On Holding reported second-quarter 2026 revenue growth that met market expectations, according to Business Wire, but offered limited clarity on how the Swiss running brand plans to balance its expanding retail footprint against wholesale partnerships — a tension now central to investor concerns.
The company's quarterly results showed continued momentum in direct-to-consumer channels, though specific revenue figures and year-over-year growth rates were not disclosed in the earnings release. What stood out: management commentary acknowledged ongoing questions about capital allocation and the pace at which On will scale its owned retail presence versus deepening distribution through sporting goods chains and specialty run shops. According to WWD, analysts pressed executives on whether the brand's premium positioning can sustain growth without broader wholesale penetration, or if aggressive retail expansion risks channel conflict.
The mechanism that made On's early growth possible — selective wholesale distribution paired with high-margin DTC — now faces a structural decision point. Running specialty retailers provided credibility and trial in the brand's formative years. As On opens flagship stores in major metros and expands its e-commerce operation, those same wholesale partners watch for signs the brand will prioritize its own storefronts over their shelf space. The risk: a halfway approach that neither dominates retail real estate nor fully leverages wholesale scale, leaving the brand stuck between growth models.
For a physical product brand navigating this same crossroad, the play is to declare a primary channel and design the secondary channel to feed it. If DTC is the long-term margin engine, wholesale becomes a customer acquisition cost: limited SKUs, hero products only, sold through doors that build brand credibility in markets where you lack retail presence. Price integrity stays tight. The wholesale program exists to generate trial and drive customers to your owned channel for the full assortment and repeat purchase. You measure wholesale success not by door count but by how many of those customers convert to DTC within 90 days.
If wholesale is the growth engine, retail becomes the brand amplifier: fewer, high-traffic flagship locations in top markets, designed to showcase the full line and educate sales staff at wholesale partners. The stores exist to create demand wholesale partners fulfill. You open in neighborhoods near your largest wholesale accounts, not to compete but to prove the brand's pull. Co-op marketing funds flow to partners who match your retail merchandising standards. You measure retail success by how much it lifts wholesale sell-through in the surrounding region.
The error is operating both channels at full scale with no clear hierarchy. That path burns capital on rent and staffing while wholesale partners lose confidence and reduce buy-in. On's investor call suggests the company has not yet committed to a lead channel. For the smaller brand, the advantage is simpler: pick one, build it to profitability, then layer the other as a deliberate support function with a defined ROI threshold.
The broader pattern: as premium physical product brands mature past the early-adopter phase, distribution strategy becomes the binding constraint on growth. The brand that wins clarifies which channel owns the customer relationship and structures every other touchpoint to feed it.