On Running - A Case Study

On is a Swiss footwear and apparel company, which since its founding in 2010, has secured a place in a little over decade at the top end of the global sportswear industry — worth around $384 billion in 2021, according to McKinsey & Company, and grown from a start-up to an NYSE listed brand.

On founders didn't have any prior shoe industry experience and yet, On has made its mark in a fiercely competitive space. A new Business of Fashion case study highlights On's success formula - Product Innovation, Brand Positioning, Distribution Strategy, and the Federer effect (Roger Federer is On's brand ambassador and the brand has a Roger collection).

From a brand standpoint, On is premium, advanced tech, their key messaging highlights product innovation and Swiss engineering and is primarily aimed at runners, while the portfolio also extends to walking, hiking and lifestyle segments. Powered by an innovative product, a smart channel strategy, and brand positioning, On is on to great success, estimated to cross $1Bn this year. More work is needed to improve shipping speeds and support which have been a challenge lately in US, but the success is undoubtable.

Their product lives up to the promise of running on clouds, with a patented unique outsole technology CloudTec for function and superb design including an offbeat color palette. There is a sophistication about the brand in every aspect of presentation. Their in-store displays in multi-brand outlets are designed to stand out and highlight premium with black color fixtures and their discounted products (discontinued models, excess stock) are messaged as On Classics. Add to that, the Roger Federer effect (On's brand ambassador and pretty involved with the brand) and On has swiftly built a following.?

They also have a prominent focus on ahead of curve circularity and sustainability in their messaging. They launched the first circular program, have an undyed shoe range, and have just launched a trade-in/refurbished purchase program aptly named Onward.

All of that said, I want to highlight the distribution strategy as On's channel strategy is what's quite interesting and runs contrary to the DTC led push in the last decade from other emerging brands. On aligned the channel strategy first focusing on where their primary customer set (running community) can discover the brand in the right setting, helping them generate buzz and gain momentum for scale. In the founder's words, “To gain credibility, you need good runners wearing your product, and for that you need specialty shops”.

On built specialty retail presence before focusing on mainstream wholesale and DTC. A specialty running store focused distribution helped On

a) reach their primary customer set

b) be in a setting with high purchase intent

c) side by side placement to competitor brands

d) access to sales professionals to educate customers and drive conversion, and finally

e) enable brand switching, not easy for runners

I myself discovered On in 2019 in a footwear store in Norway, wore their Cloud shoe (actually a walking shoe) on a technical hike the next day and have been a convert since then.?On scaled fast quickly expanding to new markets but also took learnings from initial failures, fully understanding the market before expanding doors and running overstock risk, which can dilute the brand. According to founders, "Now, when a [retail] account asks us for 200 doors, we give them 20 instead.”

Having built success in specialty channel and among the runner audience, On followed by expanding gradually into mainstream wholesale and rolling out DTC channel. Their DTC site also represents the brand well with a great focus on customer education (their model comparison module is a great example).

On used a smart distribution strategy to build the brand, find and target the right customer in the right setting, generate buzz and build momentum for the brand to scale further boosted by a strong foundation and following. Perhaps some strategy learnings here for emerging brands and startups on how to differentiate and grow in a crowded, competitive space, leveraging a distribution strategy that matches the customer and the product best. Lesson for emerging brands, understand your target audience where and how they buy, define your brand building strategy, and then use that to shape your channel strategy and roadmap. The fundamentals never cease to matter.

Link to the Business of Fashion case study here and On website here.

#brandbuilding #onrunning #channelstrategy