As published on brandchannel.com on October 29, 2013.
Earlier this month, Under Armour introduced a completely different retail concept to the Chinese sporting apparel market—a market that has proven hard to crack even for the most seasoned retail veterans, including Nike and Adidas. But Under Armour’s new Shanghai retail theater experience aims to do much more than just sell clothes and sneakers.
Located in the Jing An Kerry Centre, the store features a 270-degree screen that covers 90 percent of the relatively small boutique, encapsulating store-goes in the sights, sounds and experiences of athletic training—a truly foreign concept in China and greater Asia.
In China, especially, working out is not a common activity. Seeing joggers is a rarity and oftentimes in the gym, Chinese are seen wearing jeans or leather shoes as opposed to sporting apparel. Sports participation is also low due to lack of time, the single child policy, and limited governmental support to popularize sports. But, there is still huge market potential; after the Beijing Olympic Games, there has been dramatic growth in sporting brands.
Still, the market has proven difficult, with Nike, Adidas, and others struggling to localize their retail approach to fit the unique needs of Chinese consumers, both young and old. In fact, Nike and Adidas have spent much of their time in the country with a hard focus on building a lifestyle brandaround young consumers, capitalizing on consumer trends towards creativity and self-expression. Still, Nike recently saw a three percent decline in its China sales while it experienced an increase in all other geographic locations.
So Under Armour, a brand built largely on its popular undergarments, is instead focusing on introducing the idea of athleticism to Chinese consumers, putting retail sales second. “You walk in the store going how do athletes train?” Under Armour CEO Kevin Plank explained in a press release. “In China they don’t exercise, so they’re going, why do I exercise? It’s a tutorial on why would I train.” Guests are greeted by a familiar, athletic face: Michael Phelps, who took home eight gold medals at the Beijing Olympics, serves as the store’s virtual host.
“Wherever we go around the globe, we will lead first with our story and bring the people into the best Under Armour experience possible before we ask them to try our performance apparel and footwear,” said Plank.
The company, which as experienced steady quarter-by-quarter growth over the years, saw a 26 percent increase in revenue in the third quarter ending Oct. 24, growing by over 20 percent for the sixteenth consecutive quarter, according to Seeking Alpha. Netting its highest revenues from apparel, followed by footwear and accessories, the retailer shows a lot of promise—that is if it can maintain its impressive growth rate.
In order to do so, the relatively new retailer is doubling down to turn its largely North American-based business into a global brand. Last year, of Under Armour’s $1.8 billion in revenue, less than 10 percent came from global sales, compared to Nike, where more than half of sales come from outside the US. Plank’s plan is to double overall and international revenues by 2016—a difficult goal, for sure, but one certainly in reach for the hard-nosed company. In fact, Plank says, by the end of the year, Under Armour will have more international offices than those in the US. Beyond China, the brand is especially focused on growth in Latin America, with upcoming opportunities in the 2014 World Cup and 2016 Summer Olympics in Brazil to help make in-roads.
Still, China plays a major role in Under Armour’s ability to become a global leader in sports retail. In the last two years, the brand has opened six stores on Mainland China and one in Taiwan and Hong Kong, and the fact that the company manufactures over 50 percent of its products in Asia makes it easy to distribute new designs quickly to the market as the company expands in the region in the future.
To see the original, click here.