Brief Summary
This video explores the rise of On, a Swiss sportswear company challenging industry giants like Nike and Adidas. It examines On's unique design, marketing strategies, and the factors contributing to its rapid growth, including the athleisure boom and Nike's missteps. The video also addresses the potential impact of tariffs on On's business and its plans for future expansion.
- On is rapidly growing and challenging established brands like Nike.
- Unique design and focus on premium pricing have contributed to On's success.
- Tariffs pose a potential threat to On's profit margins and growth.
Introduction
The video introduces On, a Swiss sneaker company that has emerged as a significant competitor to Nike. Despite being a relatively new player, On has experienced substantial growth since its IPO in 2021, with net sales increasing in 11 out of the past 13 quarters. The company's stock price has also outperformed its competitors. The video questions how On achieved such rapid growth and whether it can sustain this momentum amidst challenges from tariffs and established competitors.
Chapter 1: The rise of On
This chapter examines the factors behind On's success, including its innovative spray-on technology that allows for the creation of a sneaker in just three minutes. Marc Maurer, one of On's co-CEOs, explains that this technology significantly reduces the time and labour involved in traditional sneaker production. Analysts highlight the unique design of On's running shoes, particularly the hollow pads in the sole, as a key factor in attracting customers. Initially perceived as a lifestyle shoe, On has focused on performance and company-owned stores to its brand image. This strategy has proven successful, with athletes like Hellen Obiri winning the Boston Marathon in On shoes.
Chapter 2: Taking on Nike
The chapter discusses how On capitalised on market trends and Nike's missteps to gain market share. The rise in recreational running and athleisure during Covid lockdowns, combined with Nike scaling back retail partnerships, created an opportunity for On to secure prime retail space. While Nike still dominates the global sports footwear market with 40% market share, On has increased its share eightfold since 2019. Despite Nike's efforts to regain market share under its new CEO, On remains focused on product innovation and expansion. The company plans to double its store count and expand its apparel offerings, which currently make up a small portion of its business.
Chapter 3: Tariffs
This chapter addresses the potential impact of tariffs on On's business. With a significant portion of its products manufactured in Vietnam and Indonesia, On could be affected by proposed tariffs on these countries. While these tariffs have been suspended, their potential implementation could lead to price increases for consumers. Experts doubt the feasibility of moving production to the U.S. due to high labour costs and a lack of infrastructure. On has not confirmed whether it will move production due to tariffs but suggests that costs may be passed on to consumers. Analysts believe that On's premium brand positioning and pricing power may enable it to withstand the impact of tariffs.
