Welcome to the Glossy Weekend Briefing, an overview of this week’s fashion news. As a valued Glossy reader you will receive these in your inbox on the next Sundays. Sign up for the Glossy Weekend Briefing here to ensure you continue to receive this email. Enjoying!
Over the past week, Nike escalated its conflict with StockX, accusing the resale platform of selling counterfeit sneakers and continuing one of the biggest conflicts in the fashion resale space. Meanwhile, the crypto market looks dangerous to investors, which should be of interest to crypto-curious fashion brands, and the ongoing Covid lockdowns in China impacted the recent earnings and future prospects of luxury brands. Don’t forget to subscribe to the Glossy Podcast to hear the latest episode, an interview with Frame co-founder Erik Torstensson. –Danny Parisi, senior fashion reporter
Nike feud with StockX
On Wednesday, the feud between Nike and StockX, the nearly $4 billion resale platform, escalated to new levels. Nike publicly accused StockX of selling fake Nike shoes, claiming it could buy four pairs of StockX shoes that were confirmed to be counterfeits.
It’s a major escalation of Nike’s anti-StockX rhetoric and one that seems clearly intended to bolster Nike’s pending lawsuit against StockX that it filed in February. Nike is suing StockX for selling NFTs with Nike’s trademarks and logos. StockX began selling what it called Vault NFTs in January with images of real sneakers, many of them Nike. One of the alleged counterfeit sneakers that Nike was able to purchase from StockX was the “Patent Bred” Air Jordan 1 High OG, which also happens to be one of the sneakers StockX sells in a Vault NFT.
Ultimately, the conflict boils down to a dispute over what an NFT actually is. Nike’s argument is that StockX makes and sells a product using trademarked images owned by Nike. StockX states that what it actually sells is a virtual proof of ownership of a real pair of sneakers in StockX’s vault that users can buy and sell to each other. NFT holders in particular do not actually receive the physical sneakers.
It’s a fine line between the two definitions and one that doesn’t have much legal precedent yet. StockX, as a marketplace where Nike products can be purchased, is allowed to use Nike in its advertising and often does, even though Nike does not technically have an official partnership with StockX.
But even that arrangement caused some grumbling from brands. In 2019, streetwear designer Jeff Staple voiced concerns to Glossy about allowing resellers to use the trademarked images of the brands they sell in their ads. This leaves brands out of control over how their brand is presented and can lead to potential consumer confusion that the brand is officially involved in some way.
The conflict is also interesting for three other reasons. First, StockX and other resellers have often made big claims about their ability to authenticate products, an area of particular interest for products aimed at collectors of sneakers and luxury handbags or rare collectibles, all of which are sold by StockX. Nike’s undermining of StockX’s authentication capabilities could reduce consumer confidence in StockX’s products.
StockX’s rebuttal of Nike’s counterfeit claim was particularly strong. In a public statement, it called Nike’s false accusations a “panic and desperate attempt to revive the lost lawsuit against our innovative Vault NFT program.”
Second, while StockX sells sneakers from all kinds of brands, there’s no denying that Nike is the backbone of the company. Nike is the most in-demand sneaker brand in the world and StockX is built on the power of reselling Nike sneakers.
Previously, Nike didn’t seem to care much about what the resellers did. But now that Nike is launching its own NFTs and its own resale platform, StockX has suddenly become competition. Nike cannot prohibit StockX users from buying or selling Nike products on the market, so lawsuits like this are Nike’s only option to curb competition.
“Ultimately, brands can’t control third-party platforms,” said Andy Ruben, CEO of brand recommerce company Trove. “In the days of retail wholesalers, if Best Buy conflicted with what Apple wants, Apple would just cut them off. There’s no such option in a third-party marketplace.”
Finally, Nike’s claims about counterfeit sneakers are similar to Chanel’s claims that The RealReal cannot guarantee the authenticity of the Chanel products sold on the site. Both claims point to a split between brands and resellers. While many brands have come to embrace the idea of resale, they are much more interested in controlling that resale internally. Brands like Madewell, Levi’s and Patagonia have all launched their own resale programs, and while none have attacked a third-party platform like Nike or Chanel, they are now in direct competition with them for the second-hand sale of their own clothing.
Likewise, according to Ruben, third-party resellers are not obligated to do what brands want.
“In the end, they don’t need any brand other than the logo that validates the product,” he said.
Crypto Market Crash
Panic broke out among crypto investors Thursday morning following the precipitous decline of the dual cryptocurrencies Luna and Terra, the latter of which is a “stablecoin” meant to always trade at $1 per coin. On Thursday afternoon, Terra traded at 23 cents a coin. Those who invested their money in Terra’s companion Luna collectively lost billions of dollars, sending reverberations to the rest of the crypto world, causing other major currencies like Bitcoin and stablecoin Tether to fall as well. Tether fell to 95 cents and Bitcoin fell nearly 9%, to its lowest level since 2020.
While it’s too early to say exactly what the impact of Thursday’s market panic will be on the rest of the crypto world, fashion brands should take note. The fashion industry has wholeheartedly embraced NFTs, which can often only be purchased with cryptocurrency, and has even started accepting cryptocurrency as payment, as Gucci announced Tuesday. If other currencies collapse – most notably Tether, the largest stablecoin and gives liquidity to many other currencies – that would be bad news for all crypto-related projects that fashion brands invest in, such as Nike with its NFTs or Off-White which accepts crypto payments.
Fashion takes tennis
Tennis has been all over the place this week. Fabletics, Louis Vuitton, Michael Kors and Terez have all launched tennis categories in the past week, and Sporty & Rich, UpWest and Lululemon have all launched in the past two months. Tennis companies such as Wilson and Universal Tennis have also made their way into fashion, the former with a luxury streetwear collection and the latter by partnering with Fabletics.
For Glossy this week I looked at why the fashion world is so fascinated by tennis right now. In part, it’s simply because the sport has recently become popular in the US. In 2020 and 2021, tennis adoption grew by more than 20% a year, which Lacoste North American CEO Robert Aldrich attributed to tennis being a “socially distant sport.”
China lockdowns affecting luxury sales
Ongoing lockdowns to contain the spread of Covid-19 in China popped up several times in luxury brand earnings reports this week, but the forecast was different depending on who you asked.
Holding company Tapestry, the owner of Coach and Kate Spade, said the lockdowns hurt sales in China, dropping them by mid-teens percentage points for its brands. In response, Tapestry lowered its full-year forecasts in anticipation of continued losses in China. Meanwhile, Italian luxury brand Tod’s also expects losses in China, but has not lowered its full-year forecast, telling investors on Wednesday it still plans to hit its targets regardless of its performance in China.
on the calendar
Join us tomorrow, May 16, at the Glossy E-Commerce Forum in NYC, where we bring together leaders from influential brands and retailers to explain how they are winning customers, driving sales and rethinking the omnichannel concept. Purchasing a pass also grants you access to Commerce Week City Hall, which takes place virtually on Tuesdays at 11 a.m. EDT.