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THE RETAIL GAME

PERFORMANCE SPORTSWEAR BRAND UNDER ARMOUR IS OPENING ITS OWN STORES

By Neil Janowitz

For 11 years Under Armour has been doing to its own competitors precisely what it helps its customers do to theirs: dominating them. The Baltimore-based athletics-apparel company, a pioneer in performance sportswear made from polyester-based, moisture-wicking materials, burst on the scene armed with well-attuned marketing campaigns and savvy strategic partnerships.

Over the years Under Armour has forged exclusive deals to supply its wares to collegiate and professional sports teams, while "We must protect this house," "Click-clack" and similar ad slogans were winning the company a reputation among teen- and college-age consumers.

But though a robust wholesale and mail-order business has catapulted Under Armour to a point of mention alongside the likes of Adidas, Nike and Reebok, the company realized that to be a real player, it would need a storefront presence.

"We're interested in vertical integration," said Christopher Hufnagel, senior director of retail, who joined the company last January. Hufnagel set the wheels in motion for a store to embody the highly charged, win-at-all-costs experience that Under Armour promotes on the pages of both catalog and Web site.

Cincinnati-based FRCH Design Worldwide oversaw the blueprints, and in November Under Armour opened its first store, a 4,500-square-foot unit in Westfield's Annapolis (Md.) Mall. The store carries all the products the company offers through the catalog and online. Its design and execution are a point of pride for Under Armour.

From a design perspective, FRCH knew that Under Armour's aggressive ethos would be hard to fit into a traditional storefront setting. "Our goal was to create something that didn't exist in retail, something that would enable people to escape the mall atmosphere," said Steve McGowan, FRCH's creative director. "And so, instead of a simple doorway, we began with a tunnel that leads you past a series of showcases. We use music, video and the product itself to build anticipation by teasing all five senses. Then, when you emerge from the tunnel, you get this vista of the store, and you're suddenly emotionally connected. We were trying to evoke a Friday Night Lights feel. The idea behind it all is something we called sports theater."

Hufnagel says the store's innovations are not limited only to its aesthetics. Recognizing that Under Armour customers enjoy technology, the design incorporates flat-panel TVs and a "floating" point-of-service system - sales associates can wirelessly scan a customer's selections from anywhere in the store and charge to a credit card, then bag the items and e-mail a receipt.

The employees are selected based in part on athletic aptitude. Under Armour staffed the store exclusively with former and current athletes of all ages. "The idea is that they can dispense athletic advice as well as product advice," said Hufnagel.

Under Armour's efforts appeal not just to customers, but to industry analysts and potential landlords as well. Under Armour was the "most competitive" retailer last year and placed fifth out of some 500 companies in a ranking of the most competitive outfits overall, according to W Ratings, a research firm based in Herndon, Va., that studies market leaders across 10 sectors of the economy and ranks them based on profits and customer satisfaction.

"Under Armour is a great firm," said Gary Williams, CEO of W Ratings. "It does well with profits, and it does well with customers. It just needs to be sure it's preparing itself to maintain that success, because the company is so profitable that it's attracting the attention of competitors. Under Armour won't survive unless it's three steps ahead of Nike. That's why the company needed to start rolling out retail stores, to develop and sustain closeness with its customers. Now Under Armour needs to keep the stores experience-driven. It will heighten what the brand is about."

Williams says he sees similarities between Under Armour and Victoria's Secret, particularly with regard to Under Armour's long-term potential. "Victoria's Secret is so great with its models and events," Williams said. "Just think about what Under Armour could do with event-driven marketing like that. Look at what Victoria's Secret has done over the past 25 years, and it's a blueprint for how Under Armour could go forward. It shouldn't try to be Nike. It needs to create its own unique position in performance apparel and has already begun making inroads in that direction."

Robert K. Passikoff, president of the New York City-based Brand Keys retail consulting firm, expresses similar sentiments. "What Under Armour has done is smart for two reasons," he said. "So far, it's done an excellent job building its brand without retail. But the paradigm is changing. It used to be, ‘You're not a brand until you're sold everywhere.' Now it's: ‘You're not a brand until you have retail outlets.' It just gives you a better ability to control the brand, and that's why it's good that Under Armour is making the move."

But today's retailing is less about brand and more about experience, and this is one of the ways that Under Armour stands out, says Passikoff. "It's in the sports apparel industry, in which it faces a lot of competition," Passikoff said. "You can't do it with good product alone. Having a store that affords the company the flexibility to enhance the shopping experience is going to go a long way, and it's so specialized that it can enter any market that's already supporting a strong athletic presence."

And yet both Williams and Passikoff caution that because Under Armour is so specialized, it should expand slowly and prudently. Indeed, Hufnagel thinks so too. "This first store is a test for us, a lab, if you will," Hufnagel said. "We plan to learn what being a retailer means for our brand, and in the process, we can hopefully become a better distributor, as well."

At this point the company has neither plans for future stores nor specifics on the types of sites it would target, says Hufnagel. For now the idea is to ensure that the store runs as smoothly as possible.

"Our demographic for these stores is the 15-to-18-year-old male and female high school athlete," said Hufnagel. "The brand appeals to all ages, but as far as this retail channel goes, we have a specific target. Because of that, we're paying close attention to how that consumer group reacts to the store. We've seen things that we'll tweak in subsequent locations, but nothing we're going to throw out going forward. It's just a matter of asking ourselves, ‘Does the design resonate with our customer?' And so far, it seems to be working."

Have an opinion about this or any other story in this issue? Send feedback to emander@icsc.org.