Under Armour Running Hits the Streets on January 31, Comments by Larry Eder

In a recent article on Money magazine’s website, http://money.cnn.com/2009/01/20/technology/mehta_underarmour.fortune/index.htm?postversion=2009012613it was evident that the folks at Under Armour are gearing up for the new launch: going after the running business. It was the natural next move for Under Armour.
Women’s UA Apparitionâ„¢


The running shoe business is a very competitive and very profitable business. It is one of the few sports business areas that sees more competition and growth in 2009. At this time, we identify 35 running shoe brands, with a dozen of them making very good shoes and ten making excellent shoes. In this type of environment, the consumer is the winner, as they should be able to find the perfect shoe for their foot, and their amount of activity.

In the $7.5 billion running footwear business, the cream of the crop is the top $1.5 billion,where the average price goes from $95 to $150. ASICS, Brooks, Mizuno, Saucony, New Balance, Nike, adidas-that is the food chain at the top. This year, Ecco, a 45 year old Danish company, will launch a running shoe priced at more than double the average specialty price point. The majority of the business in the specialty running channel is priced $110-$130. However, we continue to find runners who will pay whatever it costs for a shoe that fits their foot, and their needs.
Serious runners, core runners, fitness runners, whatever you call them, have one thing in common. Someone who has gotten the running bug or walking bug knows that a great pair of shoes keeps the miles going easier and the body feeling better. So, $100 or $150 is a small price to pay for the benefits from the activity.
Then, you get to the footwear companies’ dreams-the person who does not know that they are a runner, or who uses running as part of their fitness. Whatever one calls them, someone who is not convinced that running or walking is the first person who will go for the $65 shoe when the economy goes South. For these newbies, talking to a running store owner or a season runner makes all of the difference. I find it amazing that, year in, year out, we seen companies trying to invent these new categories of runners. They just do not exist.
There are, however, close to ten million runners who go two to three days a week. They do not race much, they get in their runs in solitary splendor, and they feel good afterwards. They do not consider themselves runners. They are really one step from the bug, but they have found a place where they do not get injured, and those three days a week are pretty tough to come by.
This fitness athlete is key to the success of future running growth. The running community has to make it cool to race or not race. The idea is to get active, on a team, with a club or by oneself. The key is to move, locomotion.
80 percent of shoe sales are not used for running in the $65 to $80 category. Nike owns the $65 to $80 market, with $2.5 billion in sales in that part of the market attributed to the swoosh. ASICS has done quite well in that business over the past four years, with double digit growth in the $65 to $85 range. Much of this is attributable to the quality of their high end product. The perception of quality and performance given by a brand name is critical in its success. The influencers who wear the $110 to $130 product are asked by their friends, who are new runners or walkers, on which brand to buy. Influencers who have had a good experience with a brand are cheerleaders for a brand.
Under Armour made a name for itself in performance apparel. We started seeing UA on cross country runners about five years ago and as the company has grown to nearly $800 million in sales, the young athletes, in football, track, cross country, and soccer have embraced the brand.
The battle royale will be between Under Armour and Nike over the hearts and minds of the 14-22 year old male and female athlete. Under Armours’ women ads have been well-received by young women, who want their athletics to be taken seriously. Wanna be athletes will also see the brand as the must have-why? Because it has authenticity for them.
As each company competes with each other, the good news for the industry is that specialty will get a nice kick. In trying on new shoes, young athletes will be given the chance to see not only Under Armour, but other product. Under Armour will sell a lot of running shoes, and so will the other brands . It is the nature of the channel and the environment.
Grass roots running stores will get the young athletes into their stores and a chance to click with a new generation. Remember, the serious kids already shop at the geek shops, however, the young athletes who want Under Armour head to toe will see grass roots running stores as kind of cool, their local chapels of sport. Under Armour should get some credit for waking up another generation to the local running store.
The hoopla involved in the launch, with web, TV and print campaign, will draw the attention of serious running consumers and possibly new running consumers. Watch your local running stores as the launch begins in the next few days. Check out your local stores and tell us how you see this emergence of a new running brand!