TL;DR: The meteoric rise of brands like On Running, which have earned the nickname "the middle-class harvester," reveals a dangerous paradox in modern marketing. Achieving viral, trend-driven success with this demographic often leads to a "growth at all costs" mentality that can mask fundamental weaknesses in profitability and product quality. As seen with predecessors like Lululemon and Arc'teryx, the loyalty of the middle-class consumer is fleeting, and no amount of marketing can outpace a failure to deliver on the premium promise.
I am James, CEO of Mercury Technology Solutions.
When a brand earns the nickname "the middle-class harvester," you can be sure of one thing: it isn't cheap. This is the label now attached to the Swiss brand On Running, and it serves as a powerful and cautionary tale for any business aiming to capture the hearts and wallets of today's trend-driven consumers.
Since entering the Chinese market in 2018, On has rapidly become a status symbol, joining Salomon and HOKA as one of the "three treasures of the new middle class." Its popularity has soared, but a closer look at its financial performance reveals a troubling disconnect that every business leader should study.
The Growth Paradox: When Sales Soar and Profits Collapse
In the second quarter of 2025, On delivered a financial report that was impressive on the surface but weak at its core. Net sales grew by a remarkable 32% year-over-year, beating market expectations. But the real story was in the profits. Net profit plummeted by 232.7%, turning a healthy profit from the previous year into a significant loss. The net profit margin fell off a cliff, from 5.4% to -5.5%.
This report sounds a clear alarm: the quality of On's growth is in question. This is a classic symptom of a brand caught on what I call the "Middle-Class Treadmill."
Surviving the Middle-Class Treadmill
The only constant for today's "middle-class essentials" is that they are constantly changing. The consumer preferences of this demographic shift with dizzying speed. When a new trend emerges, the previously hyped items tend to fade.
- Lululemon, once the "Hermès of yoga pants," has had to move into outlet malls with steep discounts, and its stock hit a five-year low after its Q1 earnings report.
- The coveted Arc'teryx "Year of the Snake" jacket, once flipped for over ¥20,000 RMB, has now returned to its normal price.
As these brands became mainstream, the middle class sought newer, more niche labels to maintain their sense of exclusivity. The new "trio" became Salomon, On, and HOKA, driven by the boom in outdoor and running culture.
A Tale of Two Playbooks
On and HOKA, while both targeting the high-end running market, have completely different strategies:
- On Running pursues a "professional + fashion" strategy. It has successfully entered the fashion world through collaborations with luxury brands like Loewe and partnerships with superstars like Roger Federer and Zendaya, cementing its image as a "sports luxury" brand.
- HOKA, by contrast, stays laser-focused on the core running and trail-running world, building its high-performance reputation by sponsoring professional races and athletes.
On's strategy has been undeniably successful in generating hype. Brand awareness in China reached 30% in 2024, and nearly 50% in first-tier cities, perfectly filling the void for a niche status symbol.
The Inevitable Battle: Marketing vs. Quality
On has set an ambitious goal to achieve 3.55 billion Swiss francs in revenue by 2026, laying out a strategy to Elevate market share, Expand in China, and Establish itself as a multi-category brand. This is a proven path, pioneered by Lululemon: first, win over a specific group of high-spending consumers, then integrate the product into their lifestyle.
However, On may not be able to avoid the pitfalls its predecessors faced.
The brand's loyal fans argue that its high price is justified by its core technologies, but to many other consumers, the premium feels more like a marketing tactic. On's strategy reinforces this, focusing more on its luxury status than its performance features. As one consumer joked, "You're not buying running shoes, you're buying middle-class approval."
This creates a dangerous situation when the product itself fails to live up to the hype. The bigger problem for On is that for such an expensive shoe, the quality is often criticized. Social media is filled with users complaining of "cracked soles" and "torn heels" after less than six months of use. In a K-Tipp report last year, an On salesperson even admitted: "The shoes are very light, but they are also very fragile. The lining tears quickly at the heel."
Conclusion
This is the critical lesson for any brand targeting the trend-driven middle class. No company can survive on marketing alone. The fierce competition in the high-end market, combined with growing consumer demand for genuine quality, creates a precarious balancing act. Finding that balance will be On's greatest challenge moving forward, and it serves as a powerful reminder that a brand's long-term health is ultimately determined not by the brilliance of its marketing, but by the integrity of its product.
