Alo CEO Danny Harris just announced the brand’s biggest gamble yet: $3,000 Italian leather handbags. He’s betting customers will “swap their Chanel for Alo.” He’s about to learn why abandoning your perfect market position is one of the deadliest mistakes a brand can make.
Today’s article is a case study on how brands destroy themselves by abandoning the positioning that made them successful in the first place.
The Sweet Spot Alo Is Abandoning
Alo built their empire by owning the perfect middle position in activewear: premium enough to feel luxurious, accessible enough to be aspirational. At $100-200 for leggings, they sat beautifully between mass market brands like Nike and true luxury like The Row’s $800 athletic pieces.
This positioning was genius because it served two distinct customer psychologies simultaneously:
- For wealthy customers: Alo was high-quality activewear without the pretension of obvious luxury signaling. Rich people could wear it to Pilates without looking try-hard.
- For aspirational customers: Alo represented attainable luxury; expensive enough to feel special, affordable enough to justify as an investment in wellness and self-care.
Both groups felt good about the purchase for different reasons, but they shared the same product experience. This dual appeal created Alo’s massive, diverse customer base.
The $3,000 Embarrassment Problem
A $3,000 handbag destroys this carefully calibrated positioning by embarrassing both customer segments:
Rich customers think: “This is embarrassing”. If I’m spending $3,000 on a bag, I’m buying Bottega Veneta or Chloe– i.e. from brands with actual luxury credibility. Alo trying to charge luxury prices feels desperate and inauthentic.
Aspirational customers think: “If I’m spending $3,000 on a bag, I’m buying a real designer bag that people will recognize and respect. Why would I pay luxury prices for an activewear brand?”
Neither customer segment sees the value proposition. Alo is asking luxury prices without luxury credibility, from a customer base that chose them specifically because they weren’t trying to be a luxury brand.
The Positioning Disaster
Alo’s original positioning worked because both customer segments could rationalize the purchase within their existing value systems:
- Wealthy customers: “It’s high-quality activewear, not conspicuous consumption”
- Aspirational customers: “It’s an investment in my wellness and self-image”
But a $3,000 handbag forces both groups to confront that Alo is, in fact, trying to be a luxury status brand. This destroys the psychological cover that made the original positioning work.
The customers who buy $150 Alo leggings and the customers who buy $3,000 handbags want fundamentally different things:
Alo’s current customers value:
- Functional luxury that improves their daily experience
- Wellness-focused lifestyle alignment
- Quality that justifies the price within activewear context
- Subtle premium positioning without obvious status signaling
$3,000 handbag customers value:
- Clear luxury hierarchy and brand prestige
- Social signaling and status recognition
- Heritage craftsmanship stories
- Investment pieces with resale value
- Access to products that the average person can’t
These psychological profiles don’t overlap significantly. Alo is betting their wellness-focused customers will suddenly develop an appetite for status consumption, and that luxury customers will accept activewear credibility as luxury authority.
By introducing $3,000 handbags, Alo is essentially trying to operate two incompatible brands under one name. This creates impossible messaging challenges. How do you speak to customers paying $150 for leggings and $3,000 for bags simultaneously? The brand values that resonate with one group (authentic wellness, functional luxury) actively repel the other (status signaling, traditional luxury).
The Historical Precedent
Brands that abandon successful middle positions typically fail on both ends:
J.Crew tried to go upmarket with their Collection line while maintaining their core positioning. They lost their core customers without gaining luxury credibility, eventually filing for bankruptcy.
Banana Republic struggled when they moved too far upmarket from their original adventure-travel positioning, alienating core customers without convincing luxury shoppers.
The difference: Those brands moved gradually. Alo is jumping from $200 activewear to $3,000 handbags overnight, a much more jarring brand identity shift.
What They Should Have Done
If Alo wanted to increase average order value and expand their addressable market, they had numerous options that would have reinforced their positioning instead of contradicting it. The most obvious path was testing elevated activewear at $300-500 price points using premium performance fabrics or limited-edition designs within their core category. This approach would have allowed them to gauge their customers’ willingness to pay luxury prices for products where Alo actually has expertise and credibility. By introducing small collections of ultra-premium leggings, sports bras, or athleisure sets made with advanced materials or exclusive cuts, they could have gradually moved upmarket without abandoning their wellness positioning. These elevated pieces would have felt like natural extensions of their existing product line rather than jarring departures into unrelated luxury categories. If customers responded positively to $400 leggings, Alo could have continued pushing price boundaries within activewear before ever considering handbags. This strategy would have grown revenue while strengthening their core brand promise rather than fragmenting it across incompatible market positions.
In Summary
Danny Harris thinks he’s expanding Alo’s addressable market. He’s actually about to alienate the customers who made them successful without gaining the customers he’s chasing.
The middle position Alo occupied wasn’t a stepping stone to luxury, it was the destination. They built a billion-dollar business by serving customers who specifically didn’t want obvious luxury but did want quality and aspiration.
A $3,000 handbag forces those customers to confront that Alo has luxury aspirations after all, destroying the psychological positioning that made the brand work in the first place.
Sometimes the biggest risk is abandoning the perfect position you’ve already won.
What do you think: Can Alo maintain their core customer base while chasing luxury handbag buyers, or will this fragment their brand beyond repair?
Thanks for reading this week! As always, I love helping small businesses win, whether that’s through my self-paced Social Media Masterclass here or through a 1:1, Direct discovery or working with my agency!
xx,
Camille