Saturday, February 16, 2008
Mixing up the recipe

JENNIFER WELLS

'That's our grippy shirt," says Matt Shearer, fondling a sleek piece of Under Armour.

"Grippy?"

"We call it grippy."

In the high-tech world of athletic performance wear, "grippy" is as technical as it gets when you want to know the in-house lingo for those little rubbery dots on the sleeves of the uber-cool under gear made by Under Armour Inc., designed in one line to keep football gear in place and in another hockey gear.

The makers of compression shirts (shirts that really stick), which boast moisture-repelling fabrics for both hot and cold climes (as in, shirts that really wick), have put their cold gear performance wear on wide display. You can see it in the country's hockey arenas, as bantam players and college teams strut about in hockey pants topped with microfibre second-skin insulation armour. And you can see it in the form of Calgary Flames defenceman Dion Phaneuf, whose laser-eyed stare gazes down from an Under Armour promotional panel as Mr. Shearer itemizes the vast product offering on display at a Toronto SportChek store.

Reporter's observation: "He looks severe."

Mr. Shearer's response: "He's a very intense player ... He bases his game on performance. He really fits our brand."

The Under Armour brand, which extends to golf shirts and women's wear and kids' wear, has been an unqualified marketing success. "They've done a marvellous job of getting their product to be identified as something that will enhance performance," says John Shanley, an analyst with Susquehanna Financial Group in New York.

Mr. Shearer, general manager for the firm's Canadian operations, says everything the company does is a co-ordinated effort to tell the performance story. "We're all about speaking to the brand," he says.

Who would want to mess with a recipe like that? As it happens, Under Armour.

The Baltimore-based company has announced its move into sports footwear, specifically the ill-defined submarket known as the cross-trainer, which the firm has dubbed a "performance trainer," of course.

"It's a category that's been basically asleep for 10 or 15 years," says Steve Battista, Under Armour's vice-president, Brand. "What we saw through sports marketing and research was that those athletes who spend 90 per cent of their time training for game time weren't wearing the right shoes to train in."

The new trainer got its first big marketing splash on the Super Bowl, with first-quarter ads that ran, refreshingly, in both the U.S. and Canadian markets. This is what Mr. Battista is referring to when he talks about the "firepower" that he's putting behind the product launch, though he declines an offer to clarify whether his early booking of Super Bowl time gave him a break on the $5.4-million (U.S.) rate card for a 60-second spot.

The throw-down campaign (come on down, Nike) carries the declamatory tagline "The future is ours," which Mr. Battista says was solidified around the time of the firm's first brainstorming session just over a year ago. (All product marketing and advertising is kept in-house. "I just don't trust anyone working on creative who is not living and breathing the Under Armour brand," Mr. Battista says.) In the run-up to the product's actual launch, Under Armour is featuring a countdown clock online and at retail sites, marking the seconds until product availability May 3. In the meantime, U.S. consumers can place online orders for the three shoes - Proto Power, Proto Speed and Proto Evade - each of which provides specific directional cushioning for the purposes of power, speed, and, well, evasion.

In resurrecting the sleepy category, Mr. Shanley at Susquehanna sees a smallish company poking a stick at a very large, now angry bear. "Nike is sitting on $3-billion (U.S.) in cash on its balance sheet," he says, "and they don't want to be caught off guard as they did with Under Armour performance apparel."

The cross-trainer market is, in relative terms, pretty small beer: Mr. Shanley puts it at between 1 and 2 per cent of the $16-billion footwear market. Yet Nike, he says, has talked up the investment community about its own campaign to launch a new cross-trainer a month prior to Under Armour's. And the behemoth sportswear maker plans to do so "in depth" - in other words, with multiple offerings that will bracket Under Armour's $80 to $100 price points. Mr. Shanley further says Nike has made clear its intention to be "more aggressive than they've ever been for any other product launch of a similar size."

(Nike did not respond to a request to confirm its plans.)

It doesn't sound as though pitting itself against a mighty brand is keeping Mr. Battista up nights. "We will stay focused on what we're doing. We have a definite strategy in place," he says. "We intend to deliver what we believe will be the best-in-class product."

Mr. Shanley imagines that Under Armour will see success on the sell-in: They'll get the retailer to try the product. "You always get a shot out of the box when you introduce a new product," he says. But the company's experience in cleated footwear, where sales in the fourth quarter of last year fell 25 per cent from the year prior, makes the point that maintaining customer loyalty is a different proposition.

In any case, there's a new game afoot. Mr. Shanley puts it bluntly: "The big guys like Nike want to make sure that this product fails."

SOURCE: UNDER ARMOUR

BY THE NUMBERS

41

Under Armour's percentage

revenue growth in 2006-2007

44

The company's percentage share of the performance apparel

business in the United States

53

The percentage of the company's sales in men's technical apparel through all Sport Chek stores

29

The percentage of the company's sales in women's technical

apparel in Sport Chek stores

+4

Dion Phaneuf's plus-minus

record

1

From a standing start three years ago, Under Armour is the top vendor through the Sport Chek chain despite having a presence in only 50 per cent of the lines carried by the chain.

THE WICK SHTICK

In little more than a decade, Kevin Plank has built Under Armour into a $600-million-plus business, all because the onetime University of Maryland footballer recognized the need for moisture-wicking T-shirts. Thus was born the first compression shirt in 1996.

In 1999, the Oliver Stone movie Any Given Sunday captivated the eyeballs of moviegoers, not least because of the plentiful locker-room footage of the tight Ts, not to mention Jamie Foxx's jockstrap and its jaunty sporting of the distinctive Under Armour logo, which gave new meaning to the term brand placement. The technical performance wear caught on quickly with what the company deemed its core consumer, the 10-to-24-year-old male.

Six years later, Fast Company magazine dubbed Under Armour a "disrupter" for its deft and audacious ability to disrupt a sporting goods universe dominated by the likes of Nike. To survive, posited the magazine, the company would have to grow innovatively beyond its chosen niche.

Under Armour accomplished precisely that with women's wear while continuing to uphold its edgier street appeal through plentiful brand referencing in the currently hot cop show The Wire. ("It's Baltimore. No one lives forever.")

Next up: cross-trainers. Says retail analyst John Shanley: "They're really rolling the dice."

Jennifer Wells