Lululemon— the Rise of Athlesiure

Brand Performance

In the last year, Lululemon has seen extreme growth. 2021 proved to be a great year for the athletic clothing company as its net revenue reached $6.3 Billion, a 42% increase from 2020. The gross profit also reached a total of $1.2 billion for the year, with even higher expectations expected for the 2022 year. The financial performance of Lululemon proved its return since the slow growth experienced during the pandemic. Since then, Lululemon has had a focus on growing direct-to-consumer business, as it accounted for 49% of revenue in Q4 of 2021 and has continued to grow in 2022.

Social media is the gateway to reaching a large mass of people. Lululemon has a great presence on all platforms, including Instagram. Lululemon uses Instagram as a large platform to showcase products through spotlights on users to show the practicality of the products. Each post that contains articles from Lululemon’s product mix is designed with people actually in motion — not just the products in an idle stance. This allows for people to see the usability of the products and to visualize themself in those clothes.

One of the top competitors of Lululemon is Athleta, another clothing brand that specializes in active wear for both men and women. Athleta uses a similar approach when posting to various social media platforms. The Instagram presence of Athleta shows the products in use and real people sharing their testimonial stores about how and when they wear Athleta. While the approach is very similar to that of Lululemon, Athleta has a lack in the aesthetic consistency that Lululemon seems to have down pat.

Find the entire Q4 and 2021 report for Lululemon here.

The Persona

When Lululemon describes its ideal customer, the first quality to come to mind is the willingness to partake in active hobbies. Whether this be practicing yoga or running a marathon, each and every active person should strive to have Lululemon in their closet. Wearing the brand means you know what quality athletic and leisure clothing is. Take Eleanor for example. At 24, she is living in the thriving city of Raleigh working as a nutritionist full-time, while teaching yoga on the side. She has been a loyal customer of Lululemon since she moved out of her small town when she was 18. Being introduced to this all inclusive brand made her realize just what she had been missing out on in her entire life — a brand she could wear for any and every occasion. Whether she is teaching a class in the comfort of an Align top or running errands in her Wunder Under leggings, Lululemon has taken over her wardrobe in the past 6 years.

Brand Awareness

The online presence of Lululemon is very strong, as represented through its website, app, and social media. In order to learn more about the brand, customers are exposed to various ads that promote the Lululemon app and its new introduction of memberships. These aspects of promotion can range from influencer engagement, billboards, tv advertisements, and even just the ever-so-popular reusable Lululemon bag that everyone seems to carry around.

A Blended Distribution

Lululemon operates through both physical stores and direct-to-consumer distribution. Throughout the pandemic, Lululemon, along with most other physical retailers, began to cater more towards the direct-to-consumer side of sales. Since then, DTC has proved to be a positive tactic in the company’s growth. In 2021, DTC increased from 20% in 2020 to 22%. While this growth is small, it also has to be taken into account that even though businesses were opening up shops more in 2021, customers were still willing to utilize the DTC option available by Lululemon. DTC is nothing new to Lululemon, as it has had an online DTC presence for over a decade. This idea of DTC is something that has been a key to the fast growth of Lululemon, but this is also true of its competitors like Athleta.

Blended + The Shopper

When incorporating this blended distribution format with the ideal shopper, it causes a change. In a traditional company that only focuses on physical stores, it has limited ways to engage the customer from their own home. However, when a company begins to incorporate DTC, it can reach customers through both physical and online ads. While physical stores offer a customer experience that is hard to recreate online, brands like Lululemon are trying to merge the benefits of the two. By emphasizing DTC, Lululemon has begun to make the online user experience as useful as going into a physical store. On the app and the website, Lululemon began to show various products on models of all sizes — allowing for everyone to see how certain clothing items might fit them. The new membership program now allows for all paperless returns and purchase tracing. Lululemon also offers the option to meet with one of their virtual educators if any questions arise when shopping throughout the website. This gives the consumers the feeling of being with a sales rep inside of the store while they are still in the comfort of their own home.

Take a look at the Lululemon virtual shopping experience here.

The Future and the 4 P’s

Shopping habits are changing post-pandemic, and it seems to be in the direction of online stores that engage in DTC. Lululemon is on the right track for this, but they still have some areas of improvement. Here are some suggestions that they could use:

• When it comes to the product, Lululemon has this down pat. Athleisure demand has been on the rise since some companies began to allow the “working from home” option. A suggestion to offer to Lululemon might be to expand the amount of product that they are producing. The most popular items seem to always be sold out in common sizes and colors. If Lululemon was to reinvest some of the extra revenue into increasing production, this might result in more satisfied customers and more sales.
• The price of Lululemon is something that is unwavering, and during times of inflation, seems to be continuing to increase. Obviously with the increase in revenue and gross profit, this means that the increase in price is not causing damage to the cliental base. According to an article written by Rethink Retail, the customers of brands such as Lululemon and Athleta have come to expect a higher cost for these products. That being said, Lululemon needs to make sure to keep up the prices of products as inflation continues, in order to keep the status as one of the luxury athleisure brands.
• Lululemon’s place is considered both as an online DTC and physical stores. An improvement for this segment would be to increase their customization options when shopping online. For instance, while Lululemon offers the option of meeting with a virtual educator to answer questions, they do not have the option of virtually trying on clothes. With the advancements being made in virtual reality and the Metaverse, it is important that Lululemon stays relevant and up-to-date with the trends around the world. Companies are beginning to invest in the Metaverse and selling virtual clothes that people can purchase for their virtual characters. If Lululemon were to invest in this idea, it might allow for their customers to see how certain products look on themselves. This might help to increase sales and build their credibility among both returning and new customers.
• Promotion is something that Lululemon does is in a subtle but effective manner. With the changing times, however, they need to make sure they are using the best tactics. They just launched their membership program, which is a great way to promote people to engage with their brand more. However, they have not done the best job at actively marketing what the membership means and how people can get involved. Once the word is out about this program and it is effectively promoted, Lululemon will see the effects of this new program and how/what they might change it for the better.