How To Save Under Armour

Performance brands are funny. We see them all around us — the Nikes and Gatorades of the world — and absorb their messaging, the messaging that says “this is a product for athletes and functional performers at the highest level.” Of course, we then proceed to wear our Nikes to go out drinking, and buy our Gatorade the next day when we’re hungover. In the world of the performance brand, this gap between messaging and reality is never addressed, and for good reason: all of us aspire to be great performers, while none of us aspire to be hungover and eating McDonald’s. Thus, to maintain the brand image, the veneer of being a product solely for athletes has to be maintained.

But what happens when you embrace being a performance brand and ignore everything else? After all, Gatorade can talk all they want about fueling athletic pursuits, but if it doesn’t taste good to the casual user, 85% of their market vanishes. Nike can tell us that they serve the athlete above all else, but if the shoes were ugly, they’d still be selling track sneakers in Oregon.

If you really, truly want to see what happens to a brand that stays true to the idea of being a performance brand to the detriment of everything else, look no further than plight of Under Armour.

Part 1: Where Things Went Wrong

When I first heard of Under Armour in 2005, there was something mysterious about it. Unlike its sportswear or fashion counterparts of the mid-2000s, it was a brand that people wore, not talked about. It wasn’t trying to be cool. It wasn’t trying to pander to you. It was trying to be functional. And most importantly, it was trying to be functional for a specific subset of people in high school: the athlete, AKA the coolest kid in the class. It’s not surprising that over time, other people started noticing.

We don’t have to recount the intervening years in detail, but suffice it to say, things took off and were good until they weren’t. And over the past few years, the company has become increasingly schizophrenic in its focus around what it is and what it should be doing to get over the hump and join Nike and Adidas in its rightful place in the sportswear troika.

Under Armour has made a lot of mistakes trying to get there, but I am going to skip an exhaustive list and will instead attempt to diagnose what I believe are the three core problems lurking underneath Under Armour today — problems that need to be solved before they can get back on track.

Problem #1: The Transformation From An Athlete Brand To A Suburban Dad Basics Brand

I realize the irony of writing this while fashion culture is in the midst of a prolonged embrace of dad-style. Nevertheless, I am fervent in my belief that as Under Armour shifted from workout shirt-maker to full-fledged clothing and shoe brand, there was a belief inside the company that as long as the products were created with a focus on performance and the kinds of technical materials that propelled their initial growth, then everything would carry through nicely into the world outside the workout.

And it seemed that way at first, especially after reporting 26 straight quarters of 20% growth from 2011–2017. But that growth came from selling a lot of mid-priced apparel and clothing through sporting goods stores to people that, to put it kindly, don’t comprise the fashion crowd. Now, that’s not necessarily a bad thing. But this kind of success enabled the brand to turn a blind eye to the corrosive rot forming underneath. The truth was, the brand hadn’t really been ‘cool’ since the late 2000s, and while they continued to grow by acquiring new customer types, they were simultaneously losing the ‘it’ factor that made them take off in the first place.

It’s something that took them until their first slowdown in late 2016 to acknowledge, but nearly two years since, the brand has yet to produce a meaningful response in the form of a zeitgeist-capturing product line. And this, I believe, is at least partially due to a reticence on their part to stray from their performance roots. Even during their most recent earnings call, when pressed by analysts to explain their poor showing in athleisure, they doubled down: “I believe that our perceived short-term weakness, our focus on athletic performance, will ultimately prove to be our greatest long-term strength.”

Focusing on performance is all well and good, but to see where this belief has driven them, one needn’t look further than a recent study by Piper Jaffray, who noted in their 2017 “Taking Stock with Teens” survey that “Under Armour was the top brand that upper-income male teens were no longer wearing. It ranked 11th in preferred apparel brands among upper-income male teens, down from 8th place a year ago.”

This is perplexing, as it’s clear that performance and style don’t have to be at odds. After all, Nike has managed it just fine. This is not to say that a focus around functionality should be mitigated in favor of fashion; however, there are two elements that need to be present alongside a functionality proposition for it to succeed: brand and design. And right now, neither of these are working.

Problem #2: Competitor focused, not customer focused

All brands (and people, for that matter) reach a certain point where the thing that got you to where you are isn’t going to be the thing that propels you to go further. For companies, new capabilities, products, ideas, and strategies are needed to capture bigger and more expansive audiences. Yet for Under Armour, it’s hard to point to any sort of differentiated innovation on this front over the past half-decade.

It wasn’t always like this. In the company’s first ten years, there was a significant amount of product-level innovation that looked and performed differently than anything the market had produced to-date: ColdGear, HeatGear, and all sorts of other performance lines that blew the competition away. These products represented a value proposition that was distinct and identifiable for consumers — something that was vital in luring away the Nike or Adidas loyalist.

But as consumers began to eschew performance gymwear in favor of casual sportswear, Under Armour has shown a surprising lack of ingenuity in their response. Instead, what’s transpired over the past few years has been a series of moves that seem to reflect a brand that’s trying to imitate its peers by doing things that “an athletic brand should do”:

• Years after athleisure became popular, launched a tepid line of casual clothing with designer Tim Coppens. Mostly featuring basic sweatshirts and jackets, the line made little impact and was discontinued 1.5 years in.
• Invested heavily in basketball and football, signing athletes like Steph Curry and Cam Newton. The Curry line, widely mocked in its second iteration in 2016, has underperformed; meanwhile, Newton and other sponsors continue to churn out pseudo-Nike-esque ads about winning, having drive, being motivated to achieve and proving the haters wrong. It should be said that none of these investments look like they’ll pay back their upfront investment over the long term, a sentiment shared by NPD analyst Matt Powell.
• Released a series of brand anthems — some genuinely compelling — over the course of the past four years, starting with “I Will” in 2014 to “Rule Yourself” in 2015 to “Unlike Any” in 2017. All beautifully shot, all nicely written, but all ultimately undifferentiated from the messages that Gatorade, Nike, and other hard-driving, inspired-athlete-narrative brands pushed.
• Plowed cash into acquiring tech platforms and digital communities, their version of the Fuelband strategy (use tech to connect to physical products), which Nike abandoned in 2014. After years of these acquisitions, the combined user base of these platforms remains impressive, but it’s telling that the company quietly shelved its flagship tech offering this year, the Techbox, apparently without anyone noticing.
• Hopped on the subscription box trend and launched ArmourBox, a subscription box service that debuted in early 2018 and features the familiar value proposition made popular by Stitchfix, Trunk Club, and others: receive a consultation, get sent some gear, pick what you want and return what you don’t.

On an individual level, none of the above moves are indications of anything gone especially awry. However, in aggregate, they paint a picture of a company dangerously teetering from trend to trend, and so focused on covering the well-worn territory captured by their peers that they’ve completely lost sight of what makes them unique in the first place.

Problem #3: Losing The Digital Culture Wars

Years after sitting on the sidelines while Adidas and Nike pioneered collaborations with fashion and music stars, Under Armour finally made a move in late 2017 and signed ASAP Rocky to develop an upcoming line of sneakers and apparel.

While not a bad move in and of itself, their laggard status here is concerning, as such an extended delinquency indicates a lack of awareness around what’s driven the sportswear category the past five years (and longer). A cursory look at the sneaker and apparel brands to reach a level of major cultural cache over the past decade — Supreme, Vetements, Palace, Balenciaga, Gucci, Bape, and Off-White, to name a few — demonstrate that what threads them together is an understanding of a few key factors:

• Using scarcity to harness hype: Understanding what drives younger consumers in the internet era, and deploying strategies both in digital and at retail around scarcity and authority to send the hype machine into overdrive.
• Leveraging influence subtly: Connecting the brand with people and places that embody the zeitgeist of today and generating the co-signs necessary to increase the perceived taste and coolness level of the brand.
• Cultural POV: A perspective on culture that manifests itself into differentiated offerings that initially go against the grain and eventually endear themselves to the masses.

It’s troubling that Under Armour hasn’t shown an inclination of understanding that these factors, more than anything else, will ultimately be responsible for their success or failure with the younger audiences that matter most to their future. Whether as a result of the wrong talent at the top, a myopic perspective, or misaligned priorities, the fact that it took until this year for the company to come around to the idea of collaborations doesn’t garner much optimism for how they’ll handle the sportswear division going forward.

Part 2: What Under Armour Can Do To Win The Future

Despite the problems outlined above, there is still hope for Under Armour, and with the right strategic moves, they can set themselves up to regain a majority of the $14 billion in market cap they’ve lost over the past two years. I believe there are three key moves that need to be made in order to right the ship.

Recommendation #1: Retool the brand with a focus on the collective

There’s an instinctual appeal to the idea of marketing to the individual. Of course, it’s individual people, not groups, that choose whether or not to buy a product. And over the past few decades, it has more or less become the dominant lens through which brands communicate, something that David Foster Wallace noted even back in 1993: “Since at least the ’80s, the Individualist side of the great US conversation has held sway in TV advertising…products are now most often pitched as helping the viewer ‘express himself,’ assert his individuality, ‘stand out from the crowd.’”

For most of Under Armour’s competitors, this is also their strategy. Nike’s ethos is about honoring the individual athlete, a theme encapsulated by perhaps Nike’s most famous ad of the past decade, featuring a lone runner pushing himself to something better, and finishing with the tagline “Find Your Greatness.”

Adidas also embraces the individual through its Creator platform, defined through taglines like “Creators Never Follow.”

But all of this belies the fact that marketing to the individual is often a luxury that can only be exercised fully once a brand has established an enduring fanbase. Until then — while a brand still needs to establish a cult-like following — it has to first convince people that they should join the cult. And to join the cult, consumers need to understand who’s in the group and why they’re worth aspiring to. Apple is a good example of this: creating a singular “Mac” guy doesn’t make sense unless you’ve first established your cult of the “Crazy Ones” that Think Different.

Under Armour has a good brand, but it’s not yet cult-like. To get there, it needs to retool its brand away from “I Will” and towards the collective “We.” Who is the Under Armour cult? What does it stand for? I believe that the answer actually lies in Under Armour’s past, contained within its first and most resonate brand strategy to date. Yes, I’m talking about “We Will Protect This House.” That strategy, which prized the collective of the team and the mission-like fervor that comes with being part of a unit defending its turf (and by extension, its ideals), was responsible for creating a lot of UA’s initial consumers in the 2000s. And while they had to move away from a team-like mentality once the brand grew outside the high school football space, there’s a kernel from that notion that’s worth preserving.

“We Will Protect This House” Ad

Today, most of Under Armour’s consumers aren’t on athletic teams, but they are still tribal people. And in this age of tech-facilitated isolation, that craving for community is stronger than ever — something that may explain why both Millennials and Gen Z consumers participate in digital communities at a much higher rate than other demographics. Digitally-native brands that have succeeded in this era — a group that spans everything from Vetements to Glossier — are able to carve out a communal subculture from these larger social platforms, and can nurture and grow a community rooted in a set of shared values and aesthetics that are different from their peers.

And it’s in this vein that Under Armour can move toward. While Nike and Adidas exalt the individual, UA can instead focus on the collective. It can build the cult by honing the team-like mentality of groups that come together — through shared values that the outside world doesn’t understand — to accomplish tasks that people couldn’t do alone.

Be a connector and stand for more than the sum of the parts. Be the brand that invites people to come join the community — a hive of like-minded people working to get to the next level, in whatever field that means for you. You can still keep the focus on performance — and you can even use the community you’ve already built — just interpret it in a way that’s inclusive of what people aspire to today.

Recommendation #2: You Can’t Own The Past, So Focus On The Future.

In case anyone’s been asleep recently, we’re currently in the middle of a ’90s revival. By going back into the archives and reissuing modern interpretations of retro styles, Nike, Reebok, and New Balance have all been able to mount a formidable defense against the rise of Adidas over the past few years. (Adidas, for its part, created that rise partly through a reissue of classic models like the Stan Smith and Superstar). Elsewhere, we see brands that were left for dead decades ago, among them Fila, Champion, and Kappa, re-emerging through strategic fashion partnerships and Instagram-centric campaigns. And while this has all been happening, Under Armour has sat on the sidelines.

That’s because in the ’90s, Under Armour was only an idea. There are no archives to tap into. There are no retros to reissue. But maybe that doesn’t have to be such a bad thing. Maybe that lack of history can be an advantage. Maybe the fact that Under Armour can’t easily ride the current wave of the past means that it has the opportunity to run toward the other side of the spectrum. Instead, maybe it can own the future.

What does the future mean? To most people, the future is a metaphor for what we wish to be. Things work better, more seamlessly; people are more connected, happier, and productive. To see what this looks like from a brand/design/messaging point of view, you have to go back to the last futuristic era: the Y2K period. Hallmarks from this era included the use of metallic colors, translucent materials, and blobby shapes.

Yet those aren’t timeless interpretations of the future. What would we come back with if we did the “What does utopia look and feel like?” exercise today?

Under Armour has always had a certain edge to it — a kind of roughness that eschews perfection in favor of working hard and giving 100%. UA should embrace these attributes and create a new kind of design language around the idea of grit and wear. I’m not suggesting things should feel dirty or used. But I do think that today, our future aspirations aren’t so much about ease or lazing about as much as they are about accomplishment (both big and small), honoring the journey, and, once you’ve arrived, picking a new mountain to climb. There’s a certain sort of wear-and-tear ruggedness that stands outside what sportswear is about right now, and it represents a significant white space for Under Armour to move toward.

What would that new brand look like? Feel like? Getting there is a project unto itself, but here’s a first stab at how UA’s values can translate into a new brand space:

Recommendation #3: Don’t Focus On The Basics.

Technically, Under Armour makes most of their money selling performance apparel. But Under Armour actually makes most of their money selling basics. For every technical t-shirt that’s sold for gym use, there are as many — if not significantly more — worn primarily because they’re good at wicking sweat away and are comfortable to wear in hot weather. And there’s nothing wrong with that. But to make a product-level leap forward, Under Armour is going to have to venture beyond the core of what the company has been built on: basics — things worn as underneath layers, as supporting garments, as complementary pieces.

That’s not to say these items should be ignored. But when you examine how consumers under 35 shop today, you realize very quickly that being an apparel company specializing in basics is a hard place to be when trying to command a premium. At Firstborn, we call the new sportswear consumer a “high-low” shopper: these people, who are typically under 35, living in urban areas, and college educated, tend to spend nearly all of their clothing budget on a few visible, conspicuous, high-usage items, and fill out the rest with fast fashion or Amazon. And the pieces that command the bulk of this spend aren’t basics — they’re sneakers, coats, bags, and pants. (Designer sweatshirts are growing and in some respects can be thought of as the new it-bag, but that’s another discussion).

Going from a gymwear brand to sportswear brand — with items that command a premium — is amazingly hard. This is because what’s required to change is not merely a product or design shift — it’s everything: even the environment itself is different when you go from sporting goods stores to sportswear retailers. But it can be done if certain pitfalls are avoided. For Under Armour, that pitfall is the temptation of an easier transition, which is toward fashion basics — or as some people call it, athleisure.

Brands like Outdoor Voices, successful as they’ve been, don’t signal a strategic direction worth emulating. Under Armour lacks the authenticity to play in fashion, and if they do get back to being a sought-after brand, it won’t be through fashion-y basics. Instead, there’s a different brand worth emulating as they retool things: Stone Island.

A brand that’s both fashionable (without being ‘fashion’) and performance-driven (without being ‘for performance only’), Stone Island has found the right balance over the past half-decade and has benefited tremendously, with 36% growth YoY and a record $181 million in revenue last year. They’ve done so without abandoning their focus on technical appeal, and have even used this foundation to grow their non-performance base, as they’ve incorporated a range of experimental fabrics and garment treatments that both serve a use case and, well, look cool. Additionally, well-timed collaborations with Supreme and Nike set up a well-received entry into streetwear, something that made their ascent easier than if they’d gone at it alone.

Likewise, Under Armour doesn’t have to abandon its performance roots in order to enter these new worlds. But it does have to understand today’s playbook in the digital era and redefine the brand in a way that will be uncomfortable, but ultimately necessary, if they are to realize their potential as the next giant of the industry.

Scott Fogel is the Director of Strategy at Firstborn.