STUDENT
CASE
STUDY
Hoka One One:
The New Trendsetter
Spandana Battula, Alejandra Mazariegos, Thomas Pols
Evan Spark-Depass, Diego Suquillo
April 2015
Case study EIB B236
Evan Spark-Depass, Spandana Battula,
Alejandra Mazariegos, Diego Suquillo, Thomas Pols
Hoka One One: The New Trendsetter
Background
In 2008, Nicolas (Nico) Mermoud was largely known as an accomplished ultra-marathoner, having placed
third in 2007 in the Ultra-Trail du Mont Blanc (UTMB) and eighth in 20061 a 166km race through the
mountains. As was the case with many ultra-runners, Nico faced extreme fatigue and muscle tension
during ultra races. He recognized the need for a shoe that would enable him to go downhill faster2 and
reduce the shock on his knees from running long distances in the rugged terrain of the Alps, Pyrenees
and Dolomites3. One day, Nico approached Jean-Luc Diard, the former CEO of Salomon and inventor of
the parabolic ski, with an idea of heavily-cushioned “maximalist” shoe4.
Unbeknownst to Nico, Jean-Luc had already been experimenting with bringing oversize design concepts
to running shoes5. He was interested in how oversize running shoes might enable runners to handle
downhill more efficiently, much like parabolic skis do for skiers. The inspiration for the original shoes
came from the oversized technology that had been successfully used in mountain bike tires, powder skis
and tennis rackets6. As Jean-Luc put it: “Mountain bikes addresses tough terrain with big tires and
shocks, and oversize skis allowed you to float. We wanted to make a shoe that worked the same way.”7
Combining this ‘bike concept’ and drawing from years of experience in design and professional sports,
Jean-Luc and Nico set out to design their revolutionary shoe.
The entrepreneurs approached the shoe industry with an entirely fresh perspective. One running
industry executive noted, “They didn’t even look at what had come before. Diard’s team took a maverick
point of view and asked totally different questions, starting with the idea of treating the shoe as
equipment, not a piece of apparel.”8 In 2009 the two collaborators and their team entered the shoe
industry with their maximalist shoe brand called Hoka One One (originally pronounced Onay Onay, which
means “time to fly” in Maori). Describing what the brand stands for in a 2014 interview, Jean-Luc
1
Bryan Powell, Nicolas Mermoud Pre-2010 UTMB Interview, iRunFar, accessed April 2, 2015,
http://www.irunfar.com/2010/08/nicolas-mermoud-pre-2010-utmb-interview.html.
2
Thomas J. Ryan, Hoka One One Looks for Oversized Growth, SGB Weekly, Issue 1337, September 16, 2013, accessed April 2,
2015, http://d4ex6pvli7xof.cloudfront.net/sgbweekly/2013/SGB_13Q3/SGBW_1337Rlo.pdf.
3
Brain Metzler, Sole Man: The Story behind Hoka Shoes, Running Competitor, April 3, 2013, accessed April 2, 2015,
http://running.competitor.com/2013/04/shoes-and-gear/sole-man-hoka-is-in-for-the-long-haul_68788.
4
Hoka OneOne website, May 22, 2014, accessed April 2, 2015, http://hokaoneone.com.au/tag/jean-luc-diard/
5
Supra note 2 and 5.
6
Supra note 3.
7
Gordy Megroz, The Clown Shoe That’s Changing Minimalist Running, Outside Magazine, December 3, 2013, accessed April 2,
2015, http://www.outsideonline.com/outdoor-gear/footwear/Sole-Power-Nicolas-Mermoud-Minimalist-Running.html
8
“The Rebirth of Running | Running Shoes | OutsideOnline.com,” accessed March 17, 2015,
http://www.outsideonline.com/outdoor-gear/footwear/running-shoes/hokaoneone.html.
described Hoka as “a very new brand that is especially about innovation. An innovation both about
performance in terms of easy rolling and about maximum protection so that people can enjoy the sport
of running in any conditions.”9
The design concept
Nico and Jean-Luc collaborated with a chemist at a Chinese shoe manufacturer to create a light and soft
but thick foam for the running shoes.10 Using proprietary chemicals and applying different baking
methods, the chemist developed a sole with 29 mm of cushioning without any added weight.11 The
additional 18mm of thickness of the outer sole, as compared to traditional shoes, allowed runners to
attain better forward propulsion.12 This “rocker” technology acts as a fulcrum, and allows a runner to roll
through their stride.13 Describing the product, Jean-Luc noted that “the wheel is the most efficient
design, and Hoka attempts to best recreate that wheel-type efficiency.”14
Jean-Luc’s design skills proved instrumental during the development process. The team experimented
with different geometrical shapes and designs, and updated these geometries based on runners’
feedback.15 Originally, the team considered designing a downhill-only slip-on shoe that could be put over
one’s normal running shoes in particularly difficult sections of races, but this idea eventually evolved into
a full running shoe.16 The shoe that emerged from this process has a stack of 35mm in the heel and
29mm in the forefoot, giving a heel-toe drop of 6mm. 17 Typical running shoes have a stack height of
23mm in the heel and 11mm in the forefoot, giving a heel-toe drop of 12mm.18
So, what does this mean to the regular costumer? It all comes down to how your foot hits the ground
when running. Many studies indicate that running in shoes with a larger heel-toe drop encourages a heel
strike.19 This is relevant because heel strikes not only diminish running efficiency and speed, but also are
also associated with increased injuries due to higher impact and rotational forces on the foot, ankle and
knees.20 A lower heel-toe drop, as with Hoka shoes, encourages a midfoot strike and helps the runner
9
Interview with Jean-Luc Diard: What Hoka means? Mountain Blog, July 29, 2014, accessed April 2,
2015, http://www.mountainblog.eu/interview-with-jean-luc-diard-what-hoka-means/.
10
“Behind the Clown Shoe That’s Changing Minimalist Running | Footwear | OutsideOnline.com,” accessed March 17, 2015,
http://www.outsideonline.com/outdoor-gear/footwear/Sole-Power-Nicolas-Mermoud-Minimalist-Running.html.
11
Ibid.
12
Ibid.
13
“HOKA ONE ONE Running Technology | Official Site,” accessed April 1, 2015, http://www.hokaoneone.com/technology.html.
14
Greg Dutter, Footwear Plus, August 1, 2014. Available at http://www.readperiodicals.com/201408/3620291111.html.
15
“JimVanDineInterviewRunnersConnect.mp3,” accessed March 17, 2015, https://s3-us-west-2.amazonaws.com/rcpodcats/JimVanDineInterviewRunnersConnect.mp3.
16
“Sole Man: The Story Behind Hoka Shoes - Competitor.com,” accessed March 17, 2015,
http://running.competitor.com/2013/04/shoes-and-gear/sole-man-hoka-is-in-for-the-long-haul_68788.
17
Hixson, Jim. "Comfort Question: Should We Be Running on Pillows Like the Hoka One One?" Natural Running Center. Last
modified January 12, 2013. http://naturalrunningcenter.com/2013/01/12/comfort-question-running-pillows-hoka-one/.
18
JustRunLah. "What is a Heel-toe Drop and Shoe Stack Height? | Just Run Lah!" JustRunLah!. Last modified January 19, 2014.
http://www.justrunlah.com/blog/2014/01/19/what-is-the-heel-toe-drop-and-how-to-measure-shoe-stack-height
19
Ibid.
20
Ibid.
maintain its natural position and avoid injuries.21 Achieving this reduced drop was the first goal of the
design team, however this was only part of the answer. To deal with the remaining shock when running,
the designers considered important to have some extra cushioning in midfoot of the running shoe able
to dissipate up to 80% of the shock associated with the heel-striking by allowing for as much as 20mm of
compression in the heel.22
The early days of the company
Nico and Jean-Luc debuted Hoka One One shoes in 2009 at a 105 mile race around Chamonix, Europe’s
highest peak.23 As Jean-Luc explains, Hoka shoes were an instant hit with the ultra-running community
“We let five runners take our prototypes for an hour-long run beforehand, and they came back and
asked if they could do the race with them. That’s when I knew we were onto something.”24
Though Hoka One One was born in France, the company quickly moved its operations into the US market
in 2010.25 During its first year of operations in 2010, the shoes became available for sale in in 80 specialty
running stores worldwide.26 In the United States, an extremely influential running specialty store,
Boulder Running Company, became a champion for Hoka One One shoes.27 The shoe became popular
locally in Colorado, however this did not spread far beyond Boulder.28
As an ultra-marathoner himself, Nico began to promote the shoe through his preexisting networks in the
ultra-running community in the US, especially in Colorado, Utah, and California.29 The company’s
marketing strategy largely consisted of these informal relationships, and Nico giving shoes away to
runners at ultra-distance races.30 In 2010, Nico called Brian Meltzer, one of the United States’ premier
ultra-marathoners, to test out the Hoka One One Mafate. Brian was hooked after a short run and
became one of Hoka’s very first sponsored athletes.31 Despite his small sponsorship deal, Brian became a
vocal advocate for Hoka shoes due to his fervent belief in the product.32
21
Ibid. 20
6pm.com. "Hoka One One Stinson Tarmac." Accessed April 1, 2015. http://www.6pm.com/hoka-one-one-stinson-tarmac.
23
Ibid. 8
24
Ibid.
25
Ibid. 15
26
Ibid. 10
27
Ibid. 15
28
Ibid.
29
“About HOKA ONE ONE | Official Site,” accessed March 17, 2015, http://www.hokaoneone.com/meet-hoka.html.
30
Ibid. 15
31
“Sole
Man:
The
Story
Behind
Hoka
Shoes
Competitor.com,”
accessed
March
17,
2015,
http://running.competitor.com/2013/04/shoes-and-gear/sole-man-hoka-is-in-for-the-long-haul_68788.
32
Ibid. 15
22
Business model
While Nico was promoting the brand in the US, Jean-Luc continued to work with a development team in
Annecy, France, coming up with new concepts and further refining the product.33 In an effort to increase
their product diversity, Hoka began to release other models in addition to the original Mafate. These
included the Bondi B, the company’s first offering designed for road running, and the Stinson B Evo,
which became Hoka’s ‘middle’ shoe between the oversized Mafate and the slimmer Bondi B.34 35
As a small company, Hoka faced a number of considerable challenges during its early years. Perhaps
most significant among these difficulties was a severe lack of resources.36 Retailers were often unable to
stock enough shoes to make investing in the brand worthwhile, which meant that few consumers were
exposed to Hoka.37 In addition, Hoka did not have a catalog, further limiting the company’s contact with
the mainstream running community.38
Hoka also suffered from its unique design, which was wholly unfamiliar to mainstream runners. When
Nico and Jean-Luc began to design Hoka shoes, “they did not examine current running shoes and look to
improve them, instead they approached the project as if there were no running shoes and they were
inventing them. This release from conventionality spurred true innovation resulting in a shoe that
provides superior cushioning and inherent stability.”39 While the result reflects Hoka’s innovative and
unique design, it also presented a major obstacle, as many runners were wary of trying a product that
looked like “clown shoes.”40 Ultra-running legend Jenn Shelton explained why she won’t use Hokas:
“They might be the best shoes in the world, but I would not be caught dead in them. And you wanna
know why? They are not sexy."41
This tension between the clunky aesthetic of the product and the benefits of having a superior design
became major obstacles in the expansion of the business. However, in an effort to head the way of the
new “maximalist running movement” (as opposed to the barefoot, minimalist movement), Hoka started
recruiting elite athletes as brand ambassadors to promote their running shoes. One such ambassador
was 30-year-old Leo Manzano, an Olympic medalist in the 1,500m, and fifth fastest American all-time in
the event. In an interview, Manzano noted “they’re not your normal shoe, but I actually think they are
33
Ibid.
“Hoka One One Bondi B Review,” accessed March 17, 2015, http://www.irunfar.com/2012/07/hoka-one-one-bondi-breview.html.
35
“Trail Runner Magazine,” accessed March 31, 2015, http://www.trailrunnermag.com/component/backissue?id=80.
36
Ibid. 15
37
Ibid.
38
Ibid.
39
“RunBlogRun INTERVIEWS: Jim Van Dine, Brand President of HOKA ONE ONE, by Larry Eder - RunBlogRun,” accessed March
17, 2015, http://www.runblogrun.com/2013/10/runblogrun-interviews-jim-van-dine-brand-president-of-hoka-one-one-by-larryeder.html.
40
Behind the Clown Shoe That’s Changing Minimalist Running | Footwear | OutsideOnline.com. accessed March 17, 2015
41
Should You Try the New Maximalist Hoka One One Bondi BS? | Gear Guy | OutsideOnline.com, accessed March 17, 2015,
http://www.outsideonline.com/outdoor-gear/gear-shed/gear-guy/Should-I-Try-the-Hokas.html.
34
better than normal” referring to the Hoka running shoes.42 Others such as Darcy Piceu, winner of the
2012 Hardrock Ultra Marathon and Hoka’s brand ambassador commented: “if you are walking and
running from 50 to 100 miles, or sometimes even more, you are going to need a pair of shoes that can
handle the distance”.43
While professional endorsements were very valuable in gaining traction within the ultra-running
community, Hoka faced another major challenge immediately upon entering the US market. The year
before Hoka came to the US, barefoot and minimalist running had become an incredibly popular trend
among mainstream runners. 44 Popularized by the book Born to Run by Christopher McDougall, runners
everywhere were trading in their traditional trainers for slim, minimalist shoes, or even foregoing
running shoes altogether.45 In retrospect, this was an incredibly difficult time for an oversized running
shoe company to gain traction with a concept that provides extreme cushioning. To make things more
complicated, the product initially appealed much more to elite athletes and ultra-marathoners rather
than regular consumers. Although the concept seemed to have potential given the logical need for
increased support among some types of runners, questions remained regarding how the company
should compete for the business of serious and recreational athletes in the running shoe market space.
Industry landscape
Today's runners are those looking to achieve a new goal: to stay fit, to relieve stress, to feel empowered
or to run for a cause. Many casual runners are entering events to have fun, as a social activity, and for
the experience. In 2011, 14 Rock ‘n' Roll Marathon series events saw more than 255,000 individuals cross
the finish line. Of those, 37% were debuting in the marathon or half-marathon, and 62% were female,
reflecting the broad appeal of running nationwide46.
Running and jogging continues to show strong and consistent growth annually as total running
participation was up almost 13% overall from 2011 data and has increased by 57% in the last 10 years,
according to the Sporting Goods Manufacturer's Association (SGMA).47 It also projects running / jogging
has some of the greatest growth potential among all sports from 2010 to 2015, with a 31% growth rate
(See appendix 1).48
42
Crouse, Lindsay. "Log In - The New York Times." The New York Times - Breaking News, World News & Multimedia. Last
modified February 16, 2015. http://www.nytimes.com/2015/02/17/sports/forget-barefoot-many-seek-cushioning-in-runningshoes.htm
43
Hoka One One. "100 Miles High - Darcy Piceu Africa and the 2013 Hardrock Ultra Marathon." YouTube. July 8, 2014.
https://www.youtube.com/watch
44
“Forget Barefoot; New Trendsetter in Running Shoes Is Cushioning - NYTimes.com,” accessed March 17, 2015,
http://www.nytimes.com/2015/02/17/sports/forget-barefoot-many-seek-cushioning-in-running-shoes.html
45
Ibid.
46
Running USA. "2012 State of the Sport Part II: Running Industry Report | Running USA." Welcome | Running USA. Last
modified July 15, 2012. http://www.runningusa.org/2012-state-of-sport-part-2.
47
Ibid.
48
Ibid.
The National Sporting Goods Association's "Sporting Goods Market Edition 2013" reports that
running/jogging shoe sales totaled $3.04 billion (record high) in 2012, up 23% in total dollars from the
previous year ($2.46 billion in 2011).49 Sales are projected to grow an additional 16% to approximately
$3.51 billion in 2013 (See appendix 2).50
It is important to note that most of the sales of jogging and running shoes in the U.S. are made in general
sporting goods, specialty athletic footwear, and discount stores. Additionally, online sales are increasing
and play an important role as a sales channel.51
While there are numerous running sports companies, the running shoes market segment is clearly
dominated by Asics, Brooks, Nike and Saucony who all have a market share above 10%. (See appendix
3).52
Continued growth?
By late 2011, Hoka was struggling to reach a broader market base. The shoes, which sold for $160 a pair,
were out of the price range of many runners,53 and the minimalism movement was still going strong. In
addition, Hoka’s small distribution network was further constricting the company’s growth.54 The
expectation was that sales in 2012 would be $3 million, a fraction of the market.55 Still, Hoka brand
manager and former athlete Jim Van Dine confidently predicted that sales of $100 million were possible
with the current line of products.56 Van Dine was not bluffing when he made his claim as he had done it
before as part of the team that turned Reebok from a startup into a billion dollar corporation in a matter
of years. However, he explained that Hoka did not have the resources to build out the brand, nor did
they have the experience of managing a shoe brand in the United States.57 Some in the organization
believed significant investments would be needed and outside investment would need to be attracted.58
In early 2012, Deckers, the company that owns the Ugg brand, approached Hoka One One to try and
convince Jean-Luc and Nico to sell the company.59 Deckers was convinced that Hoka would not be able to
49
Running USA. "2013 State of the Sport – Part II: Running Industry Report | Running USA." Welcome | Running USA. Last
modified June 26, 2013. http://www.runningusa.org/state-of-sport-2013-part-II
50
Ibid.
51
Statista. "Running & Jogging - Statistics & Facts. Statista." Www.statista.com. Last modified 2012.
http://www.statista.com/topics/1743/running-and-jogging/.
52
Ryan, Tom. "Brooks Looks To Become Next Billion Dollar Running Brand." Performance Sport Retailer, April 2010.
http://performancesportsretailer.com.
53
“Comfort Question: Should We Be Running on Pillows Like the Hoka One One? | Natural Running Center,” accessed April 2,
2015, http://naturalrunningcenter.com/2013/01/12/comfort-question-running-pillows-hoka-one/.
54
Ibid. 15
55
Van Romburgh, Marlize. "Deckers Makes Run for Athletes with Hoka." Pacific Coast Business Times. April 5, 2013. Accessed
March 5, 2015. http://www.pacbiztimes.com/2013/04/05/deckers-makes-run-for-athletes-with-hoka/.
56
Ibid.
57
Ibid. 15
58
Ibid. 55
59
Ibid. 15
survive without an injection of capital, and was highly interested in Hoka’s radical shoe design.60
Deckers was also interested in the popularity of the shoe amongst professional athletes.61 Soon after
their first meeting Deckers decided to invest in Hoka, but could not convince Jean-Luc and Nico to sell
the company.62 In the months that followed, the management of both Hoka and Deckers started having
meetings on the new investment with different questions on their mind.
Back in their Goletta headquarters Nico and Jean-Luc were also strategizing what their next step should
be. Was Deckers the right partner as Jim Van Dine suggested? Partnering with Deckers meant that Hoka
would have access to their considerable financial resources and shoe-industry savvy. However, did Hoka
really want to become the next Ugg? Nico and Jean-Luc’s success with Hoka was a product of their
fearlessness in throwing convention out of the window and starting from scratch. A partnership with a
large corporation seemed somehow antithetical to Hoka’s roots. The big question was whether Hoka
could make it on their own. If not, what would Nico and Jean Luc be giving up by selling the company to
Deckers? Would they lose the unique and creative design control that had been essential component to
Hoka One One’s success?
Questions for class discussion:
1.
2.
3.
4.
5.
6.
60
Is Hoka really different from other running shoes? If so, how is it innovative?
What need do Hoka One One shoes fulfill?
What difficulties has Hoka faced in growing the company?
What mistakes, if any, were made in the design and launch of Hoka?
What are the advantages/disadvantages of Hoka selling the company to Deckers?
Should they sell?
Ibid. 15
Ibid.
62
Ibid.
61
Appendix 1: Running/Jogging Participation
Running/Jogging
Participation (in millions)
2004
2005
2006
2007
2008
2009
2010
2011
Total participation
24.7
29.2
28.8
30.4
30.9
32.2
35.5
38.7
40
42
Male participation
13.2
16.4
15
15.9
16.1
17.7
18.7
19.7
18.4
20.2
Female participation
11.5
12.9
13.8
14.5
14.8
14.5
16.9
19
21.6
21.8
Source: National Sporting Goods Association. Sports Participation in the United States 2014. Edition
Appendix 2: Jogging and Running Footwear Sales in U.S.
Jogging & Running Footwear Sales in U.S.
1998
2010
2011
2012
Running Shoe Units (Million)
29.41
37.16
38.02
$44.62
Running Shoe Dollars (Billion)
1.47
2.32
2.46
$3.04
Sales Channels - % of Units
1998
2010
2011
2012
General Sporting Goods
15.90%
22.50%
23.30%
22.40%
Discount Stores
14.80%
21.40%
18.50%
19.80%
Online/Internet
-
12.20%
12.50%
17.50%
Specialty Athletic Footwear
22.10%
16.20%
19.60%
18.00%
Department Stores
16.10%
8.80%
7.20%
7.40%
Family Footwear
10.40%
6.30%
6.40%
4.10%
-
7.70%
5.70%
4.90%
4.90%
4.70%
5.20%
4.40%
-
-
-
-
2.60%
1.40%
0.40%
1.10%
-
-
-
0.40%
Factory Outlet
Specialty Sport Shops
Other Outlets
Mail Order
Pro Shop
SOURCE: National Sporting Goods Association. Sporting Goods Market 2013 Edition.
2012
2013
Appendix 3: Jogging & Running Footwear Sales in U.S. by Brand
Brand of Running Shoes Last Purchased
Brand
2009
2011
ASICS
29.90%
25.80%
Brooks
14.40%
16.30%
Nike
14.70%
13.70%
Saucony
11.30%
12.80%
Mizuno
8.90%
8.80%
New Balance
9.70%
8.40%
Adidas
5.50%
4.10%
Newton
<1%
2.20%
Vibram Five Fingers
<1%
2.10%
Source: Running USA. National Runner Survey 2011.
Appendix 4: Total shoe and running shoe sales historical data ($m)
Shoe Sales Historical Data ($m)
Year
Total Shoe
Change
Running Shoe
Change
2009
28,283
-
2,360
-
2010
30,079
6.35
2,320
-1.69
2011
30,892
2.70
2,460
6.03
2012
31,114
0.72
3,040
23.58
2013
30,840
-0.88
3,510
15.46
Source: 2014 State of the Sport - Part II Running Industry. Report and Footwear
Wholesaling in the US Industry Report
Appendix 5: Hoka One One
Source: Hoka One One
Appendix 6: Hoka Clifton, broadening the product line
Source: Hoka One One