Inside Allbirds’ Plan for Reviving Growth With Classics

Allbirds is banking on its classic styles to yield growth in 2024 — but that doesn’t mean the footwear brand is sacrificing newness and innovation.

After some product missteps in 2022, Allbirds in March outlined a transformation plan meant to jumpstart growth and improve capital efficiency and profitability that largely hinged on this idea of doubling down on core products. This involves zooming in on popular core franchises, like the Wool Runner, and shifting away from newer styles that have not resonated as strongly with consumers, explained Allbirds co-founder and CEO Joey Zwillinger in a recent interview with FN ahead of the company’s Nov. 8 earnings.

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“Our core franchises have great sell-through,” Zwillinger said. “The ones that go way too far outside that core area, frankly, have less good sell-through. And that’s been true in the wholesale accounts as well as in our in our direct channels.”

This strategy has most recently come to life with the launch of the Wool Runner 2 earlier this month. Allbirds’ update to the original model that launched in 2016 features 15 new innovations, including upgrades to comfort, durability, design and fit. To improve the fit element, the Wool Runner 2 utilizes a new shoe last and now offers shoes in half-sizes.

“The wool runner was one of Allbirds most popular style,” said Matt Powell, an advisor at Spurwink River and senior advisor at BCE Consulting. “The update looks great. It should help the turnaround.”

Despite the changes, the iconic Wool Runner shoe still maintains the style and comfort elements that make it one of Allbirds’ most important franchises.

“It’s an evolution — not a revolution — on the original design,” Zwillinger said. “It is very recognizable.”

Zwillinger said that by Fall ’24, this shift toward core styles should help build the business with Allbirds’ current partners, including REI, Nordstrom, Public Lands, House of Sports and Scheels. Once this strategy takes off, Zwillinger said the brand could consider expanding into new wholesale accounts as well.

“We want to drive strong sell-through and good margins for the partners that we work with on the wholesale side,” Zwillinger said. “And we need to get our recalibrated product assortment inside of their walls before we really put the gas down to accelerate that channel.”

The strategy is the same for owned stores. Allbirds opened three units in the U.S. in 2023 and is waiting for its new product strategy to take hold before opening any additional stores.

Getting back on track

In the second quarter, the San Francisco-based footwear company reported a decline during the period due to decreases in average selling prices, foreign exchange headwinds and a highly promotional environment. Compared to the prior year, revenues dropped 9.8 percent to $70.5 million in Q2. Allbirds posted a net loss of $28.9 million, or 19 cents per basic and diluted share.

In addition to this core styles approach, Allbirds has undergone some leadership shifts and corporate layoffs to cut costs. The company has also started to shift its international direct go-to-market model to a third-party distributor model.

According to Zwillinger, the headwinds of the last year appear finally be receding. Coming off the pandemic-driven boost in running and exercise footwear, Zwillinger said he sees runway for Allbirds’ niche in the “active life category,” which he describes as “versatility between work, play and workout, probably best epitomized by traveling.”

“We thought that people wanted us to continue to push into athletic performance,” Zwillinger said, describing a category mistake that Allbirds made in the pandemic. “We’ve learned through a series of consumer insight work that people really think about us in this active life category.”

According to Powell, the “active lifestyle” category is still dominant, though the sector is starved for new ideas. He added that “quiet luxury and understated products are key right now, so this is also a good position for the brand.”

Now, as pandemic-driven consumer tastes begin to shift, a convergence of these modern trends could likely benefit Allbirds.

“I think we’ve now started to shift back into that quiet luxury space where people are really interested in a more austere approach to design that is a little bit more versatile, a little less showy and ostentatious,” Zwillinger said. “That’s going to be a really nice trend for us. We were amazing before Covid, had some difficulties during Covid. And I think we might be able to straddle the pandemic with success.”

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