On Holding AG defends premium strategy amid retail discount pressure

Swiss sportswear brand On is aggressively defending its premium market position through a high-margin strategy. The company maintains a industry-leading gross margin of 65 percent by prioritizing high price points and strictly limiting discounts.

To bolster its brand prestige, On recently secured football star Kylian Mbappé, who will wear the brand, competing against major rivals like Nike. However, the company faces challenges to its ‘Premium Playbook’ as large retailers, including Zalando, offer significant discounts that undermine On’s pricing strategy. In response to slowing growth, management has recently moved to limit the volume of products sent to retailers to protect brand value.