Lululemon Athletica is one of the fastest growing Canadian retail chains. Originating in Vancouver, the company quickly grew into a 19-store chain that sells its own yoga-inspired brand of clothing. Although most of the stores are located in major Canadian cities such as Toronto and Montreal, the company recently opened four stores in the United States (three in California and one in Washington), as well as one store in Melbourne, Australia, and two in Tokyo, Japan. In the coming year, 19 new stores are expected to open, continuing expansion in the
Lululemon is based on the philosophy that yoga “is the way to maintain excellence in all sports,” capitalizing on the recent yoga and health trends. It is estimated that Yoga is growing at a rate of 2.5 million people per year worldwide (The Yoga Journal). This widespread fascination with Yoga is due greatly in part to
Lululemon apparel, originally designed for yoga/athletic purposes, has been adopted by consumers as the hot new casual clothing line. The stores sell men’s and women’s apparel, as well as a variety of yoga accessories including mats, bags and DVDs. The men’s line is fairly basic, consisting mainly of cropped and full length yoga pants, T-shirts and hoodies. The women’s line is far more extensive, featuring capris, full length pants, shorts, exercise tops, T-shirts, sweatshirts and undergarments. More recently, Lululemon has expanded its women’s line to include clothing for swimming and tennis, in addition to yoga. Women can now purchase bathing suits, tennis skirts and dresses at all Lululemon locations.
Starting out as a single store in
About the Company – History & Philosophy
In 1998, founder and CEO Chip Wilson opened the first Lululemon store in Kitsilano, Vancouver. The location was an ideal fit, as the city is believed by many to be one of the healthiest places to live and is affiliated with a variety of outdoor activities. Wilson, a former athlete, was inspired to found the company when he noticed a void in the market of women’s athletic wear, and in the practice of yoga. Along with a group of friends,
The name Lululemon was created by
Lululemon’s philosophies all center around health, happiness and love. Their mission statement is “to raise the level of health and success in our communities and around the world.” They are doing this through education, loyalty, and giving back to the community.
Ever since its inception, Lululemon has been a strong believer in education. The company offers complimentary yoga classes to its staff, allowing them to experience and understand yoga on a deeper level. The practice of keeping the staff active, healthy and educated in its core business is unique to Lululemon and may account for part of the company’s success. Stores have extremely low turnover rates – employees rarely quit, and those who leave often do so on good terms, and are welcome back at any time. All employees are compensated with a competitive hourly rate compared to most other retail organization. As well, commission for all employees is calculated as a percentage of total sales. This way, there is an incentive for the employees to sell the merchandise, however there is no personal sales quota that must be met. Other incentives include daily sales bonuses based on estimated sales per day. If the figure is met, every staff member that worked that day receives a bonus.
Employee loyalty is one of the principal beliefs of the organization. In fact, Lululemon feels that its staff on the sales floor is the key to their business. At Lululemon, salespeople are referred to as “educators.” There is extensive training involved in becoming a part of the education team, focusing on the fact that the primary goal is to inform customers, rather than sell to them.
In addition to being loyal to their staff, Lululemon is a company that gives back to the community. They have recently become part of the Canadian Business for Social Responsibility (CBSR), which is a non-profit organization made up of Canadian organizations who are like minded, and committed to doing business in a socially responsible manner. In fact, Lululemon is currently developing a Sustainability Department which will oversee recycling procedures as well as the production process. In addition, Lululemon is currently involved with two charities: The Center for Integrated Healing (www.healing.bc.ca), which supports holistic methods of treating and preventing cancer, as well as Canadian Olympian Silken Laumen’s organization, Active Kids Movement (www.silkensactivekids.com). Lululemon also sponsors “
The Yoga Demographic
The people who practice Yoga are crucial to Lululemon’s success, as they make up a large portion of their customers. According to the Sporting Goods Manufacturers Association, of those who practiced yoga in 2002, 5.6 million (or three out of four) were women. Also, the average Yogi is 40-years-old, with an annual household income of $67,000 (USD) and has practiced Yoga for more than four years. This large segment of Lulu customers are characteristically more loyal and less prone to ‘fads’ and short-lived trends than are teens (but it doesn’t mean that they can be sucked into the occasional one!), which is good for Lululemon. This demographic isn’t particularly wealthy ($83,000 CAD, annual household income) and therefore may be concerned with the comparatively high prices that Lululemon charges. This will be discussed further in the competitors section of the report.
Current Product Line
This season’s men’s line is strikingly similar to that of last year’s. The pants, as always, are featured in similar styles and in neutral colors (black, grey and white). The only real hint of color can be found on some T-shirts and sweatshirts, but even then the colors are safe, usually a deep red or blue. The women’s line this season is much more exciting. Although the clothing is mostly the same style as in previous seasons, this year the colors are much more vibrant. Clothing is being shown in bright colours – green, purple, pink and yellow –and in a variety of shades. Although Lululemon is not big on promotions, the store typically features a variety of discounted clothing from past seasons.
At Lululemon, new styles and colours are updated and changed about every 45 days, although the selection differs from city to city. In Vancouver, it is more typical to see extreme color combinations and patterns on the clothing, whereas Toronto and Montreal stores are more likely to feature clothing in basic colors (such as black and grey) with a more subtle flash of color. This is because each city’s inhabitants view fashion in a different way; Vancouverites can be characterized as more laid back and fun, whereas Torontonians and Montrealers are often seen as more sophisticated and cosmopolitan when it comes to style. Playing it smart, Lululemon tailors their product selection to each city’s personality.
The most notable difference in this season’s product line is the expansion of accessories. Lululemon originally started offered only yoga mats and DVDs, but now also sells headbands, sweatbands, water bottles, books and pilates mats. The most popular accessory by far is the trendy lulu headband, which is being purchased by both grown women and their daughters. According to the staff, they receive more phone calls about when headbands are coming in next ,and what colours are going to be available, than they do about any other item.
Competition
Lululemon was the first retailer to sell stylish yoga-inspired apparel, giving the company a first-mover advantage. Once other stores caught on to the trend however, a variety of look-alike Lulu wear started showing up. Most notably, Canadian retailer Aritiza expanded its TNA line to include a series of clothing nearly identical to that of Lululemon. Other Canadian retailers such as Roots and Space FB have tried to emulate Lululemon’s style, offering their own brand of yoga wear. On a more global level, companies such as Nike, Reebok and Wal-Mart have created similar clothing lines. In addition, Puma recently launched a Yoga line with model Christy Turlington called Mahanuala. There are only a handful of well known, strictly yoga influenced clothing companies besides Lululemon, such as Kharma and Tonic.
Lululemon should not be too concerned with the vast amount of followers that their style has created. As a result of being first in the market, Lululemon established a strong following of customers who will remain loyal to the brand. Their competitors have failed to show initiative as they simply copied Lululemon’s line, and their products may also be of inferior quality. Consider for example, Aritzia’s TNA brand – after one or two washes, the clothing loses its elasticity, feel, and shape. What truly sets Lululemon apart from its competitors are the technically sophisticated fabrics from which their designs are made.
Lululemon’s signature fabric is called Luon, which is a blend of 86% Nylon and 14% Lycra. This specific blend of fabric is made to wick sweat away from the body during exercise to keep you cool and dry. As well, the fabric provides a 4-way stretch to make movement easy. Another widely used fabric at Lululemon is the WDW fabric (100% Polyester), which is highly breathable. This is used on the inside of all sports tops and bras to provide the wearer with a lightweight, breathable option for exercise. For some of their heavier pieces, Stretch Cotton Fleece is used, which is a blend of 86% Cotton, 9% Polyester, and 5% Lycra. This fabric is still warm and comfortable, and it helps the garment to maintain its shape better due to the added Lycra. Many of Lululemon’s main competitors use these same fabrics in a slightly different blends.
All Lululemon clothing is unique in the fact that it is flat seamed to avoid any chafing or rubbing during wear. As well, all jackets and pants are pre-shrunk before being sold in order to avoid any shrinkage to the garment after washing. Another interesting feature that sets Lululemon apart from its competitors is that most of their pants are offered in two lengths: regular and tall. Lululemon also offers a free alteration service for those customers who need a shorter length or who fall in-between. Although Lululemon charges a slightly higher price-point for its products, customers believe that it is worth it for the high-quality, great style and excellent service they receive.
Personal Experiences
Lauren Clark
My fascination with Lululemon began 2 years ago when I moved to Whistler BC. I was immediately drawn to the comfortable and unique designs of the brand. As an avid snowboarder I found the clothing perfect for layering under my boarding gear. The moisture wicking properties and lightweight nature of the Lululemon merchandise was ideal for a long day on the slopes. The clothing was also stylish enough to wear in an après ski type of environment.
I have a lot of respect and admiration for the Lululemon brand. The founder of the company, Chip Wilson also started Westbeach, a successful West Coast inspired surf and snowboard company. I agree with many of his philosophies on business and life in general.
Upon returning to the
With the increasing popularity of the health craze, and the need and want of more attractive athletic wear, I predict that Lululemon will continue to do well, and grow to include more locations worldwide.
Kathryn Findlay
As a former Lululemon employee at what was once their only
Aviva Shedletzky
The first time I came across Lululemon was while living in residence, during my first year of University in 2002. There were about ten girls from
Growth
Although Lululemon is growing at a rapid pace, the company is careful not to lose sight of its core values. Lululmeon feels that its growth most coincide with finding the right people to work for the organization, and to help carry out the larger goal of bringing health and happiness to the community. With plans to continue expanding across
In addition to expanding Lululemon, the company has plans to broaden its already thriving business. The newest line, Oqoqo (pronounced O-coco) is currently located just above the original
West Coast Traffic Watches
While observing the Lululemon location on
While observing the Lululemon location at Metrotown Centre in
A note for both Traffic watches
Concerns
One of the most controversial aspects of Lululemon is its choice of marketing strategy. The company currently does not participate in mass-advertising (commercials, print-ads), rather, they rely solely on word-of-mouth. Although this seems to be working for the time being, if the company wants to expand on a global level, it would be wise to advertise. This would bring the company into the spotlight and help it reach its target audience in a cost and time-efficient manner. This is not to suggest that Lululemon sell out and advertise in every available venue. The strategy should be stream-lined and directed toward the company’s target audience. For example, advertisements could be strategically placed in health/fitness magazines, or the products could be promoted on teleprompters in local gyms.
A second cause of concern for Lululemon is the lack of success of the men’s line. Sales are drastically lower than originally predicted, due in large part to the public’s strong association of “femininity” with the brand. Men are reluctant to enter Lululemon stores, much less wear the clothing, for fear of being ridiculed. Possible ways to remedy the problem include changing the name of the men’s line (perhaps dropping “lulu” and calling the line lemon), or removing the visibility of the symbol on men’s apparel. Men believe that the symbol is “too feminine” and too closely tied to the brand image, and therefore they feel uncomfortable wearing clothing that prominently displays it.
Conclusion
Lululemon is a growing company that will continue to be successful in the coming years, due in large part to its huge following. What which started out as being trendy, has now turned into a lifestyle. The products have redefined the look of casual clothing, turning away from the bulky fit of sweatpants and track suits that used to be the only options. With a loyal group of consumers, soaring sales and plans to expand into new markets, Lululemon is looking toward a bright future.