This article is part of our Vogue Business Membership package. To enjoy unlimited access to Member-only reporting and insights, our NFT Tracker, Beauty Trend Tracker and TikTok Trend Tracker, weekly Technology, Beauty and Sustainability Edits and exclusive event invitations, sign up for Membership here.
Swiss activewear brand On rose to prominence in niche running clubs around Europe. Thirteen years later, the brand formerly known as On Running is cementing its position on and off the track or trail, worn by fashion and sports fans from Paris to Silicon Valley.
Co-CEO Marc Maurer says On is set to double its expected 2023 net sales to at least CHF 3.55 billion ($4 billion) by 2026. To do so, the motto is “Elevate, Expand, Establish”, which in practice, means boosting brand awareness, expanding direct-to-consumer retail, investing in new categories like tennis and training and pushing further into fashion, with new apparel drops and continuing its buzzy Loewe collaboration. It’s playing in a crowded market, but with a focus on innovation and premium positioning, Maurer is confident it can differentiate from rivals.
“We want to become the most premium activewear label in the world,” Maurer says, speaking from On’s Zurich HQ, where they employ over 2,000 people. “What we’ve done in running has worked as a recipe, so when we enter new categories, we will use the same recipe, starting with innovation.”
On was founded in 2010 by friends David Allemann, Olivier Bernhard and Caspar Coppetti, who set out to create a running shoe that was comfortable and cushioned with a transparent supply chain. The founders stepped back from daily operations after its IPO in 2021, appointing Maurer — who was COO — and CFO Martin Hoffmann as co-CEOs. Both Maurer and Hoffmann have been with the company since 2013.
On is a premium label, with footwear retailing from $130 to $220. It’s known for its distinctive “cloud sole”, with large square holes in the foam sole that compress to allow for cushioning without having to add the thicker soles you might see from other running shoes. “Running shoes in 2010 were full of a lot of bling bling,” says Maurer. “I could share pictures with you from 2010, and you could not distinguish [between leading running brands]; it all looked the same. We were different, which drove some curiosity.”
It’s On’s distinctive design that’s allowed the label to win market share from incumbents and uphold resilience as other labels meet headwinds, says Matt Powell, senior advisor at international brand consultancy BCE. (In Q1, Nike missed its earnings goals for the first time in two years.)
“I don’t think the problems that we’re seeing in athletic footwear right now are really macro-economic problems, I think they’re product problems,” says Powell. “There’s not enough newness and freshness in the marketplace. And the customer is saying, ‘If I don’t see anything new, I’m not going to spend any money.’ On has brought fresh products into the marketplace and been very successful.”
In the beginning, to build a community with limited budget, On partnered with running stores like Run and Become in London or events like Zurich’s Zoo Run. Eventually, the brand gained popularity via word of mouth and became a key player in the specialised running space. But when the brand listed on the New York Stock Exchange in September 2021, it made its way into the big leagues. On sold 31.1 million shares priced at $24, raising $746.4 million and valuing the company at $6.5 billion.
“The IPO gave us a bit of a megaphone to the world. Before, we were a sizable brand, but we were way below 1 billion in revenues. We didn’t have the brand awareness we have now, especially in the US,” Maurer says. Before the listing, On had just one store in New York’s Lafayette. Today, it has 30 single-brand stores across the US, EMEA, China and Japan, with new openings in Berlin, Zurich and potentially Chicago in the coming year.
More than a running brand
After its IPO, On’s goals extend far beyond its running roots. As people emerged from lockdown seeking more versatile wardrobes, the brand’s minimalist design and cushioned comfort meant customers started wearing their shoes at work or when running errands, as well as on their runs or workouts. The brand leaned in, pushing lifestyle shoes like the Cloudnova and the Cloud X Shift (designed for walking around the city).
In 2022, Loewe’s creative director Jonathan Anderson approached On to collaborate, and they inked a high-profile, multi-year collaboration. The Loewe x On Cloudtilt reimagines the shoe’s signature cloud sole in bright colourways, from lilac to lime green, complete with the Loewe Anagram logo. The fourth collection, released last month, is nearly sold out across major luxury retailers. In Japan, Maurer says, the On stores sold 90 per cent of stock in the first two days.
Apparel currently represents 5 per cent of On’s business, but Maurer hopes to double this over the next three to five years. Continuing its high-fashion play, On released a campaign with British Vogue last month, which saw a Vogue editor photographed in New York, styling On leggings or sports bras with luxury blazers and skirts. “As our budgets get bigger, we are looking more at top-of-funnel advertising to raise brand awareness outside of our community,” Maurer says.
The category is certainly an opportunity: sports-inspired apparel grew faster than performance wear in 2023, according to Euromonitor. And activewear players from Lululemon to Nike have invested in fashion-forward casualwear collections this year, with performance wear designed to be styled with everyday clothes. Just last week, Adidas unveiled the first iteration of its long-term collaboration with LA luxury label Fear of God.
Footwear’s growth opportunities
Footwear remains On’s bread and butter. The global sports footwear market is worth $156 billion this year, per Euromonitor, up 10 per cent on 2022. On is expanding into new sports to capitalise on growth potential.
The On founders met fellow Swiss man, tennis legend Roger Federer, in 2019. After initial discussions about developing a tennis shoe with On, Federer ultimately invested in the label in an undisclosed deal. The brand went on to launch The Roger, its first tennis shoe, in 2021. Since then, it’s launched a suite of tennis shoe styles and has also signed players Ben Shelton, Iga Świątek and João Fonseca as ambassadors to build credibility and brand awareness in the sport.
When asked about the tennis expansion, Maurer offers two explanations. The emotional: “On and Roger fell in love with each other.” And the strategic: tennis and racquet sports are having a huge cultural moment right now, he says, presenting a lot of white space for innovation. “From a product perspective, the white leather tennis sneaker has been the same for the last 15 years, and it’s very uncomfortable. We created the Roger Advantage, which is comfortable and looks great.”
To cement its ambitions, On ran a tennis night in Brooklyn during the US Open this year, securing eight courts and inviting Federer, Shelton and Świątek to play with 100 On Community members, followed by a party.
Training is the next frontier, Maurer says, to help On reach young consumers. “The reality is most 18 to 25-year-olds spend a lot of time training in the gym,” he says. “It’s very important for us to be able to cater to that community.”
On will launch a new training shoe next spring alongside a training apparel offering that’s intended to work for multiple activities, reflecting the way young consumers buy activewear. “Most people would not buy just running apparel,” he says, “they would basically buy sports apparel that you can also run in. And usually that authentication comes from the training space. So we feel it’s a big category and an important element to our three-year journey to above $3 billion.”
Scaling up and the implications for sustainability
Over the last two years, On has been focused on its DTC channels, pulling back from new wholesale accounts to focus on existing partners and new own-brand retail opportunities.
As well as giving exposure to new categories, On stores are key to the brand’s premium positioning, Maurer says. London’s Regent Street store opened in February and features a robot leg demonstrating the running shoes, a wind simulator to prove the durability of apparel, and easy-access drawers that allow store associates to access all available sizes of a shoe without going in the back. “We’re trying to give an experience that’s not a mass market experience,” says Maurer.
China is the world’s second-biggest sneaker market, says Powell. But it’s not easy to penetrate, as consumers favour local brands like Li Ning over Western players. While Chinese consumers aren’t big into running, On has achieved high penetration in China by focusing more on general movement. It has 20 stores across Tier One cities like Beijing and Shanghai.
China is still a small portion of the brand’s business, but there’s room for growth, Maurer says. Powell adds that, to reach its ambitious growth goals, On needs to up its retail footprint in the US, where it trails behind major players like Nike and Adidas.
As On grows, Maurer sees the company’s bigger scope and budgets as an opportunity to innovate. It’s necessary because performance footwear faces unique sustainability challenges, including its waste footprint and its dependence on raw materials — such as leather — and petrochemical adhesives, the company acknowledges.
The race to create more sustainable footwear has been on for some time now, with brands from Allbirds to Veja aiming to create lower-impact shoes. On says its Cyclon subscription shoe, launched in 2020 and made with castor beans, is 100 per cent recyclable; customers can return after six months and receive a brand new pair, while the company grinds the returned shoes down to be turned into new product. The brand has also created a new midsole material called CleanCloud, which it says is made with 50 per cent captured CO2. It’s hoping to roll this out across all its products as soon as possible, Maurer says. The brand also moved from dye cutting to injection moulding its internal speedboard shoe component in the last year, which it says reduces waste by 90 per cent.
In this sense, Maurer argues that the brand’s growth is positive. “Scale allows us to invest in these solutions,” he says. “The real challenge is how do we stay as innovative as we are today and as nimble as we are today together with our partners to keep on pushing those solutions? Our task is to keep the team very focused and give them all the means and freedom they need to have in pushing sustainable solutions, together with our partners, as we grow.”
Comments, questions or feedback? Email us at feedback@voguebusiness.com.
More from this author:
Alo Yoga takes on Europe, starting with the UK
Grace Beverley’s Tala is growing up. Just don’t call it an influencer brand
Nike crashes Paris Couture Week to unveil new era for womenswear
