Under Armour's Three Strategic Steps to Connect With Consumers

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Under Armour's Three Strategic Steps to Connect With Consumers

By Tim Denman - 08/01/2016
Under Armour continues to gain market share and nip at the heels of rival Nike. But in order grow at the pace the athletic apparel and footwear manufacturer and retailer has set, continued realignment of strategic initiatives and investments must be made.

On a recent earning call with press and analysts, chairman and CEO Kevin Plank outlined some key strategic steps the brand is taking to reach more customers. Plank outlined his plans for three key areas: channels, categories and geographies.

Channels. Under Armour is the definition of omnichannel. In addition to its thriving wholesale consumer goods business the brand operates its own retail stores, e-commerce site and mobile retailing platform.
During the second quarter, wholesale revenues grew 27% to $635 million, direct-to-consumer revenue grew 28% to $321 million, licensing revenue grew 16% to $21 million, and Connected Fitness revenues grew 73% to $23 million. While its wholesale business continue to be the biggest piece of Under Armour's revenue pie, it is investing to aggressively grow its direct-to-customer channels.

Currently the retailer operates 160 company-owned stores in North America, comprised of 146 factory house stores and 14 brand house stores. More stores are on the horizon including its biggest and brightest store to date in mid-town Manhattan. The retailer recently announced its plans to take over the iconic FAO Schwarz retail space on Fifth Avenue at the base of the GM building in New York City.

"The approximately 53,000 square foot space is one of the most recognized and high-traffic areas in all of New York," Plank said. "Our plan is to build the most breathtaking and exciting consumer experience ever conceived at retail."

In addition to its growing company-owned retail footprint the retailer has also announced it is entering a partnership with Kohl's for the department store chain to begin selling Under Armour merchandise in 2017.

"One of the top retailers of activewear in the U.S., Kohl's has a large and loyal consumer base, the majority of which are women shoppers," Plank said "We want to reach our consumer where they expect to find Under Armour product, and we'll continue to partner with the retailers that provide us the opportunity to showcase the Under Armour brand."
 
Categories. Of course the number of stores UA is available in is irrelevant if the brand doesn't continue to release on-trend products that connect with shoppers and meet their needs. As the atheletic company continue to evolve it has announced Under Armour Sportwear (UAS)— a line of apparel designed for use off the field.  To help grow the new line which will be available in September, UA Tim Coppens has been named executive creative director of UAS. Coppens has a reputation in the fashion world with his existing line already carried in premium retailer like Barneys.

"UAS is not just a category play or a distribution play, it's about bringing a new consumer into the Under Armour brand," Plank said. "UAS will bring a young, fresh and modern voice to sportswear and reflects the insights we've gained as a performance brand now applied to the everyday wardrobe. Consumers have the expectation that performance product is not just functional but is fully executed through fit and style."

Geographies. As the retailer continues to invest to grow its retail footprint in North American it is also looking to increase its profile internationally, specifically in China. Under Armour's e-commerce presence in the country is experiencing amazing growth, with year-to-date revenues up 157%.

"Our eCommerce in China has basically exploded for us," Plank says. And so this is not just a bricks-and-mortar story. And frankly, China may actually end up being the palette that we're able to write the script of what is that balance. Because I think, one of the questions that everybody is having in this space right now is, where – some of our competitors specifically, they talk about the power of their growth in terms of the number of retail stores. I think that's one indicator for it, but I'm not sure that all the retail stores that are open today are going to be open in the future."