New Balance is the latest activewear brand to jump into the digital athletic sector in a major way.
Reached by phone Tuesday at the Consumer Electronics Show in Las Vegas, New Balance president and chief executive officer Rob DeMartini said the launch of the New Balance Digital Sport division is first and foremost “to serve runners.” He noted that more than half of the brand’s consumers are physically active or they “declare themselves as such.”
“We’re not really in this for the device part of it. We’re in it to build better running products and serve runners better. I think people are refreshed by that,” DeMartini said. “We’re going to have to live up to the fact, ‘Can we build better product? Can we create better experiences for consumers?’ We believe we can by knowing them, but that’s just me talking. We’re going to need to actually do it before we’re going to get credit for that.”
Through alliances with Intel, Google, Strava, Zepp and other companies, New Balance, a $3.3 billion brand, will zero in on wearables and technology designed to help improve consumers’ athletic performance. The new division initially will focus on three product categories: Devices, embedded technology such as intelligent sensors for footwear and apparel and performance sport, which will include sports equipment with micro-fob features designed to analyze and provide feedback for the wearer’s athletic performance. Declining to pinpoint New Balance’s investment beyond “significant,” DeMartini said “as a private company we’re going to leverage that to our best extent.”
“Standing here at CES, this is an incredibly crowded space [with 3,500 exhibitors], and it moves at a pace that is faster than our primary industry,” DeMartini said. “As I rolled around last night, thinking about where the risks are, that clearly is one of the areas that has me concerned. You have to be able to move at the pace of the consumer and not at the pace of the industry. I had a sleepless night thinking about all the challenges we’ve stepped into but they’re very exciting.”
The Boston-based brand’s first foray will be an Intel- and Google-developed smartwatch that will debut at retail for this year’s holiday season. DeMartini said, “Primarily, we recognize where our strengths are and where they’re not. We felt that partnerships with some of the best in the world was a better way to go at it potentially than some of our competitors who are spending big dollars buying companies or apps. We did not want to go that route.”
Asked if he was referring to Under Armour, which has invested $710 million in three fitness-related apps in the past year, or Adidas, which purchased Runtastic for $239 million, DeMartini said, “It’s best not to refer to anybody, but certainly everybody is very active in the space. I think the method that we’re going at it with is a little bit unique.”
At CES, Under Armour, a $4 billion Baltimore-based operation, debuted a few products including its Healthbox, a $400 device that includes a Bluetooth-enabled scale, a heart rate monitor and band for the wrist that measures the wearer’s steps, distance covered, resting heart rate and hours of sleep.
Designed by runners, New Balance’s smartwatch will track runners’ routes via GPS and enable them to run with music. Google and Intel will provide the athlete-focused smartwatch platform powered by Android WearTM. With 200 New Balance stores in North America, the watch will be sold via its Web site and “wherever runners are so that may extend beyond New Balance’s direct outlets,” he said.
“Will it take us into channels we’re not in business today? Probably not,” DeMartini said, allowing if the company had access to sell its wearables at marathons and other specific race venues, “it certainly would.”
“Technology has tremendous power to make the amazing possible, and nowhere is that more apparent than in sports and fitness,” Intel ceo Brian Krzanich said. “As an avid runner, I look forward to seeing how our collaboration with New Balance and their deep intelligence about the running experience can unlock the performance potential for runners everywhere.”
DeMartini will be staffing up the Digital Sport division, which will be divided between the Brighton, Mass., corporate headquarters and a yet-to-be-opened office in Silicon Valley where a team of New Balance workers has been active for the past year. He declined to specify how many people will be added. More than 600 employees moved into New Balance’s futuristic Elkus Manfredi-designed home office above the Massachusetts turnpike in September. That $500 million headquarters is meant to relay the company’s forward-thinking approach to the athletic industry.
DeMartini said, “Not only the design, but also the physical layout inside of the new building, was very much aimed at something that has always been part of our culture — teamwork. But teamwork in today’s world physically looks different. It’s much more open, collaborative, digital and engaging. That’s clearly evident in the design of the building.”
The first New Balance Run Club will bow in Boulder, Colo. early this year, with more to follow in the U.S., Europe and Asia later in the year. Powered by Strava, the platform will connect runners online and offline to share favorite routes, mark accomplishments and participate in virtual training, among other things. As is the case with Nike, Lululemon, Patagonia and other athletic labels that host heart rate-rising activities for consumers, New Balance will use its stores for pre-run meet-ups, as well as group training and classes.