On the verge of bankruptcy in 2001 (and $65 million of annual revenue in 2000), Brooks grew at 18% compounded annual growth through 2014, largely due to reinventing its business and operating models.
Rather than compete head on with athletic footwear and apparel brands like Nike, Brooks chose to focus on a single sport–running. This required cutting products that produced $30 million in annual revenue. The company decided not to offer any shoes priced below $80. This decision wiped out the athletically styled family footwear category that current CEO Jim Weber refers to as “barbeque and lawn-mowing shoes.” The company is now a leader in the specialty running shoe market with almost 30% share. That market leadership was quite apparent when I toed the starting line of a marathon this past summer–I wasn’t the only one wearing a pair of Brooks. The shift from being “everything to everybody” to a laser focus on running, including doubling down on product innovation, catapulted the company from laggard to leader.
Sales reps are dedicated to specialty running stores and events that attract runners. All marketing dollars are spent talking to runners, often literally. Rather than just pay some money to get its logo on a banner or race shirt, Brooks brings real people to running events and engages in person to person interaction with runners. One example is Brooks’ partnership with the Rock n’ Roll marathon series which holds 23 events annually. Besides connecting with runners, Brooks has also made significant headway in converting other key influencers to the brand, such as running coaches and sports medicine professionals.
This focus on running has enabled Brooks to assemble a more talented team of sponsored athletes (including former Olympian Nick Symmonds). The team, known as the Brooks Beasts, trains close to headquarters in Seattle and plays a valuable role not only as brand champions, but also in the process of product innovation. The Beasts, among the most demanding runners, are available to offer feedback on new products/features.
Perhaps most significant, is Brooks’ support of their retail customers by ceasing sales of products on Amazon and 50 other internet-only re-sellers. Brooks knows it wins when both its customers and consumers win. Now, Brooks’ products in both brick and mortar and online stores are almost always full price and presented as premium products.
The business and operating models align because the North Star is the running-centric strategy. Brooks makes products to delight runners, sales through channels that attract runners, advertise at events where runners are present, and sponsor only professional runners. It would be difficult to compete head on with Nike across the plethora of sports, but Brooks has successfully competed in the running domain. Product performance oriented innovation coupled with reaching runners where they run, shop, and race has created an advantage versus many of Brooks’ more generalist peers.
Having purchased the company in 2006, Warren Buffet’s Berkshire Hathaway is convinced the business can still double its ~$500 million annual revenue to become a billion dollar brand.