Building a brand that fits
Growing health awareness a boon for sportswear maker
THE growing awareness on health has not only encouraged more people to live healthier lives, it has also led to the growth of sports across the globe, and Malaysia is no exception.
As interest in sports grows, sports apparel brands are reaping the benefits.
International brands, often viewed as the premium range, have long dominated the local sportswear industry.
But consumers are warming up to newer labels eager to take a bite of the pie. This helps pave the way for smaller players – and local brands – to make a mark in the market. Certainly, there is an upside to the demand for products that cater to this growing crowd.
For Shah Alam-based sports apparel manufacturer MYS Ultron Sdn Bhd, this trend not only allows it to tap into a mass market, it also enabled the company to rebuild a business that was languishing in the wake of China’s success as the world’s factory.
Getting involved in the local sports scene is the best avenue to building the company and its brand, says Ultron founder and chief executive officer Marc Chua Yee Kuan.
“Sports uniquely delivers beyond what traditional marketing can achieve as it enables brands to build intangible benefits such as loyalty, emotional connection and relevance, on top of tangible benefits such as exposure and interactivity,” says Chua.
Ultron – derived from the play of the word ultra-marathon, which denotes endurance and toughness – is a testament to the brand’s ambitions.
Chua aims to build Ultron as a local sportswear brand synonymous with affordability, reliability and one that is trendy.
These qualities will appeal to loyal fans from among the throng of avid and casual marathoners and sports enthusiasts.
Chua is no stranger to the sportswear industry. His family has been involved in sports apparel manufacturing for the past 30 years. But like most other industries, the apparel sector was badly hit when China emerged as the world’s manufacturing centre with an efficient ecosystem that is unparalleled in modern times.
However, the rising awareness on staying fit and changing lifestyles provide Chua with a second chance to tap onto a ready infrastructure and available expertise to build its own brand presence and gain market traction.
Chua eventually founded Ultron in 2015 by transforming his family’s sportswear original equipment manufacturer business into an original brand owner and manufacturer of its Ultron sportswear.
According to Chua, Ultron currently controls around 50% of the local and international mass participation sports market in Malaysia. Ultron’s products are designed for running, cycling, football, fitness, zumba and yoga as compression wear for amateur and professional sports use.
Expanding reach
Having made its mark in the local sportswear scene, Chua says Ultron is now looking at new regions such as Indonesia and the Middle East to penetrate the affordable sports apparel market there. These markets would increase logistics efficiency and enable it to capture a larger market share of the sporting events with mass participation such as marathons.
The company has seen business almost doubling every year over the last three years and Chua expects revenue to be in the region of Rm30mil this year. It has 80 employees and supplies sportswear to an average of 50 mass-participation sporting events per month across Malaysia.
The current factory has a capacity of over 200,000 pieces of sportswear per month. Chua expects the market to more than double over the next three to four years as more marathons and sporting events are organised each year. He thinks sporting events will increase to 100 events per month. This means the company would need to manufacture at least 500,000 pieces per month to maintain its market share.
Ultron has a complete range of sportswear from modest athletic wear, sports bra to jackets and sweaters.
Chua says Ultron has the advantage of leveraging on its existing infrastructures such as machinery, warehousing and research and development (R&D) expertise to develop its own brand of quality and affordable sports apparel.
“Small businesses usually do not have the resources to hire specialists to do R&D and face great challenge in responding to the challenges posed by liberalisation and creating new opportunities in foreign markets,” he says.
Apart from supplying to events, Ultron also has 10 retail stores. According to its website, they are located in the Klang Valley, Sabah, Sarawak, Pahang and Perlis.
These standalone retail stores are mainly for branding purposes and function more as a community outreach centre to obtain public participation in sporting events, rather than to increase sales, Chua says.
Over 90% of its business volume is currently generated from the supply of sportswear to large-scale sporting events like marathons, triathlons and cycling tours or races for public sporting events organised by the government and local authorities, the founder notes.
At the local community level, mass participation sports are also extremely popular social events that reach out to the mass market.
Ultron has tied up with some of these bigger events including Ironman Malaysia, Men’s Health and Women’s Health Night Run, PJ Half Marathon, Perlis State Marathon, Terengganu State Marathon and Borneo International Marathon.
Second-tier towns
For an upstart like Ultron, it would seem natural for the company to focus heavily on online and digital platforms to promote the brand given that its products are mainly targeted at the younger demographic.
However, Chua says the company made a strategic decision to focus its attention on the larger but underserved mass market segment, especially the markets outside of the Klang Valley.
“After getting involved in sports events all over the country, we discovered that the market in the Klang Valley, while it remains the single largest market in Malaysia, is very different from the rest of the country.
“Those who go for the high end international brands like Nike, Adidas and Under Armour, are mainly from the Klang Valley. But there is also a smaller group of loyal followers for these international labels in other big towns, (which gives us the opportunity to tap the majority of the consumers in these other towns).
“Our main target customers are those in the mass market segment, people who would otherwise not get involved in sports or people in smaller cities or states that are outside of the Klang Valley.
“We want to aggressively expand our market reach, especially in East Malaysia and outside the country,” says Chua.
Ultron has been opening up stores in Perlis, Kedah and other smaller second tier towns where there are large untapped markets.
Many sports participants in these areas are still opting for over the counter products and prefer to fill up their registration forms manually. Therefore, having physical outlets in these towns are ideal for providing convenient access to registration and will be able to pull in as many participants as possible, thus, complementing its existing retail store model, he adds.
So while retailers are looking at ways to shift and expand their operations online, it makes sense for Ultron to expand its brick and mortar presence.
To further fund the expansion of its retail network, Chua says the company has set aside a reasonable amount for capital expenditure and the funds will be provided for internally. The cost of each store will depend on its size and location. Chua notes that it is important for the company to have a single-digit or the lowest possible double-digit rent-to-sales ratio.
The athletics wear is a huge market. Major players are still making a killing. For last year, Nike alone recorded more than Us$40bil (Rm167bil) in sales.
Globally, by 2020, research reports are expecting athleisure to hit Us$350bil in value, driven mainly by the ongoing wellness and health trends.
Chua says Ultron, which is currently fully owned by his family, foresees a capital expenditure of up to Rm10mil for expansion over the next two to three years, which includes the opening of more stores in secondary cities and setting up small scale manufacturing facilities across Malaysia.
Ultron is seeking private or strategic investors to raise more capital by next year to help increase its production capacity and enter new markets.
“Before we venture abroad, our goal was and is to always grow a strong foundation right here in our home country, and then only can we expand abroad with the pride of representing Malaysia,” says Chua.
But with the local market largely untapped, there is still a lot of room for Ultron to grow and establish its roots here.
Once its regional markets start to kick in and take hold, Ultron may well have enough staying power to finish the race.
Successfully turning a lackluster OEM business into a fast growing brand was certainly a feather in Chua’s cap. But that was just the first stage. Chua has his eyes set on the bigger prize: he wants to be a regional champion.
But first, he has to win the local endurance race.