Under Armour: Key Areas Of Growth Through Connected Fitness

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Early last year, at the SXSW, Under Armour (NYSE:UA) CEO Kevin Plank stated that “data is the new oil”. He added that the most successful companies in the world are now using math and data analytics to weed out competition at every step. Hence, it comes as no surprise that Under Armour has made leaps and bounds in the direction of implementing technology in its fitness gear. However, given the nascent character of the market, it seems too early to talk about the success of the strategy.

In a previous article, we examined how the company has worked towards integrating technology into its products. In this article, we will try to focus on the key areas where connected fitness can enable growth for the company.

International Expansion

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In FY 2015, international revenues at Under Armour came in at about 17.5%. In comparison, Nike managed to rake in almost 53.6% during the same period. Management at UA has constantly stressed on its intentions to grow its international presence. The company’s Connected Fitness app can help in this respect.

Approximately three out of ten users (35%) on the Connected Fitness network belong to regions outside the U.S. This feat was made possible thanks to the acquisition of Endomondo in early-2015. At the time, Endomondo was a profitable and high ranking training app with close to 20 million users based primarily in Europe. Consequently, Connected Fitness gave UA the ability to market its products to a specified international target audience at a fraction of the marketing cost. At present, Connected Fitness has close to 200 million users worldwide.

Increased Revenues From Women

Of the total revenues, only about 30% of UA’s apparel customers are women. This provides Under Armour with a significant room for expansion. With the strategic partnership with Kohl’s and the introduction of uniquely catered products, Under Armour has worked hard to try and improve the ratio over the last year or so. Connected Fitness can help increase sales in this respect. Close to 60% of the Connected Fitness community is women and the company provides recommendations based on user’s data. This strategy has resulted in a 26% greater chance of the customer buying the product.

Growth At Footwear

Footwear at Under Armour has exploded in the last few years primarily due to the success of the Curry line of shoes. Despite this, the company lags behind Nike in terms of footwear’s contribution to sales. However, UA can use connected fitness to propagate footwear sales.

Under Armour could use the data it gathers in two ways. First, to create world-class products. For example, the company’s popular Speedform Gemini running shoe was created using the average running distance collected from the apps. Based on the distance, UA lined the shoe with a unique padding to increase the performance, resulting in increased sales of the shoe. Additionally, features such as Gear Tracker on the MapMyFitness app tells the user when it’s the right time to change their shoes based on usage logged in the app.

If things go according to plan, Under Armour may have something that its other competitors don’t. This could enable long term growth for the company.

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