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PESTEL Analysis of Under Armour (sportswear, sports equipment)

The Under Armour group is an American company created in 1996 by two former top athletes. The brand specialises in clothing and sportswear fashion, as well as sports equipment. The equipment manufacturer has experienced significant growth and has become a serious competitor for international brands such as Nike or Adidas. The group was created in Baltimore and then embarked on an international conquest: to not only produce its products but also to sell and distribute them. It benefits from several secondary sites and a significant international sales presence.

Under Armour

Credit Photo : Unsplash Brandon Erlinger-Ford

Here we draw up a PESTEL analysis of the Under Armour brand. It is a question of reflecting on all the political, economic, social, technological, ecological, and legal factors which are imposed on a sector, a market, or an organisation.

 

I. Political factors

Under Armour is likely to be impacted by the political stability of the markets it targets, for example, in particular, to export part of its production. The group may also be impacted by changes in interest rates, exchange rates between currencies, customs taxes, etc. All of these elements can make the group more or less competitive internationally and/or in its own market in the United States.

Furthermore, as the group is American, it is subject to changes in American policy. The CEO of the group, for example, quickly declared himself in favour of Donald Trump's economic policy a few weeks after his election. This position was not at all appreciated by many of its customers and sports stars who use this equipment supplier. Thus, the group is influenced by political decisions specific to the United States but also beyond its borders.

 

II. Economic factors

Several economic factors have a strong influence on Under Armour. The level of growth, for example, as well as the level of inflation, has a strong impact on the brand. Indeed, when growth is strong, and inflation contained, households are much more likely to spend their savings on “pleasure” type purchases. On the other hand, when the economic situation contracts, growth slows, or inflation picks up again, many households try to reduce or postpone certain expenses considered non-urgent or non-essential. Thus, purchases of sports or leisure equipment can be qualified, for the most part, as non-essential and can negatively impact opportunities for Under Armour.

 

III. Social factors

Habits, fashions, influences from Key Opinion Leaders of social networks, and several social factors are of key importance to Under Armour. For example, the confinements of the years 2020 and 2021 strongly penalised clothing brands. Indeed, with the generalisation of teleworking and the reduction of leisure outings, households have spent much less on leisure purchases and luxury products such as perfumes, etc. Thus, lifestyles have changed (even temporarily), which has had a significant impact on textile brands. The fact that the brand is recommended by famous personalities in the sports world, such as Dwayne Johnson, for example, is a major stepping stone for the brand. This is the case for all sports, and, in particular, for basketball, American football, skiing, etc. Under Armour is a solid and well-recognised supplier, and this reputation in these demanding fields gives it a better reputation in the everyday clothing sector.

Finally, we are witnessing a movement of change in habits: formal wear is gradually being abandoned, and street wear or casual wear is becoming more and more popular. Similarly, more and more households are choosing prettier, more elaborate homewear outfits than simple pyjamas. This stimulates opportunities for Under Armour and supports its growth and development.

 

IV. Technological factors

Under Armour is strongly impacted by technological developments. This is particularly the case for so-called technical materials, which the group uses to design its clothes. This is what made it famous in the years following its launch, with significant word of mouth from customers satisfied with the technical developments incorporated into the brand's clothing. In 2011, it invented and marketed a football shirt, baptised E39, equipped with intelligent sensors and allows a detailed analysis of the player's performance. The role of high technology is, therefore, central to Under Armour. The group very quickly understood the interest of this digital shift and invested colossal sums in the years 2000 and 2010 to be at the cutting edge of technology. They offer several applications such as Mapmyfitness or MyfitnessPal. In addition, the group is acclaimed by millennials, and it has had to adapt its communication plan, with massive use of social networks, in particular. Indeed, this generation of consumers is fond of technology, online applications, and social networks.

 

V. Ecological factors

Under Armour comes up against all ecological developments. Consumer choices are changing and this can penalise the brand, as well as benefit it and boost its sales. For example, many consumers, in recent years, no longer seek to accumulate equipment but to buy in a more reasonable and reasoned way. They more often wait for their equipment to be damaged before buying another one, for example. This can penalise the Under Armour group, or even favour it. Indeed, more and more consumers are choosing a quality and opting for products that may be more expensive, but probably of higher quality, and which will last longer.

The brand clearly displays its efforts to reduce environmental impact, as well as its partnerships with non-governmental organisations specialised in environmental protection and the reduction of ecological impact.

 

VI. Legal Factors

Under Armour is subject to legislative developments that apply in the United States and in the other countries in which it operates. For example, the regulations related to the GDPR have come to weigh heavily on the group by requiring it to quickly comply with the law.

In addition, rumours of lawsuits, fraud, etc., negatively impact the Under Armour group and penalise its reputation. This is the case, for example, for the rumours (which may or may not be true) of accounting fraud that have tarnished the reputation of Under Armour in recent years.

 

Under Armour is a large-scale international group, which has experienced rapid growth in 25 years. It is now a credible alternative to the major global equipment manufacturers, with a global and multi-sport presence, such as Nike or Adidas. The group has established itself by concluding major partnerships with famous sports teams, mainly in the United States. This has enabled it to develop its notoriety in the United States but also beyond its borders since the group now benefits from a strategic international presence. Nevertheless, the group is subject to numerous influences and potential impacts in terms of politics, the economy, societal changes, technological developments, ecology, and legislative changes. All of these elements can have an influence on Under Armour, whether positive or negative, and this pushes the group to have to carry out an active watch in all these areas.

 

Sources: SportsPromedia, Seeking Alpha, USA Today