Under Armour put the rest of the athleticwear vertical on notice when it announced it would be taking over the former location of fabled toy store FAO Schwarz on Fifth Avenue in New York. The news was accompanied by a sense of bravado from Under Armour CEO Kevin Plank, who declared that the location would be the “single greatest retail store in the world” upon its opening in 2018.
While details surrounding how long the lease will run or how much it will cost have not been disclosed, the move surely will amount to a pretty penny for the brand, which is doing everything in its power to take control of a field that includes both Nike and Adidas.
The RTP editorial team discusses whether Under Armour’s move to the New York store will work out for the brand as it seeks to expand its market growth.
Debbie Hauss, Editor-in-Chief: Admittedly, I was quite surprised to find out Under Armour was moving into the iconic New York City FAO Schwarz location. It’s a lot to live up to. But company CEO Kevin Plank does not seem intimidated. He was quoted stating that he is building “the single greatest retail store in the world.” It better be, since the space is located in one of the most expensive chunks of real estate in the world — some locations in the area rent for as much as $3,500 per square foot, which adds up to $185.5 million for the 53,000 square feet of space Under Armour will possess. But the property won’t be turned over to the athletic brand until 2018, so Plank has a few years to make good on his promise. This comes at a unique time in the athletic business, with the recent bankruptcy at Sports Authority. Under Armour, though, seems to be rising above the pack as Nike takes a dive. It will be interesting to watch Under Armour’s marketing moves during the next few years as it gears up for a big splash in New York.
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Adam Blair, Executive Editor: Even given the problems that the sporting goods retail sector continues to face, Under Armour’s recent moves make a lot of sense to me. Selling through Kohl’s gives the brand a solid brick-and-mortar distribution network at a time when other venues (i.e. Sports Authority) are shutting their doors. As for the costs of opening its own retail outlet in an iconic location, the old FAO Schwarz store in midtown Manhattan, Under Armour will likely reap benefits beyond just the sales that will take place there. There’s the millions in free publicity the company will garner from making a bold move in a major world media capital. There’s a subtle appeal to baby boomers who visited the location themselves when it housed a toy store, and who might be interested in seeing if there are new games to play there. (Under Armour would be smart to make the store as interactive, experiential and high-tech as possible.) Also, given that the space has stood empty since Toys “R” Us pulled up stakes in 2015, perhaps Under Armour was able to negotiate a break on the rent!
Alicia (Fiorletta) Esposito, Content Strategist: What I find extremely interesting is that while sporting goods retailers have faced an onslaught of challenges, athletic brands like Under Armour, Nike and Reebok seem to be thriving and investing extensively in their brick-and-mortar experiences, online strategies and expanding their retail partnerships. Under Armour has an extremely cool store in SoHo that touts digital displays, technology and user-generated content, so I can only assume the brand is going to try and tap into — and amplify — that experience for such a grand space. I will also be keeping my eyes out for any announcements that Under Armour will be holding events, classes or demonstrations to immerse tourists and NYCers in the brand experience and all that Under Armour represents.
David DeZuzio, Managing Editor: For a business that started out in his grandmother’s basement, Kevin Plank has managed to make all the right moves. Counter to the sporting goods sector’s current downward trend, Under Armour is opening the “greatest single retail space” in one of the most iconic locations in NYC. The move is sure to bring in millions of visitors, if not actual buying customers, and will cement its status as an iconic brand and continue its brand growth. This will be a huge trial by fire for the brand’s transition from a supplier to a supplier/retailer, but it will pay off. Hopefully, there was some sort of a rent break, but let’s be serious; 53,000 square feet on Fifth Ave in NYC? It depends on what you consider a deal. As Frank once sang, “If you can make it there, you can make it anywhere.” Other brands can take note of Under Armour’s success to not be afraid to take a risk to make a big splash, but to also help give back by developing initiatives outside of retail such as Plank’s big plans for Baltimore.
Klaudia Tirico, Associate Editor: I, too, was quite surprised at Under Armour’s decision to take over the former FAO Schwarz location. And while it’s no doubt a pricey risk, I can definitely see the potential of Kevin Plank’s vision to make it “the single greatest retail store in the world.” Under Armour is capable of offering on-trend and stylish athletic wear, a feat that other sporting goods retailers, such as Sports Authority, seem to have lacked. Given the rise of the athleisure trend, I can see the company competing with brands such as lululemon and Athleta in that department. And what better way to do that than to make a home for itself in one of the biggest shopping districts in NYC? As Alicia said, the opportunity to make it a “hot spot” for tourists and active NYC dwellers is there. FAO Schwarz alone can provide some unique inspiration for the brand. Wouldn’t it be fun to test out some Under Armour sneakers or activewear on a massive Big Piano à la Tom Hanks’ character in Big? I think so!
Glenn Taylor, Associate Editor: You can’t say the Under Armour team isn’t ambitious; in 2016 alone, the brand has launched a mobile shopping app that integrates data of +170 million users and built out a new design and innovation center in Baltimore. If there’s one thing the company is unafraid to do right now, it’s spend. I’m not sure I’m sold on the New York store space, especially since they already have real estate in SoHo and the Times Square exits of Aeropostale and Toys ‘R’ Us illustrate the difficulties of keeping open a flagship facility. However, Under Armour’s $1 billion Q2 revenue is nothing to sneeze at, and with the money they bring in, it would be sensible to try to keep growing the brand into new ventures. Now that Under Armour has an active relationship with Kohl’s, it can make the effort to broaden its horizons to other demographics that aren’t visiting sporting goods/athleticwear retailers. Since the brand has continued to focus on its digital operations over the past year, it’s certainly more likely Under Armour will continue to thrive by pulling double duty as a merchandise supplier and a retailer.
