In 1996, the personal preference of a former University football player-turned-entrepreneur, for a quick-drying t-shirt during practice, birthed the sportswear apparel and footwear giant, Under Armour (UA) Inc. Headquartered in Baltimore, Maryland, USA, Kevin Plank’s mind child is today one of the largest brands involved with production and distribution in the athletic market. Here is the Under Armour SWOT Analysis.
Under Armour SWOT Analysis
SWOT stands for Strengths, Weakness, Opportunities, and Threats. SWOT analysis is carried out to understand a company’s stand in the competitor’s market. A well-researched, detailed SWOT analysis can serve as the ultimate tool for a company’s scope of improvement and survival. According to the annual report 2021, with a global workforce of around 15,000, UA had faced a hard pandemic situation leading to the shutdown of some of their outlets and people going out of jobs. According to Forbes, UA’s current revenue (TTM) is $5.45B. Under Armour’s stock, UAA prices had drastically dropped during the pandemic. However, the MNC has fabulously survived and re-emerged with a rising stock value, reaching 25.77 USD (as of 11th Aug 2021, NYSE) the highest since August last year. Thus, a detailed SWOT analysis is a vital aspect to learn about the company.
Source: Under Armour Fiscal Report 2020
- Premium Quality
- Shift To Digital
- Increase In Product Portfolio
- Exceptional Marketing Strategies
- Global Presence
- Distribution Channels
- Innovative Technology
- Workforce Diversity And Care
For all the 21 years since its establishment from Kevin Plank’s basement, Under Armour has improved its product quality, increasing adaptability and customizations. The premium quality of its moisture-wicking t-shirts is a name in itself. Apart from improved design and manufacturing techniques, UA also collaborates with sportsmen to create specific sports line products. This adds to the value for the requirement for each sport varies.
Shift To Digital
Since the COVID-19 pandemic, an unavoidable drop in sales was seen and Under Armour turned towards increasing its digital outreach. UA developed applications viz. Map My Fitness (a workout tracker) and My Fitness Pal (a diet and exercise tracker). This has helped improve the company’s portfolio all the while expanding and diversifying its product reach. The second half of the year 2020 started showing promise on the digital scale and has helped UA redeem its sales situation at least halfway.
Increase In Product Portfolio
The company hasn’t restricted itself to sports shorts and t-shirts alone. It has continuously adapted the market trends and studied the processes to evolve into a brand that excels in footwear, accessories, and casual wear as well. Its products also encompass women’s wear besides the usual men’s range of athletic wear. The company targets a wide range of customers and is predominantly popular amongst the youth. The online shift and sale of at-home workout lines has recently hit success and increased the brand reach in the digital space.
Exceptional Marketing Strategies
Under Armour has done well for itself through an exceptional team of advisors and workers that manage their intangible resources of creative marketing strategies and leaves room for further improvement. It has invested highly in market expansion and sponsorship details. This has, in turn, worked as a boost for the company’s publicity.
Under Armour has managed to establish a presence in the global athletic wear market even with key locations in North America, Latin America, Asia-Pacific, and EMEA. This is partly possible due to the vast range of distributor chains involved in the process.
Under Armour is known to distribute its products in North America through wholesale and direct-sale-to-consumer channels. In the case of overseas geographical reach, the sale is done primarily through wholesale customers, independent distributors, e-commerce websites, and brand and factory houses within the region. They also sell their products to regional sports clubhouses and teams. The vast array of distribution networks widespread over its area of work indicates the extensive efficiency of the entire need and supply chains involved. The UA Fiscal 2020 report indicated that sales made through wholesale, direct-to-consumer, licensing and connected fitness channels were 53%, 41%, 2%, and 3% of net revenues respectively.
The Under Armor product development team works closely with the marketing and sales team to collaborate and reach heights of product amplification based on trends and needs of athletes. They continuously strive to create a better product that delivers superior performance. As of March 2021, Under Armour has been named as one of Unifi Inc.’s REPREVE® Champions Of Sustainability. This is to appreciate the efforts of Under Armour in incorporating the REPREVE® recycled fiber into their products, thereby aiding the reuse of plastic waste gathered from the environment.
Workforce Diversity And Care
As of the December 2020 report, the company has around 16,000 teammates worldwide. The race and ethnicity of the teammates in the US are as follows:
- Brand and factory outlets:
51% white, 21% Hispanic or Latino, 17% Black or African American, 6% Asian, and 5% other.
- Director and above positions:
78% White, 7% Hispanic or Latino, 7% Black or African American, 6% Asian, and 2% other.
In addition to these, 53% of the global teammates are women, with 37% representing director level and above positions. For the better engagement and satisfaction of their workforce, Under Armour organizes workshops, seminars, and programs for the continued growth of their employees and also collects feedbacks to improve work experience and environment.
- Comparatively Less Overseas Presence
- Lack In Efforts Towards Sustainability
- Heavy Reliance On Third Party Suppliers And Manufacturers
- Failure To Maintain Sponsorship Details
- Not First Choice For Women Athletic Wear
Comparatively Less Overseas Presence
Even though Under Armour is successfully one of the top giants in the market, its lack of physical presence in the form of stores or outlets worldwide, as compared to its competitors, has a profound influence on establishing its brand presence effectively. According to its annual report, 66% of the fiscal revenue is centered in and around the US and North America, while 31% comes from the international segments.
Under Armour is known to deliver outstanding quality. But what is more outstanding is the price. This kills potential buyer curiosity and they tend to divert towards competitors that provide quality at relatively lower prices. Under Armour can gravitate towards a better price plan to attract customers.
Lack In Efforts Towards Sustainability
The trend of increasing consumption consciousness in consumerism is an uptake on reversing damage made to the environment through human activities. The global leaders allot indexes that mark companies or organizations based on their efforts towards attaining a no waste or sustainable influence. However, several surveys and studies have tended to continuously rebuke Under Armour for its low sustainability goals. It lacks transparency and the shift towards sustainable methodologies from conventional is still at its baby stage that needs to be geared up at a hectic pace.
Heavy Reliance On Third Party Suppliers And Manufacturers
A large portion of the technologically advanced products under Under Armour are produced through third parties and sourcing of raw materials is done through a few collective trusted sources. According to Fiscal 2020, 10 manufacturers produced around 57% of Under Armour’s apparel and accessories while 6 others produced all of their footwear. This reliance on third-party sources for raw materials, manufacturing, and distribution makes it a competition game, for other competitors add up in the race for the quota of quality products. Thus, long-term contracts though seem a hassle and risk, tend to keep the companies in the run for suppliers.
Failure To Maintain Sponsorship Details
Under Armour is known to make a part of its sales through official supplier licensing agreements and sponsorships. However, the expense needed to keep up those sponsorships going is hefty as competition is tough. In due time in case the company doesn’t receive the expected returns, it affects the brand image as they fail to keep up with the costs incurred to maintain the funding. During the COVID pandemic due to complete lockdown, UA has suffered heavily in this aspect.
Not First Choice For Women Athletic Wear
Under Armour is unexpectedly not the first choice when it comes to women’s athletic wear. The company lags in this aspect as it has failed to effectively target the foresaid population and lapsed in the right marketing strategies needed to boost the sales in the right direction. However, the current home workout routines have seen an increase in the sale of women’s bras and bottoms.
- Fit Lifestyle
- Global Outreach
- Target Kids’ Range
- Invest In Marketing Their Women’s Range
The increase in consumer population who believe in the fit lifestyle is a head-on plus for companies like Under Armour to grow. The environment is conducive for improvement as more and more people are becoming health conscious.
With the advent of more dependence on technology and the internet, the world is now available in the palm of our hands. This indicates the vast influence and power of the e-commerce scene in today’s scenario. Managing to reach out globally to customers online is a huge add-on for a company’s business to expand and diversify its customer range and geographical reach. Under Armour is on the right path and needs to act on this to change its sale overview to a higher percentage when it comes to revenue collection through online sales.
Target Kids’ Range
The kids’ athletic wear is not a very monopolized market and this makes it easier and even convenient for established brands such as Under Armour to invest in an exclusive kids range. As mentioned earlier UA is popular amongst the youth which makes it more likely to be pleasable for kids as well.
Invest In Marketing Their Women’s Range
Under Armour has a dedicated women’s range of sports apparel and footwear, but it lags in sales in the women’s section for UA has underestimated the need to market their women exclusive range. Though it provides the same at par quality as it does in the men’s range, the women’s range has certain other products that are women-centric such as bras and bottoms that need specifically targeted marketing. A better marketing scheme would ensure bigger and better sales.
- Brand Loyalty
- Market Competitors
- COVID-19 Pandemic
The athletic market is ruled by UA’s competitor giants such as ADIDAS and NIKE which have predominant domestic as well as overseas brand presence, which inherently gives them an upper hand. Under Armour is at a great disadvantage due to the market being monopolized in certain geographical regions by previously established giants.
Under Armour’s core competency lies in its famous and equally effective moisture-wicking t-shirts. But these are not specific to their brand alone, as competitors have managed to bag similar products and that too at lower prices. This is an evident threat to Under Armour’s individuality which has created a dire situation of either improving or becoming invisible.
The pandemic has brought about an unavoidable economic recession that has affected businesses globally. Under Armour has suffered heavily due to the pandemic situation and this has led to the closing of certain outlets and stores, a drop in stock prices, and profits on the revenue front.
Conclusion of The SWOT Analysis And Competitors
Thus, a detailed SWOT analysis indicates that Under Armour has its strengths and weakness as a premium sportswear brand but it is leading at the forefront despite facing threats due to the proper human capital management and thoughtful shift in the digital scenario at the nick of time to cut down on the losses incurred due to the pandemic lockdown. Under Armour’s top competitors include Adidas, Nike, Reebok, ASICS, Lululemon Athletica, New Balance, and Puma.