{"id":18697,"date":"2016-11-18T15:27:15","date_gmt":"2016-11-18T20:27:15","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/sweat-and-record\/"},"modified":"2016-11-20T20:36:29","modified_gmt":"2016-11-21T01:36:29","slug":"sweat-and-record","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/sweat-and-record\/","title":{"rendered":"Sweat \u2013 and Record"},"content":{"rendered":"

Under Armour\u2019s CEO and founder, Kevin Plank, kicked off his most recent earnings call by declaring that \u201cbrands that five years ago were viewed as leaders in our field are in danger of being commoditized, disrupted, or worse, becoming extinct as technology and the way we live changes the way consumers need and value them\u201d[1]<\/a>.<\/p>\n

Plank refuses to let Under Armour become a retail dinosaur. In order to remain competitive and to fulfill the brand mission \u201cto make all athletes better through passion, design and the relentless pursuit of innovation\u201d, Plank is adapting the Company\u2019s business and operating model by focusing on forming the \u201cworld\u2019s largest digital health and community\u201d[2]<\/a>. Thus, as many traditional retailers\u2019 view the threat of online cannibalization as a core challenge, as online growth continues to outpace overall retail growth, Under Armour is poised to benefit from digital transformation[3]<\/a>.<\/p>\n

The emergence of e-commerce companies has transformed how consumers connect with brands and purchase goods. In addition, due to the transparency and convenience of purchasing online, consumers\u2019 expectations are elevated and attention spans are reduced[4]<\/a>. Brands need to capture the attention of the consumer and find a way to develop loyalty by directly improving the lives of the consumers. Under Armour\u2019s solution is the Connected Fitness Platform.<\/p>\n

The platform will collect data on athletes through tracking and measurement devices, providing Under Armour insights into habits and needs of athletes. In order to form a robust platform, Under Armour has acquired or created a number of different apps and products that will provide data and feed into the platform. A few key launches and initiatives include:<\/p>\n

MyFitnessPal and Endomondo Apps (February 2015)[5]<\/a><\/strong><\/p>\n

Under Armour expanded beyond their retail scope and acquired two apps, MyFitnessPal and Endomondo, focused on fitness and nutritional tracking for a combined $560mm.<\/p>\n

\"myfitnesspal\"<\/p>\n

HealthBox (January 2016)[6]<\/a><\/strong><\/p>\n

Collaborating with HTC, Under Armour debuted the HealthBox which is a Connected Fitness system consisting of a band, heartrate strap and scale in one package. The HealthBox records key health and fitness data.<\/p>\n

\"healthbox\"<\/p>\n

Gemini 2RE (January 2016)[7]<\/a><\/strong><\/p>\n

Under Armour launched the Gemini 2RE shoe, which captures and uploads data on duration, speed and distance to the Connected Fitness platform. It also tracks the total usage of the shoe and informs the athlete when a replacement is needed. This allows athletes to run without any wearables or hardware.<\/p>\n

\"shoes\"<\/p>\n

UA Record (January 2016)<\/strong>[8]<\/a><\/p>\n

In a partnership with IBM, the UA Record app uses IBM Watson\u2019s cognitive computing technology to offer users real-time, personalized, evidence-based insights around fitness, nutrition and sleep.<\/p>\n

Under Armour\u2019s Digital Team (Ongoing)[9]<\/a><\/strong><\/p>\n

The Company has invested heavily in the human capital element as well. Under Armour\u2019s digital team has expanded from 60 people in 2013 to over 500 in 2016.<\/p>\n

With over 190mm users currently registered, the Company has formed the world\u2019s largest digital health and fitness community, providing them with granular data about how consumers behave[10]<\/a>[11]<\/a>. This should help to make the shopping experience more targeted for consumers and should lead to increased sales. For example, the data collected will be used to create personalized e-commerce homepages with customers\u2019 fitness routines, sleep habits, geographic locations, sports preferences and demographics dictating what products are emphasized[12]<\/a>. In addition, Under Armour will be able to provide more specific advertising. As shown below, the Company believes that a \u201cvirtuous cycle\u201d will be formed with the data insights from the connected fitness platform generating additional product and equipment sales[13]<\/a>.<\/p>\n

\"ua-cycle\"<\/a><\/p>\n

Going forward, the Company has stated their commitment to continue to innovate and introduce new products. They intend to launch hardware partnerships in 2017 and smartwear in 2020.<\/p>\n

However, more can be done to increase the impact of the platform.<\/p>\n

Under Armour should accelerate the launch of smartwear (clothing with sensors that records data). The platform\u2019s current success is contingent on athletes using the wearables. Often, athletes remove their wearable for work and may forget to put it back on. When the sensors are directly embedded into clothing, users do not need to remember to wear the additional device and any annoyance factor is eliminated.<\/p>\n

The Company also needs to increase engagement on the apps. The average order on Under Armour\u2019s e-commerce site is 26% higher than orders derived from other sources[14]<\/a>. The Company can increase user engagement by continuing to roll out innovative products as well as simplify the user experience. For example, entering the exact type of food and size of the portions into a phone can be time-consuming, so Under Armour may want to consider developing technology that can determine the specifics of a meal from a picture.<\/p>\n

In addition, the apps should allow for direct purchasing, as consumers have shown a high propensity to buy. As the Company increases both features offered and convenience, engagement will increase, generating more data \u2013 and sales \u2013 for the company.<\/p>\n

Word Count (798)<\/p>\n

Sources:<\/p>\n

[1]<\/a> Kevin Plank, Chief Executive Officer, remarks at Q3 2016 earnings call, 25-Oct-2016. From transcript provided at http:\/\/files.shareholder.com\/downloads\/UARM\/3251633237x0x914565\/B54C5072-DE2C-409D-9FC6-BB784247C2FA\/UA_3Q16_Transcript.pdf<\/a>, accessed 17-Nov-2016.<\/p>\n

[2]<\/a> Kevin Plank, Chief Executive Officer, remarks at 2015 Investor Day, 16-Sept -2015. From transcript provided at http:\/\/files.shareholder.com\/downloads\/UARM\/3251633237x0x851285\/EEA170BC-04C1-4288-94D8-8EEA79970590\/UA-Transcript-2015-09-16T14_00.pdf<\/p>\n

[3]<\/a> National Retail Federation, \u201cHoliday Headquarters:2016 Forecast\u201d, accessed 18-Nov-2016, https:\/\/nrf.com\/resources\/consumer-data\/holiday-headquarters<\/p>\n

[4]<\/a> Goldman Sachs, \u201cThe Connected Consumer: The Internet of Things Meets Retail\u201d, May 2016. Accessed on 15-Nov-2016, http:\/\/www.goldmansachs.com\/our-thinking\/pages\/iot-meets-retail.html<\/a><\/p>\n

[5]<\/a> Sara Germano, \u201cUnder Armour Acquires MyFitnessPal for $475 Million\u201d, Wall Street Journal, \u00a04-Feb-2015, accessed on 16-Nov-2016, http:\/\/www.wsj.com\/articles\/under-armour-to-acquire-myfitnesspal-for-475-million-1423086478<\/a><\/p>\n

[6]<\/a> Kevin Plank, Chief Executive Officer, remarks at Q1 2016 earnings call, 21-Apr-2016. From transcript provided at http:\/\/files.shareholder.com\/downloads\/UARM\/3230954760x0x896741\/1500AF76-04B8-4B51-9A2B-9079B8E32316\/1Q16_Transcript.pdf<\/a>, accessed 17-Nov-2016.<\/p>\n

[7]<\/a> Kevin Plank, Chief Executive Officer, remarks at Q1 2016 earnings call, 21-Apr-2016. From transcript provided at http:\/\/files.shareholder.com\/downloads\/UARM\/3230954760x0x896741\/1500AF76-04B8-4B51-9A2B-9079B8E32316\/1Q16_Transcript.pdf<\/a>, accessed 17-Nov-2016.<\/p>\n

[8]<\/a> \u201cUnder Armour And IBM To Transform Personal Health And Fitness, Powered By IBM Watson\u201d, IBM Press Release (Las Vegas, Nevada, 6-Jan-2016)<\/p>\n

[9]<\/a> Kevin Plank, Chief Executive Officer, Connected Fitness Presentation, http:\/\/files.shareholder.com\/downloads\/UARM\/3251633237x0x808497\/47858994-ADBA-46D1-A4AA-07D6D32406F8\/NASDAQ_Version.pdf, accessed 17-Nov-2016.<\/p>\n

[10]<\/a> Kevin Plank, Chief Executive Officer, remarks at Q3 2016 earnings call, 25-Oct-2016. From transcript provided at http:\/\/files.shareholder.com\/downloads\/UARM\/3251633237x0x914565\/B54C5072-DE2C-409D-9FC6-BB784247C2FA\/UA_3Q16_Transcript.pdf<\/a>, accessed 17-Nov-2016.<\/p>\n

[11]<\/a> Tom Foster, \u201cKevin Plank is Betting Almost $1 Billion Dollars that Under Armour Can Beat Nike\u201d, Inc. February- 2016. \u00a0http:\/\/www.inc.com\/magazine\/201602\/tom-foster\/kevin-plank-under-armour-spending-1-billion-to-beat-nike.html<\/a> , accessed 18-Nov-2016.<\/p>\n

[12]<\/a> Kevin Plank, Chief Executive Officer, remarks at Q3 2016 earnings call, 25-Oct-2016. From transcript provided at http:\/\/files.shareholder.com\/downloads\/UARM\/3251633237x0x914565\/B54C5072-DE2C-409D-9FC6-BB784247C2FA\/UA_3Q16_Transcript.pdf<\/a>, accessed 17-Nov-2016.<\/p>\n

[13]<\/a>Kevin Plank, Chief Executive Officer, remarks at 2015 Investor Day, 16-Sept -2015. From transcript provided at http:\/\/files.shareholder.com\/downloads\/UARM\/3251633237x0x851285\/EEA170BC-04C1-4288-94D8-8EEA79970590\/UA-Transcript-2015-09-16T14_00.pdf<\/a><\/p>\n

[14]<\/a> Tom Foster, \u201cKevin Plank is Betting Almost $1 Billion Dollars that Under Armour Can Beat Nike\u201d, Inc. February- 2016. \u00a0http:\/\/www.inc.com\/magazine\/201602\/tom-foster\/kevin-plank-under-armour-spending-1-billion-to-beat-nike.html<\/a> , accessed 18-Nov-2016.<\/p>\n","protected":false},"excerpt":{"rendered":"

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