The idea is that businesses can leverage the insights gleaned from this data to identify consumer needs and promote more relevant products and services, all while building a relationship with customers that’s not purely transactional.
So, does Under Armour’s sale of MyFitnessPal suggest that the business case for apps no longer holds?
Not so fast, according to Rosanna Iacono, a Sydney-based retail expert whose career includes a nine-year stint at Nike.
Data still key
“There’s no doubt that the biggest value in tech for sports brands like Under Armour, Nike and Adidas is in the data that enables them to create products and experiences that better serve their customers’ needs, and therefore keep those customers in their brand ecosystem – it’s the ultimate loyalty tool,” Iacono told Inside Retail.
“This means data, and the tech that enables its capture, will continue to be a key aspect of all these brands’ strategies in the foreseeable future.”
Indeed, just a few days after Under Armour announced the sale of MyFitnessPal, the subscription fitness company Peloton reported a 232 per cent increase in its Q1 FY21 revenue to US$757.9 million.
Unlike Under Armour, Nike and Adidas, which started out selling activewear apparel, footwear and equipment and then ventured into digital fitness, Peloton built a fitness platform first and is now branching out into apparel and other products.
The growing convergence between activewear brands and digital fitness platforms can also be seen in Lululemon’s acquisition of the in-home gym startup Mirror for CA$500 million earlier this year.
Lululemon’s CEO Calvin McDonald said the acquisition would enhance its digital and interactive capabilities and deepen its roots in ‘the sweatlife’, the aspirational mindset the company hopes to cultivate in its customers.
Workouts drive sales at Nike
Covid-19 has made the opportunity in digital fitness even more apparent. With gyms closed in many countries due to health concerns, people have embraced outdoor exercise and at-home workouts, and apps that help them keep track of their exercise, like never before.
Earlier this year, in response to the pandemic, Nike announced it was making its Training Club app free for anyone to use for 90 days. Previously, just a few of the app’s workouts were available for free, with most behind a US$14.99 a month paywall. But now Nike has decided to do away with the paywall permanently. It might be because the workouts are already driving users to buy Nike products.
“We are definitely trying to just get super personal, and through data and analytics, monitor the types of workouts that are important,” Heidi O’Neill, Nike’s president of consumer and marketplace, said in an interview in May.
“[For example], we are seeing yoga workouts as really important, so we are creating connected experiences and journeys when we see a consumer interested in yoga, and connecting them to our yoga apparel. Then we see our yoga products trending.”
A shift in focus
But if brands like Nike and Lululemon are reaping the benefits of fitness apps, why did Under Armour decide to give up its foothold in this space?
“It’s the loss in value that may go towards explaining the divestment,” Iacono said.
“When you consider that this transaction is happening at a time where other fitness tech like Peloton has grown in value (Peloton shares have soared by 290 per cent in 2020!), it indicates that they did not adequately continue innovating and evolving the technology, and its relevance to customers, to maintain and grow value. This lack of capability, or the resources to focus on it properly, is likely the key reason they’re getting out.”
Another reason may be that there’s not enough crossover between the average MyFitnessPal user and the brand’s target customer. Under Armour CEO Patrik Frisk said in October that the brand was prioritising its strategies and assets to connect even more deeply with the ‘focused performer’. It should be noted that Under Armour is holding onto its MapMyRun and MapMyRide apps, presumably because they are better aligned with the target customer.
Iacono believes this is a smart move.
“It appears they are removing distractions to get back to basics, at least for the short- to medium-term. They have some underperforming channels like wholesale that they need to address,” she said, noting that the divestment will free up some cash to make more strategic investments or reinvest in the core business.
But there’s a risk in ignoring the average runner or gym-goer.
“One criticism that can be made of Under Armour is that their narrow focus on what they call the ‘focused performer’ means they have missed out on 2020’s biggest growth trend, athlesiure – something their biggest competitors managed to go after without compromising their performance positioning,” she said.