How Lululemon Popularized the Athleisure Market
In the crowded sportswear market, brands have built their name focusing on niches before expanding. For Nike, it started with high-performance running shoes; for Under Armour, it was T-shirts using synthetic fabric; and for Lululemon, it was yoga-inspired technical apparel.
This is the story of how Lululemon went from a modest shop in Vancouver, Canada to a billion-dollar company that shaped the athleisure market.
Back in 1998, Chip Wilson began taking yoga classes to alleviate his back pain. That’s when he noticed nobody — not even his yoga instructor — was wearing yoga-specific apparel.
Sensing an opportunity, he set out to create quality apparel for women to wear during yoga. The idea was to create stretchy, comfortable gear for low impact exercise, as most sports gear was focused on high-impact sports like running, football, and tennis. The concept took a few years to take off, but the yoga market eventually went from a niche to a mass, and Lululemon was perfectly positioned to become the dominant player.
Fast forward to 2019, and Lululemon has since grown into an industry powerhouse, diversifying its product range into running, tennis, and more.
Chip Wilson is no longer part of the management team after a series of controversial statements — though he’s still a large shareholder, making him one of the richest men in the world.
The Athleisure Market
While household names like Adidas, Nike, and Puma went head-to-head with ever-increasing marketing budgets, Lululemon decided to carve its own path by making the athleisure market mainstream.
By positioning its designs as a hybrid between sports and casual wear, the brand was able to avoid stiff competition from established players in both markets. In a way, they created a new category in your wardrobe.
Sure there’s been a fair bit of luck for the brand too. Over the last couple of decades, people have become more health-conscious, women have gained more purchasing power, and society is more accepting of casual wear, all of which have benefited Lululemon.
Creating a sense of urgency
While some core items are always in-store, many of Lululemon’s products have life cycles as short as three weeks. This rapid turnover gives them a competitive advantage in two ways: generating more traffic and avoiding discounts.
Generating more traffic
While most customers visit a store four times a year (once per season), Lululemon’s rapid turnover means customers eager to see new designs visit about 15 times a year — generating almost four times more traffic than the average apparel store.
Unlike other large apparel companies, Lululemon rarely has sales. Avoiding discounts by shortening an item’s life cycle has given Lululemon stable cash flows, higher revenues, and greater margins.
Ultimately, this strategy leads to customers buying items on the spot — rather than waiting for discounts — as they’re aware it might not be there tomorrow.
Chip Wilson’s book Little Black Stretchy Pants details some of the eccentric methods the brand used to approach customers while he was in charge. Among them was the 6/13 rule, which meant that if a customer looked at a product for six seconds, the workers could educate them for exactly thirteen seconds, after which they would leave them alone — unless customers had follow-up questions.
With the same attention to detail in mind, Lululemon purposely positions folding stations next to the fitting room — instead of the storage room — to overhear praise or complaints on specific items. This “intimate” customer feedback is then raised to the management team for consideration.
Lastly, the brand creates digital profiles for customers by collecting data using inputs ranging from measurements and favorite colors to more subjective information such as how they like to feel in their clothing. This digital profile can be filled online or in-store to optimize the shopping experience. Customers are then recommended certain items based on their profile. Back in the innovation lab, this data also helps the R&D team identify the latest trends in design, color, and texture based on these digital profiles, which they then use to produce innovative gear.
- Opportunities are everywhere. Though yoga was merely meant to be treatment for his back, Wilson turned it into a ride of a lifetime.
- Create a sense of urgency to buy your products. You will benefit from more traffic and fewer discounts.
- Listen to your customers. Similar to Amazon’s principle of customer obsession, it’s no surprise Lululemon keeps a close eye on what the customers want.
As other brands have swiftly transitioned into the athleisure market, perhaps no quote is more suitable than:
“Imitation is the sincerest form of flattery” -Charles Caleb Colton