of these companies, you know, in a substantive way, they're starting to make waves. They're the hottest shoes in certain corners of the market. And all of this should be hedged by the fact that Nike is still the dominating company by a far stretch when it comes to athletic and sportswear, like catching up to Nike, which has a hundred billion dollar plus market cap for some of these brands, it's still light years difference.

5:14It's a brand heat conversation in a lot of ways. Of course, but that does tend to have something of a snowball effect. No one of these companies can take on Nike on their own, but all of them together are seriously chipping away at Nike's lead. This year, you mentioned the market cap. Their stock is down about 30 % this year. Adidas stock is up about 30%. And these smaller rivals, the Hoka's and On's, their share prices basically doubled. So they are catching up. There's a big way to go, but it is happening. And Nike is not resting on its laurels, I would imagine. There are some things that have happened since Dan's story, which came out in February of this year.

5:54And Nike is trying to really turn around a very large ship, but they're doing a lot of things. What happened? Yes. Well, the big update, of course, is that Donahoe is no longer with Nike. I think people assumed he was on borrowed time, but when his exit was announced in September, it was a total surprise, the timing of it at least. There were reports of people popping bottles of Prosecco in the middle of the office in Beaverton. I mean, he was not loved. And his replacement is Elliot Hill, who is really well known inside Nike. He had all these senior roles at the brand over more than 30 years, but he didn't have much of a public profile.

6:32And I think that's important because he also hasn't said much about how he's actually going to fix Nike. He's been in his job about two months now, which isn't that long, but Nike's situation is pretty dire. People are definitely waiting to hear what is the turnaround plan. And what do you think that turnaround plan can be? We're looking ahead to 2025. Any semblance of information about what he might do? There are a few clues. So when Hill has spoken publicly, it's been in these very sheltered, Nike-sanctioned interviewer or Nike itself interviewing him. But he tends to hit these same points about basically taking Nike back to its roots, making it a brand for high-performance athletes and people who want to run or play basketball or tennis or golf just like their idols.

7:20And you saw hints of this even before Hill arrived with Nike's Olympics campaign, Winning Isn't for Everyone, which really did harken back to those good old days. But the problem was there wasn't a compelling new product for people who liked that campaign to go buy. And I think that's the project for 2025 is to say, here's what we're going to actually sell people once we get them excited about the brand again. Absolutely. That makes sense. I'd like to see some product too. So Sheena, what is a story of yours that you'd like to talk about? So one of my favorites, it's selfishly my own. I did a black beauty series, which published in the spring.

8:01It was a three-part series for the business of beauty that looked at in pretty significant, almost pedagogical detail, how Black founders like Myel's Monique Rodriguez or Danessa Merix and a few others like Desiree Verdeo from HyperSkin, how they built, launched, scaled, and funded these multi-million dollar businesses. So the Black Beauty space has been under significant pressure this year. It's always had some challenges, but there was that windfall that happened in 2020 after George Floyd, and it was still a meager windfall just for perspective. I think VC funding going to Black founders edged up to about 1 % or something like that, that year, and now it's gone back down.

8:46So 2024 challenged a lot of Black founders to keep their businesses viable. There was a lack of funding and investment alongside the high cost of retail partnerships. So it's tough enough to get into retail and then you've got to fulfill large orders. You have to market. There's everything from where your product sits in the store can be expensive. So brands started to shudder at a rapid clip this year. Ceylon, the established are a few examples. So that piece was pedagogical because it was a servicey, like here's how you can do it if you are starting your own brand or if you're struggling with your brand, but also recognizing the innovation of Black founders and all of the category expansion that came out of the textured hair care market, but also the brands that focused on things like, you know, skin and foundation tones and all of that.

9:34I really like these stories. I mean, they felt essential because we've written a lot about how funding has dried up for startups and it's gotten a lot tougher out there. And that's obviously going to have a magnified impact on a historically disadvantaged community where there wasn't a ton of funding to begin with, as you pointed out. I'd love to know what was the response to that story? You must have heard from a ton of Black beauty founders after they published. Yeah. I mean, I did get a lot of those DMs and emails where I think people were both appreciative of the recognition, but also like reminding me that it's dire and that there needs to be some fundamental shifts in how VC funding is doled out and also mentorship and support mechanisms within the market that help brands get ahead.

10:20And I pointed this out on the debrief in the past, but like moving these investment conversations beyond social impact and something nice to do that there's so much innovation that's coming out of the multicultural hair market, but also the skin categories that target black and brown skin. So I use this example before, but products that were developed for textured hair tend to have really high quality ingredients and very interesting ingredients that actually have broader application if you start with the black or brown customer. And I think that's an interesting reminder of the value of these brands to the broader beauty market.

10:59And so I got a lot of emails thanking me, but also reminding me that we need to talk about the innovation part a lot. And looking ahead to 2025, are there any reasons to be optimistic? I mean, this can't be an entirely bleak story, right? No, I mean, there's some brands that are doing really, really well. Like I spoke to Desiree Rogers from Black Opal and Fashion Fair, and this is a black owned and ran set of brands. And they just were the beauty partner at the DNC convention in Chicago. Monique Rodriguez with Mayel is still doing really well, even though that's now under P &G. There are other brands like Hannah Diop and Issa Rae with Sienna Naturals.

11:36There are a lot of brands that are still finding their way. I think brands are also learning that this is a long game, not a short-sighted journey. So you're taking your time to grow, recognizing that retail partnerships are super important, but they can also be the undoing of your brand. So there's something to be said for growing slowly and taking your time. Also, you know, when you're getting investment, not having to rush to get the largest VC fund investment, because then they're going to want to see tremendous growth multiples, which is also hard. So taking your time, remembering that not all investment is good investment.

12:11It's okay to pivot. So for example, Desiree Vordeo of HyperSkin gave this example of when she first went into Sephora, her brand was not popping on the shelf. So she, within months of being in Sephora, pulled it off the shelf and rebranded it in a way that it popped a little bit more. Hannah at Sienna Naturals talked about starting out in Mastige because she assumed that if you're making product for textured or natural hair, it should be at the Mastige price point, which is around 15 to 20 bucks. And then she recognized that in order to truly serve her customer and to have the quality ingredients that she wanted, she needed to go prestige.

12:45So now they relaunched her and Issa Rae fully prestige. So recognizing it's a long gain, being willing to pivot, and then also seeking investment, but remembering that not all investment is good investment. You mentioned Mayel before, And they ran into some problems shortly after your series ran, although it seems like they've landed on their feet. But can you talk a bit about what happened there and whether there's any lessons for other brands that have maybe been following their model? Yeah. So Maiel had in the trajectory of a brand, a successful brand and beauty, they had their first big internet born negative moment, which is their hero product.

13:29The rosemary mint oil was the subject of social media claims that was causing, among other things, hair loss, scalp irritation. And that conversation and controversy really bubbled up very, very quickly. founder Monique Rodriguez, who's still on, her and her husband Melvin are still on with the brand underneath the parent company P &G. They were very quick to take to social media. Monique addressed the controversy in the channel where it was happening, which was Instagram, and denied the claims and also said that there were no changes in her product formulation under P &G, which is typically what people are worried about when a brand is bought.

14:07I don't know if they're lessons, But the things to think about as black founders bill and scale and maybe want to have a successful financial exit is that this can sometimes be par for the course. It's not just black brands, although they have a higher burden here. When your brand goes under a new parent company, people are going to be eagle eyed about everything that happens with the product. And I think for all intents and purposes, the way that Monique navigated it, it seemed to work for her. She addressed it in the channel. she went to the lab and showed how the product formulations did not change.

14:39And moving forward, I think she'll continue to be successful because she has such a broad range of products that I think she has a viable path forward and you can live, your brand can survive beyond one controversy. And sometimes this is, to me, it solidifies the fact that it is a big and formidable brand. There aren't many beauty brands that haven't had something like this in their path to growth. And at least they're not Nike with the see-through baseball uniforms. That's right. We'll be back with more of The Debrief right after this.

15:18Okay. I am going to nerd out a bit now and talk about affiliate marketing. I think this is the year that affiliate marketing took over the internet. It became something that normies know the term. It has just burst into the mainstream in every conceivable way. Can we rewind and talk about what that is? Okay, sure. For those of us that are not yet nerding out on affiliate marketing, what is it? Okay, I have overestimated how much it's gone into the mainstream, clearly. But affiliate marketing are those little links you see in newsletters and gift guides and sponsored posts and reviews and just about everywhere you look on the internet or social media now.

15:57And they invite you to buy a product that an influencer is talking about, or maybe a website is reviewing or a fashion publication is showing on a celebrity. And if you click that link and you make a purchase, whoever created the link gets a little percentage of that sale. And this has been around for a long time, but it really became one of the primary ways that a huge swath of the creator economy and fashion media and beauty media made money in 2024. And they've become increasingly dependent on it. And as evidence, I will point you to all of those holiday gift guides you are seeing, including from many publications where you're like, why are they advising me what to get my uncle?

16:42They're doing it because somebody's gonna click that link and buy that product and they'll get a few pennies from whatever that brand is or Amazon or whoever. And we wrote about this well before the holiday season, way back in May, where our senior news and features editor, Diana Pearl, wrote a story about a very interesting lawsuit happening in this world. I understand that this is how influencers and a lot of media companies make money. And I myself have probably clicked on and funded a few of these ventures, especially during this holiday shopping season. But it's a little complicated sort of how this works.

17:17And there are companies that actually make it their business to create these links or monetize them for influencers or brands. Is that right? And something went really horribly wrong in that arena this year. I don't know if I'd say horribly wrong, but yes, that has been one of the big battlegrounds in social media this year. And it's all happening very much behind the scenes because, I mean, if affiliate marketing is nerdy, then the intermediaries who are running this affiliate marketing economy are even nerdier. So the two biggest names in that world, specifically in the influencer space, are a company called LTK, which used to be Like to Know It, and a newer rival called Shopmai.

18:00And so for a while, LTK really dominated this scene. They say they have 300 ,000 influencers using their platform to secure sponsorships and gifting and, above all, those affiliate links. And they were basically facilitating the conversation between brands and creators. then Shopmai bursts onto the scene and they say, hey, we'll hook you up with these brands, but we'll also let you do all this yourself. We'll give you the data. We'll let you reach out to brands yourself without going through us or needing the brand to reach out to you. They basically said, we are the creator's platform. And LTK really didn't like this.

18:36And in fact, they sued Shopmai for false advertising and trademark infringement back this past spring, basically saying Shopmai was playing dirty to win creators over to its platform. And they had won some high profile people over there. And the reason that I'm flagging this story is one of the most important for 2024 is that this is a multi-billion dollar economy. And how this battle played out really says a lot about how people are going to make money on the internet going forward. And so how did it play out? Well, LTK dropped its lawsuit in September, which I don't think came as a major surprise.

19:10It is very hard to prove something like false advertising, at least in a way that's going to hold someone legally responsible. But more interesting than the fact that they dropped the suit is right before they did, LTK introduced a bunch of features that make its business model look a lot more like ShopMai. Now they're promising to give additional data to creators and allowing more direct communication between creators and brands. They really have just handed the keys to this market over to the creators. And I think it's not a coincidence that we're seeing the rise of this at the same time as some other developments in social media and as this market has gotten significantly bigger.

19:48And by other developments, you don't mean a TikTok ban, do you? Well, that is going to throw a huge spanner into the works here. I don't think anyone knows what will happen if TikTok goes away or is severely curtailed on January 19th, but it will definitely have major ripple effects. And one of the reasons for that is also that TikTok has been at the center of what I'd say is probably the next phase of this whole category, which is live stream shopping, which is something people have been trying to do in the U.S. forever. And it really only began to take hold this year and mainly on TikTok. And, you know, they've seen the amount of direct commerce happening on there, not just affiliate links, but people actively selling things really shoot up just in the last few months.

20:34And the idea that this might all suddenly go away just as it's really gathering speed is really quite something. Sheena, what's your next story? So another favorite of mine was our chief sustainability correspondent, Sarah Kent's investigation of luxury's Italian sweatshops. It was such a riveting read, first of all. And by all accounts, it only scratched the surface of what's been happening for several years. So as a reminder, Sarah's piece, which was also highlighted on the debrief this year, was published in September. It found that luxury brands that manufacture in Italy that really renowned made Italy label routinely turn a blind eye to labor exploitation in their supply chain.

21:16They ignore red flags raised by audits and sustainability teams for the sake of convenience and cost. The story also pointed to an investigation by the Milan prosecutor's office, which named Armani and Dior specifically. So both brands, I should say, pushed back vehemently against the allegations made by the Milan prosecutor's office. One that was really that went viral was Dior. So there's this handbag that retails for around sixteen hundred dollars or euros. And according to the investigation, it costs roughly fifty seven euros to make. Dior is very adamant that there's so much more that goes into the making of a bag and that that figure is incorrect in that sometimes a factory could just be putting together, you know, the components of something, but that it costs much more than that to make.

22:05That is neither here nor there for now. But this is interesting to me that the read itself was interesting. The reactions on social media has been interesting to peeling back the layers of how luxury allegedly works. And so the disparity between what people pay for products and then some of the things that happen in the supply chain, how much the workers make, how much the products actually cost, you know, at the factory level. Why this will be interesting to watch in 2025 is that new regulations in Europe, specifically the incoming European due diligence rules, could mean that brands that are found to not be doing their part to adequately monitor and prevent labor abuses in their supply chains could face penalties of up to 5 % of global revenues.

22:51And so you think about Dior parent LVMH and like the hundreds of billions of dollars that they make. Five percent is no small amount. So I think that'll be interesting to watch. We're only at the beginning of how some of this shakes out and how transparent brands, if you think about luxury specifically, they're the North Star for healthy supply chains. And how they approach the next year or more will be one to watch. This was an incredible story. I definitely recommend people go read it and just learn all about what is happening, what has been happening in this world. The other reason this story really resonated is that it's happening against this wider luxury slowdown where it does seem like a lot of people are getting fed up with paying these very high prices, you know, for certain items that have gone up quite significantly, doubled or even tripled over just a few years.

23:49And when people see something like this, where they find out how these products are being made, it just adds that extra little push to say, hey, is that Dior bag really worth it? And that's something a lot of brands, even if they're not implicated directly in this scandal, are going to have to deal with next year. Absolutely. I mean, I think we've been giving a lot or the industry has been giving a lot of lip service to the customer's values driven. But I think luxury is one of the areas where people lean into this. I am investing in this piece because it is being made with integrity. And if that is chipped away at continuously, I think that'll be it'll be interesting to see whether values driven purchasing is really a thing or not.

24:33I always like to end with a couple of predictions from our guests and our hosts. Let's talk about what developments we think we're going to be looking at in 2025. What do we think are going to be the biggest stories that we do next year? Well, I'm going to be selfish to keep the theme going and say in my beat of workplace talents and culture, I think ESG and DEI will be interesting to watch in 2025 because we're seeing those things attempt to continue to take shape in a very hostile political environment. I was speaking to a recruiter and also a few brand consultants about how fashion talent can plan their career for 2025.

25:13And one of the most fascinating points I heard was from a recruiter, Kyle Rudy, who said he compared the ESGDI trajectory to that of e-commerce in fashion. So like the companies that were early adopters of e-commerce are now further ahead today, even as it ebbed and flowed and there was evolutions. The ones that adopted early and stuck to their guns are further ahead than their competitors today. And he compares that to DEI and ESG. He says the talent that are looking at companies that they work at or that they currently work at or that are pursuing employment at a certain company in the next year should be very mindful of how they approach things like DEI and ESG.

25:55Because he predicts that the companies that are early adopters of it and that stick to it will be the most innovative 10, 15 years from now. So don't watch quarter to quarter or, dare I say, the next four years. Watch the companies that are actually early adopters and that stick to their guns despite the ebbs and flows. So it's another way to say that is know how to work both sides of the trend without changing who you are. Sound advice. Nice. My prediction is one of these big struggling brands that we've been writing about this year in 2024 is going to successfully pull out of its slump. So I'm looking at, you know, Nike, Gucci, Estee Lauder's wanted beauty, and there's a couple others.

26:40And I'd have to pick Nike out of that group as probably having the best chance of maybe having some positive stories written about them next year. I'm certainly looking forward to that. Absolutely. I think the swoosh can do it as well. Please be sure to check out all the stories we discussed today and many more at businessoffashion.com. These and other stories are available to BOF professional subscribers only, and you can find the links in the episode notes. You've been listening to The Debrief, produced by Olivia Davies, edited, mixed, and mastered by Eric Bria. I'm Sheena Butler-Young. Thanks so much for joining us, and be sure to follow us wherever you get your podcasts.