Selling Lifestyle: lululemon’s Impact as the Pioneer for Athleisure

The sports apparel industry will never be the same, thanks to the athletic apparel company Lululemon athletica inc., known affectionately as Lululemon or lulu by shoppers. Lululemon was founded in 1998 in Vancouver, Canada, by Chip Wilson, who had a goal of making athletic clothing for women that was stylish and dependable.

Over the years, Lululemon has successfully created chic athletic apparel for yoga, running, training, and other exercises and pioneered the athleisure look— comfortable clothing that can go from the gym to casual errands. By investing in customer research and development, Lululemon has created athletic clothing products that customers want to wear for their workouts and their leisure activities. Explore more about the brand in this Lululemon case study.

History of Lululemon

Lululemon was established in 1998 in Vancouver, Canada, by entrepreneur Chip Wilson. Wilson’s first enterprise was a surfing company called Westbeach Sports, followed by a skateboarding brand called Homeless Skateboards. He eventually sold the company in 1997 for $1 million and started looking for his next venture.

After hearing about yoga a few times, Lululemon’s founder took a yoga class. During the class, he realized the many active young women participating didn’t have many options for breathable and comfortable workout wear that was still fashionable and flattering. He was inspired to start a business designing women’s athletic wear. Lululemon was born from this inspiration.

Lululemon’s name stems from Wilson’s experience with Japanese customers who were intrigued with company names that contained the letter “L.” He played around with many variations of alliterative “L” names until deciding on Lululemon, spelled with a lowercase l for a relaxed vibe.

Lululemon started as a design studio during the day and a yoga studio at night, with the first storefront opening in 2000. The Vancouver Lululemon location was one of the first stores to recognize and capitalize on the yoga apparel trend.

The first Lululemon product was little black stretchy pants made from a unique technical fabric that felt like cotton but was durable and squat-proof. The yoga pants soon became a popular choice for runners and other athletes besides yogis, prompting Lululemon to start selling different athletic apparel and accessories beyond yoga-specific items.

In July 2007, Lululemon stock (LULU) went public, raising $327.6 million. Since 2007, Lululemon stock has grown 13-fold, competing with other athletic wear giants like Nike (NKE), Adidas (ADDY), and Under Armour (UAA).

What Makes Lululemon So Successful?

Source: Lululemon Website

Lululemon has experienced success and growth over the years due to its high-quality products that customers see as exclusive and flattering. Nowadays, cute athletic wear is widely found, but in the early 2000s, the options for women were limited.

Lululemon’s triumph can be attributed not only to the excellence of their athletic wear but also to the vibrant lifestyle they’ve fostered around their brand. Originally conceived as community hubs promoting healthy living discussions alongside shopping, Lululemon stores have evolved into bustling centers where the shopping experience has outshone the brand itself. Despite this, the brand remains committed to educating customers and encouraging dialogues on well-being.

In crafting their acclaimed athletic wear, Lululemon employed focus groups comprising chic and active women to glean valuable insights into their preferences and aversions in sportswear. What became evident to Wilson, the founder, was the women’s demand for versatile athletic apparel seamlessly transitioning from gym sessions to grocery runs to school pickups.

Subsequent clothing designs for Lululemon products focused on using lightweight fabrics, sweat-wicking and stink-proof technologies, and flat seams for comfort during and after workouts. Lululemon patented their first fabric “Luon,” which boasted higher levels of microfiber for softness and stretch. Soon enough, both athletes and people out running errands were sporting Lululemon athletic wear, leading to the term “athleisure,” which Wilson is credited to have innovated.

Although some critics see Lululemon as controversial and too exclusive, the company has continued to see success and growth. As of January 2023, Lululemon operates more than 650 stores throughout the United States, China, Canada, Australia, and the United Kingdom. Lululemon reported a net revenue growth of 30% to over $8 billion in fiscal year 2022.

Perfecting the Formula

Source: Lululemon Website

When creating the vision for Lululemon, Chip Wilson knew he wanted to control 100% of Lululemon’s brand, without interference from wholesale buyers. Wilson embraced a vertical retail model, which is when the brand designs, produces, and sells its products without any middlemen. However, Lululemon doesn’t operate any manufacturing facilities— rather, they use a small group of trusted vendors to manufacture their products.

With this vertical retail model, Wilson decided not to sell his products in sporting goods stores. Instead, Lululemon products would be found solely in Lululemon stores. Wilson’s goal with Lululemon was to do what had never been done before— make women’s technical athletic apparel beautiful and sell it at a premium. By selling Lululemon products only at their company stores, their products also have a more exclusive feel.

Eventually, products became available to purchase through their website and mobile app. Nowadays, Lululemon wholesales certain product lines to boutiques, online retailers, fitness centers, and yoga studios.

Defining the Target Market

Source: Lululemon Website

The target market for Lululemon, according to founder Chip Wilson, is “Super Girls,” or fit and athletic young women with professional careers and disposable income. These Super Girls are committed to their health and staying fit and want to look good while doing so, which is why they can and will pay big bucks for yoga pants.

Some people have criticized this target market that Wilson defined and other comments he’s made about how some women’s bodies weren’t suitable for Lululemon’s clothing. After a series of controversial comments, Chip Wilson resigned from the Lululemon board as CEO in 2015 and was replaced by Christine Day.

A Methodical Marketing Strategy

Since the first store opened in 2000, Lululemon experienced a decade of peak growth, later followed by four years of declining revenue and company shares. In 2019, Lululemon was back and ready to compete with an updated marketing strategy known as the “Power of Three.” This strategy focused on:

• Product innovation in men’s apparel and new women’s products
• Omni guest experience with brand marketing coming from multiple channels
• Market expansion with goals to quadruple their international revenues by 2023

These strategies proved effective, with Lululemon boasting a 40% increase in brand value in 2020. Lululemon also used strategies to maintain relevancy during the COVID-19 pandemic by purchasing the virtual exercise company Mirror in 2020. In 2022, Lululemon launched membership programs with two tiers that provide customers with exclusive benefits.

In global markets like China, Lululemon has previously tried to target new audiences by launching fully integrated advertising campaigns, like their 2021 Feel Campaign. This global campaign aligned with Lululemon’s goal of expanding to wider audiences and competing with rivals that are already established globally.

“Lifestyle” Branding

Source: Lululemon Website

The mission statement of Lululemon is to “elevate human potential by helping people feel their best.” Marketing is mainly targeted at active women looking for stylish workout gear, as well as yoga instructors and fitness enthusiasts. Increasingly, Lululemon is seeking to appeal to active men with new products. Lululemon branding focuses on living a balanced lifestyle, embracing movement, and leading healthier lives overall.

The Lululemon marketing strategy has adapted to focus more on promoting the lifestyle that customers can achieve through using their products, rather than the products themselves. This tactic has been effective for Lululemon because it enables them to have higher price points for their products, as they are seen as a path toward healthier living and better wellness. Marketing messages also aim to foster a sense of community within Lululemon stores and between their customers.

Lululemon’s Impact on the Industry

Lululemon has cemented itself as a go-to choice for athletic wear for millennial and Gen Z women, fostering strong customer loyalty. Social media influencers have also played a role in the demand for Lululemon products. Many budget retailers have tried in vain to copy the look of Lululemon’s scuba jackets and align leggings, but they can’t compare with the quality and name-brand association of the real thing.

By continuously investing in research and development, Lululemon can learn what their customers like, dislike, and want more of, and then give it to them. Lululemon updates its products frequently, developing and patenting several fabrics and technologies that make its offerings stand out from the competition.

After some controversy, Lululemon executives have worked to implement diversity and inclusion measures that help enhance inclusivity among employees and customers of Lululemon. By enacting an IDEA (Inclusion, Diversity, Equity, and Action) program, Lululemon aims to hold itself accountable for previous missteps and make systemic changes to improve the community. It’s decisions like these that explain the significant impact Lululemon has had on the activewear industry.

What’s Next?

Source: Lululemon Website

Current Lululemon CEO Calvin McDonald has said that Lululemon’s “success over multiple years demonstrates the ongoing strength of Lululemon and the tremendous growth potential of the business.” By adopting the Power of Three ×2 plan that stems from the original Power of Three strategy, Lululemon has a goal of reaching $12.5 billion in revenue by 2026. Tenets of this plan include:

• Product innovation to double men’s apparel revenue by 2026
• Guest experience to double digital revenue by 2026
• International expansion to quadruple international revenue by 2026

By following this plan, Lululemon is poised to increase revenue, sales, and customers in the coming years. Lululemon has also enacted an Impact Agenda to enhance its sustainability and social impact efforts. Lululemon has also made a dedication to sustainable practices with the “Be Planet” initiative that promotes more environmentally friendly practices, such as reduced water usage and the inclusion of eco-friendly materials in production.

Develop a Marketing Strategy at MarcomCentral

The Lululemon branding strategy has allowed the business to recover from missteps and return to competing with other major athletics retailers. MarcomCentral is here to help your business or brand develop a marketing and branding strategy that will enable you to succeed like Lululemon within your market. Whether your business needs assistance with digital asset management, brand management, or collateral distribution, MarcomCentral can help.

Marketing enthusiasts interested in learning more about compelling brands should subscribe to our newsletter, which features our “Brand Story” series with other entries like the Lululemon brand story. This series highlights brands and companies that have broken barriers and succeeded in different industries. Request a demo today to learn more about how MarcomCentral can help your business.