Maybe they should aim for a different market segment then. Common Projects, a plain but very well made luxury sneaker seems to be doing well. I'd imagine fighting for scraps against Amazon/Walmart isn't going to go well.
They can't price their shoes too high because their market would scoff at paying more than $~150 for shoes. This market also won't care about where the material is sourced from or who makes it.
Allbirds made a cheap product people can easily copy, so they did. Shrug.
That said, if you love merino - check out Icebreaker...