Behind Kevin Plank’s Plan To Disrupt Retail
Under Armour is one of many retailers today executing an omni-channel business, selling products in retail stores and online. Under Armour’s direct-to-consumer (DTC) business has been growing at a healthy 31% per year for the last five years, and in Q4 was 40% of the company’s overall revenue. In the company’s most recent earnings call, CEO Kevin Plank talked candidly about what customers are demanding, how traditional retail is not meeting the mark, and how just investing in e-commerce is not enough. Plank’s comment about retail being disrupted seems to be “code” for losing sales and relevance. He clearly recognizes the “Amazon effect” and how the e-commerce giant has raised customer’s expectations, but what is Under Armour’s answer to the Amazon threat? Plank’s quote is not easily decoded unless you understand that he wants to disrupt the apparel manufacturing process, which has been done the same way for the last 100 years. Plank has a grand vision of personalized products that are made in a local-for-local, high-tech manufacturing facility like the Lighthouse project in Baltimore. The idea is that you could get your foot scanned and have a performance shoe made with the options, color, and fit that is perfect for you. But that’s not enough, this product needs to be made locally so that the delivery time is minimal. While Plank’s vision of the factory of the future is a number of years away, the company is investing heavily in the near term trend of e-commerce. But for Under Armour there’s more to e-commerce than a cool website and fast delivery. Read more at The Motley Fool.
