Can Under Armour Replicate its North American Success in Asia Pacific?
Sportswear brand Under Armour is certainly flying high in North America. In Euromonitor International’s latest research, it held 4% of the North American sportswear market in 2015; notably surpassing long-time sportswear titan adidas to become the number two sportswear brand in value behind Nike.
However, the brand has for several years now, been overly dependent on a single market, especially when its competitors have been making large strides in emerging markets. If Under Armour wants to continue growing in the long run and compete with the big boys even on a global level, geographic expansion is essential. In recent years, it turned its attention to expanding its presence internationally, notably in growth markets such as Asia Pacific, where sportswear is set to rise at a CAGR of 10% over the next five years. However, in a region where its footprint is diminutive compared to other sportswear giants such as Nike and adidas’ longstanding presence, Under Armour faces an uphill battle to replicate the success it found in North America.
Expanding into sportswear’s second largest region
Considering that it does the same thing as all other sportswear brands do—design, manufacture, distribute – Under Armour has seen an unusually hot streak of growth in North America, where it generates about 90% of its revenue and sponsors athletes and college teams. The company credits its initial success to innovation and consumer demand for its highly functional products, and with its strong brand equity in performance wear, this is likely to be true. The problem is that for a company that is deeply entrenched in its North American heritage and experiences, it faces a much less homogenous market in Asia Pacific in which all of the above may not apply. Under Armour has had to and will continue to have to abandon much of its American football roots and reinvent itself as a global cross-discipline training brand.
To date, the brand has established presence in almost every market in Asia Pacific, especially in Greater China, Japan, and Southeast Asia. In its largest Asian market of Japan, the brand already commands 3% of the sportswear market value despite entering decades after other brands did. Under Armour has also distinctively positioned its brand amidst Asia Pacific’s competitive landscape, which is incredibly crowded with both domestic and international brands jostling for market share. In between the fashion and lifestyle-leaning brands, such as New Balance, high performance specialty brands such as 2XU, and traditional heavyweights Nike and adidas, which focus on both form and function, Under Armour has carved itself a niche in pure performance wear for the masses. The global sportswear scene may also be currently riding on the athleisure trend, but Under Armour does not need to let itself be shaped by it. It is more important for Under Armour to enter a fragmented market such as Asia Pacific’s with a strong brand identity in order to set itself apart. Instead, the brand is doing well to capitalise on the growing health and fitness trend, which shows no signs of abating as the gym industry thrives and per capita expenditure on sports-related products increases. Beyond North America, Asia Pacific is the next most dynamic sportswear market for Under Armour to establish itself in.
Global retail value sales of sportswear by region: 2015/2020
Source: Euromonitor International
New continent, new strategy
Under Armour may have already made its first big splash into the Asia Pacific market, but its current presence still has a long way to go before it matches that which it has achieved in its home market. In order to grow into a truly global brand and sustain long-term growth in its new geographies, tweaks to its existing formula will have to be made.
While its marketing game is strong— it runs the global campaigns featuring its representative stars, and clearly conveys the brand’s signature ethos of authenticity, determination and high-energy grit—sportswear is not just about the aspirational figures and brand culture that much of the apparel and footwear industry is based on. Product innovation is a key driver for brand differentiation, and particularly so for Under Armour as it is expanding in Asia at the same time as many other sportswear brands, such as Lululemon Athletica. Even globally, the sportswear market is getting crowded, and Under Armour is just one of many foreign, unfamiliar sportswear brands to Asian consumers. While it certainly needs to continue focusing on building exceptional brand strength, its brand strength is not yet its most bankable feature. Under Armour needs to build product credibility before it attempts to build the brand clout to rival bigwigs Nike and adidas. The brand is not shabby in R&D either—the company spends 9% of its net revenue on it, compared to adidas’ 1%, and has prominent lines, such as Speedform and Heatgear, to market. Under Armour needs to shine more of the spotlight on these and balance its marketing campaigns to feature its tangible products alongside its intangible branding, to show that it does put its money where its mouth is.
The future should also see Under Armour localising its approach to the Asia Pacific market. By running the same global campaigns as it does in North America, the brand has had hits and misses. For instance, brand ambassador Stephen Curry has been largely successful even in the Asia Pacific region due to the universal appeal of basketball, the NBA, and his status as the league’s Superstar of the Moment. However, other brand ambassadors such as NFL quarterback Tom Brady and ballet dancer Misty Copeland are not as recognisable by Asia Pacific consumers, and have not resonated as strongly as they do with American consumers. Under Armour can explore domestically popular sports and the possibility of engaging prominent local athletes, and finding ones that complement its carefully-cultivated brand image should not be too hard an endeavour. It is not to say that Under Armour has not attempted any localisation at all in its regional efforts—for example, it successfully supported the OneFC Mixed Martial Arts event in the Philippines, where the sport is big—but more has to be done to show that Under Armour has truly grown out of its North American origins and into an international brand.
The homogeneity of Under Armour’s current strategy may also be causing its Asia Pacific foray to fall short of its potential. In recent years, the company turned its focus to building its footwear business after relying heavily on apparel sales for many years. Expanding its footwear offerings has allowed the brand to compete more evenly in both apparel and footwear, and sports brands usually bank upon their footwear segment for differentiation. However, this simultaneous emphasis on footwear even in Asia Pacific means that Under Armour is pushing footwear in a market that has not fully acknowledged its traditional strength of apparel yet. Sports apparel constitutes a slightly larger portion of the Asia Pacific sportswear market at 56% of value, and Under Armour should be using its signature sweat-wicking apparel to spearhead its capture of Asia Pacific consumers, especially since it is still a relative newcomer to footwear and Nike and adidas are both already well entrenched in the category. The Curry Two basketball shoes may be all the rage now, but its most identifiable product and strength in apparel has unfortunately been lost on Asian consumers.
Under Armour has found the next big place it needs to be in Asia Pacific, but to continue the successful streak it began in North America, it needs to cut back on the marketing glamour now and return to its roots—not its American football ones, but to a time when it focused on putting the “athletic” in athletic wear.