Editor Dan Owen caught up with Richard Palmer-Jones to find out how the brand are helping their retailers get back to work.
What have Under Armour done to help your retailers get back to business.
One of the key elements is how long you give retailers to pay. The first thing we did with the retail groups and the pros was to extend the terms. Our sales team and credit control have been in touch with our retailers on an individual basis, creating new payment plans for our retailers that will help them. If they have no trade and a shop full of product gathering dust, they can’t be expected to pay.
I’ve had a number of emails from customers saying thank you for what you’ve done, and you’ve done the right thing. That means a lot. When this all started, people were worried about being able to get food, so we couldn’t have them worrying about missing payments. We turned off our automated reminders. Going in with a heavy hand wouldn’t help anyone
From the moment of lock down, we stopped any further shipments to retailers, and we cancelled all our order books. This was another way to relieve pressure on the retailers, so they weren’t overloaded with stock. Through our ArmourHouse trade portal, retailers have been able to top up orders as and when they’ve needed to.
How is Under Armour going to do its business for the foreseeable future?
Firstly we looked at the seasonality of our product. Golf restarted at the end of May. Normally we would start shipping in July. We didn’t believe that the market needed to see
new product that soon.
We took the decision to delay our AW20 launch until September. Again, this will help give the retailer time to sell through their product.
We’ve got excess product in the warehouse. But at the moment we’re actually experiencing at once business daily orders at a record level. Shorts, in particular, are hot, partly because they wouldn’t have been in that initial order the pros received around March. Gloves and consumables are flying too, as more rounds are being played.
What the market doesn’t need to see is a flooding of the market of excess inventory at this point, that’s not going to happen from Under Armour. Our best-selling lines will never be put in the market at a discounted price. We’ve committed that to our customers. We want to protect the market and the brand. I think you could lose both if the market becomes flooded with excess inventory.
We also have a lot of product that carries over across seasons, so we won’t have to re-buy as we already have the stock in our warehouses.
How will this change Under Armour’s business moving forward?
We are moving to a 3D virtual selling process. We can now perform our sell-in process via web calls with customers, and we can show the product in a 3D virtual cad form. They are able to zoom in on product detail and it’s like seeing a photo of a real-life item but it’s actually a virtual sample.
It allows us to remain socially distant, and also more flexible with times. We think we can be more effective in terms of taking customers through the product line, and also how it applies to their business. We’ve asked our reps to focus on consulting with our retailers, rather than selling to them. If you sell people the wrong product, you might hit a sales number, but they won’t buy from you ever again.
We have over 500 shop-in-shops installed around the country, and with the 3D virtual tool, we can show retailers how the range they have bought from us will look on their display. We’ve not seen that done before and we’re really excited by it.
We’re working with a former Olympic Swimmer and he is coaching our sales team on how they approach this new world, how their mindset needs to change, and how they will overcome challenges and disappointment. And the reps will have been used to a lot of travel, a lot of interaction with people, that has had to halt. So we’ve made sure we’ve kept them engaged.
What have been the positives for you this year?
Our footwear sales are flying, and for that short time where shops were open and the shoes had been delivered, we were tracking at 11% market share, that had risen from around 7%. Our shoes have improved every year, and our Spieth 4’s and HOVR Drive GTX golf shoes are our best yet.
But we are importantly still #1 in the apparel market for the fifth straight year. While there has been an impact on the level of sales, our market share has gone up from 21% to 22.4%. Our on-course share is equal to the next two brands put together, and the off course business is worth the next three brands combined. Consumers still want the brand, and they want to buy more from the brand. We’ve got 33.8% of the trouser and short market, and we have a proven track record of our product selling through. We think that’s going to be really important as retailers make buying decisions next year.
We understand that it will take time to get back to the levels that we were at before. But we’ve got time, we’re not going anywhere. And we want it to be business right for people as we all rebuild together. GR