Having a niche is the key to many successful businesses. Retailers, especially, benefit from being the company that's really good at that one thing. But as companies look to expansion, they're trying to branch out of those niches and try new things.
One way that apparel companies are pushing the boundaries is by expanding their consumer base. Companies that had focused on men's clothing are offering women's lines, and vice versa. Two brands that are seeing some great success already are Under Armour (NYSE:UA) and Coach (NYSE:COH). The gender expansion plays a big role in these companies' futures, and their actions are laying out a path for others to follow.
Title IX comes to shirts
Under Armour began its life as a solution to a problem at the University of Maryland's athletic department. Football players were sweating a lot -- shockingly -- and it was making their shirts heavy and unwieldy. By using a better fabric, Under Armour was able to make clothes that didn't suffer as much in the heat. The line quickly spread across the football community, with the help of some good advertising and endorsements.
That beginning led Under Armour down the path of selling mainly to competitive male athletes. In 2008, women's revenue accounted for only about 25% of total apparel. That presented the company with an opportunity to really expand its sales without having to build more locations. With a focus on women's sales, that part of the business is now generating more than 35% of the company's apparel revenue.
The business has grown on the back of the company's studio offering -- which aligns with lululemon athletica's (NASDAQ:LULU) offerings -- and its Armour Bra line. The change in product mix highlights the danger that companies take on when they expand -- new competition.
Lululemon is the biggest competitor that a push into women's clothing will bring Under Armour in new contact with. The yogawear retailer sells $1.4 billion worth of clothing annually, putting it well ahead of Under Armour's women's revenue position, but the payoff is clear. If Under Armour can keep attracting more female customers, it can really break out.
It's not a purse -- it's European
Working the other way across the gender gap, Coach is making a push for more revenue from its men's line. The company is hoping to hit $600 million in revenue this year, which would be a 50% increase from 2012. The growth is being driven by an increase in men's accessories along with a strong real estate push.
The Coach men's line is now in 600 of its stores, with some outlets focused on the line. One of the biggest drivers for Coach has been that carrying men's options can bring more women into the store. The brand isn't necessarily looking for the kind of equality that Under Armour has planned out, instead being happy to have men's offerings as a driver of foot traffic.
Because of its potential, and the limited competition, Coach is really focusing on the men's line over the next year. Earlier in the year, the company showed how that single-mindedness can be a burden, if it causes you to lose focus on your core demographic. Coach fell short in sales of North American handbags, in part because of the effort put into the men's line.
For both companies, the payout is worth the risk of increased competition and focus. By expanding into businesses that target both genders, Under Armour and Coach are opening up a huge source of potential income and, hopefully, getting out ahead of their competitors. While there is a risk, I imagine more companies will follow their lead, hoping to find success across the spectrum.
Fool contributor Andrew Marder has no position in any stocks mentioned. The Motley Fool recommends Coach, lululemon athletica, and Under Armour and owns shares of Coach and Under Armour. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.