Retail

Allbirds debuts its first running shoe. To succeed, it must face rivals like Nike and the challenges of a pandemic

Key Points
  • Allbirds, known for its comfy wool sneakers made out of sustainable materials, has been working on perfecting the running silhouette for years, said Allbirds co-founder Tim Brown. 
  • Its first running shoe goes on sale Tuesday and retails for $125. 
  • "People are running ... more than ever," Brown said about Allbirds' decision to launch the shoe during the coronavirus pandemic. 
The running shoe, which launches Tuesday, retails for $125.
Source: Allbirds

Allbirds is daring to enter the highly competitive market for athletic footwear. 

And if going up against brands like Nike, Adidas and Asics was not daunting enough, Allbirds is debuting its first-ever running shoe in the midst of a coronavirus pandemic

The Silicon Valley-based start-up, known for its comfy wool sneakers made out of sustainable materials, has been working on perfecting the running silhouette for years, said Allbirds co-founder Tim Brown. Prior to Covid-19 slamming the U.S. economy and forcing the closure of thousands of retailers' shops, including Allbirds', Brown said the company was targeting an April 2020 launch. 

The company said it plans to work on launching additional athletic shoes in the future, for other workouts.
Source: Allbirds

Despite the fact all of Allbirds' U.S. shops and the majority of its stores overseas remain shut, the company decided to go ahead with the product's debut. A key reason why, it said, is that with gyms also shut down to try to halt the spread of Covid-19, more people are turning to running outside for exercise. 

"In the midst of all this, people are running ... more than ever," Brown told CNBC in an interview. "We felt like the product was serving that purpose." 

The shoe, which retails for $125, will be available Tuesday in four colors: Geyser (light blue sole); Cyclone (light green sole); Flame (light red sole); and Thunder (white sole). 

Allbirds said it has been working on the running shoe for years.
Source: Allbirds

The shoe is not meant for triathlons or marathons, but for people looking to run as as much as a 5K or 10K race, Brown said. Allbirds expects to release additional athletic shoes in the future, he added. 

At the moment, only four of Allbirds' 19 locations, globally, are open. But the company hopes it will gain trial on the internet by offering free returns for up to 30 days after a purchase. 

Brown suspects that shoppers are growing more comfortable with online shopping, as they look to buy the items they need without venturing to stores. Lockdowns continue to be widespread, and many states are still trying to determine when and how retailers can reopen

"People's familiarity with shopping online is going to come out of this in a stronger place," Brown said. "Traditionally footwear has been dominated by wholesale ... and in-store purchases. That is not possible at the moment." 

"This presents challenges and opportunities," he added. "Like everyone else, we are trying to adapt to this situation." 

The shoes come in four colors, including this one in light red.
Source: Allbirds

Still, like many nonessential categories in retail, footwear has struggled through this pandemic. People are hoarding groceries and household essentials, but are drastically cutting back their spending on clothes and shoes. 

Adidas said Monday that its first-quarter profits fell more than 90% due to coronavirus-related store closures. E-commerce — which it described as "the only channel that has remained fully operational in most parts of the world" — rose 35%, but failed to offset losses elsewhere. 

Overall, athletic footwear sales in March in the U.S. dropped by 40%, as the crisis hit consumers hard, according to NPD Group analyst Matt Powell. Data show running footwear sales also dropped in the mid-teens during the first quarter of 2020, despite more people turning to running for exercise, he said. 

Allbirds to date has raised $77.5 million and has a reported valuation of $1.4 billion. 

VIDEO4:3204:32
Former Saks CEO on the long-term impact of coronavirus on the retail industry