The so-called 'dad shoes' sports brand New Balance, which has emerged as a representative of global running shoes, has declared its direct entry into the Korean market. New Balance has officially announced its establishment of a Korean corporation in 2027, stating plans to conclude its partnership with Eland World, which has lasted for the past 15 years, and pursue an independent path starting in 2030.
According to ChosunBiz on the 19th, industry experts evaluate that New Balance's decision for direct entry into Korea is a strategic judgment aimed at the rapidly growing domestic running market. New Balance is a sports brand that opened in Boston, Massachusetts, in 1906. It primarily produces various sports goods and casual shoes, focusing on running shoes.
In our country, Eland World obtained the domestic exclusive license from New Balance Athletic Shoes in 2008 and expanded its domestic business. As of last year, New Balance surpassed 1 trillion won in domestic sales, ranking second in sports brand revenue after Nike.
◇Cases of struggles after Puma's direct entry... Seeking differentiation
Direct entry of global brands into the Korean market does not guarantee success. Similar sports brand Puma experienced a significant drop in sales after its direct entry in 2008. Various fashion brands have also struggled after direct entry.
However, New Balance plans to attempt a differentiated approach. It will engage in a dual-track operation for three years to promote its establishment in the domestic market while inheriting Eland's distribution know-how and effectively conveying its technological capabilities and brand value.
New Balance will implement a dual-track operational system from 2027 to 2030. The newly established Korean corporation is expected to handle technology marketing focused on running shoes and operate running communities. Eland World will manage the kids' line and institutional sector based on its knowledge from 15 years. New Balance Kids is a children's clothing line that Eland launched as the world's first in 2013.
An official from Eland noted, "We are redefining the role of the Korean branch, ensuring that the current framework remains stable."
◇Will the successful model in Japan work in Korea?
Experts interpret New Balance's actions as groundwork for executing a successful running community strategy, similar to Nike. Recently, sports brands are strengthening ties with consumers by directly operating running clubs through social media, emails, and apps. Nike manages substantial running communities like the 'Nike Run Club' globally. However, New Balance has faced structural limitations in implementing such strategies due to its reliance on Eland World.
According to a survey by Korean Gallup, the adult population enjoying running at least once a week increased significantly from 15% in 2020 to 28% in 2024. The expansion of running crews centered around the MZ generation and the growth of digital platforms related to running are expected to drive market growth for the time being.
Japan has been a country where global sports brands applied running community strategies ahead of Korea. New Balance recorded an average growth rate of 15% annually from 2015 to 2020 in Japan, as a result of directly operating its running community strategy.
Sports brand experts said, "For New Balance's experiment to succeed, it must redefine relationships with existing distribution networks and effectively communicate with the domestic running community," adding, "It is also important to introduce locally optimized products that are noteworthy in the Korean market, just like other brands."
In particular, how to establish new relationships with the first-tier agencies currently under contract with Eland is expected to determine the success or failure of its direct entry.
Brand positioning expert Kim So-hyung, a consultant at Davis & Company, remarked, "New Balance's direct entry into Korea will be more than a simple business model transition; it will serve as a new experimental ground where domestic sports culture, highlighted by running, meets the localization of global brands," adding, "Moreover, Eland finds itself in a situation where it needs to look for brands to replace the lost revenue from New Balance after 2027."
An official from Eland stated, "The structure where New Balance's sales significantly decline in Eland's revenues from 2027 is not the case; for the time being, we will continue the partnership." They added, "Currently, several brands are reportedly sending 'love calls' to New Balance, but there isn't a particular atmosphere of preparing for relevant matters."