Under Armour Inc. is trying to take on competitors with the release… (Handout photo from Under…)
Nike made its mark with Michael Jordan sneakers in the 1980s, eventually wresting near-total control of the U.S. basketball shoe market from Adidas, Reebok and other smaller players.
Now, Baltimore sports apparel company Under Armour Inc. is trying to gain a foothold in the fiercely competitive business with its first-ever basketball shoe collection, which was unveiled Thursday and will hit stores in limited numbers in November.
The step is a crucial one for Under Armour, whose footwear business has been struggling even as executives consider it a key part of the corporate growth strategy. Building a successful sneaker business can help Under Armour cement its brand as a major player in the athletic industry, open new distribution channels and increase revenue, said Gene McCarthy, the senior vice president of footwear at Under Armour who had spent two decades at Nike.
Basketball shoes, in particular, hold pop culture significance — and can be marketing and retail gold. Jordans have become collectibles and can fetch hundreds of dollars, with lines forming outside stores for the debut of the latest version, the first of which Nike launched in 1985.
The basketball shoe category is a "powerful one and a very lucrative one," McCarthy said. "On the other hand, it's not a category to be fooled with."
Trying to make inroads in the $2.4 billion U.S. basketball shoe market is especially difficult, considering that Nike controls 95 percent of it, said Matt Powell, chief retail analyst at research company SportsONESource. Nike also owns the Jordan and Converse brands.
Brandon Jennings of the NBA's Milwaukee Bucks, a top young player, will serve as the face of Under Armour's Micro G Black Ice — the centerpiece of the four-shoe collection — and will wear the shoe during the upcoming season. The shoe name was inspired by Jennings' on- and off-the-court presence, his fashion and playing style.
Under Armour debuted the shoes at an exclusive media party Thursday evening at the penthouse of the Cooper Square Hotel in New York City.
Under Armour contends its Micro G technology is a lightweight alternative to heavier, thicker foams, giving athletes increased quickness, improved turning ability and enhanced elevation. Prices for the Under Armour shoes range from $80 up to $110 for the Micro G Black Ice.
The company has tried to make inroads in the athletic footwear market before, including the disappointing launch of its running shoe in January 2009. But to truly make market gains, Under Armour has to establish a basketball shoe presence, Powell said.
"If Nike is the brand you want to go after, you have to get them at basketball shoes," he said.
Sonny Vaccaro, an industry luminary who once worked for Nike, Reebok and Adidas, said Under Armour could become a competitive No. 2 player in the market because its shoes are fresh and new.
"Your competition isn't Nike. That game is over," said Vaccaro. "You have to compete against the others."
Vaccaro signed Jordan to his first shoe deal at Nike and helped create the shoes' endorsement frenzy that followed with other NBA players. He also served as Jennings' unpaid adviser and brought him and Under Armour together, Vaccaro said.
But Under Armour stopped short of a full-scale launch. Instead, the company is providing a "taste" by selling a limited number of basketball shoes in November, McCarthy said. The company worked closely with retailers to determine where the shoes will be sold, including independent retailers it has never done business with, such as Baltimore's Downtown Locker Room.
Under Armour is not disclosing how many shoes it will release into the market in November. Powell, of SportsONESource, speculated the number will be less than 100,000 shoes, much smaller than its running shoe launch when more than 1 million shoes were brought to the market.
The launch is intentionally small to create buzz and excitement — and to keep expectations manageable, Powell said. "Under Armour wants this product to sell out in the first week," he said.
The company tested its basketball shoes with Division 1 basketball teams and top high school basketball programs for three years, McCarthy said. Besides Jennings, high school and college players will be wearing the shoe at the University of Maryland, Boston College and University of South Florida, among others, the company said.
Under Armour will debut a marketing campaign featuring digital and television advertising on TNT, ESPN, NBA TV and YouTube in the fall.
Powell said the company has gotten good response from product testing with consumers; retailers he has interviewed like the shoes.
"It really comes down to the product," he said. "Retailers are open to other brands in their space if the product is appropriate and if the kids want to buy it."
McCarthy said he's confident that Under Armour has the wherewithal to be a "player in this game." He cited his background, his team of employees who know basketball, and the company's manufacturing experience.
Compared to the small-scale release of the basketball shoe, the launch of Under Armour's running shoes was the largest in the company's history during what was the toughest retail environment in years.
While the company said the shoe was well-received, sales were not up to expectations. As a result, it replaced the head of footwear last year and is revamping the shoe.
Besides basketball and running shoes and cross trainers, Under Armour also sells football and baseball cleats.
"Four years ago, there was no shoe business at Under Armour," McCarthy said. "Four years later, we have the No. 2 market share behind Nike in football and baseball."