At the time of starting a sportswear business in 1996 from his grandmother’s basement in Washington DC, never would have Kevin Plank imagined that his start-up would one day challenge iconic brands like Nike and Adidas. In the next few years, not only did Plank’s underdog brand, Under Armour, go on to become a solid sportswear franchise but also ended up becoming an aspirational brand that was built around innovation and performance. The past few years, though, have been rough for Under Armour and Plank’s personal brand, which he tells us is inextricably linked to his company’s. Its list of woes also includes an expose by a global financial daily that brought attention to a toxic work culture and lack of diversity in the company, and Plank’s statements in support of US President Donald Trump that turned even Under Armour’s own brand ambassadors against it.
Despite a few knocks along the way, Under Armour has firmly established itself in its hyper-competitive home market, the US. The company is in its third year of “a multi-year transformation” journey, which is designed to bring change that’s structural, cultural and everything in between. Now, Plank is taking the brand global and India is an important part of the international expansion blueprint. In a conversation with Brand Equity, the former athlete and Under Armour CEO, Plank, and chief operating officer, Patrik Frisk discuss the brand’s India entry strategy, building a new age global brand and the art of hiring celebrity endorsers.
India is a tough market to crack given the competitive intensity, pricing problems, discounting, distribution challenges, etc. What’s your go-to-market strategy?
Frisk: We’ve been doing a lot of work in Under Armour over the last 2-3 years to get ready. We used to be a company that was growing extremely fast and we were very US-centric because that’s where we began. About two years ago, we really started the journey to organise ourselves more from a global operating model to be able to really drive the business more regionally versus, you know, driving from the US.
We wanted to wait. We didn’t want to just come in and start selling products. We did test the market with both Amazon and Myntra to get ready and understand the market. We accelerated plans after we received a phenomenal response when we went live on Myntra. We didn’t have any offers! That’s when we felt that India is probably more ready that we might think. Participation in sports has tripled over the last ten years. But we are realistic about our plans here.
Nike, Adidas, Reebok and Puma are now well-entrenched in the market. How will you differentiate your brand?
Frisk: We are well aware of the competitive intensity in the segment but we believe we bring something different to the table. We’re very focused around athletic performance. Our mission is very clear as a company – ‘Under Armour makes you better’. That’s what we do. We’ve entered international markets and really made a big effort at being part of the local community and we have done that successfully. We believe we can take market share here.
Plank: We’ve been to a new gym every day we’ve spent in India and we believe that we can help Indian gym-goers dress better. Part of it is because they are wearing the wrong brands (laughs).
Even successful global brands have taken a long time to crack the Indian market. Are you up for the long-haul challenge?
Plank: We’re not here for the quarter or the year or even for five years, we’re here to stay. Anywhere we go in the world, our ambition is to become an eternal brand. It might take a little longer in this market than some other markets, that’s fine. We will stay in the market and we’ll fight it out for the consumers’ minds and hearts.
Frisk: When Kevin started the brand in ‘96, everybody would have said the same thing, why another athletic brand? Can you imagine how difficult it would have been in a market like the US? We are used to being the underdog. We touch a vein that makes people believe we make them better.
Celebrity partnerships have played a big role in the growth of the Under Armour brand. What kind of celebrities are you looking at for partnerships in India?
Plank: The cool thing about our brand is that we’re walking in without the need of saying who we are going to sign because the partnerships that we’re walking into India with, to create the handshake, to create the hub with the people of India, are phenomenal. It’s Stephen Curry and basketball; one of the greatest of all time. It’s Tom Brady in American football, one of the greatest of all time. It’s Anthony Joshua, the heavyweight champion of the world. It’s Michael Phelps, the greatest Olympian of all time. The list is our introduction, it’s exceptional and that’s why we have the credibility to make this claim. That’ll get people interested. But what will keep people interested is that there is a commitment that we have to innovation.
We will keep looking for partners who are the right fit. But those partners have to come to us. The cricketer would want to say “I want to be a part of that brand, that story.” When we signed Stephen Curry, he hadn’t made an NBA All Star game yet. He’d been in the NBA for three years when we signed. We have always picked what’s next. We want partners who will say “the game is on the line, hand me the ball.”
Under Armour hasn’t been able to establish itself as a “cool street brand”. Has it ever been an ambition of yours to get into athleisure?
Plank: We know who we are, we are an authentic performance brand that was built on the field or the court, on the pitch. That’s our DNA, not Under Armour participating in athleisure or some other fad. We will stick to who we are, our base, authenticity and our brand promise.
Fast-changing customer preferences is a challenge all brands are grappling with. A lot of brands now have inventory problems. How are you managing that and also the resultant margin pressure due to discounting?
Frisk: I think it’s a combination of understanding your line, your architecture — what needs to be core and what actually needs to sell a little bit quicker. But ultimately a lot of longevity is built on franchises in our industry. Look at some of our competition, a lot of the things that have been hot lately have been things that were built a long time ago and have come back. Then in the performance sector you have a performance factor which is, I feel really good when I run in these shoes and I want to buy the same shoe again so please make it for me. There’s this combination of the nostalgia factor, newness in this nostalgia, and then you have the performance factor. So you have to balance the two of those. You need to have what we now call SPF — stock, performance and fit—factor, as a component of whatever you build.
Under Armour is a brand born in the age of the Internet. What kind of digital strategy are you following in building the brand today?
Plank: Really what’s happened is that the consumer is now in charge, more than ever before. I think one of the big things for Under Armour over the last couple of years has been us spending more time engaging the consumer in the conversation whether it relates to product, marketing or execution. Because if you don’t, the consumer is going to pass you by and be gone.
Frisk: You have to make the effort to truly understand how the consumer is moving through the decision journey when they’re deciding on who, when, where and with what to engage. You have to be there with the right content, the right tone of voice and the right way to engage them to consider your brand. And that requires a lot of different new capabilities. We spent also the last few years investing into it and it started way before that when we bought our apps you know four or five years ago. The whole idea was really to get a bigger data set of consumers to really truly understand this new digital world.
And today we’re incredibly proud of what we’re doing and when are in our connected fitness world. We have today the largest fitness community in the world. We get about 80,000 downloads a day and we have had about 265 million downloads of our fitness apps. We have about 40 to 50 million active users a month. It gives us the ability to understand what people actually do. We’ve had over 183 million workouts logged on our platforms just this year. It gives us the ability to personalise, which is really what you’re after today.
How far along are you on Under Armour’s “multi-year transformation” journey? Which areas of business still need work?
Plank: We announced a transformation program at the beginning of 2017. It was structural, it was a process, it was organizational as well as cultural. We upgraded our systems, we changed our operating model from North America selling and selling in other places to four distinct regions. Patrick’s job was to create the Chief Operating Officer role to help me run and organise the company. Our systems upgrade with SAP was a massive undertaking. We’ve declared it being a three-year transformation and 2019 being the third part of that transformation. We still have work to do this year, you’ve seen sort of things slow down as we’ve stabilized the business, stabilize the company.