lululemon athletica inc. 2 01 8 report G.E.M.S. Laurel Friedman Kelsie Heaslip Haley Soble Jamie Somerstein Grace Withers April, 24, 2018 ADV3500 1
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shop.lululemon.com 3
the team our philosphy G.E.M.S., or Gaurenteed Excellent Marketing Solutions, is a hardworking team of individuals who are dedicated to assisting companies in their marketing and advertising pursuits. Guided by in-depth research, G.E.M.S. strives for consistency, accuracy, and quality of results and recommendations. 4
laurel Friedman Kelsie Heaslip Haley Soble Jamie Somerstein Grace Withers 5
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table of contents Agency Philosophy......................................................................................................................4 Team Members...........................................................................................................................5 Executive Summary.....................................................................................................................8 Research Questions....................................................................................................................9 Situational Analysis...................................................................................................................10 Industry Analysis.......................................................................................................................10 Company Analysis.....................................................................................................................12 Competitor Analysis..................................................................................................................14 Consumer Analysis....................................................................................................................18 Qualitative Research.................................................................................................................22 Quantitative Research...............................................................................................................32 Research Conclusions...............................................................................................................36 SWOT Analysis..........................................................................................................................38 Reccomendations....................................................................................................................40 References...............................................................................................................................42 Appendix.................................................................................................................................45 7
executive summary Lululemon athletica inc. was founded by Chip Wilson in Vancouver, Canada in 1998. It is a multibillion dollar, worldwide company that has over 400 stores as of January, 2018. Best known for its upscale clothing for yoga, running, cycling, training, and other athletic activities for both men and women, lululemon is at the forefront of the athleisure and luxery athleticwear trend. Due to its prestigious positioning in the athleisure apparel industry, we analyzed lululemon athletica to gain a better understanding of the product benefjts associated with the brand’s high pricing strategy. In addition to researching the benefjts associate with the brand we analyzed the overall attitude towards the athleisure trend. 8
research question With the recent athleisure trend, we decided to analyze the price points of lululemon in comparison to other athletic apparel brands. definition of athleisure Athleisure has been on the rise within the past few years. This upcoming trend can be defjned as comfy, casual clothing that can be used for exercise and everyday wear. 9
situational analysis industry analysis product lifecycle stage brief history This industry is in the maturity The athletic apparel industry stage has been on the rise in more recent years as it has become Industry has wholehearted more “fashion-forward” to wear market acceptance athletic apparel in leisure settings. There has also been a rise in the Industry goods lack large industry as settings that were technological innovations once considered formal are becoming increasingly casual. It Industry is saturated with major is more acceptable today to wear comfortable clothing in public Players account for signifjcant than it was in other decades. The amount of industry revenue industry has expanded with the rise in athletic participation and health consciousness as well. seasonality Athletic apparel has a relatively Withing this industry there are low seasonality. However, there around 3,020 businesses/stores. are ties between sales in active The revenues of the global apparel and seasons. Sales tend sports apparel market are around to increase during warmer tem- $656.72 billion. (see Appendix A) peratures when it is more natu- ral to spend time outdoors. For example, there is a rise in sales in colder climates between the months of March and August as it tends to be warmest in the spring and summer in those areas. 10
growth & legal & potential forcasts regulatory issues The athletic shoe store industry The athletic apparel industry is is not subject to any industry- predicted to grow 30% between specifjc regulation. 2016 - 2020, totaling to $353 billion. In addition to this growth, Congress and individual states the prices of goods and consum- have enacted trade regulations er demand, due to a rise in par- with the intention of creating a ticipation in sports, are expected free and competitive economy. to increase. Conversely, revenue growth predicted to slow, and Industry costs are highly most sales will come from return- dependent on minimum wage ing customers. levels (higher wage costs lead to lower profjt margins for industry the economy participants). The athleisure trend and subse- quent market grew 42% between societal & cultural 2009 and 2016. Exports and im- considerations ports in this industry are low and steady. The locations of stores The rising focus on health will dedicated to this type of apparel keep industry revenue growth are typically located where the steady. Increased interest in most active people of the US fjtness and healthy lifestyles has population live. Industry sales are helped industry growth. somewhat dependent on con- sumer disposable income levels, Growing acceptance of casual as goods in this category are wear in the workplace and in often expensive, and therefore general has led to a boost in considered luxuries. The level of sales. capital intensity is low: for every $1 spent on labor, the industry spends $0.10 on capital. 11
company analysis history & company mission sales Lululemon was founded in 1998 The company’s revenue in the by Dennis Chip Wilson, but the United States have increased fjrst store, located in Vancouver, over the past fjve years. In 2014, British Columbia, did not open revenues were $1.59 billion. These until 2000. Lululemon’s athletic sales have grown and revenues apparel is designed for those with to date in 2018 are up to $2.65 an active lifestyle. Products are billion. Below is a look at the annual sold both online and in stores. fjnancials from 2014 to 2018. Lululemon’s apparel includes, Additionally, profjts are Revenue but is not limited to, tops, pants, had grown by seven percent from shorts, jackets, and accessories, previous years. Lululemon hopes with an adult line (Lululemon) and to reach revenue sales of at least a line for young girls (Ivivva). $4 billion by the year 2020. (see Appendix B) Lululemon prides itself on the “lululemon manifesto” instead of locations having a direct mission statement. There are 351 lululemon stores The manifesto is a unique way and 55 Ivivva stores located in the of expressing the company’s United States, United Kingdom, visions and inspiration. In 2017, Canada, Australia, New Zealand, Lululemon’s vision was to touch China, Singapore, Hong Kong, the lives of a billion people leading South Korea, Germany, Switzerland an active, mindful lifestyle. and Puerto Rico. Lululemon also sells from many outlet stores and online. Customers love that lululemon has free shipping and free returns for their online orders. 12
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