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.