According to Running USA, over 9 million people run more than 110 days per year. The nonprofit trade group reports a record number of marathon finishes throughout 2013, with 541,000 people crossing the finish line at one of the country's 1,100 marathons.
Combined with the millions of runners who don't go the full 26.2 miles, that's a lot of feet. Feet that Seattle-based running specialty company Brooks Sports wants to put in its shoes.
Backed by Warren Buffett's private equity firm Berkshire Hathaway, Brooks--which is celebrating its 100th anniversary this year--is now the leader in the multibillion-dollar specialty running shoe market, with a 29 percent share.
It is hard to believe that Brooks, known for is brand ethos 'Run Happy,' was on the brink of bankruptcy in 2001. A white-hot brand in the '70s and '80s, Brooks made shoes and apparel for a variety of sports including basketball, tennis, and football, until 2001 when Jim Weber came on as CEO. With the company losing money on many of its product lines, Weber decided to undertake a massive strategy change.
He narrowed Brooks's focus to running, cutting products that produced $30 million in annual revenue. The move paid off. According to Weber, in the last 13 years the Seattle-based company has grown 18 percent compound, and is expected to crack $500 million in revenue this year. Here is how Weber and Brooks took the company from near-failure to market leader.
All about the product
When Weber came on as CEO, Brooks was selling two high-performance, stability running shoes, the Beast and the Addiction, and several cheaper models in the athletically-styled family footwear category. These "barbecue and lawnmowing shoes,"--the term Weber uses because that's all you would do in them--made up half of Brooks's business and were losing the company money. Brooks jettisoned more than half of its shoes and other products and focused solely on running.
"We were everything to everybody and were sixth, seventh, or eighth at everything," Weber says. "Brooks was like every other athletic footwear company, only a lot smaller. We didn't have the marketing spend. Our brand was tired and running on fumes."
Weber knew specializing was the only way to survive when up against generalist-giants like Nike. The company built an in-house lab, brought in experts, dove into materials research, and extended its running product offerings while perfecting the fit and ride of its shoes.
"We stopped making shoes under $80 and shifted all to run. We burned the boats and the product got better and better and better," Weber says. "The product experience is where you build a performance brand. You can't get there with advertising. Advertising is a turbocharger, but the product is where you really create authenticity and credibility."
Building an identity
After Brooks scrapped much of its product line, the company went dark on advertising for a year and started to build a community around the reimagined brand. During this period, the company focused on putting Brooks shoes on runners' feet, getting key influencers such as coaches and sports medicine professionals behind the Brooks brand, and building relationships with specialty running stores.
"The relationship is really good and I would categorize it as really special from the standpoint that [Brooks's] focus in the running category allows them to do some things that certainly are more challenging for some larger brands that are multi-category," says Jeff Phillips, the CEO of specialty run franchise Fleet Feet.
Brooks also focused its marketing efforts specifically where runners were located. Today, the company has more than 40 sales reps that work with specialty run stores, and a group of a hundred of field marketing employees known as 'gurus' who promote the Brooks brand and peddle products at retail locations, run expos, fun runs and community promotional events.
Paying off in partnerships
The run-only identity has opened up other doors as well. In 2009 Brooks was able to land a partnership with the Competitor Group, the company behind the Rock n' Roll marathon series, which holds 23 events in North America and six in Europe each year. And earlier this year professional middle-distance runner Nick Symmonds left the Nike-sponsored Oregon Track Club and signed a shoe and apparel contract with Brooks--a huge steal for the smaller brand.
"I had been running with Nike for seven years and as much as I enjoyed working with them, it was always a little bit frustrating to be a small division of such a large company," says Symmonds, a former Olympian. "I could tell that Nike's focus was more on some of the other sports. I am not a professional golfer, I am not a professional basketball player--I am a professional runner. I really wanted to work with a company that got that."
Still hurdles ahead
As much as its focus on running has paid off, Brooks is still building and adapting to a changing industry. The surging popularity of online shopping has made it much harder for Brooks's partner stores. "We are facing a number of challenges. One is a digital-empowered consumer. I have been in the business for 30 years and have seen the balance of power shift from the manufacturer in the early days, to the retailer, and now ultimately to the consumer," Fleet Feet's Phillips laments. "They have access to a tremendous amount of information and unlimited access to product and multiple channels of distribution."
Weber says that most runners are still buying their first pair of shoes in a store and then shifting to online retailers once they know what they want. "You can't stop a runner from getting their second or third pair on the Web, but what we can manage is that they are full price and presented as a premium product," he says, adding that Brooks no longer sells inventory on Amazon and has ended its relationships with another 50 Internet-only resellers in the last four years.
Weber says that he doesn't believe that local run shops are on the way out, but Brooks isn't relying solely on brick-and-mortar stores. He is working to focus the company on digital and further spread the brand name. "We have a lot of opportunity to build awareness and connection with people that don't really know us," he says. "We still aren't reaching all the runners that we want to reach yet, but we will get there. We are only at mile 10."