Birkenstock IPO

Hippy style Birkenstock speed marches into an IPO. What does its flagship Tokyo store reveal about its growth strategy?

According to Bloomberg, bohemian German shoe brand Birkenstock will IPO shortly for around $8b. 

If all goes to plan it’s almost double what PE Group L Catterton, LVMH and Groupe Arnault shelled out when acquiring the business just over 2 years ago.

What’s driving such a rapid rise in Birkenstock’s fortunes?

To start with Birkenstocks aren’t cheap. Last year I bought my first pair and paid close to $150. Pricey for sandals! (Probably the ROI for new customer acquisition is quite high?)

Phot: Marsha Reid, Unsplash

Second, this year Birkenstock has received notoriety with Barbie the movie where a pink pair were worn by actress Margot Robbie.

Birkenstock’s iconic footbed is trademarked plus hold several patents on newer styles.

The company is also tweaking its route to market model. Here in Japan Birkenstock has moved away from a distributor and franchise model towards having more fully owned and managed stores.

Last week in Tokyo I visited its flagship outlet in Harajuku, close to Shibuya.

Birkenstock, Tokyo. August 2023

Honestly speaking the store was much smaller than I anticipated. It was also a little hard to spot from a distance (though it was over 35c and my thirst could have been a contributing factor). Inside the store’s centrepiece is a pine-oak-teak seat to try on apparel. The walls are curved, to symbolise how Birkenstocks adapt to your feet. 

There were many shoppers when I visited but far fewer trying on shoes. 
The product range was impressive with over 100 varieties of sandals. The shopper profile was heavily skewed to internationals and tourists, I didn’t see many Japanese. The crowd were in their late 20s or 30s.

Birkenstock doesn’t reveal publicly its Japanese revenues. Besides its owned stores it also enjoys distribution in fashion chains like United Arrows and Beams. I do not know what the consumer penetration is for Birkenstock in Japan but I’d guess it’s not more than 5%. Penetration is  its biggest growth driver in my opinion.

If I were Birkenstock management I’d want my stores to be big enough for new customers to try on shoes without being tramped on by other shoppers in the process.

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