Brooks: A Laser Focus on Running

Brooks

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.

Business Model

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.

Operating Model

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.

Alignment

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.

http://www.cbsnews.com/news/brooks-running-toward-success-in-a-niche-market/

http://fortune.com/2014/10/31/how-buffetts-brooks-running-plans-to-become-a-1-billion-brand/

http://www.inc.com/abigail-tracy/how-brooks-running-became-an-industry-leader.html

http://www.seattlebusinessmag.com/article/light-step?page=0,1

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4 thoughts on “Brooks: A Laser Focus on Running

  1. Reading your post reminds me of the many benefits that a relentless focus on the customer can bring: product innovation, strategic direction, renewed energy, etc. But is it essential to choose just one customer? There are lots of companies–even in the althetics apparel space–that make shoes, clothing, balls, and the like for many segments in their market. Is the point here that Brooks needed a turn-around strategy, and running shoes was a good organizing principle? Do you foresee a day when they will expend into other customer types? What will that mean for the running-centricity they’ve so carefully cultivated?

    I’m also really interested in the concept of limiting their sales channel to Brooks stores ONLY. I can understand how that might help control price point and the presentation of their merchandise, but it comes with a high cost. Surely they reach fewer customers than they would if they sold through Amazon? And mightn’t some of their hardcore loyalists appreciate the ready availability of Brooks shoes delivered through their favorite online retailers? Lots of premium brands sell their products through myriad channels while maintaining their desirability and commanding price point. Why not Brooks?

    1. Great questions. Regarding the choice of one customer, I don’t think it necessarily has to be universal principle, but I do think the likelihood of Brooks being successful against the likes of Nike is vastly higher if they can focus on a specific segment of the market. I could definitely see future expansion to other markets in the future, but I think there is still a lot of runway left in the running world.

      Regarding channel, it’s not so much that Brooks won’t use online channels, they just make sure that price points are lower than those in their retail partner’s stores. Also, Brooks shoes are sold on Amazon, but they are not sold directly from Brooks and typically are past year models. But, as you allude to, perhaps there is a way to satisfy multiple channel partners. So far though, I think Brooks has erred on the side of making their traditional retail partners happy.

  2. Nice post and good question. The concept of focus is always a bit murky… how do you define the dimensions and extent? It’s always a question. I think Brooks benefits from alignment across various elements… technology – use case – manufacturing process – consumer segment – distribution model… when you can line up all of these different elements good things will happen!

  3. Ryan – what a great comeback story! They really took a risk in that big shift to focus on just running, but clearly it paid off! The alignment is just so crystal clear through this shift as well as their innovative partnership with Rock ‘n Roll… a great way to target exactly who they’re going after. They clearly saw and capitalized on a great opportunity to be the serious running shoe brand by making very deliberate, tough calls (like scrapping Amazon!). I’m curious if/how powerhouses like Nike and Asics responded?

    Also I’m curious if you know… were they founded in Seattle? I’m also fascinated that Adidas chose to move to Portland (near where Nike was always HQ-ed in Beaverton)… the pacific northwest seems to attract fitness apparel industry leaders!

    PS – interesting to see that you sport Nikes day-to-day for lifestyle wear, but you are a Brooks devotee when it comes to running… I’ll have to pick your brain about that! 🙂

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