By Tyler Quigley
Can the swoosh be beaten? The swoosh, its that ever so famous check mark that graces all products manufactured by Nike, the most famous athletic apparel company in the world. But to be very cliche there is a new kid on the block and they are claiming “The Future is Ours.” That new kid is Baltimore, Maryland athletic apparel company Under Armour (UA) and they have trademarked that phrase. Thats a rather brash statement from UA to think they can challenge Nike. Nike, a company who got their name from the Greek Goddess who personified victory has been on a pedestal for a long time. But after this past year in sports its Under Armour athletes who have personified victory and not Nike’s. Now all of sudden it is looking like the future may just be UA’s. Under Armour athletes have dominated the professional sports industry for the past year, having the world’s best player in four major sports. Cam Newton was this year’s NFL MVP taking the league by storm with his trademark smile and dab. Steph Curry was last years NBA MVP and barring a huge meltdown will likely claim the crown again this year. Bryce Harper was the NL MVP last season and was nothing short of spectacular, and lastly Jordan Spieth. Spieth put together a year only guys like Tiger Woods and Jack Nicklaus would think of on his way to Player of the Year on the PGA Tour. This same strategy of employing high profile athletes like Michael Jordan, Kobe Bryant, and Tiger Woods was used by Nike to further market their brands. Some would argue Jordan was the catalyst in putting Nike on the map as a premier basketball shoe due to its drastically improved sales after they signed him. This is what allowed Nike to become the brand they are today. Under Armour is using Nike’s strategy to gain ground in the athletic field. This is the best marketing tool a company can use, it allows for them to build their brand awareness and helps bolster brand equity which are both key components of marketing a product or brand. Some might argue that this means nothing but the “Look good, Play Good” mentality of athletes everywhere could catapult Under Armour closer and closer to Nike.
While Under Armour not only signed world-class athletes to their brand they are setting their eyes on the prize. Under Armour made a huge splash in the last few years on the shelves, in 2014 UA overtook Adidas and claimed the number 2 spot in the sports footwear and apparel business. This means athletes everywhere are going out and buying this product at a record high. Revenue for 2015 was about $4 Billion. While Nike’s was about $30 Billion. To the naked eye this seems like a no contest and Nike has nothing to worry about. But take into account the fact that Nike’s marketing budget is around $3 Billion, while Under Armour’s is only $330 million. Nike is spending 9 times what UA is and only gaining 7 times the profit. Also the fact that Nike is nearly 8 times the size of UA. All this shows is that Nike is a much bigger company that has been around for much longer. According to Investopedia Under Armour announced a long-term growth plans to reach 7.5 Billion by 2018, this will give Nike investors another reason to worry on top of the fact that founder of Nike Phil Knight also stepped down as chairman in the summer. Under Armour has also increased its sales overseas, revenue is up 70% abroad. Nike also has laid out a plan for revenue growth at below 10% that is not even comparable to Under Armour’s 25% growth rate. The best news for Under Armour is the rapid growth of the Athletic apparel and footwear market that shows no signs of slowing according to Yahoo Finance. Again Nike is about 8 times the size and has about 5 times the market cap of UA but still finds itself in competition for high profile athletes and sponsorships. Just a couple summers ago high profile athlete Kevin Durant’s contract ended with Nike. Under Armour offered a competitive offer to Durant making Nike raise their initial offer by 150 million dollars. UA made Nike spend 150 million dollars more than they initially wanted to just to keep Durant. UA also landed a big deal with Notre Dame for a 10-year stint. Notre Dame was a team that used to be all Adidas.For those who do not believe athlete endorsements can sell product, lets take a look at the debut of The Curry One which released in February of last year. According to CNN Money the company sales rose 31% during Curry’s championship run after the release of the shoe and the quarter profits were up 21%. Jordan Spieth put Under Armour on the map as far as Golf apparel goes, just days after he won the 2015 Masters his trademark blue polo sold out of stock.
Athlete endorsements and success play a huge role in sales, because what does every athlete do at the beginning of his or her season? Take a nice trip down to their closest athletic department store and stock up for the season. In virtually every sport, athletic apparel and gear are some of the most important things. Athletic gear and apparel do many things to boost performance and prevent injury in each sport. In Football, choosing the right gloves and cleats have become necessary for success in the game. Many of the all-time great pass catchers like Jerry Rice and Tony Gonzalez have pointed out that the stick on the gloves gives an advantage to the receivers in today’s world. Gonzalez is on record as saying,
“The gloves are great. The gloves keep getting better, as well as the technology. I didn’t wear gloves when I first came in the NFL, and then I tried them toward the end of my second season. There is no doubt that those gloves are playing a part in some of these spectacular catches.”
So the need for gloves and apparel is apparent from some of the all time greats.
Football isn’t the only sport where gear and apparel matter. Shoes matter in sports like Basketball and Track and Field. Basketball shoes have been specially designed and innovated to improve cushion and decrease the stress cause by the hardwood. Bats and Gloves are big in Baseball, Clubs are important in Golf whether to select a cavity back for more game improvement and forgiveness or blades for more shot shaping and control. The biggest aspect of them all is the comfort of these products. An athlete can only be at his best if they are comfortable with the gear and apparel they are wearing. This is where the idea of “ You Look Good, You Play Good” comes from. The need for gear and apparel is a very relevant; in fact the active wear industry is exceeding the apparel industry as a whole. This means that market leaders Under Armour, Nike, and Adidas have become more of a necessity to athletic industry.
Under Armour is not going to overtake Nike in the near future because of the size and age of the company but they are a force in the long term sports industry. After all Under Armour is employing the same strategy that allowed them to rise to the top and that is to employ top level athletes in order to promote their brand and become synonymous with success. In the past several years this is exactly what UA has done. By releasing products that certain top athletes are wearing it allows for others to emulate their athletic heroes thus allowing for more sales.
The youth and success that the current Under Armour athletes have is very promising especially with the aging of Nike athletes like Peyton Manning, Tiger Woods, and Kobe Bryant. While Nike still has some high profile athletes to help them market those athletes have not had as much success in recent years. Under Armour also has a deal with NFL for supplying athletes at the NFL Scouting Combine by providing new and improved products for the athletes to wear to be at their best. But promotion is not the only driving force for sales. Product innovation can also drive sales, and since 2009 Under Armour has developed a new product every single year. These two factors together are the reason behind UA surge ahead of Adidas in the market. As the sports market continues to grow there is no reason that UA will not grow along with it. This will be an interesting company to keep an eye on for years to come.