Name: How On Running Shoes Are Taking On Nike And Adidas
Uploaded: 2025-05-26T03:06:24.000Z
Duration: 10 min 29 s
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Here in Zurich, a Swiss sneaker company is taking on Nike.

We couldn't be happier for where we are as a brand after 15 years.

Adverbs of degree

And it all started quite simple, actually.

The brand On sells premium-priced athletic wear and is quickly gaining ground on legacy competitors.

The way the shoe looks is like nothing else on the shelf.

I think that the problem with Nike is On hold it.

I'm not kidding. This is the first true challenger to Nike.

Since going public in 2021, the company's net sales have grown in 11 out of the past 13 quarters.

And On's stock price has soared ahead of its competitors.

In its most recent earnings report, the company posted net sales of over $865 million for the quarter.

We all know about the running shoes, which everybody's gaga for, and they're just expanding the brand.

At the same time, On's biggest competitor, Nike, has faced stalling growth.

As of March 2025, Nike posted a sales decline in two of its last four quarters.

Adidas has also faced challenges in recent years and has ended its controversial partnership with Kanye West.

But On is also under pressure as tariffs proposed by the White House threaten to raise prices.

accounted for almost 60 percent of On's revenue.

Around 90 percent of On's products are manufactured in Vietnam, which President Trump has said could face a 46 percent import duty.

Nike is also undergoing a turnaround under its new CEO, Elliot Hill.

The company is aiming to win back market share it lost during the past few years.

Nike's biggest threat is if Nike spends 1 percent of their sales on marketing and On spends 1 percent of their sales on marketing.

That's the difference of billions of dollars.

So you're going toe to toe with someone that has a much bigger megaphone.

So how did On go from a startup to becoming one of the biggest global challengers in sportswear?

And can the company maintain its rapid growth despite pressure from tariffs and competitors?

CNBC visited On's headquarters in Zurich to get a behind the scenes look at the company and how its new spray-on technology can make a pair of sneakers in just minutes.

It allows us to produce an upper material in a completely automated way.

You have one single material that is approximately one mile long, which is being sprayed around the last.

One shoe is made in just three minutes, a fraction of the time it takes to create a traditional running sneaker.

A traditional product is usually touched by approximately 200 hands and it's going through various, various steps.

And it consists of many, many different individual parts, which is very, very different.

The technique is still in its early stages, only producing a limited number of shoes in one style.

The model doesn't have any laces and it sells for $330.

What we want to be able to do is to bring it from a couple of thousand pairs to millions of pairs.

But analysts say what has propelled the brand is the unique design of its main running shoe line, which feature large, hollow pads in the sole that provide extra cushioning.

My absolute ride or dies are the On Claude Monsters.

They're my favorite shoes of all time and I only got them a few months ago.

When you look back into 2010, all the running shoes looked more or less the same.

So basically, you could almost not compare what an Essex is or a Brooks is or a Socon is.

But On's shoes weren't always taken seriously as high-end performance products.

When they first started, they were basically giving the product to anybody that would take it.

The first generation of running shoes that was intended to be a performance shoe was not received as such.

And the feedback that we heard from retailers as well as consumers was that it was more of a lifestyle shoe.

It was comfortable, it was nice to wear for daily use, but it was not highly rated for serious runs.

To elevate its brand image, On doubled down on performance and company-owned stores.

The strategy to engage both serious athletes and casual wearers seems to have paid off.

In 2024, Olympic medalist Helen O'Berry won the Boston Marathon in the then-unreleased light-spray shoes.

I think the main thing that they really understood was they went for the aesthetic of the shoe.

The trajectory of them getting to a billion dollars versus Nike, they did it in one-eighth the time of Nike.

So Nike's better wake up and realize that On is a performance shoe that has also taken on the fashion element.

Analysts say another factor driving sales is that On's products are geared towards wealthy shoppers.

A typical pair of its running shoes sells for $150 or more.

They're not interested in ever having a low-end price point and ever being in low-end retail.

So they're well situated there because people are willing to pay more for a pair of running shoes because they have more use cases for them and they see it more as an everyday shoe.

The company has also been able to attract new customers through partnerships with athletes like Roger Federer, as well as celebrities like Zendaya and FKA Twigs.

It has also partnered with luxury brands like Lueve.

We're often playing in a more premium space, almost a little bit in a space where Nike stops, but luxury is not yet.

Analysts say that timing played a key role in On's rapid rise.

During COVID lockdowns, recreational running increased and athleisure boomed.

Athletic shoe usage just picked up dramatically.

We were at home, we were doing more sports, going out for walks more.

We weren't dressing formal for about two years, right?

It was luck as well as design that got them that huge scale.

Around the launch of On's IPO, Nike also aggressively scaled back retail partnerships with Macy's, Foot Locker and Dick's Sporting Goods.

It does appear, according to analysts, that Nike over-rotated toward the direct-to-consumer.

And then when it came back time for Americans and folks around the world to go shopping again after COVID, Nike just didn't have the same kind of priority and placement on the shelves.

And it didn't have the styles that were really resonating with consumers.

So for the first time, retailers were actually going out there and looking for emerging high-growth brands to take that space.

So it happened to be very serendipitous for them to be able to get that retail space, prime retail space that the number one competitor had voluntarily just dropped and left for them to gain.

Meanwhile, On continued to post quarterly revenue beats, boosting its stock.

Decker's owned Hoka also surged while Nike declined.

Nike has since kind of acknowledged that mistake through their actions and are trying to go back to that channel.

On effectively acknowledges that that was a big break for them.

The issue now, though, as it relates to sort of the broader competitive space, is that they've already been given that oxygen.

Nike still owns 40 percent of the global sports footwear market, followed by Adidas.

On makes up a little less than 3 percent of global market share.

But that share has increased eightfold since 2019.

Anyone who says they're not worried about slipping of market share is lying to you, me or both.

People care about market share, but that doesn't mean that they're worried they're not going to get it back.

Nike has a new CEO, has been tasked with a turnaround plan at that company.

There's an expectation, at least among investors, that at some point it starts to grow again.

So we focus on our products, on innovation.

And in April 2025, Adidas posted revenue growth of 13 percent compared to the same quarter last year.

CNBC reached out to Nike and Adidas for comment, which did not respond by the time the story went online.

For On, apparel could be the next growth frontier.

Nike and Adidas make up over a quarter of their revenue from T-shirts, shorts and other apparel items.

Currently, On's clothing offerings make up a little over 4 percent of its business.

On also plans to double its store count from 53 to 100 in the coming years.

Currently, the company has 11 stores in the U.S.

But could those expansion plans be impacted by tariffs?

On designs its products here in Switzerland.