Allbirds, once a favorite among tech entrepreneurs and startup enthusiasts, has recently experienced a decline in popularity within its core demographic. With the tech crowd moving on to new trends, the sustainable footwear brand must now navigate a changing landscape and adapt to stay relevant.
In this case study, we'll explore the challenges that Allbirds faced in retail and provide insights into what went wrong and how the company is working to overcome these obstacles.
The Rise of Allbirds
Launched in 2016, Allbirds quickly became the go-to footwear choice for tech bros in Silicon Valley. The brand's commitment to sustainability, eco-friendly materials, and simple yet stylish designs resonated with the tech community. The shoes were praised for their comfort and minimalistic appearance, making them a must-have for entrepreneurs and startup employees.
What Went Wrong?
Expansion Too Quickly
Allbirds expanded too quickly and could not keep up with the demand for their shoes. Product availability led to long wait times for customers and issues with customer service.
Lack of Innovation
As with any trend, the popularity of Allbirds began to wane over time. Customers started to gravitate towards new, emerging brands like Veja, Rothy's, and Vessi. These competitors have embraced sustainability while offering different styles and designs, further capturing the attention of the tech crowd.
In response, Allbirds has expanded its product line to include running shoes, apparel, and accessories, hoping to recapture the interest of its initial audience.
Pricing Strategy
Allbirds' pricing strategy needed to be lower for many customers, with some of their shoes costing up to $150. The high price points prevented them from competing with other brands that reached a wider audience.
Although sustainable shoes tend to run at a higher price point for high-quality eco-friendly materials and sustainable practices, the lack of offering lower-cost shoes hindered growth in an already crowded and competitive market.
Supply Chain Issues
The average consumer has felt the pain points of supply chain issues over the past few years, and Allbirds is no different. Between the low stock of the products, high prices, and long wait times, consistent supply chain issues created a problematic situation for the brand experience.
Greenwashing Accusations
Allbirds has faced criticism for its sustainability claims. Critics argue that the brand's use of petroleum-based foam in its soles undermines its eco-friendly image. Although Allbirds has defended its practices, these accusations have the potential to erode consumer trust.
Delayed Entry into Key Markets
Allbirds' gradual approach to international expansion has left the door open for competitors to establish a foothold in key markets. For example, the brand's late entry into the Asian market provided rivals like Veja, Rothy's, and Vessi with an opportunity to attract eco-conscious customers in the region, making it more challenging for Allbirds to gain market share.
Limited Collaborations with Major Retailers
Allbirds has primarily focused on direct-to-consumer sales and building its own retail stores, rather than partnering with major retailers for broader distribution. This strategy may have limited the brand's exposure to new customers who might not have been aware of Allbirds or its sustainability initiatives. Collaborating with well-known retailers could have expanded the brand's reach and helped to establish it as a household name.
Slow Adoption of Omnichannel Strategy
Allbirds initially focused on online sales before gradually transitioning to a brick-and-mortar retail presence. While this approach allowed the company to build a strong online following, it may have missed out on the opportunity to capitalize on in-store experiences to drive sales and create a more comprehensive omnichannel strategy. By not having a strong physical presence earlier, Allbirds may have lost potential customers who prefer to try on shoes and experience the products in person before making a purchase.
Lack of Diversification in Store Locations
Allbirds has primarily opened standalone stores in urban centers and high-end shopping districts. This focus on prime retail locations may have limited the brand's exposure to potential customers in suburban or rural areas. Expanding its retail presence in a wider range of locations could have helped Allbirds reach a more diverse customer base and further drive sales.
Increased Competition from Sustainable Brands
Gone are the days when you could only find one brand of sustainable shoes. Luckily for consumers, there are over hundreds of brands of shoes made with eco-friendly materials and sustainable practices. And it doesn't stop with sneakers, running shoes, sandals, slides, and boots. There are many options, no matter what type of shoe you're looking for. Read more here.
Adapting to the Changing Retail Landscape
To remain relevant, Allbirds has taken several steps to evolve its brand identity and product offerings. Some of these initiatives include:
Collaboration with Adidas: In 2020, Allbirds partnered with Adidas to create a sustainable performance shoe, showcasing their commitment to innovation and environmental consciousness.
Public Benefit Corporation Status: Allbirds has become a Certified B Corporation and a Public Benefit Corporation, cementing its dedication to sustainable and ethical business practices.
Expanding Retail Presence: The company has been opening brick-and-mortar stores worldwide, making their products more accessible to a broader customer base.
Diversification: Allbirds has moved beyond shoes, introducing clothing made from sustainable materials like merino wool and Tencel.
Flying High: Success After the Downturn
After implementing changes over the past 2 years, Allbirds has adapted since 2020 and continued to achieve notable growth and performance:
Successful IPO
In November 2021, Allbirds went public, raising $269.5 million in its initial public offering. This capital infusion has given the company resources to invest in innovation, marketing, and expansion, positioning it for long-term growth.
International Expansion
Allbirds has successfully expanded into global markets, including Europe, Asia, and Australia. This geographic diversification has opened up new revenue streams and reduced the brand's reliance on the U.S. market.
Revenue Growth
Despite pandemic-related headwinds, Allbirds has continued to see steady revenue growth. In 2020, the company generated $219 million in revenue, up from $194 million in 2019.
Quick Takeaways for Retailers and Brands
- Perform market research early on
- Identify ideal customer and personas
- Introduce a sustainable go-to-market plan
- Keep the customer as the center of your strategy
- Introduce new products often and pivot as needed
- Focus on the customer experience
- Build community loyalty
Allbirds Lessons Learned - Customer Research, Pricing Strategies, and Building Loyalty
Allbirds' case study is an important reminder of taking calculated risks when growing a brand. These issues caused them to lose customers and become less relevant in the market.
By understanding their target markets and developing strategies that meet customer needs, while focusing on building customer loyalty, companies can ensure that their brands remain successful in the long term.
For more on brand industry trends, check out 2023 Brand Predictions Report
