Hoka Going Retail - Good Thing?

Looks like they are moving direct-to-consumer with brick and mortar. Good idea?

I had a talk with a CEO of a major endemic brand in the trail running space and we talked about this very question last week…the desire to move to a direct-to-consumer model. His perspective was very interesting. He said, that it is not a minor shift in operations to add DTC…rather, it involves the development of an entirely new division in the company that runs, almost, on a parallel track to the traditional distribution model. He said it is such a major commitment that many brands ultimately decide to shy away from it after consideration. Can Hoka be an exception and make this work?

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Interesting @davidc - Did the CEO give any insight into production volume? I think at least two of the possible strategies are 1) splitting current production volume among DTC & resellers, or 2) increasing production separately for DTC.

I can see the appeal of DTC brick n mortar in heavily urbanized or metropolitan areas. In a low population density area such as central Pennsylvania, specialty running or outdoor gear stores are the only option for retail. I’m actually kind of surprised that Penn State downtown doesn’t have at least one major athletic brand DTC

So this is similar to cycling’s Specialized Concept stores? As @Blake says, you’d need some pretty heavy traffic for that to work IMO.

I buy my Hokas from a variety of sources but have never bought directly online from them.
In Oz many years ago, there was a triathlon brand called Jaggad that tried going both traditional retail (to shops selling multiple brands) and then went direct also. Trouble was Jaggad would have regular sales, which would undercut the shops that were trying to sell their brand. A lot of the shops dropped them in the end.

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No, we didn’t get into that detail. It was, rather, a very high-level discussion on the challenge that consumer brands face if they try to pivot to a DTC model. The crux of that conversation centered around how quickly the perceived higher margins in DTC begin to erode as you layer on all the necessary levels of structure that are required to make DTC work.

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Gotcha. Yeah I can imagine that all of the pieces (logistics and otherwise) of setting up an entirely new distribution model require significant capital deeply affecting bottom line.

I wonder about something like pop-up shops, almost like a “micro DTC” brand strategy.

What he said is that most large brands, with branded retail stores, aren’t really running or operating these stores. Rather, they are contracting with an experienced consumer retail company to run and operate these brick and mortar stores.

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Okay, that makes a lot of sense - rather than going in new and alone, going in with an experienced partner. One upside, that outfit takes care of a majority of the heavy lifting. Down side, that service and expertise doesn’t come for free.

That’s interesting to now think of traditional brand retail stores in this way - not something I’d really considered before

Great stuff! Thx David