Lululemon Strategy: When a Challenger Threatens the Big Players of Activewear
• Lululemon’s strategy focuses solely on activewear apparel, while its competitors fight over who has the best shoes.
• The iconic legging comes at a price at Lululemon — almost three times the most frequent price of its competitors.
• Lululemon’s sustainability strategy — or lack thereof — is reflected in its most-used fabric. The highest share of fabrics used is petroleum-based materials.
Who said yoga pants were made only for yoga? Not Lululemon! Founded in 1998 in Vancouver, Canada, the yoga-inspired, technical-apparel brand is on everyone’s lips.
Is it because they managed to grow in 2020, reaching revenues up to $4,4bn while others faced downturns during the Covid-19 crisis? Or is it because so many hip influencers swear by those highly technical, and high-quality products?
One thing’s for sure: Lululemon has successfully transformed from an activewear brand into a lifestyle company — a particularly savvy move since activewear and “athleisure” have become acceptable to wear for just about any occasion.
Let’s dive deeper into this incredible success story and learn about Lululemon’s winning strategy.
No Marketing Necessary: Lululemon’s Authenticity and Money Generator
One important element of Lululemon’s strategy is that the brand does not utilize any marketing. Unlike its competitors, there are no extensive campaigns, no flashy billboards, no significant collaborations, and no TV ads. Simeon Siegel, BMO Capital Markets Managing Director and Senior Analyst said that “For every dollar earned at Nike, Adidas, and other activewear players, 10 cents goes to marketing, while lululemon does not.”
This strategy is built on Lululemon’s active, strongly nurtured community. Thanks to this authenticity, the brand can avoid relying on marketing — and still earns money. In fact, the Canadian brand generates almost two times Nike’s operating margin.
How to Focus on the Customer? Ask Lululemon.
One of the most significant differences between Lululemon and its competitors is that the yoga-inspired brand focuses solely on apparel and sports accessories. Unlike companies like Nike, Adidas, and Puma, which started as sports-shoe brands — and get the largest share of their revenue from shoes — Lululemon does not sell shoes.
Some might say that this is a development opportunity for Lululemon. However, as activewear is a highly competitive category, differentiation is essential. Selling articles in an arena where one has no competitive advantage would be risky, and Lululemon understands that — which is why Lululemon’s strategy focuses only on what its consumers are looking for when they head to Lululemon: yoga and fitness-inspired apparel.
Retviews data shows us that the famous legging made Lululemon a household name accounts for the second-biggest category and that competitors are not prioritizing leggings.
On a side note, as Lululemon does not offer shoes and focuses solely on apparel, their strategy allows the Canadian brand to offer a wider variety of products and colors. It focuses on its customers more than its competitors.
Sports: Not Just for Men
Lululemon went into business making yoga-inspired apparel for women, which became a hot commodity and made it a successful company. Recently, the Canadian brand has expanded its offerings to men as well.
There are more clear differences in strategy compared with Lululemon’s competitors in terms of articles geared toward men.
Indeed, well-established activewear brands like Adidas, Nike, and Puma focus mainly on male consumers — though it’s worth mentioning that the gender gap in this area is steadily narrowing.
Iconic Yoga Pants Come at a Price.
In terms of price positioning, Lululemon stands out once again among its peers. While the most frequent price of a pair of leggings is $40, the Canadian brand prices its iconic stretchy athletic pants at more than $110.
According to Lululemon, the price is justified by the article’s quality, and the brand’s fans are more than willing to pay that price. As Simeon Siegel said in Business of Fashion, “Its products might be pricey, you might not like the design, but you cannot complain about the quality of the product.”
Are yoga pants going to become a status symbol?
Activewear Brands are Moving Toward a More Sustainable Future
Compared with its competitors, who aim to make 100% of their assortments with sustainable materials in 2025, Lululemon’s strategy takes it slightly slower. The Canadian brand goal is to reach 75% made of sustainable materials by 2025.
When looking at the biggest share of fabric used, Lululemon still relies heavily on nylon, polyester, and elastane, which are all petrol-based fabrics. Lululemon isn’t alone in this regard — its competitors also use a lot of petroleum-based materials.
Retviews data shows us that Lululemon uses the same amount of recycled polyester as it does new polyester. This is a small step, but it moves them closer toward sustainability.
One side note: a tricky element to consider when discussing activewear is that this industry has to balance performance with eco-friendly materials. Indeed, most innovations and technology for the production of breathable, water-repellant, sweatproof garments are made with highly engineered fabrics derived from petroleum. The question arises: should one compromise performance to create a more eco-friendly product?
Lululemon’s Secret? Focus On What You Do Best —and Only That.
The iconic yoga brand has done one thing since its debut, and now the big players in the industry are pushing it forward: focus on building a community. Indeed, nurturing consumers to develop a community and make them into brand ambassadors is what Lululemon has done since its early days. This helped Lululemon spend nothing on marketing but still earn almost every penny of their products.
At the same time, Lululemon’s strength lies in understanding its comparative advantages and improving its products to meet consumer expectations. “Focus on what you do best, and only that” is a crucial component to Lululemon’s success — combined with premium prices, because business is still about making money.