The running shoe middlemen

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We bring you insights and stories from behind the supply chain of everyday products. Today's newsletter is about how athletic footwear is distributed in the US, and Latin America.

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Distribution in the US

Pre-pandemic, roughly 70-80% of brand sales were made to wholesale customers. But the tide is beginning to shift.

Today, well-known brands are cutting out the middleman and going directly to the customer. Just last year, Nike halted its distribution to Big 5 Sporting Goods, DSW, and Urban Outfitters.

By 2025, most major brands expect to have 50% of sales come from DTC!

Eyeing the empty shelves left behind by Nike, HOKA, a relatively new, yet budding brand owned by Deckers Brands, sees a golden opportunity.

Capitalizing on its growing appeal in the pandemic throughout the running community, Hoka added shoes for trail running, and hiking, while also broadening its distribution through strategic wholesale partners such as select Dicks Sporting Goods and Foot Locker.

Without the scale and resources to compete against a giant like Nike, brands like HOKA believe that expanding their wholesale network is powerful in introducing their brand to new customer cohorts.

Distribution in Latin America

Unlike in the US, most major brands continue to rely on local partners in Latin America to distribute their products.

From a strategic point of view, Grupo Axo and Grupo SBF understand the nuances of their respective local consumer better than any individual brand, and have the built-in operational scale for distribution:

  • Grupo Axo operates nearly 5,000 corners in department stores and nearly 800 retail stores
  • Grupo SBF owns and operates 211 retail stores and multiple distribution centers under its Centauro Brand

For Skechers, the deal with Grupo Charly was necessary, as a tariff for manufactured goods from China made it unprofitable for Skechers to sell its shoes in Mexico.

Looking to return to the market, they signed an exclusive deal with Grupo Charly in 2010, and the partnership is still going strong!

That's all for today. Thank you so much for sharing your Sunday with us!

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