Business and retail news : Steele Fitness and Under Armour to open co-branded stores ( US )

The two companies hope that the concept, called Under Armour for Steele, will eventually spread across the country.

Steele Fitness is strapping on its Under Armour.

The Golden Valley-based chain of upscale fitness centers recently signed a deal with athletic wear maker Under Armour to open a retail store in Edina. The 2,500-square-foot store at 50th and France Avenue, to be called Under Armour for Steele, will open in May and feature thousands of co-branded workout apparel items, including yoga pants, jackets, and sneakers.

Steele operates just six locations in the Twin Cities, but the company hopes to launch an Under Armour store next to every Steele fitness center as the chain eventually expands across the country, CEO/founder Steele Smiley told the Star Tribune.

Retail and fitness “flow very well together,” Smiley said. “Our fitness customers also need new clothing to feel good.”

Smiley declined to disclose financial terms but said Steele Fitness will be the only fitness chain in the United States to carry this concept.

The Steele/Under Armour alliance underscores the rapidly changing nature of the retail industry. As more shoppers flock to the Internet, retailers and manufacturers are increasingly testing new ways to draw consumers to stores and create excitement. For example, Best Buy Co. and Samsung recently announced plans to build a sizable Samsung mini-store staffed with Samsung employees at 1,400 stores and Best Buy Mobile locations by this summer.

Each Under Armour for Steele store also will feature employees from both companies.
It might seem odd that Under Armour, a $2 billion-a-year business whose clothing is worn by top athletes in the NFL and other major pro leagues, would choose to open its first regular stores with a small fitness chain that’s little-known outside the Twin Cities.

But since Under Armour has never operated its own traditional stores, it makes sense for the company to start small, said Jeff Green, a Phoenix-based retail consultant. Nowadays, manufacturers like Under Armour, which already sells its merchandise through department stores, outlet stores and specialty shops, must distribute its products any way it can, Green said.

Steele Fitness offers Under Armour the chance to test the concept in the Twin Cities, an ideal market for Under Armour to sell upscale workout apparel to a young population willing to spend a little more money on health and fitness, he said.

“When Steele perfects the model in Minneapolis, it has the ability to go West Coast and East Coast,” said Brian Cummings, vice president of sales for Under Armour.

For Steele, the stores will give the chain another way to differentiate itself from a crowded fitness market in the Twin Cities, Green said.

Steele already operates a store at the Edina location. The company will remodel the store and expand its offerings from 500 units of products from 15 vendors to 3,500 units of Under Armour merchandise priced at roughly $25 to $200, including collections made exclusively for the new concept.

The hodgepodge of ­vendors “didn’t allow us to be perfect at anything,” Smiley said. “You also have to manage 15 different vendors. It made a lot of sense to have one relationship” with a well-known brand like Under Armour.

Green, the retail consultant, said it’s not clear how long it will take for the stores to be profitable. But fitness centers seem like a natural place to sell workout apparel, he said.

“They have to get customers used to buying clothing where they also work out,” Green said.

Article by: THOMAS LEE , Star Tribune

Thomas Lee • 612-673-4113

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