Allbirds rebalances innovation and marketing

Footwear retailer Allbirds has acknowledged “strategic and executional missteps”, spending too much time and money on developing new products and not enough on building brand awareness. 

“We have come to recognize that our overinvestment on newness came at the expense of focus on consumers who are loyal to our brands and on nurturing our core franchises,” co-CEO and co-founder Joe Zwillinger told a Q4 earnings call. 

Background 

Six years after the brand was launched, the final few months of last year saw its first quarter of negative growth, a fact Zwillinger attributed to shifting focus away from its core consumers over the past two years.

“This dynamic was exacerbated by the fact that the final weeks of December were exceptionally promotional and we did not sufficiently promote to meet consumers' expectations,” he added. In fact, marketing spend was reduced in Q4 compared to the previous year.

A new way forward

Zwillinger outlined:

• a more focused product strategy to reconnect with core consumers and better appeal to new consumers.
• a repositioning of products previously categorized as performance: these will now promote an active lifestyle as opposed to a technical performance offering.
• a slowing of the pace of store openings in the US, with more partnerships with third-party customers to enhance brand awareness and drive sales. 

Marketing 

• Allbirds has less than 15% aided brand awareness in the USA, according to the brand’s own research; it sees significant opportunity here. 
• A focused product strategy will be complemented by increased investments into mid-funnel brand marketing, embracing a disruptor position and differentiated brand purpose. 
• “We plan to spend additional US marketing dollars on a year-over-year basis in 2023 to support our brand, including additional spend for store marketing,” said CFO Mike Bufano.
• Insights work shows that in-store shoppers are less price resistant and drive omnichannel shopping behavior, which is Albirds’ most profitable consumer journey.
• The creation of values-aligned products and brand partnerships aims to better integrate marketing investments, increase awareness growth, and drive sales. 

Key quote

“Newness is still really important. It’s just directing that newness in a way that’s listening really deeply to these consumer insights that we picked up” – Joe Zwillinger, co-CEO at Allbirds.

Sourced from Seeking Alpha

[Image: Allbirds]