I had a mad idea to run the London Marathon this year and for the first time I immersed myself in the world of running, discovering the joys of Strava, energy gels and anti-chafing shorts! Most of all I noticed that many ‘serious runners’ seemed to have moved on from the once dominant Nike running shoes to distinctive thick-soled HOKA shoes.
Post by Managing Partner Jon Goldstone.
This trend is born out in the numbers. In the full fiscal year 2024 HOKA’s sales increased 27.9% to $1.8bn and gross margin of Deckers, the brand owner, increased from 50.3% to 55.6%. In stark comparison, Nike’s shares plummeted 20% in June, erasing $28bn from its market capitalisation in a single day.
So what is the story behind the remarkable rise of HOKAs?
Click below to listen to the mini podcast version of Jon’s blog:
1. Founded upon a niche insight with mass application
HOKA was the brainchild of two avid trail runners on a quest to design a shoe that would allow them to feel like they were flying over rugged mountain trails. They envisioned a shoe that could provide superior cushioning to enhance downhill running, while also offering improved stability. Of course, that combination of superior cushioning and improved stability had appeal way beyond hard-core trail runners.
2. Built upon a highly distinctive product
The brand’s name itself is derived from the Maori language phrase “hoka one one” which translates to “fly over the earth”. While the world was chasing minimalist footwear HOKA developed their signature maximalist design, thick-soled but surprisingly lightweight. When first seen in the French Alps, the brand soon got noticed for its unconventional design. Over time the combination of breakthrough technology for superior performance and unconventional aesthetic (bold design, large logo, bright colours, over-sized sole) has disrupted the whole running shoe category.
3. Achieved credibility via close-in partnerships
After presenting initial HOKA prototypes at a tradeshow in 2009 a deal was struck with Mark Plaatjes, co-founder of Boulder Runner Company and a former world marathon champion, who had taken the shoes on a test run and fallen in love with them. The following year ultra-runner Karl Meltzer dropped La Sportiva in favour of HOKA and fame of the new challenger began to spread in the running community.
4. Drove physical availability across multiple channels
Immediately after Deckers acquired HOKA in 2012 they focussed on expanding distribution, making the brand available to consumers across the US. The omnichannel strategy focussed on building a seamless DTC experience, engaging with wholesale partners and developing their own immersive retail environment where customers could experience 3D foot-scanning, workout classes and communal events.
5. Broadened penetration base via range extension
The Deckers acquisition also kick-started the expansion of the range. By differentiating between ultra-sized shoes for elite athletes and oversized shoes for a more amateur audience HOKA was able to continue catering to loyal customers while tapping into a new audience and drive mass adoption.
6. Drove mental availability via more mainstream communication
As the target audience broadened so did HOKA’s communication channels. Partnership work continued with highly respected and credible brands like Strava, Outdoor Voices and Engineered Garments. HOKA also invested in the global “Fly Human Fly” brand campaign, featuring real users from amateur runners to trail runners and elite athletes, sharing their personal stories and achievements while wearing their distinctive HOKAs in action.
7. Established and maintained premium pricing power
Right from the start HOKA established a premium price, a pair of HOKAs averages at around £150, with the most premium products costing well over £200, which is very much in line with the price of Nike’s running shoes. Evidence of HOKA’s pricing power can be seen in the way that inflationary price increases have failed to slow its sales momentum and the very low level of discounting that it participates in.
In conclusion, HOKA is an outstanding example of a brand that has delivered true value to consumers by delivering the main category benefits (cushioning and stability) in a highly distinctive way that is best demonstrated in its product design but also across the whole marketing mix, from where and how it is sold through to the price that it commands.
No wonder David Powers, Deckers CEO said “HOKA has plenty of room to grow awareness, consideration and, ultimately, market share across all global regions” during May’s fourth-quarter earnings call with investors.
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