[By: Greg Spielberg] [Brand Union] [Read More]
“Challenger.” Not the ideal position to be in.
Who wants to be Burger King to McDonald’s, Trump to Hillary, Holland soccer to Belgium? Enviable, no. But brand competitions are enduring battles, and every brand starts at the bottom. At a panel a few years back, Kickstarter’s co-founder Yancey Strickler reminisced about the endless patience he exercised before his company gained recognition. “Dark days,” he said. Now, the crowdfunding platform far outpaces Indiegogo and the rest of the competitive pack. Being a challenger brand can be a drag but the status gives companies a chance to be playful, experiment, and, oftentimes, adapt more quickly to cultural changes. We took a look at three emergent challenger battles across industries. In sports apparel, Under Armour just overtook Adidas and set its cross-hairs on Nike. Samsung is evolving out from under Apple’s shadow. And, in fast food, Sweetgreen is looking to supplant Chipotle and a buffet of other competitors to feed America’s appetite.
Under Armour beats Adidas, takes on Nike
With $32b in overall sales, Nike is eight times bigger than Under Armour. The iconic brand controls 90% of the North American basketball sneaker market, but Under Armour is a rising contender. The Baltimore-based company knocked Adidas out of US sportswear’s No. 2 spot and is enjoying significant sneaker success, too. UA’s Curry and Curry Two are currently the best-selling basketball shoes in the US, and they’ve assisted the brand’s 350% growth in the category since 2014 (enough for Morgan Stanley to say the results might signal “the end of Nike’s basketball dominance”) Here’s a one-two punch helping drive Under Armour’s success.
Investing in Talent and Cities of Tomorrow
A few years ago, Stephen Curry was a skinny shooter with bum ankles. Now, he’s a two-time MVP and basketball’s most popular player. Curry is emblematic of Under Armour’s sponsorship portfolio, focusing on clean-cut challengers in major sports. Andy Murray (tennis), Jordan Spieth (golf), Julio Jones (football), and Buster Posey (baseball) are All-Stars, but not the best in their league. Same with Notre Dame (college football) and Southampton (UK soccer). They’re relatable to suburban weekend warriors and amateur athletes – Under Armour’s core consumer – and evoke outsized “fervor” from the locals, as VP of Direct-to-Consumer and Omnichannel Digital Sid Jatia puts it. At the same time, Under Armour invests in the best of the best of secondary sports: Michael Phelps (swimming), Lindsey Vonn (skiing), Gisele Bundchen and Misty Copeland (workout), Lee and Tiffany Lakosky (hunting). The diverse focus, and lovable underdogs, paved Under Armour’s path from "football and gym rat" to cross-category competitor. The investment in women accurately anticipated a thriving women’s sportswear market. And the Bundchen, Vonn and Copeland campaigns channel the flexibility, aggression and mental toughness ambitious women cultivate in themselves.
Under Armour’s Curry deal put a halo over the brand, but all of their Droga5 campaigns whisper that you, too, can overachieve, even if you’re not the biggest, tallest, fastest, strongest. It speaks to their appreciation for the challenger journey, a personality Nike doesn’t embody. (In a seismic folly, Nike lost Curry when their pitchman called him the wrong name and then showed a recycled slide with fellow NBA player Kevin Durant’s name. Meeting adjourned.) Under Armour understands that winning isn’t the only wellspring for fervor, a perspective that informs their attack on strategic cities. Born in Baltimore, UA is moving global footwear operations to Portland, just 10 miles east of Nike’s HQ. Instead of setting up next to, say, The Ace Hotel, they’re building the office on the edge of a public sports park that Nike used to sponsor. Under Armour will replace the swoosh, and they’ll work daily in front of the people and hard-earned practice fields it stands for. The move also produces PR, word of mouth and goodwill from Portland’s mayor and creative agencies who are always happy to tout the city as America’s pre-eminent city for athletic and outdoor innovation.
Portland is the northernmost of a trio of West Coast cities Under Armour is targeting. San Francisco, where Curry and Posey play, is the only city where Curry’s shoes outsell Air Jordan’s, and Under Armour’s marketing team splits time between SF and NYC. Now that Nike-sponsored Kobe Bryant retired, Los Angeles’ hottest assets are both on team Under Armour: Dodgers pitcher Clayton Kershaw and UCLA athletics.
Under Armour's "Rule Yourself" campaign featuring USA Gymnastics
Poaching Talent to Drive Innovation
Investing in grassroots stars and strategic cities is one side of Under Armour’s assault. The other is aggressively luring talent to develop product innovation. The Future Show, an annual Shark Tank-style competition, generates thousands of applicants that Under Armour whittles down to a dozen finalists. “Let them know that Under Armour is going to embrace the entrepreneur,” Founder Kevin Plank told Bloomberg’s Trish Regan. My favorite example an ingenious magnetic latch that lets you zip up a jacket with one hand. Invented by a Future Show finalist, Under Armour invested in and licensed the idea and now equips all its outdoor gear with the UA Magzip. This VC-style grafting gives Under Armour the ability to rapidly improve gear and capitalize on crowdsourced ideas (and, hopefully soon, help Patagonia replace its notoriously terrible zippers). Plank is bringing the innovation pipeline even closer to home with Lighthouse, an ambitious Baltimore manufacturing project that should attract talent eager to bring production back to the US.
While performance has always been UA’s core, “cool” has not. But Under Armour snagged two Adidas guys to start changing that. Ben Pruess built adidas Originals’ from a $600m segment to $2.5b in less than five years, the most successful growth cycle in the company’s history, according to his LinkedIn page. Now he’s SVP of Sportswear at Under Armour. In June, Under Armour named Belgian-born Tim Coppens Creative Director of Under Armour Sportswear (UAS), a new division charged with expansion into non-sports retail. Coppens designed for Ralph Lauren and Adidas, in addition to his namesake menswear label, and earned entree into Barney’s, a sign that UAS, with its yacht club flag-inspired logo, should be making waves outside of UA’s typical pond.
Samsung vs Apple
If there’s anything more intimidating than going up against Nike, it’s battling Apple. The world’s most valuable brand specializes in laying waste to the competition. Samsung, though, is suddenly carving out a unique identity and mustering a challenge to Apple’s dominance. Stock is up 13% since last year (Apple is down 25%) and it moved 81 million phones in the first quarter to Apple’s 52 million, according to Gartner. In the US, Apple controls 40% of the smartphone market, but Samsung is not far behind at 31%. Samsung is suddenly embracing the freedom that comes with challenger status and recreating our image of the brand through two main strategies. Not to mention they won Marketer of the Year at this year’s Cannes.
Samsung 837: The World’s Most Social Store
Apple’s Meatpacking store looks a bit sad these days. The Scandinavian style feels bare instead of clean – a stock room for phones, watches, tablets and computers. The lack of lounge space and cafe feels like a reflection of Steve Jobs’ austere furniture tastes. In a moment where retailers are investing heavily in experiential, Apple feels outdated.
Down the street, Samsung 837 is alive and partying. Designed by Tokyo’s Wonderwall, the store doesn’t sell products and focuses on experiences instead. It’s a platform for the South Korean brand to make an imprint on downtown Manhattan – a way for Samsung to explore “what it can be, what it can’t be, PSFK Founder Piers Fawkes told me. It sits on New York’s most social block, sharing a Meatpacking corner with The Standard, the High Line and the new Whitney Museum. The experiment is a momentous departure from Apple’s shadow, harnessing an endless array of screen and performance spaces rather than wood, glass and steel. Samsung 837 leapfrogs Apple by rethinking what a tech space can be.
First, it’s an expression of New York City, accented with partnerships like Rag & Bone-designed uniforms and a Smorgasburg-curated cafe. Second, it’s a digital story, with the world’s largest multimedia display, a series of commissioned technology-based art installations and a virtual reality tunnel. Putting bits first makes 837 incredibly fleet-footed (a July 4 theme and then Christmas and so on). And the constant differentiation allows for Samsung to make its entire location into a concept store. Home section with smart TV and loungey couches here, kitchen section with futuristic touch-screen fridge there. “Because they don’t sell any products at the location, they can provide low-pressure demonstrations that help people wrap their mind around these emerging categories,” Bryan Yeager, senior analyst at eMarketer wrote in an email.
The no-pressure invite promotes discovery, engagement and organic conversation. Freed from retail constraints and sales commissions, 837 hosts performances with Diplo and Gwen Stefani, conversations with Bill Plympton and Karen Robinovitz and after parties for the CFDA Awards and Governors Ball. They curate a consistent lineup of lunch discussions, DJ performances and food pop-ups. Recently, they handed out free Ramen Burgers during a panel with irreverent, and influential, restaurant reviewing site The Infatuation. Then they chatted wellness with New York Times bestselling author Marianne Williamson and taught young parents how to make quick, healthy meals with Chef Sam Talbot. The flagship is an engine for Samsung to create personality and challenge the idea that Apple is the only hip product maker in tech. Socialyte Founder Daniel Saynt, whose influencer agency counts Google, Club Monaco and Chrysler as clients, views 837 as a scalable model that can spread to international cities. “Honestly, it is way too good not to duplicate…Apple is feeling a little like Microsoft when you compare the Apple stores to Samsung’s immersive, on-target experience.” But, as Fawkes reminds me, “Samsung is just playing shop here. Samsung’s store is drama and fun. Apple’s drives sales.”
Samsung’s post-Apple products
Samsung is winning the global phone sales battle, and part of the reason is a return to the Samsung roots. Instead of copying Apple’s closed design, they brought back unique offers like replaceable batteries and expandable memory. They continue to reinforce the product’s water-resistant messaging, an attribute that resonates with any of us who’ve buried our phones in a bag of rice. While iPhones get knocked for being new, but not necessarily improved, Samsung is applauded for every new feature from its iris scanner security and diversity of color choices. A nice touch, too: If you pre-order the Galaxy S7, it comes with a free Gear VR headset, which is otherwise available for $99. More than one million people used the device, a collaboration with Facebook’s Oculus, and Samsung sold out of the product on the day it was released. The experimentation in virtual reality is a significant differentiator for Samsung, and a lead into what Tractica predicts will become a $22b industry by 2020. Something else we love? Samsung Pay’s swipe simulation for payment readers that don’t do near field – making it much easier to buy everywhere. Like VR, the mobile payment market is exploding right now, up 137% in the US and eMarketer estimating that it will double by 2019.
Sweetgreen vs Chipotle (and the fast-casual world)
Samsung and Under Armour are admittedly some pretty gigantic challengers. But creating brilliant experiences, carving your own path and investing in social is a good strategy for the smaller guys too. Take Sweetgreen, the Washington DC-born fast food restaurant that’s redefining quick and healthy meals. Founded in 2007, the startup raised more than $95m and scaled from 10 locations to 45 in the past five years, a pace that echoes Chipotle's rapid rise a decade ago. Darren Tristano, president of foodservice tracker Technomic, expects Sweetgreen to have 100 to 150 stores, and $100m to $150m in revenue (up from $50m in 2015) by the end of 2018. Chipotle stock, meanwhile, is down 40% since last year, and McDonald’s closed more stores than it opened last year – a firstsince 1970. In a hyper competitive space, here are a few ways Sweetgreen is winning.
Sweetgreen’s menu is blueprint at this point: local, sustainable, seasonal. One big difference is that unlike Chipotle’s farm-to-table, Sweetgreen’s choices constantly change. Right now, New York is in the early summer menu, and in October, it’ll move to fall, and then later in the year to winter. The calendar defends against the inevitable fatigue we get from seeing the same options over and over again. Like Samsung’s digital displays, Sweetgreen uses ingredients as a platform for collaboration. A partnership with Blue Hill’s Dan Barber, for instance, on wastED salads made with ingredients that would otherwise hit the trash. The sheer volume of combinations is almost absurd until you consider that they implicitly reflect America’s increasingly diverse population, not to mention the international profile of the three co-founders, who are sons of French/Lebanese parents, Chinese/Mexican-American and Iranian Jewish.
Sweetgreen’s widespread appeal crosses demographics, with stores in NYC’s Wall Street and Williamsburg, DC’s Logan Circle and Navy Yard. Instead of imposing a standard design on retail locations like Starbucks, Chipotle, Chop’t, Pret A Manger or Hale and Hearty, Sweetgreen goes a different path. They let the local architectural flavor inspire retail design, embracing sleek wood finishes in one location and red brick in another. The original location, a few blocks from the Georgetown apartment where founders hatched the idea, is tiny, with a sloping sidewalk and a Keebler elves feel. Manhattan’s NoMad Sweetgreen is gigantic, with a wall of windows and stadium seating. The lines are long, but with an elegant app, you can pre-order and pick up from a separate counter in just a minute. A quarter of customers buy through the app, meaning more time for Instagram.Combined with the endless ingredient options, the efficiency helps drives a beautiful mosaic of red strawberries with white feta, light green avocado and darker mint and kale.
Talk about a lifestyle brand. Sweetgreen’s Sweetlife music and food festival features headliners like Lana Del Rey, Foster the People and Kendrick Lamar. Instead of greasy food, they serve healthy bowls and wraps, rethinking what a festival concession stand can be. The Sweetlife festival attracts young consumers across gender and ethnic backgrounds and reinforces Sweetgreen as a company to gather around.
“It’s such a pleasure spending money with them. I believe in what they do. I think the way they’re making fast-casual healthy and a reasonable price, they seem like standup guys who have a mission aside from making money,” says Rune Knudsen, a friend and founder of TrySome online platform for healthy foods.