Lululemon Competitive Forces

...

- Industry Driving Forces – LLL Impact on it

Competition in the industry is predominantly centred on product quality, performance features, innovation, fit and style, distribution capabilities, brand image, recognition and price.

Community-based Marketing Approach – Excel in Consumer Awareness / Brand Image

Lululemon’s marketing strategy is building brand loyalty through local initiatives in retail outlets. Each store regularly organizes events providing coaching, nutritional advice and fitness classes, which increase customer engagement. For instance, Lululemon customers are free to join the running club or various free classes taking place regularly in their shops (Lululemon). Once annually, Lululemon organizes the highlight of their community events- the “SeaWheeze Marathon”, which is taking place in Vancouver with an after brunch, special Yoga sessions and a music festival. The marathon dated August 2015 is already sold out, what demonstrates the high customer engagement and interest in such activities (SeaWheeze). Apart from that, the brand maintains an ambassador program consisting of 1500 ambassadors representing the company. Those are not only celebrities or famous sports people but moreover individuals following a healthy lifestyle (Lululemon). Lululemon distances itself TV advertisements and many billboards, they only do selected print campaigns in magazines like “Yoga Journal” and other fitness specialised mediums (Mcknight 2013). Altogether, the community approach is visible in all marketing (and business) activities Lululemon undertakes: their advertisement campaigns show slogans like “Friends are more important than money” or show their brand ambassadors working out.

“Athleisure” – Fashion meets Fit and Style

Lululemon is addressing a trend that has both overtaken the fashion and sportswear market: Athleisure. Women tend to not only wear their fitness clothes in the gym but also at home in their free time. Flexible working hours and the Internet contribute positively to this movement, since people spend more time outside the office working independently on projects. As reported by chief industry analyst Marshal Cohen interviewed for the Business of Fashion there is an important difference between this trend and prior fitness fashion movements: “This is not a fashion trend, it’s a lifestyle trend. The difference here is that there’s functionality mixed with fashion, not just solely fashion” (Business of Fashion). Cohen suggests that this trend will last, since it is practical and simplifies our daily routine.

Excel in Product Design

Lululemon’s product design is its most important competitive advantage but at the same time a challenge. Firstly, LULU uses innovation and feedback of customers/ ambassadors so that product designers based in Vancouver can adapt new ideas. There is a creative exchange with customers that can influence the design process (Market Realist). Lululemon has developed a range of innovative fabrics for example Luon, Luxtreme and Silverscent that are all protected by patents. These fabrics respectively offer features like UV protection, high flexibility and prevent from growth of odor-causing bacteria. Lululemon differentiates from other sports apparel brands in terms of products is their unique combination of fashionability as well as technical advance of the fabrics. The product offering is seasonal and rapidly changing customer demands and anticipation of trends is challenging the company (Lululemon).

In the same way that Apple has put design, style and beauty at the heart of their products, so too has Lululemon. Whether it’s subtle effects in the stitching for the guys, or feminine frills for the girls, their products scream, “I care about myself and how I look.” Also like Apple, beautiful design is followed closely by functionality that responds directly to the needs of its customers. Features such as special fabrics that absorb sweat or neutralise odour and details like tiny pockets in running shorts to hold a house key are examples of this foresight and knowledge of what their customers want.

Retail Experience

The retail distribution channel is most important for Lululemon, accounting for 77% of all revenues. Lululemon positions the stores in prime street locations and malls in order to fully integrate the stores into the local community. Sales staff is extremely well trained and referred to as “educators”, since they possess knowledge about the technical products and fitness coaching. The store design is modern but down to earth; there are a lot of different models, shapes and colours on display. About one quarter of a typical store is dedicated to menswear; the majority is women’s clothes (Lululemon).

Know Your Customers by Name

If you visit a Lululemon store you’ll notice a number of unique differences. On the door of each change room is a mini whiteboard. When you try on any clothing, the assistant asks for your name, guides you into one of the rooms and once the door is closed, writes your name on the whiteboard along with the number of items you have. From then on, all of the staff refer to you by name! This makes you feel like more than just a number and personalises the whole experience.

The store assistants will go back and forth as many times as you need bringing other sizes, colours and designs. Plus, they proactively ask more questions (again using your name) about where and when you’ll be wearing the clothes. They’ll also give opinions on what they like and what else they think you need. By this stage you trust them implicitly and because they themselves look great and are now treating you like the fitness friend they never had, the experience becomes even more positive.

Price and Cost Structure

Lululemon has had record high gross margin for their apparel resulting in a strong pricing power. A basic core Luon yoga pant is set at $82, more fancy/ technical models ranging up to $98.

In comparison to its competitors, Lululemon has a quite high price point. For instance Gap sells similar pant at $79 and Nike offers pants in a range of $45 up to $130 thus comes up with a wider pricing range. With many new entrants, Lululemon might be at a point to lower prices to a competitive range or offer more technical garments to justify high prices (Weishaar 2015).

By doing the entire above well, Lululemon is able to charge up to $95 for a t-shirt (that’s two to three times their competitors’

...