Plenty Riding On Under Armour’s Basketball Shoe

As expected, getting into the shoe business hasn’t been the easiest for Under Armour .

They quickly took significant market share in the first year in football and baseball cleats, but decided to slow down their move into the category after investing heavily in the training and running shoe markets and not making as much noise.

On Oct. 30, the $1 billion apparel company will unveil four different versions of its Micro G basketball shoes, ranging from the Blur for $80 to Brandon Jennings’ signature shoe, Black Ice, for $110.

The chance to take market share is limited –- Nike , through its Nike, Jordan and Converse brands, owns an astounding 95 percent of the $2.4 billion U.S. basketball shoe market, according to Matt Powell, analyst for SportsOneSource, a sports market retail tracking firm.

If UA doesn’t grab at least 1.5 percent by the end of 2011, I’m calling this a failure. If they take 2.5 percent, I think they have a future. If Under Armour can grab four percent of the market place in year one, I’ll define it as an incredible success.

Under Armour Micro G shoe.
Source: Under Armour
Under Armour Micro G shoe.

I tried the shoes on and was impressed by how they locked in my heel. I also liked the breathable mesh tongue. But they didn’t have a pair for me to test on the court. This is key because I actually liked the feel of their running shoes but when I took them out for a test run, something just wasn’t right. My pair obviously wasn’t built for a human’s foot.

Just from the look, I was also intrigued by how thin the shoe’s bottom soles were and the extent of the herringbone traction pattern on the bottom that goes in so many directions.

I asked the head honchos at Under Armour if they felt pressure in this launch.

"We don’t look at it as pressure," said Gene McCarthy, senior vice president of footwear. "We see ourselves as a fledging footwear startup that is backed by a legendary 14-year-old apparel brand.”

Some have said the pressure is on Milwaukee Bucks guard Brandon Jennings to play well in order for Under Armour to succeed. I disagree. His playing well would be a plus. But most of the people who buy these shoes will buy them because they love the brand -– not necessarily Jennings. The shoes that Jennings actually wears will probably sell the least because the team’s red and green color combination isn’t what kids want to wear outside of Christmas.

One area where I think Under Armour is ahead of Nike is in-store marketing, which has really impressed me in recent years. They started by developing a football player mannequin and it’s continued with investing in in-store displays like no other company ever has with video that runs their commercials fixed into the store walls. Redefining the point-of-purchase space is one of Under Armour’s hallmarks that is almost never talked about. Of course, some will say that all that is only worth the spend if people really don’t know what they’re going to get when they walk into the store. In the basketball shoe category, that’s probably a very low percentage.

Under Armour Micro G shoe.
Source: Under Armour
Under Armour Micro G shoe.

When Under Armour said they would be making shoes, I thought they were crazy. I shouldn’t have been surprised when they did well in the baseball and football cleat businesses -– Under Armour has built its business on being good at niches and market leader Nike wasn’t ever pressured in that space. Basketball is a different beast. It will be the greatest test of Under Armour’s legitimacy as a footwear brand.

When the shoe comes out, you are going to hear immediate stories of success. They will sell out quickly –- much of that due to the sneakerheads who have to have a pair for their collection. But the true test will be how they are selling in late December and how they are selling to people who are actually pulling the shoes out of their closet and putting them on their feet.

My sense is if this doesn’t work, it’s in the company’s best interest to stay out of the shoe business altogether and focus on the apparel business that consumers, and Wall Street for that matter, are still in love with.

Questions? Comments?