This article is from WeChat public account: Akihiro consumption Yanxishe (ID: Charismapartner) , author: Jason Kwan, from the title figure: Oriental IC < Br>
Under Armour(UA) was founded in 1996 by Kevin Plank, former captain of the University of Maryland football team. He was tired of frequent changes to sweat-soaked clothes under his sweatshirt, and he noticed that the tights he wore during training could be kept dry, which inspired his inspiration for making T-shirts with moisture-absorbing synthetic fibers and in college. Recognized and successful, and he officially started the road to entrepreneurship.
UA has been listed on the NASDAQ IPO in November 2005 after about 10 years of operation. At present, UA’s business sales are all over the world, of which the North American market accounts for a high proportion, and the company’s distribution methods mainly include wholesale and retail channels. The average growth rate of the company’s performance in 2013-15 is about 30%. In 2014, UA’s performance surpassed Adidas, ranking second in the US sportswear market, second only to Nike. Its share price also soared 62.5%, with a market capitalization of 15 billion US dollars, once became a global concern. However, since 2016, the myth of UA’s performance growth has never appeared. In 2017, 2018 is a year-on-year loss. The former sports world has no longer a black horse. Hongzhang summed up several reasons for your reference.
01 Trend KOL – catching up with the ever-changing trend
Before and after 2013, North America began to popularize the combination of sportswear and fashion, because UA’s product design sense is more professional than other brands, and the wearing comfort is also very high, In the past, UA, which was limited to professional sports training, began to cause a wave in North America. At that time, UA’s clothing was directly linked to the concept of “cool”. It is a symbol of the identity of each sports person who is a sports professional. Every student is A “secret weapon” eager to show off to classmates in physical education. But with the UA’s popularization, the decline in consumer identity, coupled with trends and aesthetic changes, UA has become less popular in the fashion world, and the heat has dropped dramatically. At the same time, because the UA trend can be described as the current situation, UA, which does not have a little fashion gene, can’t quickly adjust the brand and product positioning to catch up with the trend, so it can only accept the fact that it has been abandoned by the trend. The current sports fashion benchmark has long been replaced by lululemon-led yoga clothing.
02 Focus on one category – category is too single
The first key element of UA’s success was the deep-rooted market segment. When Nike and Adi did not pay attention to sports tights, they entered the market with great precision. Many sportsmen used to wear only one ordinary sportswear and gradually became educated by UA and wear a layer of tights.It has been much larger than the previous market because of the education of UA. As the UA has been cultivating the tights for many years, its other product lines are not prominent. The 2018 annual report shows that clothing accounts for 67% of its total income, and most of them come from tights. The life and death of the company can be described as full bet. Single category. But as the market segments reach a certain size, competitors will not hesitate to join and trigger fierce competition.
Although UA’s performance is good, but UA is obviously struggling to face the challenge of Nike and Adi. After all, UA is in R&D level, channel capacity, brand influence, capital scale, etc. Adi is not at the same level. Although UA still has an advantage in the field of tights, it is not enough to be a high-resistance threshold. As competitors launch competing products, UA’s revenue growth in the main business is seriously affected. More than 20-30% growth to only 5.4% year-on-year growth in 2018, indicating that the participation of competitors has a great impact on the company, the prospects are worrisome.
03 Athlete endorsement – great uncertainty in sports
UA in 2013-2014 caused a sharp increase in sales due to fashion trends, and in 2015, because of its NBA spokesperson, Stephen Curry’s many days of performance on the basketball court attracted global fans to UA. Cognitive, its brand has swept the world from the North American market. In the same year, Curry’s basketball shoes sold as much as 160 million US dollars, surpassing other players in the NBA and ranking the champion in the individual basketball shoes series. Curry’s crazy performance directly contributed to the 57% annual growth of UA footwear.
But after all, the NBA has always been the world of Nike Adi. In 2016, with the NBA superstar Kevin Durant wearing Nike shoes to join the Golden State Warriors where Curry is located, Curry’s light Directly diverted, plus injury caused by lack of playing time, UA exposure in the basketball industry plummeted. By 2018, sales of its footwear products grew by only 2.4% year-on-year, and explosive growth is no longer. At the same time, the iteration of the sneakers is important in addition to the stars, the design ability of the sneakers is also important. However, when the UA needs to make a breakthrough in the footwear products, the design team and the company A big joke, the design of the Curry series third-generation sneakers style caused a lot of negative evaluations, even being ridiculed, which was designed for the grandmothers.
In addition, from the perspective of UA’s endorsement layout, it is completely incomparable with Nike. It can be basically judged that UA can only rely on luck to taste the dividend brought by the spokesperson. Readers who understand basketball can look at the gaps in the popularity of the NBA spokespersons of the three companies. Nike’s five spokesmen are players in the NBA, and Adi’s spokesperson has a high influence in China and North America. In contrast, only the UA can take the shots of Curry and Embiid.
04 Market concentration, wholesale mode leads to low customer stickiness
From the 2018 annual report, it can be seen that UA’s current market share is the highest in North America, accounting for 72%, Europe, Middle East and Africa plus Asia Pacific only 22%, Explain that UA sales are heavily dependent on the North American market. Excessive market concentration leads to changes in consumption habits in major markets or any negative news that will seriously affect sales. At the same time, Nike’s brand influence in the sports industry in North America is still in an inviolable position, and its product width and brand promotion are better than UA, so the pressure of UA in North America can be imagined. Due to the insufficient global market layout, it will face a risk of a sharp decline in performance due to higher major single market changes.
On the other hand, UA’s current sales channels are mainly wholesale, accounting for 60% of its 2018 revenue, while offline stores and e-commerce account for only 35%. UA initially thought that the wholesale model was relatively simple, and only needed to control the supply chain to ensure production. But today, global consumers have lower replacement costs for sporting goods, so if you ignore the connection with customers, the feedback that represents a large number of customers cannot be effectively communicated to UA. There will be a lack of efficient iteration of the product and timely provision of effective services because of the inability to obtain information, and eventually the loss of customers or the decline in repurchase.
This article is from WeChat public account: Akihiro consumption Yanxishe (ID: Charismapartner) , Author: Jason Kwan, titled from: Oriental IC