The origin of On, a Swiss sportswear brand, is unusual. In 2010 Olivier Bernhard, a triathlete, stuck bits of garden hose to the bottom of his trainers for added cushioning. The idea worked so well that he and two friends decided to make a business out of it.
Their shoes were a hit; last year the company made almost $2bn in sales. On November 12th it reported that its revenue in the quarter to September grew by 32%, year on year. On now has a market value of $17bn.
The global sportswear industry has long been dominated by two companies: Nike and Adidas. Last year they accounted for 35% and 16%, respectively, of the $146bn in net sales generated by the 15 biggest sportswear brands, according to Morgan Stanley, an investment bank. But that is down from a combined 63% in 2018.
Challengers are gaining ground, including established brands like New Balance and Asics as well as newer ones like On and Hoka. In China local firms such as Anta and Li-Ning are adding to the competition. The swoosh has been hit especially hard: over the past year its shares have plunged by 27% (see chart).
What went wrong for sportswear’s reigning champions? The winners and losers of the sportswear trade are decided on one product: trainers (or sneakers, as they are known outside Britain). Footwear makes up the bulk of sales at most big sportswear firms: 68% at Nike and 58% at Adidas. And shoes are where these companies differentiate themselves.
It is more difficult to produce a T-shirt that stands out,.