Making Profits Grow in Your Active Wear: Lululemon

The number of people who are getting active, or not, in their sports apparel is at an all time high. Sports apparel, as a category in overall retail, has has outpaced overall retail segments between 2012 and 2014.

Lululemon Shows Sports Apparel Is Outpacing Retail Sector Growth

One leader in the industry is Lululemon Athletica. Front runners in athletic apparel, their billion dollar empire has been derived from the vast range of superior garments they offer.  Item’s include tops, jackets, tights, accessories and swimwear; all designed for healthy lifestyle activities.

‘Mission Statement: Creating components for people to live longer, healthier, fun lives.’ 

Differentiation – Porter

The Porter Model of marketing strategy suggests that companies can dominate the market through either cost leadership, differentiation or focus (Iacobucci 2013, p. 214). According to Valos, Bednall and Callaghan (2007) the differentiator strategy is achieved by a company which has a unique offering beyond their competitors through the brand or a product. Lululemon’s differentiation strategy can be identified through their obvious focus on product differentiation on the basis of quality and design.

‘Quality is the heart of who we are. Quality shows up in our people, our conversations and of course, our product.’ 

With innovative and unique fabrics crafted by a team of designers, in collaboration with apparel manufacturers the product design and quality is the backbone of their marketing strategy.  The company holds various patents and registered trademarks with manufacturers and brands including Luon, Silversent and Luxtreme enabling Lululemon the to deliver and maintain the products that differentiate themselves from their competitors.

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How much did you say?

If you want Lulu’s not lemons, quality comes at a price. At approximately $US98 for a standard set of full length tights, yes just one pair. To dressed in Lululemon from head to toe it will cost around $US400. Nike, Under Armour and Reebok sell comparable yoga pants for $US95, $US59.99, and $US38, respectively.

Lululemon have derived strong revenue outcomes through the retail distribution channel. This channel has been a crucial part Part-9Aof it’s success as a leading active wear brand.  In June 2015, the company operated 302 exclusive stores worldwide, 26 of which are in Australia.  Revenue from stores accounted for approximately 73% per cent for quarter three in the 2015 financial year (lululemon athletica inc. SWOT Analysis, 2015).

You can’t manage what you don’t measure

Measures are important tools in the assessment and ongoing strategic planning phase (Iacobucci, 2013, p. 218). Looking at recent profit margins, Lululemon has witnessed extraordinary growth in its revenues. increasing from $711.7 million in 2011 to $1797.2 million in 2015. In financial year of 2015 alone, the company’s revenues increased 12.9% over financial year 2014 which has been attributed to the introduction of 48 new stores (lululemon athletica inc. SWOT Analysis, 2015).

Doubling Revenue – A Digital Strategy

Lululemon have been growing the foundations of their e-commerce platforms with the focus now shifting to a long-term digital plan. Lululemon are introducing a new platform with the aim of better connecting with from a brand and physical experience in a digital space. This strategy will give Lululemon the ability to interact with consumers in ways its hasn’t been able to before.

Digital channel will account for a quarter of business by 2020.

With the year 2020 in its sights as the goal of doubling their revenue, the foundations of the next strategy have begun. With product innovation on the horizon with sights set on further expansion in the men’s category as well as international expansion, and with 11 new stores expected to pop up this year. 
Lululemon-Yoga-Classes-Canberra-Centre.jpg

Customer Perceived Value – Will it last?

Customers don’t mind paying for their purchases if they really want what they’re about to buy (Iacobucci, 2013, p 3). Lululemon’s past and current consumers must see value in the price paid for these garments, with incredibly loyal  consumers continuing to spend in order to look great in child’s pose. Will Lululemon continue to be the leader with their front of mind 2020 strategy? Will an increasing amount of consumers become more outraged by the prices and begin to change their perceived value? Or will competitors soon realise that these strategies are just child’s play?

http://www.youtube.com/watch?v=CYRENWT8lz8

Posted by Emma Ridley 211263995 (emmaridley2016)

*This article was written whilst wearing active wear (not Lululemon).

REFERENCES

‘lululemon athletica inc. SWOT Analysis’ 2015, Lululemon Athletica Inc. SWOT Analysis, pp. 1-7, Business Source Complete, EBSCOhost, viewed 23 July 2016.

Valos, Michael J., Bednall, David H.B. and Callaghan, Bill 2007, The impact of Porter’s strategy types on the role of market research and customer relationship management, Marketing intelligence & planning, vol. 25, no. 2, pp. 147-156, doi: 10.1108/02634500710737933.

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