Marketing in Action Case Real Choices at Lululemon Athletica

  1. Summary of case
  2. Situation Analysis:

-External Environment Analysis

-Internal Environment Analysis

  • SWOT analysis
  • Answer Questions:
  • What is the decision facing the company?
  • What factors are important in understanding this decision situation?

(3) What are the alternatives?

      Should come up with at least two or more alternatives.

      -Alternative One: 4 P’s and Pros and Cons of strategy

      -Alternative Two: 4 P’s and Pros and Cons of Strategy etc.

      -Alternative Three: 4 P’s and Pros and Cons of the strategy etc.

(4) What decision(s) do you recommend?

      Choose alternative(s) that is most suitable for the company at the time of situation. Provide reasons that you chose the alternative for the decision.

(5) What are some ways to implement your recommendations?

Your deliverables are:

A. Paper: You will create a 2-3 pages written case analysis paper (12-point font, single-spaced). You will need more than company web site research to do this right.

Marketing in Action Case Real Choices at Lululemon Athletica

Consumers’ use of online retailers to purchase general merchandise continues to increase. As a result, some major retail chains, such as Gap and Macy’s, have closed many locations and others, like Pier 1 Imports, Neiman Marcus, JCPenney, and Forever 21, have filed for bankruptcy. When shoppers can find anything they want online and have it delivered directly to their homes, what does it take to get consumers to go to the trouble of making a trip to a physical store? Popular athleisure retailer Lululemon Athletica seems to have found the answer: experiential retailing.

Chip Wilson got the idea for Lululemon while he attended his first yoga class at the age of 42. He noticed that while the instructor wore thin and sheer dance clothing, most of the students wore baggy clothes. He realized that sweaty clothes meant clothes that bind, and those baggy clothes also made it harder for the yoga instructor to check students’ form. Wilson had developed a stretch fabric for other clothing that he believed would be perfect for yoga enthusiasts. This patented lycra/nylon mix known as “luon” stretches four ways and wicks away moisture. The company’s Wunder Under stretchy pants were a big hit, and a new category known as athleisure was born.

The Lululemon product line is primarily focused on higher-quality, stylish workout clothes that can stand up to the rigors of a workout. The clothing also comes at a higher price that fans of the brand say is worth the cost. In addition to workout clothing, the company offers water bottles, backpacks, and personal care items. As a vertical retailer, Lululemon controls the entire supply chain and sells the products it creates exclusively at Lululemon stores. As of February 2020, the company had 491 stores that fall into one of four categories: a pop-up store, a 3,000-square-foot store, a 5,500-foot version and its most impressive format, the 25,000-square-foot experiential store, with one each in Chicago and at the Mall of America in Minnesota.

At the massive Chicago store, Lululemon customers will find many of the Lululemon products they love and a whole lot more. A restaurant will serve you $12 “power bowls” that contain kale and roasted sweet potatoes. Or, if you prefer, you can order a burger and a beer, or maybe some chocolate covered bacon. Then, to work off those calories (or to think deeply about what you just ate), you can take a class in hip hop yoga or guided meditation, each offered for $25. Classes are also offered in packs of five at a discount; you can choose from 6 to 10 classes offered each day. Forget your workout clothes? No problem. Lululemon will let you try out its gear free of charge. Feel free to use the spacious locker rooms and showers available in the store after your workout.

Lululemon’s approach with these experiential stores may at first seem like the “retailtainment” that other retailers and malls use to draw customers into those retail spaces. The Lululemon strategy is differentiated by the level of involvement it offers customers and the customers’ level of engagement with the company’s products. Rather than just giving customers something to observe, the company facilitates active participation and that participation conveniently includes the use of Lululemon’s clothing. A good experience with an expertly-led yoga class will also increase the likelihood of a successful health outcome, continued involvement in exercise, and an ongoing need for quality and stylish Lululemon athleisure products.

The company’s approach is also highly focused on community—it brings people together who live what Lululemon calls the “sweatlife.” Instead of seeing customers as a group of anonymous buyers, the company considers them as people who buy Lululemon for a reason—sometimes emotional, highly motivational reasons. Lululemon knows that the purchase of workout clothes can mean more than just acquiring a nice pair of yoga pants or gym shorts. These purchases could signify a fresh start or a way to spend time with friends. This community focus is core to the company’s marketing strategy and can be seen in promotional materials, its Web and social media presence, and most notably in its brick-and-mortar stores.

While the community focus is central to Lululemon’s approach, the company is also hedging its bets with a more personalized approach to fitness. In 2020, Lululemon Athletica purchased Mirror, the company behind the $1,500 device with speakers and a camera that lets home exercisers stream workout classes and allows them to watch both themselves and the workout on the innovative technology. Of course, home athletes need workout clothes, too, and seeing Lululemon fashions worn by the virtual instructors provides a not-so-subtle suggestion for how that need can be met.

During the height of the 2020 pandemic, Lululemon temporarily closed its North American stores, ending its in-store experiences and helping to make at-home exercise options like Mirror a popular alternative for workouts. Post pandemic, the approach to yoga and other workout classes will likely change, but the larger spaces in stores like the experiential Lululemon stores should put the company in a better position than many smaller yoga studios to continue to hold such events. In June of 2020, Lululemon management stated that they were committed to continuing and expanding the experiential approach.

Lululemon’s strategy seems to be working. Between 2013 and 2019, revenue for the company nearly doubled, and in 2019, the stock price increased more than 80 percent, considerably more than rivals Nike and Under Armour. Plans for continued growth include international expansion and a major push in their men’s clothing line. The experiential store and its ability to foster a community of “Luluheads” will continue to be a key part of the strategy: Lululemon CEO Calvin McDonald says the new format could eventually represent about 10 percent of the company’s store base. Emphasizing its importance, McDonald described the experiential store model as “the pinnacle expression of our vision” and added that Lululemon is “an experiential brand that ignites a community of people living the sweat life.”80

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