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SWOT Analysis of Lululemon

Paper Type: Free Assignment Study Level: University / Undergraduate
Wordcount: 2486 words Published: 24th Nov 2020

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Description of the business


Lululemon athletica is a professional athletic apparel company founded in Vancouver, Canada in 1998 for yoga, cycling, fitness and most other sweaty pursuits.

While you can trace our origins in Vancouver, Canada, our global community is where you will find our heart. Read about our journey, our family, what sparks real conversations, and why the centre of all we do is yoga.


Lululemon is a yoga-inspired, professional athletic apparel brand for women and men founded by Chip Wilson in Vancouver, Canada in 1998. It soon became a standalone store in November 2000 on West 4th Avenue in Vancouver's Kitsilano neighbourhood and opened as a design studio by day and yoga studio by night.

Our dream for our store was to create more than just a place where people could get equipment to sweat in, we wanted to create a community hub where people could learn and explore the physical aspects of healthy living, education and possibility living. It was also important for us to develop real relationships with our guests and to understand what they were passionate about, how they liked sweating and how they motivated them to celebrate their goals. We're doing this in our worldwide stores today.


Our first models have been created during yoga for women to wear. We now model for yoga, hiking, biking, fitness and most other sweaty activities for women and men through a lot of input from our visitors, ambassadors and professional athletes. The designers are also athletes, not to mention sweat-minded people.


Our ability to empower people to reach their full potential by providing the right tools and resources and cultivating a culture of teamwork, goal setting and personal responsibility is a constant that has never wavered. Every day our people live our core values of performance, brand, honesty, balance, creativity, success and fun and are at the centre of our unique corporate culture.

We are living a life we love. We set our expectations to fit with our dream, and this is why our one-year goals are becoming the reality of today, so often.


Our manifesto is one way that we share with the world our values. It is an ongoing series of bold thoughts that allow some real conversations to occur. Read more about our manifesto and what lights our flame.


We know that yoga is rejuvenating our bodies and relaxing our minds and expressing our passion for yoga is one of the ways we practise without expectation.


Our retailers and showrooms are moving their items further each week, unrolling yoga mats and turning their spaces into instant yoga studios. Classes are complimentary and led by instructors from your community's central studios.


We are committed to representing our investors ' best interest. Core investor data and financial reports can be found to help bring the financial performance of lululemon athletica, Inc. into perspective.


We made it our dream at lululemon to uplift the world from mediocrity to grandeur. We need to work with amazing people in order to do this.

Our Strategic Sales partners with local businesses and athletes who are passionate about growing their communities; our aim is to concentrate on value relationships over quantity. Our partners are people who stand up for something greater than themselves every morning and encourage others with their passion and accomplishments.

There are three services under the Strategic Sales umbrella aimed at spreading the love of yoga and helping to raise the level of health in our communities.


Multi-channel approach

The company offers its products through corporate retail outlets, showrooms and e-commerce websites. As of February 3, 2019, the company had 440 stores in 14 countries, including 285 in the United States, 64 in Canada, 29 in Australia, seven in New Zealand, 12 in the United Kingdom, 22 in China, three in Singapore, four in South Korea and five in Germany and Japan, and one in Sweden, France, Switzerland and Ireland. Most of these stores are managed under the brand name of lululemon. The company also operates under the ivivvva brand name seven of its corporate-owned stores, specialising in women youth athletic apparel. The company primarily operates its retail stores on the highway, in lifestyle centres and malls. It also markets its goods through websites for e-commerce, like www.lululemon.com, www.ivivva.com and websites like other countries and regions. Lululemon also offers wholesale lululemon athletica products, including luxury yoga studios, health clubs and fitness centres. Such sites provide a convenient alternate distribution channel for their core customers. The firm also sells its goods through distribution and outlets in warehouses. The multi-channel strategy also expands the scope of lululemon and enables it to serve a large customer base. It, in effect, helps lululemon boost its position on the market. Lululemon's strong focus on product design and development focuses heavily on product design and development. It has a group of Vancouver, British Columbia-based scientists, researchers, designers and engineers who carry out the task of product design and development. The group recognises business insights and research-based patterns and receives feedback from their guests and ambassadors. It works closely with its manufacturers with requirements to introduce the latest technical innovation to its products. Lululemon works with independent research, validation and inspection companies performing various tests on their products, evaluating quality properties such as shrinkage, pilling, resistance to colour and abrasion. It produces patented fabrics and partners with leading manufacturers of fabrics and trimmings to produce fabrics and trimmings. The strong focus on brand design and development of the company provides it with a competitive advantage over its peers.


Overdependence on US

Although the company has a presence in the world across Canada, the U.S., Australia, New Zealand, the UK, Singapore, and other nations, the bulk of its revenue relies on the U.S. The company generated 71.9 percent of its revenue from the United States in FY2019. Overdependence on the US market may affect the operational and financial performance of the company by exposing the company to the country's economic and geopolitical risks. Any downturn in the economic and geopolitical conditions of the area could reduce demand for its products or interfere with the supply chain. It could also restrict the market share of the company and future growth opportunities.


Growth through ‘Power of Three’ strategic plan

In April 2019, the company launched its new strategic plan to expand its business and drive revenue growth. The company plans to grow its presence in key markets around the world, create seamless Omni guest experiences and accelerate brand development through this strategy. It focuses on expanding its market through regions of Asia Pacific, China, and EMEA. Lululemon's online income is expected to more than double by 2023. According to this strategy, it focuses on delivering an integrated guest experience through platforms and multiple activities, including exciting new store formats, events, and its creative membership programme which fosters guest connexions. The company seeks to broaden its businesses for men, women and accessories by increasing its existing and new categories of products. It also plans to expand its common segment of Office / Travel / Commute, continue its partnerships with brands and pursue new opportunities, including self-care. The company launched its newest product line in June 2018, which includes various guest care products. Such goods will be available in 50 lululemon stores and at lululemon.com, selected North American studio partners and Sephora.com. The business stands to benefit from increasing digital retailing, which provides customers with the convenience of shopping from home. Retail e-commerce is growing at a faster rate with the rise in interactive methods and unlimited content. Economic stability is also driving the economy in most countries. Changing lifestyles as a result of growing income levels, increasing internet penetration, user-friendly web portal interface, enhanced discounts and promotions, changing customer preferences and buying power are expected to be the main drivers of market growth in the coming years. According to an in-house estimate, from US$ 929.8 billion in 2017, the global online retail market is expected to rise at a CAGR of 13.4 percent to hit US$ 1,740.8 billion by 2022. In terms of segments, electrical and electronic products accounted for 32% of total global online sales, followed by clothing retail with 23.7%, food and grocery retailers with 15.2%. Geographically speaking, Asia-Pacific accounted for 37.6% of global online transactions, led by 32% from the US and 25.3% from Europe. The company sells its goods through various websites for e-commerce, such as www.lululemon.com, www.ivivva.com, and websites unique to other countries and regions. Therefore, the global e-retail market's positive outlook could increase the company's sales.


Huge influx of counterfeit products

The counterfeit goods market has been rising across sectors, impacting the sales and reputation of the established brands. The growing influx of counterfeit products on the market would impact its quality. According to the Organization for Economic Cooperation and Development, imports of fake and pirated products were estimated at about half a trillion dollars a year, which accounts for 2.5 percent of global imports, with the U.S., Italian and French brands having the hardest hit and many of the profits going to organised crime. It is estimated that the counterfeit goods market will reach US$ 2 trillion by 2026. With their low-price sales, the imitated items eat into the market share of the branded products. Because consumers end up buying falsified products that look like authentic brands, the low quality of these falsified items affects consumer confidence and tarnishes the real company's brand identity.

Dependence on third-party suppliers and manufacturers 

Lululemon depends on third-party distributors and manufacturers to supply materials and produce their products and therefore has no control over product quality. During FY2019, the top five manufacturing suppliers produced about 60 percent of the company's products and a single producer produced 35 percent of the raw materials. About 58% of lululemon goods were manufactured in South East Asia during the same time, about 21% in South Asia, about 12% in China, about 8% in the Americas. With its distributors or producers, the company has no long-term contracts. Consequently, any failure on the part of suppliers to achieve and maintain high production standards could result in manufacturing failures resulting in product recalls or withdrawals, production delays or interruptions, cost overruns or other issues that could seriously harm the business of the company. The reliance of the company on third-party suppliers makes it difficult to ensure the quality of the goods sold at its stores and may contribute to recalls of products. It, in effect, could adversely affect the retention of consumers and brand loyalty.

Competitive pressures

The athletic apparel market is extremely competitive. The rivalry is focused on brand image and popularity, product quality, creativity, design, distribution and cost in the athletic apparel industry. Lululemon is competing with athletic apparel wholesalers and direct retailers, including Nike, Adidas and Under Armour. The company is also competing with stores focused specifically on athletic apparel for women, including The Gap and V.F. Company. Corporation. Many of its rivals are major clothing and sporting goods companies with strong global brand recognition, broader and larger customer bases, more established relationships with a wider supplier group, and greater financial, store growth, research and development, distribution, marketing, and other assets. Increasing competition and the availability of cheaper products could result in market increases that could, in effect, increasing the profits of the company.



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