Why Nike and Under Armour are spending wildly to watch your every step
WASHINGTON - Just days after Under Armour's sponsored star golfer Jordan Spieth won the Masters, the sportswear giant was hefting its weight into a very different sports arena: the Boston Marathon. As the company-endorsed elite runner Nicholas Arciniaga on Monday battled the 26-mile course, his pace updated directly to his Twitter and his profile on Under Armour Record, the company's new fitness-tracking app.
It was a subtler partnership than the 16 Under Armour logos covering Spieth during his televised Masters win. But it could prove far more important to the rising athletic titan's long-term strategy: tracking every step of America's casual exercisers and amateur athletes - and, perhaps, persuading them just how much better the company's new clothes could help them perform.
Sportswear outfitters like Under Armour and Nike look increasingly like tech companies, with apps and digital ecosystems that stretch far beyond their traditional fitting rooms and football deals. In the age of the Fitbit and Apple Watch, where Web-connected fitness is increasingly de rigueur, the winner of the health-tracking arms race could potentially secure a gold mine from shoppers looking for the best way to break a sweat.
Boasting "the world's largest digital health and fitness community," Under Armour executives said Tuesday that their Connected Fitness platform now counts more than 130 million unique users. Most of those have come from Under Armour's $700 million health-app buying spree, during which it gobbled up MapMyFitness in 2013 and, in February, MyFitnessPal and Endomondo.
It is another way America's second-biggest sportswear firm is seeking to get ahead of its chief rival, Nike, and another way in which the underdog is already lagging behind. NikeFuel, the company's athletic mélange of fitness trackers and mobile apps, boasts a big user base, a longer track record and the backing of the Big Swoosh, which sells far more clothes than Under Armour and remains more easily recognized.
It is also a risky, costly maneuver for Under Armour, the $19 billion pewee to Nike's $86 billion varsity star. The amount the Baltimore company has spent on buying up the apps has already carved into the firm's profits, hurting its expected revenue and leading its stock to drop about 5 percent in Tuesday trading.
The upshot for Nike and Under Armour: the easier they make it for sweaty shoppers to start tracking all their workouts, the more linked those brands will be in shoppers' heads when they go to buy new gear. Under Armor's online fitness community in January logged more than 100 million workouts, the company said: That's a lot of mid-exercise thinking about comfier running shoes and sweat-wicking shirts.
But the fitness connections can go much further than simple suggestion. Through a deal with online shoe superstore Zappos, Under Armour's MapMyFitness app uses an exerciser's workout history and sends alerts that her sneakers could soon need replacing, adding a Zappos link on where to buy. Under Armour chief executive Kevin Plank said Tuesday the fitness trackers help connect "us to our consumer like no other brand on the planet."
Under Armour has, in the Nike-Michael Jordan tradition, done incredibly well at signing on sports talent, inking deals with New England Patriots quarterback Tom Brady, alpine ski racer Lindsey Vonn and NBA All-Star Stephen Curry. Those deals have given Under Armour an incredible amount of marketing and street cred: The company's largest core business, its clothes, has seen 20-plus-percent growth for 22 straight quarters, climbing to a record-high $555 million at the start of the year.
But some sportswear executives think fitness tracking could give an even bigger sales boost than star partnerships. The apps offer personalized detail and encouragement for the everywoman exercise crowd, even those who couldn't care less about major sports. And unlike athlete endorsement deals, they don't leave the company at risk of a bad game or career-ending injury, and could offer a sales bump in every season.
Fitness trackers could also help the companies win over a fast-growing yet underrepresented market among amateur exercisers: women. More than 60 percent of the 130 million users in Under Armour's online world are women, and the company's $600 million business in women's sportswear could prove to be, as Plank said, "as large, if not bigger, than our men's business."
Under Armour has based its "I Will What I Want" ad campaign around company-endorsed female icons like ballerina Misty Copeland and supermodel Gisele Bündchen. But even Plank admitted their in-store women's lines were lacking and hadn't "taken full advantage" of the sportswear giant's promotional hype.
Health and wellness is one of the fastest-growing categories in app stores for Apple's iPhone and Google's Android, which now count more than 100,000 apps for counting calories, tracking diets or logging workouts.
And Under Armour is serious about staking a claim to digital health, opening a 35,000-square-foot office earlier this year in MapMyFitness's hometown of Austin. But the biggest lingering question - whether Americans will really want to buy into a new slate of fitness-tracking apps - may be out of the company's control.
"If we could get everybody on the planet to work out just one more day a week," Robin Thurston, Under Armour's senior vice president of connected fitness, told The Wall Street Journal, "we'll be in really good shape for our business."