The running market is alive and well, and Brooks intends to capitalize.
Late last week, CEO Jim Weber and president Dan Sheridan spoke with FN on the final day of The Running Event (TRE), the annual running industry trade show held in Austin, Texas. During the event, Brooks revealed several products it expects to impress all types of running consumers throughout 2024, including its pinnacle Caldera 7 trail shoe and the road-ready Adrenaline GTS 24 support style.
Speaking with FN, Weber and Sheridan touted the brand’s improving performance in both Europe and China as a reason to have confidence, as well as the steady participation of consumers and the health of the specialty run retail channel.
Recent results should also give Brooks execs a reason to be confident. For Q3, which was reported in November, the brand’s global revenue grew 5 percent year-to-date, with revenues in North America increasing 7 percent. Also, Brooks’ revenue climbed 22 percent in France and the U.K. combined year-to-date, and China experienced unspecified growth.
Here, Weber and Sheridan reveal Brooks’ plans for 2024 and beyond to FN. The conversation has been edited for clarity.
The trade show landscape is challenged, and yet TRE is growing and thriving. What makes this event special?
Jim Weber: “The specialty running community at retail is pretty unique. Retail has changed dramatically over the last decades, but this group of stores — and it’s not just specialty run, sporting goods is here as well — this group of stores caters to that local running community. They’re connected in sports medicine, they’re connected with race directors, they’re connected with local high schools. At their best, they’re part of the community. In this day and age when the consumers are moving so fast, and they’re actually hard to reach and connect and engage with and understand. That’s what’s made this category unique and this retail trade show different because they show up here. Even when tough times come, people come here to compare notes, reinforce their judgment and their thinking, become more confident in what they’re doing or learn something from other people and how they’re solving for it. That’s happening here, and it’s kind of old school but because of the nature of the running retailers, it’s still really relevant. That’s the only reason I’m here. If the retailers weren’t here, we would not be here. They’re seeing value in it, and I’m glad it’s healthy because it’s good for our category. It’s good for our industry to have these conversations.”
Leading up to this show, TRE announced several new partnerships with the National Shoe Retailers Association and others, and revealed plans to bolster the pickleball presence on the expo floor. What do you make of the show’s evolution?
Dan Sheridan: “It tracks with the business, to some degree. If you see the trends in the business, trail is one of the fastest growing categories globally, trail and hike. That’s a natural adjacency to road running and performance, so it’s a smart move on the organizers. This show brings retailers, so now you’re getting some of that specialty outdoor as well to show up. Pickleball is another extension of that. This space has the ability to be flexible, too, of adding categories and editing categories. We’ve seen it over the years when nutrition and all the therapeutic stuff was a big part of the show a long time ago. They just adjust to the business needs.”
What is your biggest concern heading into 2024?
JW: “There’s so much volatility and change happening at every level of our society, especially globally, and the economy is such a puzzle. Everybody’s sort of confounded by the recession that has been predicted and has never come. We look at participation and all the adjacencies and addressable categories starting with run, going into walk, going into hike, going into treadmill gym, going into trail, and it is incredibly strong. People are active. That’s where you begin, that’s the addressable market. Then, our category has made the cut. Performance running footwear, in particular. If you have an income and assets and you’re in your active, this is the place people seem to be spending money right now. What’s really interesting is the price points have elevated. This category has got a bit of a hit factor now because people are willing to pay $140, $160, $180, $200 and beyond. How long is that going to last? I don’t know. Premium prices are healthy for this industry. Everyone’s investing because of that. You’ve seen these cycles go through footwear, nothing lasts forever. Ten years ago on this floor, the silhouette was minimalist footwear, barefoot-inspired. Today, it’s maximalist cushioning. What’s it going to be in five years? I don’t know. That’s what we evolve with and the customer is moving. We’re optimistic. Having said that, Europe is tough, retail is tough there, so the consumer could get very cautious. Running has tended to make it through that, and there’s more going on than runners buying running shoes in this category.”
Prior to TRE, I read a story we published in 2017 about Brooks shuttering its Heritage imprint. Because the retro runner aesthetic in favor with consumers again, does Brooks have a plan to capitalize?
DS: “There’s a few things that we think about in terms of adding businesses. That has to do with addressable market and the consumer and understand the consumer. Heritage and lifestyle, performance lifestyle, is absolutely in our wheelhouse. It will be in our future. We’ve got a catalog of some of the most iconic footwear in the running industry ever.”
JW: “Especially the late ’90s and early 2000s.”
DS: “That’s our sweet spot. So we’re thinking deeply about it. We don’t do anything out of haste or reaction. This brand is is got so much more breadth to it than we’re playing right now, and Jim and I both believe that we can do that, it’s in our future.”
JW: “We’ve had our head down to build performance credibility and authenticity with the most discerning people [for the past 20 years]. Now, we’re pulling our head up, we’ve got so much opportunity in and around performance run and adjacent consumers and activities, but this space is compelling because we’re authentic in it. We know if we do it right, we can do it so authentically.”
What is your strategy for lifestyle?
DS: “There’s two lanes we can play in. One is merchandising and materializing our performance product. That’s 2024 for us, that is happening now. We’re going after a bigger addressable market with that — people that are fit, active, in the gym but want a silhouette that isn’t completely in the run technical space. The second lane is what you’ve already identified, which is the heritage, historical product that we’ve had. That’s what we’re working toward for a later launch.”
How, and where, will Brooks win in 2024?
DS: “In the U.S. specifically, we see double-digit growth out of the U.S. next year across all channels for a lot of reasons. One, the innovation with Hyperion and Glycerin and Ghost Max. We’re working really hard on a late launch of Glycerin Max, another maximal shoe in the market. That’s the first place we’re going to grow double-digit and we’ll be getting some share out of that in the U.S. But the real growth is coming from Europe and China long term, but Europe next year. We’ve got five core countries that we are focused on. Our strategy is very similar over there, and all the signals for us over there in terms of participation. Retailer health is a little different over there, inventories are a little out of whack right now, but we feel really good about Europe. And China is what I would say is our 30-year strategy (laughs). We’re going to be focused on that for a while.”
Where is Brooks challenged the most? And how will you respond to those challenges?
JW: “We’ve come into this fall with the lightest new product pipeline ever in the last few years because of the disruption we had in Vietnam. We were delayed on all of these new products, but we’re back to normal. The other thing I would say is we didn’t aggressively merchandise to the end user in color. I call it the airplane shoe, that shoe that you can wear with jeans and travel with and then you can go to the gym, go for a run. We’re going to have a full offense now.”
From a broader industry perspective, what will be the story of the running footwear market in 2024?
DS: “The participation rate in run, and even broader than that — fitness, walking, hiking, trail running. Participation continues to drive this category. Everything that happened during COVID, the question was, ‘Was it going to be sticky? Were people that got back to running and walking on a daily, weekly basis going to stick with it or would they go back to the gym and do their classes?’ We’re seeing it be sticky. That participation is what’s driving the biggest trade show we’ve ever had here. I think that’s the story. And [specialty run] retail is really healthy. We’ve gone through times in this industry where it’s a question mark on how healthy retail is. Retail is healthy right now across channels. That’s a key story for us as we navigate participation and the uncertainty of the economy.”
