July 20, 2024

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On and Hoka are gaining market share, as Nike reports sales declines

4 min read

Over the last year, sneaker brands On and Hoka have continued to see growth, while the sector’s biggest giant, Nike, has experienced sales declines.

Nike’s fourth-quarter earnings, reported on Thursday, showed a year-over-year revenue decrease of 1.7% for the quarter, to $12.61 billion. In addition, its annual results revealed the company’s slowest sales gain in 14 years. 

With their fast innovation cycles, close connection to younger customers and smart supply chain practices, On and Hoka are becoming a greater threat to the activewear giant. Both brands do a small percentage of Nike’s sales, at about $2 billion each per year. Nike, meanwhile, has reportedly struggled to attract younger customers.

“Nike remains the biggest player in the field by a large margin, but its size is also hampering its ability to push out great product and great storytelling to the market,” said Neil Saunders, managing director of data consultancy company GlobalData.

Colin Ingram, vp of global product at Hoka, said the brand has been expanding its footwear assortment to cater to a diverse range of consumers, from core running enthusiasts to trail explorers and lifestyle customers. 

“Our Hoka identity is rooted in … delivering unmatched comfort and performance,” said Ingram. “We aim to create an unparalleled experience with every pair of shoes, combining state-of-the-art technology with thoughtful design. Innovation will continue to transform to meet specific needs, creating unique fusions within and between categories.”

This year, Hoka introduced several styles, including the Skyward X, Cielo X1 and Mach 6 for running and racing, and the Tecton X3 for trail hiking. The Skyward X offers a more plush inside with a tall midsole and carbon features, making it ideal for both daily runs and races. The Cielo X1, meanwhile, is a road racing shoe with a winged carbon fiber plate, and the Mach 6 was designed to provide extra energy return with its foam midsole.

“Our product teams work to ensure balanced growth across all segments, catering to each Hoka interest group while preserving the Hoka look and feel that has set us apart since the beginning,” Ingram said.

Both Hoka and On are also investing in retail expansion as a customer acquisition tool. In May, Hoka opened a flagship store in Paris. The following month, it opened its second flagship in New York, on Fifth Avenue. “It allows the brand to connect with consumers on a global scale,” thanks to visiting tourists and social media, Brooke Lord, vp of Hoka U.S., said of the NYC store. During the NYC flagship opening, a collaboration with local influencer Dude with Sign (@dudewithsign, 8 million Instagram followers) resulted in a June 7 post garnering 1.2 million impressions.

Hoka’s Paris flagship opening also saw significant social media traction, with 515,000 people engaging with dedicated posts.

Hoka’s new stores often serve as an introduction to new markets and work to enhance brand awareness and customer engagement. Leveraging them to source real-time customer feedback is also an objective. On, meanwhile, opened stores in Germany and Hong Kong in March after a successful launch in the U.K. last year.

Both Hoka and On are still small, compared to Nike. However, they have steadily gained market share, as evident on retail shelves and in sales. “Hoka and On have created strong communities around their brands, as reflected in their marketing,” Saunders said. “That, along with their focus on innovation, has made them interesting and relevant in a way that Nike is now struggling to accomplish.”

Another bright spot for both brands has been their running clubs which have worked to cultivate community and attract younger consumers. The global On Running Club encourages runners to join local run groups, while Hoka’s global running club offers a more fashion-centric experience through its partnerships with other brands. Nike, meanwhile, has stepped away from the investment.

“Hoka aims to inspire people to find joy through movement – whether that be running, trail exploration, or everyday lifestyle and fashion needs,” Lord said.

Hoka’s competitive edge also includes its sustainable practices. It is reducing its use of unwanted materials in production and has ambitious goals for decreasing reliance on petroleum-based plastics and conserving critical resources like paper, carbon and water. Meanwhile, Nike has been falling behind on its sustainability initiatives.

“Today, over 99% of [Hoka’s] footwear styles contain at least one preferred material that is recycled, renewed or naturally sourced,” said Ingram. “By 2030, 55% of all co-polyester fibers in our footwear and 70% in our apparel and accessories will come from renewable or post-consumer resources.”

Footwear and apparel maker Deckers Outdoor, the parent company of Hoka, has consistently achieved double-digit revenue growth, driven primarily by the popularity of Hoka and Ugg. On May 23, Deckers reported its full-year results, with net sales increasing 21.2% year-over-year to $959.8 million. According to Steve Fasching, Deckers’ CFO, the company is committed to maintaining this growth by continuously investing in new products and adapting to consumer preferences. 


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