The news: On Holdings has built its business on protecting price integrity, but that strategy is getting harder to maintain as sales growth slows amid growing competition and price-sensitive consumers’ reluctance to shell out $200 for sneakers, per The Wall Street Journal.

• On’s Q2 net sales rose 13.5% YoY, a point below its Q1 pace and roughly one-third the growth rate posted a year earlier.
• Wholesale revenues grew just 4.8%, which CEO David Allemann blamed on a highly promotional multibrand marketplace.

The context: On is operating in a challenging market in which consumers are pulling back spending and those that continue to purchase are increasingly looking for a deal. Athletic footwear unit sales fell 7% YoY in the three months through July, per Circana data cited in The Journal, and 44% of shoes sold during the quarter were marked down, up from around 40% a year earlier.

• Several companies have pointed to those pressures, including Dick’s Sporting Goods and Nike, both of which said they’ve seen consumers scale back on footwear.
• Hoka is responding by widening distribution. After parent company Deckers reported a sharp slowdown in Q2 growth, it said it would add wholesale partners in the second half.

On is taking the opposite approach. Rather than expand distribution or lean into promotions, it is sticking with premium pricing and becoming more selective about wholesale partners while prioritizing direct-to-consumer sales. Its shoes typically run from $140 to $280, with some limited editions around $300 and high-end collaborations approaching $1,000.

Why it matters: Two high-profile brands illustrate the risks of changing course too aggressively.

• Under Armour used heavy discounts to clear excess inventory after merchandising missteps, weakening its premium positioning and making its subsequent push back upmarket more difficult.
• Nike’s decision to pull back from wholesale in favor of direct sales created shelf space for brands like Hoka and On and reduced its visibility with consumers, a decision it has since struggled to reverse.

Implications for brands: On is trying to thread the needle between protecting its premium positioning and maintaining growth. Pulling back from wholesale gives it greater control over pricing and the customer experience, but it also reduces the number of places consumers encounter and buy the brand.

Discounting presents the opposite risk. Lower prices could support volume in the short term but train consumers to wait for deals, making On’s premium positioning harder to sustain.

There’s no easy answer. For now, On is accepting the possibility of softer near-term growth in exchange for protecting the brand equity that allows it to charge a premium in the first place. But if consumers continue pulling back, it may need to shift gears.

This content is part of EMARKETER’s subscription Briefings, where we pair daily updates with data and analysis from forecasts and research reports. Our Briefings prepare you to start your day informed, to provide critical insights in an important meeting, and to understand the context of what’s happening in your industry. Non-clients can click here to get a demo of our full platform and coverage.