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LULULEMON.

Author.

Institution Affiliation.

Course.

Instructor.

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LULULEMON.

Histories of the company

Lululemon Athletica Inc., based in Vancouver, Canada, is an athletics and sports clothing

manufacturer. The business began as a part-time yoga class and a clothing design boutique

(Tybout, 2017). The owner was inspired to create elastic and athletic yoga trousers after seeing a

shortage of excellent yoga gear. Even though the firm has previously designed other sports gear

for snowboarders and skiers, the yoga pants were its most successful product. Lululemon

Athletica, its current brand name, later established its first large shop in Vancouver (Tybout,

2017). that first limited the company's activities to the Canadian market, but when it began

trading publicly, it expanded. Franchises have accounted for most of the company's growth

(Tybout, 2017).

Service and Product

When it comes to development and expansion, Lululemon is now one of Canada's most

promising companies (Qian & Zou, 2021). Lululemon, for example, had 188 locations

worldwide by 2012, in addition to a significant internet presence in Canada and other countries.

As of 2012, the Lululemon company is worth more than $3 billion. This is a 292 percent increase

over the previous year (Agnihotri & Bhattacharga, 2019). Women's yoga gear is the company's

flagship product, accounting for over 40% of sales. The firm also provides additional sporting

apparel, such as casual and running attire (Agnihotri & Bhattacharga, 2019).

The company's business plan is to use a vertical-retail method of operation to attract

high-end clients. As a result, the firm has maintained control of its brand image and distribution
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networks. Individuals like instructors and yoga teachers serve as the primary brand ambassadors

in the company's vertical retailing approach (Qian & Zou, 2021).

Position of the Firm in the Market

The company's main strength is brand devotion, compared to a cult following by some

analysts (Kim & Lee, 2020). This impression stems from the company's ability to establish a

market presence and expand via grassroots efforts. Because this business strategy is not

common, this technique sets the firm apart from the others (Grabner, 2019). In addition, the firm

supports the community-yoga concept by providing free yoga classes in the majority of its

locations. Because the business retained brand ambassadors, this technique has allowed it to

continue acquiring new consumers.

Additionally, the brand is linked to several populist ideas, including health and fitness

and the desire for communal solidarity. The firm plans to extend its retail locations outside of

North America in the future and raise brand recognition (Kim & Lee, 2020). In addition, to make

its marketing strategy more acceptable in the present climate, the company plans to offer new

items and technology in the future. The company's financial situation was 3.3 billion dollars

during 2010, but it has since climbed to $47 in 2012. After a worldwide suspension of its

trousers and the following management change in 2013, the firm suffered a financial setback

2013. (Kim & Lee, 2020).

Primary Rivalry

Over the past several years, the yoga gear business has gotten more competitive, "

drawing both huge worldwide brands like Nike and smaller start-ups like Prana, as well as Lucy

Activewear," according to the report (Diao, 2021). Because of its scale economies and well-
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established distribution networks, Nike is the most formidable competitor for Lululemon

(Layrence &Lozanski, 2014).

Critique of the Company

Porter’s Five Forces Analysis

Bargaining Suppliers' Newcomers Pose a Risk Power to Bargain

leverage The danger of new entrants Due to the low switching

When it comes to vendors has little impact on costs, Lululemon's customers

vying for its business, it has Lululemon's business strategy have much-negotiating

various alternatives (Diao, (Layrence &Lozanski, 2014). leverage. As a result, the

2021). For example, the In today's business climate, business must guarantee that

company's raw materials, like the globe is flooded with new its items are high-quality and

cotton and rubber, are and emerging brands, most of inexpensive. Consumers will

plentiful in Canada, giving which are promoted over the not be able to take advantage

Lululemon purchasing internet. As a result, in the of the reduced switching

choices. As a result, suppliers face of fierce competition, a costs due to this technique.

have less negotiation strength new firm is unlikely to

compared to Lululemon's establish the brand

business strategy. recognition that Lululemon

has built over time.

Consumers may, however,

save money by moving to an

internet-based business.
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Levels of Competition Substitutes Pose a Threat

The industry in which The clothing manufacturer

Lululemon operates is now has concentrated on creating

one of the highest clothing that appeals to a

competitors in the world specific audience rather than

(Diao, 2021). Various the general public. This

companies are realigning technique guarantees that the

themselves to get a danger of Lululemon

significant piece of the knockoffs is kept to a

sportswear market. Switching minimum (Diao, 2021).

costs have also made it easy

for businesses in this market

to steal customers from

competitors.

External Analysis

Factors Economic Political

Several economic factors, particularly The present political climate makes it simple

stringent European Union regulations, have for a Canadian corporation to grow into North

hindered the company's growing pace (Xu, America. Lululemon has also secured

2020). The slowing of major global significant patents in several countries across

economies, such as the US, has reduced the globe to safeguard its commercial

prospective clients' purchasing power. interests. Because it outsources the

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manufacture of several of its goods, the

corporation has close ties to China and

other Asian nations. Increasing labor

expenditures in these sectors, on the other

hand, is expected to boost the firm's

production costs.

Factors of the Socio-Cultural Technological

The company's support of good health is one Since most of Lululemon's items are

element that's had a significant influence. accessible online, technological

Lululemon's prospects are bright, thanks to advancements significantly influence the

the current trend of adopting an active company's business strategy. For example, the

lifestyle (Xu, 2020). The number of people firm has reached out to new audiences and

who practice yoga as part of their daily demographics using social media (Xu, 2017).

routine, for example, is expected to rise in the Lululemon, on the other hand, faces more

future. competition as technology evolves.

Demographics

There is a growing demand for sports gear

within the older population looking to live a

healthy lifestyle. The sports apparel business

has focused primarily on youngsters,

disregarding a potentially lucrative market

among the elderly but still active population.

Lululemon's items are not inexpensive, as many buyers are aware. Lululemon has continuously

had a greater inventory turnover rate than Nike, Adidas, and Under Armor
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Despite its high prices.

The graph shows that the yoga clothing specialist had an asset turnover ratio of roughly 12 in

2011. (Schorer, 2017). Although Lululemon's inventory turnover has decreased, the company has

maintained its position as the market leader.

The retail sector had a significant traffic slowdown a few years ago, putting a strain on

revenue growth for many businesses (Thomas & Peter, 2015). This helps explain why the leading

sports clothing firms have lost some inventory movement efficiency during the previous five years.

Lululemon routinely outperformed its competitors in terms of inventory efficiency. There are

many significant reasons behind this. To begin with, it prefers to issue minimal amounts of particular

designs and colors, which allows it to better balance supply with demand (Thomas & Peter, 2015).
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This increases the product's value in the eyes of devoted clients, who understand that when a new style

is released, they must act quickly before it runs out.

Lululemon adds new colors and features to its best-selling core designs (Thomas & Peter,

2015). However, to boost sales and transfer inventory quicker, the brand has effectively used limited-

edition products created in conjunction with fitness superstars.

It also helps because, unlike Nike, Lululemon concentrates only on yoga and training apparel

rather than a wide range of products. However, the brand has begun to go into footwear and clothing

for every occasion (Thomas & Peter, 2015).

Given the company's initial strong growth and improved inventory turnover, it's evident that

the new categories are paying off for management (Thomas & Peter, 2015). This gets to the following

statistic, in which Lululemon outperforms its rivals.

Internal analysis

The company's distribution networks are one of the most critical assets for Lululemon. The

corporation now operates three main networks in Sumner and Melbourne (Kosbab, 2017). Patents,

trademarks, graphics, and brand names are all examples of intellectual property owned by the

corporation. Lululemon's goods are difficult to replicate because of their well-known brand name in

North America. The company's physical form, mainly in the North American market, is another

critical resource (Kosbab, 2017). In the United States, Canada, and Australia, the firm now has over

200 locations. Because Lululemon has distinguished itself from its competition, its brand name is

another intangible property (Layrence & Lozanski, 2014). Its strong brand image has also earned it a

reputation for efficiently producing high-quality goods.

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One of the company's talents is operating an inventory control system that assures that items in

its shops are artificially scarce. When things are accessible in shops, this inventory strategy

encourages customers to buy them right away. Lululemon has also proven its worth (Qian &Zou,

2021). For example, the group has successfully established specialized distribution networks.

Customers may get much-needed yoga sessions and instruction on healthy living via the company's

services (Qian &Zou, 2021). The capacity to create unique and technologically relevant items is

another essential quality of the organization. Advanced personnel training has also aided long-term

success (Qian &Zou, 2021).

Swot analysis of Lululemon.

Strength. Weakness

• Although Lululemon's goods are creative, the

 Lululemon distinguishes itself from
company's prices are greater than those of
other companies by offering high-
competitors such as Nike and Under Armour.
quality items with unique characteristics
• The brand's Yoga machinery has a limited
(Boison, 2016). When designing market
target audience, preventing it from reaching the
methods and methodologies, they
broader public;
consider the community, which helps
• The brand's inventories and logistical
them expand.
difficulties are a cause of concern, affecting their
 The firm is known for its excellent
performance.
customer service and intelligent,
• The marketing for Lululemon could need some
cooperative employees (Boison, 2016).
work. The brand fails to attract many customers
They also consider local customers,
since its internet presence is far lower than those
resulting in a larger local clientele.
of its competitors. As a consequence, the brand
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 Lululemon's customer-focused strategy recall rate for Lululemon is lower.

module compels them to consider and • The company has a tiny worldwide footprint,

comprehend their consumer base which puts it behind rivals such as Nike.

(Boison, 2016). They are one of the

most popular shops because their

product quality meets client desire.

Opportunities. Threat.

 Lululemon's foreign operations need • Lululemon is constantly threatened by the fast-

improvement. The brand's revenue growing sports retail sector (Boison, 2016).

might considerably increase to expand Other competitors, such as Nike, are attempting

its worldwide reach. The retail to grow their markets so that Lululemon might

marketplaces in Chinese and India are face stiff competition.

attractive, and the corporation should

• While Lululemon seeks to expand its business,
grow its tangible form in these countries.
it may face local government regulations and
 Lululemon should consider having some
constraints (Rappet, 2013). Internal conflicts
lower-cost items to boost its firm
may hamper the company's expansion.
(Rappet, 2013). (Rappet, 2013). It will
Promotional campaigns may enhance
end in more customers and boost the
Lululemon's visibility, and Athletes can also
brand's exposure. Lululemon's exposure
assist them in their efforts (Boison, 2016).
may be boosted by heavy advertising,

and they may also recruit the aid of

sportsmen in their activities (Rappet,

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2013). (Rappet, 2013).

Corporate level strategy.

Specializing on single business.

Lululemon Athletica has chosen to specialize on the design and manufacture of technical

sportswear, with a particular emphasis on yoga and running (Boison, 2021).

Diversification:

Lululemon's limited supply of yoga-inspired items is one of the company's defining

qualities (and critiques). Special or deluxe editions lines for other hobbies, such as golf, tennis,

and cycling, are periodically shown alongside sportswear, but no long-term intentions to include

these goods into their main product range have been developed.

The sibling brand Ivivva Athletica, which caters to pre-teens, was launched in 2009. The

initial concept was to attract young girls whose moms buy at Lululemon and who had sporty

parents (Kim & Lee, 2020). Ivivva Athletica's goods are now 30% less expensive than

Lululemon's, and the company's product range concentrates on dance as well as gymnastics, with

intentions to expand into team wear by Fall 2012.

Expansion Across Borders:

Only North America as well as Australia sell Lululemon at the moment. Because the

cultures and behaviors are similar enough, Lululemon has already been able to implement a

worldwide plan while maintaining a consistent product line and marketing strategy (Tybout,

2017).
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Integrate vertically:

Backward and forwards vertical integration are both used by Lululemon. All Lululemon

goods are created solely in Lululemon-approved facilities, after a stringent selection process and

regular assessment by the company's worldwide sourcing and leadership style. Lululemon items

are also exclusively available in-store or online at the Lululemon website (Thomas & Peter,

2015).

Business level strategy.

Differentiation.

Lululemon Athletica's key marketing approach is distinction. By creating their first

unique fabric, the signature "Luon," Lululemon paved the way for high-quality, high-

performance sportswear to be made available to customers at a significant premium (Kosbab,

2021). The continual differentiation approach includes the introduction of unique, original goods,

designs, materials, and technology for particularly specific sports or purposes.

Differentiation with a Specific Purpose:

The first strategy was to focus on creating and producing technical apparel for a specific

target market: yogis. While Lululemon's product range (and hence market segment) has extended

to include runners and other multi-sport practitioners, the company continues to pursue a targeted

differentiating approach. Since the first shop opened in 1998, the company has shifted its

approach as a consequence of its success (Grabner, 2019). The success of Lululemon's sales to

not only yoga practitioners, and other athletes and consumers looking for stylish and functional

gear for their activities, indicated a gap in the fitness-fashion industry that the company

effectively exploited.
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Forever Innovation

Lululemon's general strategical ideology of health, wellbeing, and personal kindness has

led to the company's innovation push. Lululemon has long been known for its forward-thinking

approach to clothing (Thomas & Peter, 2015). The corporation is recognized for its continuous

innovations, establishing market-driven design concepts and development of new materials to

provide unique service value to customers, and it has a considered as significant R&D

department.

International level strategy.

Digital Marketing with Interactivity

Lululemon is altering its marketing strategy to focus on high-level digital celebrity. The

brand is positioned as an important part of the fitness community in order to establish long-term

connections with sporting teams, fitness centers, including yoga studios (Kosbab, 2021).

These collaborations are widely publicized on social media, as well as via fan-driven

interactive events and ad competitions. Another Lululemon interactive endeavor is Sweat

Collective. The Sweat Collective is a collective of the "sweatiest leaders in the planet." These

individuals work out of fitness studios. Instructors, members of running clubs, athletic trainers,

and experts or Olympic athletes that use and promote Lululemon's products make up the bulk of

the membership. The Sweat Collective participation enjoys special treatments, rewards, and

public recognition. This campaign not only helps the organization develop a strong digital

presence, but it also enables it to form international collaborations with well-known people

throughout the world (Thomas & Peter, 2015). By informing customers when it's their turn to

enter, Lululemon built a virtual line to reduce customer contact and overcrowding in its stores. It
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was used by approximately 400,000 unique visitors in August of 2020, when it was introduced

on nearly 280 sites.

Launching Additional Product Lines in Various Regions to Expand the Market

Lululemon is a retailing firm with a lot of success. Their retail locations are among the

top income earners per square foot across all US businesses. The company's popularity, however,

tends to spread outside the United States (Thomas & Peter, 2015).

Lululemon appears to believe that China and other parts of the world have a better chance

of embracing new creative items, such as their new men's sports clothing collection. In order to

reach a wider audience, Lululemon collaborated with Mr. Porter to create special sportswear for

men. This campaign has increased men's awareness of the brand. By 2020, men will make up

roughly 30% of all new Lululemon purchasers. (2015) (Thomas and Peter). Lululemon's most

popular line is for women. However, the brand is going to experiment with and generating new

accessories as well as clothes for men as well as other areas in order to expand globally.

Application for Lululemon's Strategy and IT

Lululemon has utilized information technology in its strategic management throughout its

existence (Xu, 2017). In 2008, GAP Inc., Lululemon's primary rival, bought Athleta, an online

retailer of women's sportswear. Lululemon's unique market was challenged by this shift, which

presented a considerable threat to the company (Xu, 2017). The firm worked rapidly to create a

business site that could compete with what Athleta offered. By 2009, the corporation had figured

out how to sell things directly to customers through the internet.

Institutional issues were also present in the company's online selling. For example, the

firm struggled to manage inventories of its items since customers anticipated varying degrees of
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reductions on both online and physical platforms (Xu, 2017). Customers were dissatisfied,

according to reports, since they did not get the discounts they were accustomed to receiving at

other online retailers. This trend shows how IT plans to collide with different priorities. The

problem with Lululemon was that stocks for retailers and supermarkets shops were supposed to

match. The danger posed by GAP Inc.'s acquisition of Athletica worked as a stimulus for a

technology-driven approach.

Although not flawless, this method inspired Lululemon's future tactics. The company's

capacity to gather and adopt changes from online consumers, for example, is a critical strength.

IT also assisted the organization in maintaining its competitive advantage, growing, and

establishing feedback systems (Xu, 2017). Nonetheless, in reaction to competition, the

company's business went online, indicating that it lacks robust IT procedures. In the previous

five years, the number of people who have died has risen dramatically. The business now has a

Chief Knowledge Officer, who is in charge of coordinating its IT plans (Xu, 2017).

Lululemon's IT Strategy Needs to be Improved

Concerning Lululemon's business model, there are many chances for IT strategy

implementation (Boison, 2016). The firm can strengthen its market position and flourish by

taking advantage of all available options. To begin, the business may create a data farm to boost

awareness of its offerings (Boison, 2016). Companies, on either hand, can now make the most of

big data thanks to modern technology. This IT strategy can help the company's decision-making

and ensure that relevant information is delivered in real-time. (2016) (Boison)

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Lululemon is seen as a legitimate proponent of healthy living (Rappet, 2013). The

organization may exploit its position in the market and broaden beyond yoga and running by

using the cheap cost of setup (Rappet, 2013).

Furthermore, this smooth business model does not make customers suspicious when

implemented effectively, but it increases brand recognition (Qian &Zou, 2021). The online

market currently burdens consumers because they have too many options. As a result, modern IT

methods should place a greater emphasis on brand awareness rather than marketing. The

customer is spared the agony of sifting through thousands of options when using an instantly

identifiable and reliable brand (Qian &Zou, 2021). Lululemon can use a holistic model to

maintain mutual communication with consumers and track business activities.

Comparison between Lulu lemon strategy and Nike Company.

Lululemon, a 22-year-old start-up, is the industry's upstart, with a somewhat different

approach than Nike. It doesn't offer shoes (yet), and its concentration is on yoga-inspired

essentials (Kosbab, 2021). Its proprietary textiles, like as Nulu and Everlux, were created for

extreme comfort and flexibility, and it is dedicated to a community of sweaty consumers

(Grabner, 2019). It's also used e-commerce to its advantage. All of this contributed to its

meteoric rise, which it maintained until COVID-19 arrived (Kosbab, 2021).

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Although Luluemon has exceeded Nike in sales and increase, the two companies' e-

commerce growth rates have been identical, and Nike has expanded rapidly at a quick pace to

maintain its already significant lead.

Both Nike as well as Lululemon have robust corporate strategies that are poised for

development, and their stocks are as well (Kim & Lee, 2020). Nike's stock is up over 7% year to

date, while lululemon is up around 58 percent, and Nike's annualized five-year return is 14

percent, while Lululemon's is 42 percent, as of Thursday's closing. Lululemon’s stock has always

been overvalued, with a forwards P/E ratio of about 76 times expected profits for the next four

quarters, compared to 45 for Nike (Kim & Lee, 2020).

As "athleisure," or wearing athletic gear as casual apparel has grown increasingly trendy,

both Nike and Lululemon have been at the top of their game. Walking around in yoga pants and

hoodies is now almost expected in the epidemic age (Thomas & Peter, 2015). As more

individuals worked from home and chose to laze about in comfy attire, the great office-clothing

throw resulted in the folding of legendary menswear firm Brooks Brothers, as well as numerous

other businesses. Casual attire has becoming increasingly accepted in the workplace as well.
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Lululemon has demonstrated that it is more than a fad, and that it can continue to develop

and provide strong returns for investors. Nike is a solid and consistent option that has produced

great returns and has the ability to retain a healthy lead over its rivals, but Nike has demonstrated

that it is more than the flavour of the month and has the ability to do so (Boison, 2021).

Nike is the dominating player, with such a large lead that it would be difficult to overtake

them, particularly when the company is always innovating and improving both its line of

products and strategy (Tybout, 2017). Lululemon is expanding its consumer base and providing

items that match their lives. However, they each provide a unique benefit to your portfolio,

making it difficult to decide which the superior choice is. Nike's growth is slowing, and given its

high price tag, it's becoming a more affordable option (Tybout, 2017). Investors should not

anticipate large profits in the short future since the company is expensive at 40 times trailing 12-

month earnings. Nike, on the other hand, is an excellent long-term investment. Lululemon, on

the other hand, is a modest business with a lot of potential. Its stock price has dropped in recent

months, and it currently trades at 52 times earnings, which makes it more costly than Nike

(Tybout, 2017).

Conclusion.

The company's main strength is brand devotion, compared to a cult following by some

analysts. This impression stems from the company's ability to establish a market presence and

expand via grassroots efforts. Lululemon's success has also been attributed to the company's

founder's expertise in developing skateboards and snowboards. This business's technical

character necessitated a dependence on computer-assisted technology, resulting in cutting-edge

technological culture. The international operations of Lululemon need to be improved. To expand

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the brand's global reach, the company's revenue could skyrocket. China and India have promising

distributors and retailers, and the corporation should increase its substantial form in these countries.

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