Under Armour does a Nike me-too and expects success
The world of team sports is known for copycatting. If a team wins a championship with a certain type of offense or defense, other organizations follow suit by the time their preseason training comes around. The same has been known to happen in the retailing and consumer brand industries, as well.
The latest evidence is Under Armour’s announcement last week that it planned to cull “undifferentiated retail partners” from its distributor list to focus more on its own consumer-direct digital initiatives. Under Armour said it expects to pull its products out of 2,000 to 3,000 stores by 2022, lowering its total to about 10,000 locations.
The move appears very similar to Nike’s strategy. The athletic wear brand giant, according to reports, planned to end its relationship with a wide number of retailers, including Belk, Boscov’s, Dillard’s, Fred Meyer and Zappo’s. John Donahoe, Nike’s CEO, has said the brand’s consumer-direct strategy is helping it gain strength even in the face of the novel coronavirus pandemic. All reports point to the brand increasing its focus on building “one-to-one” relationships with its members (Nike-speak for customers).
Under Armour CEO Patrik Frisk told analysts on the company’s third quarter earnings call, “Our efforts remain centered around becoming a best-in-class retailer capable of providing a premium Under Armour experience whenever and wherever consumers directly engage our brand.”
Mr. Frisk called e-commerce a “bright spot” for Under Armour, with sales growing more than 50 percent during the third quarter.
“With the majority of our global e-commerce sites on one scalable platform,” he said, “we are working to unlock a more robust functionality to power our CRM efforts to help us drive more resonant and personalized interactions with our consumers.”
As to Under Armour’s retail stores, Mr. Frisk said the company has been moving in the right direction as it evolves concepts that “are more scalable, brand right and profitable.” He said Under Armour was “obsessing every moment along the consumer’s brand journey to help us make better decisions to drive greater relevance and connectivity.”
- It’s getting harder to find Nikes—and that’s just how Nike wants it – Quartz
- Under Armour Reports Third Quarter 2020 Results; Provides Outlook For 2020 – Under Armour, Inc.
- Under Armour, Inc. (UAA) CEO Patrik Frisk on Q3 2020 Results (Earnings Call Transcript) – Seeking Alpha
- What? Should Nike drop Zappos and others to focus on consumer-direct? – RetailWire
- Will Nike’s digital drive build stronger ‘one-to-one’ relationships with consumers? – RetailWire
- Nike debuts member-driven concept – RetailWire
DISCUSSION QUESTIONS: Do you think Under Armour has the right strategy in place to grow its business? Do you expect more brands in athletic wear and other categories to continue increasing their focus on consumer-direct channels and reducing wholesale partnerships?