When you picture the $91
billion sneaker market, what brands come to mind? Nike? Maybe Adidas? What about New Balance? Where does the running shoe
fit into the picture? New Balance has always been
a really reliable running shoe. But worn by chubby
white guys in their late 30s to early 40s. Did Steve Jobs wear New
Balance when he launched the iPhone? Perfect. Perfect shoe. I cannot wait to wear
these. When I think of New Balance,
I think of dads, even though I'm currently wearing New
Balances. New Balance ended 2022 with
a revenue of $5.3 billion. A new generation of top
athletes, influencers, celebrities and hype beasts
have pushed the brand into the spotlight. I feel like the past couple
of years it has been harder to get pairs that I want
because New Balance is so popular now. Here's how the company that
was once seen as the home of the ugly dad shoe became a
fashion forward brand. This is suddenly obsessed. These are the Mini Mouse's. You can only buy these at
Disney World. I bought my first pair of
New Balance around 1994. It was the 496 model. They were $40 bucks at the
time. I am Richie Rojas and I
collect New Balance sneakers. I have over 600
pairs. 43 year old Richie Roxas's
600 pair New Balance collection features both
new and vintage sneakers, along with New Balance
clothing and memorabilia. I definitely got made fun of
a lot in high school because most people were wearing
Nike's and Jordans, only a handful of us in school had
New Balances. Today, Richie is constantly
scouring websites and thrift stores, searching for rare
and unique new balance models. I think what sets New
Balance apart is the quality and the comfort, and they
just last longer than other brands. And that's, you
know, a big reason why I started collecting them in
the first place. In 2013, Rojas started the
Instagram account newbalance365 to keep track
of his growing collection. Today, his page has almost
18,000 followers. I don't really care about
selling any of my sneakers or making money off of
them. That's not really my goal. Richie may not be interested
in resale, but a lot of people are. New Balance
sales have grown for four straight years on the
retail site StockX. It's one of the top five
traded sneaker brands on the site. The most popular
styles are from the New Balance 550 Aimé Leon Dore
collection and the New Balance Kith Spring
Collection. Richie bought this special
edition sneaker at retail for $200. The same pair recently sold
for $2,000. So the resale market can do
a lot for building up buzz around the brand and
building brand heat. There's a couple of things
that you really need to see a brand do, and New Balance
has done very well. First off, you have to have
trend right product, right? If the product is not good,
it's off trend i t's not exciting to the consumer. It's not going to work.
Secondly, you have to manage supply very, very
carefully. A big part of sneaker
resale culture is this idea that people want what they
can't have. New Balance has done a good
job having product that is for the masses, but then
also having this carve out of their assortment where
supply is intentionally restricted and kept below
demand so that it can drive higher resale value and
drive buzz and heat for the brand. This buzz isn't only seen in
resale. New Balance's $5.3 billion
in sales in 2022 represent a 21% increase over the
previous year. But compared to other
footwear companies, New Balance is still a small
fish in a big pond. In 2022, rivals like Nike
and Adidas were still many times bigger than the
Boston brand. Still, New Balance is
recent popularity is helping its revenue grow faster
each year than its competitors. To fully
understand the sudden popularity New Balance is
experiencing right now, we need to go back to the
beginning of the story. The company was founded in
1906 when William J. Riley created an arch
insert inspired by the design of a chicken foot. His goal was to alleviate
pain for people working on their feet all day. The
arch inserts turned into a full shoe in 1938, when the
brand created its first New Balance running shoe. In 1941, New Balance began
selling shoes for other sports like tennis, boxing
and baseball. New Balance was a top
running shoe option all the way through the 1970s, the
same decade that the iconic N logo was added to its
line of products. But competition was on the
horizon. I'd say in the 80s and 90s. That was when you saw the
emergence and really the ascendance of Nike that
made things difficult for New Balance and other
participants in the marketplace. Nike took the footwear
market by storm, and with athletes like Michael
Jordan backing the brand, it quickly grew in both
popularity and market share. Nike was very aggressive,
very innovative. It had an impact on New
Balance, and it negatively impacted the perception of
the brand. While competitors were racing to
recruit stars, New Balance took a different approach. The company’s “endorsed by
no one” ad campaign was designed to let its shoes
speak for themselves. It didn't believe in
sponsoring athletes, right? And now it's like if you
want to compete with Nike and Adidas, you have to. In 2004 New Balance shook
things up, releasing a collaboration with UK
retailer Offspring. The partnership was a
success and in the years since, New Balance has
worked with brands like Kith, Aimé Leon Dore and
Joe Freshgoods. These collabs have helped
give New Balance a cool factor that has taken its
reputation from this... I don't think New Balance's
are that cool. They are pretty basic to
me. They don't really stand out
from the crowd. Every dad has them that he's
had, I think since the 80s and he wears them with his
khakis and his button down buttoned in and it feels
very suburban dad. To this.. I just cracked and got a new
pair because New Balance is back. New Balance seems cool
because all the cool girls are being comfortable now
instead of wearing heels to work. And I support that. Around 2010, consumers began
prioritizing comfort over fashion and athleisure. Brands benefited from this
shift. Lululemon, for example, saw
its revenue double in just four years, and New Balance
suddenly found itself in a position to capitalize on
changing consumer tastes. When you saw the trend shift
away from performance and towards casual, that was a
perfect storm for New Balance. Not only had they
been doing a lot of work to build up the credibility of
the brand and the fashion aspects of the brand, but
now this brand that was known for, quote unquote,
the dad shoe, which is a very, very comfortable
shoe. Well, now all of a sudden that became in vogue
and that was a big beneficiary to New Balance
and it created a halo for the rest of new Balance's
assortment that has helped drive the growth that we've
seen over the past 4 or 5 years. The pivotal moment came in
2017 when French luxury fashion house Balenciaga
debuted a chunky sneaker called the Triple S. Suddenly, the dad's shoe
was high fashion. What is a dad shoe? That's a good question. I imagine it to be
something kind of ugly. Usually, like all white
leather, I don't know. You always see memes of
like, people like mowing lawns or barbecuing in
them. New Balance was already
known as a bit of a quote unquote, chunky shoe. So
then when you saw high fashion runways
highlighting shoes with chunky outsoles, then that
probably trickled down to the athletic market as
well, which was another reason that New Balance
gained favor with consumers. While the Triple S sold for
over $1,000, New Balance's similar chunky styles cost a
fraction of that. As the brand's popularity
picked up, it was spotted on the feet of celebrities
like Hailey Bieber, Kendall Jenner and Ryan Reynolds. And it wasn't just the
dad's shoe getting attention. I think New Balance, they're
more than just a dad shoe trend. They have worked to
diversify the brand. They've said publicly that
they do over $5 billion of revenue annually. You can't
do $5 billion worth of revenue of selling just
quote unquote, dad shoes. Over the past decade, New
Balance has made a concerted effort to grow its brand,
investing in partnerships with star athletes like the
NBA's Kawhi Leonard and baseball's Shohei Ohtani. And in 2021, it brought on
Aimé Leon Dore founder Teddy Santis as creative director
of its Made in USA line. Definitely more
collaborations. Creative director
definitely did an awesome job pushing interesting
projects out there. You see New Balance ads
like on NBA games and like national TV networks. Like I feel like that was
never a thing before. It was only like in running
magazines and things like that. New Balance has also
benefited off of Gen Z's style influence and
obsession with the 1990s. You know, I think when you
have a brand that has as long and rich a history as
New Balance has, it's very easy to participate in
retro trends. You know, the emergence of
90s fashion, you know, coming back a brand like
New Balance that clearly has been around since the 1990s
and earlier. They're able to capitalize
on that trend by going into the vault and either
rereleasing shoes that came out back then or shoes that
are inspired by the 1990s style. I think we're in like a very
nostalgic age of fashion right now. I think
ironically, the dad shoe kind of falls into that. Put together all of these
key moments and changes have helped put New Balance in
the conversation with its much bigger rivals. The view of the New Balance
brand today is drastically different than what it was
ten years ago. They've got a much bigger
lifestyle component of the brand it has a much bigger
fashion aspect of the brand. They've done collaborations
with fashion designers and it's a much cooler brand
today than it was ten years ago. I think New Balance is
a brand that's building itself for a long term
future and not just coasting on a trend. And New Balance appears to
be on the right track. Ceo Joe Preston has said
the company could hit $10 billion in sales over the
next few years. But no matter what happens,
longtime fans like Richie will continue to support
New Balance. At the end of the day New
Balance will always hold on to its roots as a running
brand. They will never abandon
that. I always thought that was a
cool and different kind of nerdy in a way, you know? And nerdy also begins with
N, and that's kind of why I liked it in the first
place. So for me, New Balance will always be in
style.
