7000-word review: The rise and crisis of the fashion empire lululemon

Following this article, let’s take a look at the rise of the fashion empire lululemon, how it resolved the crisis and turned the tide, whether it can continue to maintain its glory, and whether its path to success can be replicated. I hope it can bring some inspiration to everyone and is recommended to friends who are interested in fashion.

In 326 BC, Alexander the Great led his army into India, intending to conquer the East. However, after a series of hard battles and long journeys, Alexander's army stopped in the Indus River Basin. The soldiers were tired and frightened by the long-distance battle and the harsh environment, and refused to move forward.

Faced with opposition from the army, Alexander had to stop his expansion and withdraw to Babylon, and the empire began to stagnate.

Lululemon was founded in Vancouver, Canada in 1998. In just over 20 years, it has grown into a world-renowned sportswear brand with a market value of over 60 billion U.S. dollars, becoming the second largest sports brand after Nike and a fashion empire.

At its peak, owning a pair of lululemon yoga pants was a fashion standard in many people's minds. Yoga experts wearing lululemon sportswear could be seen everywhere on the streets, and lululemon also promoted the practice of wearing yoga pants on the streets.

The rise of lululemon, like the rise of Alexander’s empire, is unstoppable.

However, just as Alexander's empire expansion came to an abrupt halt, lululemon now seems to be in trouble.

The company's latest financial report shows that the company's global net revenue in the first quarter of fiscal year 2024 increased by 10% year-on-year to US$2.2 billion. The estimated net revenue for the entire fiscal year 2024 will be between US$10.7 billion and US$10.8 billion, with a growth rate of about 11% to 12%, which is lower than market expectations. What's worse is that the net revenue growth rate in the Americas market is only 3%.

In terms of market value, lululemon has fallen by more than 20 billion US dollars from its peak of more than 60 billion US dollars.

The fashion empire that was once as invincible as Alexander now seems to be stuck in the mud and struggling. People can't help but ask: What did lululemon do wrong?

This article will explore lululemon's rise, analyze its past secrets of success, and also sort out the crises and challenges it is currently facing.

1. The rise of lululemon: the power of SuperGirls

Behind the birth of every great product, there is often a founder’s profound insight into life. Just as Uber originated from an experience of difficulty in getting a taxi, and Airbnb was inspired by a dilemma of having nowhere to live, the story of lululemon also began with a keen awareness of market segmentation needs.

1. Segment market demand

Chip Wilson, the founder of lululemon, is not a rookie in the sports field. He founded Westbeach in 1979 and engaged in surfing, skiing and water skiing equipment. In the process, he keenly perceived the opportunities and power of the vertical market.

In 1998, Chip once again sensed a huge market opportunity: yoga was about to explode.

Yoga originated in India and has a history of more than 5,000 years. In the early 20th century, some Indian yoga masters came to North America to teach yoga and gradually attracted some Western followers.

In the 1960s and 1970s, a counterculture movement emerged in Western society, and yoga, with its unique philosophy and practice, catered to people's needs for inner exploration and personal growth.

Some well-known yoga masters, such as BKS Iyengar and Sri Sri Ravi Shankar, opened yoga schools in the United States and published yoga books and videos, making yoga more popular.

By the 1980s, yoga began to gain wider acceptance as a form of fitness, and by the 1990s, yoga had become part of North American culture, with yoga centers popping up in cities and suburbs, and yoga teacher training courses becoming more common.

Chip’s prediction was quickly proven true. The number of Americans participating in yoga has skyrocketed from less than 10 million in 2000 to 36.7 million in 2016, and is expected to exceed 50 million by 2020.

The rapid popularity of this sport has directly driven the growth of the market for related equipment and supplies. A report released by market research firm Allied Market Research shows that the output value of the global yoga apparel industry was US$33.68 billion in 2020 and is expected to reach US$70.29 billion by 2030.

Of course, not everyone can see the future. At that time, sports brand giants such as Nike and Adidas mainly focused on ball sports and Olympic sports with larger markets, serving mainly male groups. For them, the yoga market was still small and not enough to open up new product lines.

Chip keenly saw this opportunity and decided to enter the yoga apparel market segment.

2. Keyword: SuperGirls

From the moment Chip Wilson decided to enter the yoga apparel market, he clearly realized that the key to success lies not only in the quality of the product, but also in the ability to accurately find and meet the needs of a specific group. At this time, a revolutionary concept - SuperGirls, became the core of lululemon's brand strategy.

SuperGirls, a group concept proposed by lululemon, refers to modern women who are well-educated, financially independent, and pursue a high quality of life. They are usually between 24 and 35 years old, unmarried or childless, have a high level of education and income, and have their own unique insights and pursuits on fashion.

Women in this group not only achieve success in the workplace, but also seek balance and growth in their personal lives. They are advocates and practitioners of a healthy lifestyle.

The formation of the SuperGirls group is closely related to the social changes from the late 20th century to the early 21st century. With the improvement of women's education level and the increase of employment opportunities, more and more women are beginning to pursue the dual satisfaction of career development and personal growth.

They are no longer satisfied with traditional social roles, but are eager to realize their self-worth in various fields. Women in this group have a strong interest in health, sports, travel and fashion, and are willing to invest time and money to improve the quality of life.

The characteristic of SuperGirls is that they are extremely loyal to brands. Once they find a brand that matches their values ​​and lifestyle, they will become loyal fans of the brand. What they pursue is not just a product, but also a life attitude and spiritual identity.

Chip said in "The Lululemon Method": " Super girls tend to buy fewer but better quality, more durable wardrobe essentials, and high-quality fabrics and sophisticated structures will cost more. Carefully designed sportswear allows it to be worn freely outside the gym. Now, people can wear sportswear to drink coffee. But before the Lululemon brand became popular, people never thought it was a pleasant thing to walk around outside in sportswear all day. "

SuperGirls is highly consistent with lululemon's brand concept. By understanding the needs of this group, lululemon has successfully shaped its unique value proposition, which has become the basis for lululemon's future expansion.

3. "Street Tech Sports"

Chip Wilson's observation became the starting point for the brand's innovation. He noticed that traditional sweatpants often caused chafing and discomfort after long periods of exercise. This discovery prompted lululemon to completely innovate the design of sweatpants.

Lululemon is extremely strict in the selection of fabrics and is committed to developing and using innovative fabrics that are suitable for both sports and daily wear needs.

The brand's patented fabrics, such as Luxtreme and Nulux, not only have excellent stretchability, but also good breathability and quick drying properties. The high performance of these fabrics ensures optimal performance and comfort in all kinds of sports.

Lululemon's Flat Seam Technology is key to the comfort of its products. With this technology, the seams are carefully designed and flattened to reduce friction and provide a seamless fit.

In addition, clever considerations in design details, such as hidden pockets, seamless cuts in the crotch, and special lining designs tailored to the female body structure, all reflect lululemon's pursuit of both product practicality and aesthetics.

Lululemon is not only satisfied with the functionality of its products, it also incorporates fashion elements into its designs. The brand's product line is not limited to traditional sports occasions, but also extends to daily casual wear.

Lululemon's clothing is designed with both fashion sense and popular trends in mind, allowing the wearer to show their personalized style whether in sports, work or social occasions.

These designs perfectly illustrate Chip's positioning of "streetnic", that is, " stretch+technical+street ".

Lululemon's clothing is not only very comfortable for exercise, but also has become a popular choice for people in their daily lives because of its fashionable appearance. People wearing lululemon can be seen everywhere in the streets, cafes, cinemas and other places. The brand's influence is everywhere.

Through these innovative designs, lululemon has successfully transformed sportswear into an expression of a lifestyle attitude. Its products are no longer limited to sports occasions, but have become a part of the daily life of modern urbanites.

2. Lululemon’s expansion: word-of-mouth marketing

In its early expansion strategy, lululemon did almost no advertising and did not seek celebrity or star endorsements, but instead relied mainly on word-of-mouth marketing.

Chip believes that advertising and endorsements can only bring short-term attention, while word of mouth is the foundation for the long-term development of a brand.

1. Yoga pants worn outside: mobile advertising

Every time a product appears on the street, it is actually a free mobile advertisement.

As mentioned above, due to the high-quality fabrics and the unique design of flat seams, yoga pants are very comfortable to wear, so many people wear them not only when exercising, but also when going out. The popularity of this way of wearing has made lululemon yoga pants a beautiful sight on the streets.

As more and more people choose to wear lululemon yoga pants in their daily lives, they gradually become highly visible mobile advertisements. When other people see these yoga pants and are attracted by their appearance and comfort, they will also try to understand and buy these products.

In addition, some celebrities and stars have also begun to wear lululemon yoga pants in public. For example, Madonna, Jennifer Aniston, Gwyneth Paltrow and others are all loyal fans of lululemon. They often wear lululemon yoga pants on the streets, which has brought huge attention and influence to lululemon.

Chip said: "By the summer of 1999, more and more women began to wear lululemon to go shopping, walk their dogs or sit in a coffee shop with friends. Lululemon is no longer just a workout wear in a yoga studio, but also a casual wear that can be seen everywhere on the street. Somehow, the clothes we made originally for women to wear during yoga have now become their clothes after yoga."

2. Community activities and KOL marketing

Lululemon's community activities are an important part of its brand marketing strategy. By setting up yoga experience centers in the community, the brand provides potential consumers with an opportunity to experience it firsthand.

In these experience halls, consumers can participate in free yoga classes and directly experience lululemon's products and brand culture. This interactive experience not only enhances consumers' awareness of the brand, but also promotes word-of-mouth communication.

In Manhattan, the community activities of lululemon are particularly eye-catching. The brand holds two outdoor yoga classes every week, each time attracting more than 400 women wearing lululemon yoga clothes. Such collective activities not only enhance the visibility of the brand, but also form a community culture, allowing participants to feel a sense of belonging and the power of the community.

In China, lululemon also adopted a similar community activity strategy. In the early days, the brand cooperated with local yoga studios and gyms to hold various forms of yoga and fitness activities to attract community residents to participate.

Through these activities, lululemon has successfully combined its brand philosophy with the lifestyles of Chinese consumers, further expanding the brand's influence in China.

I would like to call this marketing method of infiltrating through community activities a "spark."

In terms of KOL marketing, lululemon has adopted a unique strategy - looking for brand ambassadors, most of whom are community yoga teachers, fitness coaches, professional athletes, etc.

Brand ambassadors attract fans and followers by sharing their fitness experiences, daily life wearing lululemon products, and insights into healthy lifestyles.

This approach not only increases the brand's credibility, but also makes the brand message more vivid and attractive. Through the recommendation of brand ambassadors, lululemon can market in a more natural and consumer-friendly way.

3. Packaging: The power of proverbs

The use of mottos in lululemon's packaging design is a unique brand tradition.

Chip Wilson, the founder of lululemon, is a philosophy lover. Initially, he liked to write some inspirational mottos on lululemon's packaging bags. Later, these mottos were loved by some consumers and gradually became an important part of lululemon's brand culture.

• “Who is John Galt?” This sentence comes from Ayn Rand’s novel Atlas Shrugged and is used to inspire personal self-realization and independent thinking.
• “Be present” reminds people to live in the present and enjoy every moment.
• “Find your yoga” encourages people to find the yoga method that suits them, and also symbolizes the search for personal lifestyle and balance.

These mottos are short and powerful, able to inspire positive emotions in consumers and enhance their emotional identification with the brand.

On social networks, customers often share the lululemon mottos they see. When these mottos are widely spread on social media, they not only become a logo of the brand, but also a cultural phenomenon.

By sharing proverbs, customers expressed their attitude towards life and inadvertently promoted lululemon.

As an outlier in sports brands, lululemon started with the niche sport of yoga apparel and has fought back to become the second largest sports brand after Nike.

3. Lululemon’s crisis: internal and external difficulties

When an organization encounters a crisis, it is usually the result of a combination of internal and external factors, and lululemon is no exception.

1. Internal strife continues, shaking the foundation

Chip acknowledged the infighting in the company in "The Lululemon Method," saying, "There are two things that go into business success. The first is product and customer, which entrepreneurs feel more deeply than anyone else in the world. The second is board governance of a public company. This includes Machiavellian power shifts and existential struggles between executives and board members... There's nothing special about my story."

Lululemon has a complex equity structure, with board members coming from different backgrounds and with different interests. This leads to frequent disagreements and conflicts within the board, with the core issue being which is more important, shareholders or customers.

Chip Wilson always puts customers first, while some investors focus more on short-term interests and pursue stock price increases. For example, Chip believes that CEO Bob and Advent International have reached a private deal behind his back, and he can cash out if the company's stock reaches a certain value for two consecutive months.

This disagreement ultimately led to Chip's departure and set the stage for future turmoil at the company.

After Chip Wilson resigned as chairman in 2013, lululemon experienced several CEO changes, each of which brought different strategic directions and management styles, affecting the company's internal stability. Finally, Chip Wilson completely withdrew from the company's board of directors in 2015.

2. Product investment decreases, quality problems occur frequently

Although lululemon is well-known in the market for its high-quality yoga apparel, the company's reduction in product investment gradually led to quality problems. In late 2011, Chip Wilson realized that the company began to reduce its reinvestment in itself in pursuit of rising stock prices, which directly affected product quality.

Chip's focus and experience in fabric selection, product research, and process inspection taught him that even minor defects could become huge hidden dangers. However, as the company's investment in quality control decreased, these minor problems gradually accumulated, eventually leading to several product recalls on the market.

In 2013, lululemon recalled a batch of yoga pants because the fabric was too transparent. In 2022, lululemon was again recalled due to quality problems with some products.

These recalls not only damaged lululemon's brand image, but also exposed the company's shortcomings in product management and quality control. More worryingly, employees who raised concerns about quality control were fired, suggesting that the company may have ignored internal calls and demands for quality control to some extent.

3. Piracy and Substitution

Lululemon's success over the past 20 years has largely benefited from the trend of consumption upgrading in major markets. However, as the global economic environment changes, consumption downgrade is inevitable, which has brought huge challenges to Lululemon.

Calvin McDonald, CEO of lululemon, once said that the consumer environment in the United States is quite challenging, and in fact, consumption has also been downgraded in the United States.

Some brands have attracted consumers by offering similar products at lower prices, which has weakened lululemon's market position to a certain extent. For example, CRZ Yoga, as a substitute brand of lululemon, has performed well in the North American market, with an average monthly sales of more than 80,000 yoga pants.

In the Chinese market, the problems faced by lululemon are even more complicated. On the one hand, there are a large number of pirated products circulating in the market. These products are under the banner of "original factory manufacturing" and claim to be the same as lululemon products in quality and design, but the price is much lower.

For example, some merchants claim that they can provide the same product with an original price of 1,080 yuan at a price of 280 yuan, and claim that they can achieve the level of "blending into the counter".

On the other hand, many "substitute" brands have emerged in the Chinese market, which offer lower-priced alternatives and pose direct competition to lululemon. For example, brands such as MAIA ACTIVE have become popular with localized marketing and the "lululemon substitute" label.

4. Fierce competition

As the yoga market continues to expand, many sports brands have entered this field, hoping to get a piece of the pie.

Globally renowned sports brands such as Adidas, Nike, Puma, and Under Armour have all launched their own yoga apparel series, increasing the intensity of market competition.

In addition, some clothing retail brands, such as Athleta owned by GAP, have also become competitors of lululemon with their sports women's clothing products.

Take Nike as an example, the brand has made significant progress in the yoga market. Nike has not only launched a clothing series designed specifically for yoga, but also provided a series of yoga training plans through the Nike Training Club application, enhancing the user's interactive experience.

In the Chinese market, lululemon also faces competitive pressure from local brands, which have attracted a large number of consumers through more targeted localized marketing strategies and lower prices. For example, brands such as Li Ning and Anta have also begun to get involved in the yoga apparel market, further intensifying competition.

4. Can the story of SuperGirls continue?

The rise of lululemon is closely linked to the feminist SuperGirls, who have become loyal fans of the lululemon brand with their unique lifestyle and values. To date, sales of women-related products account for a significant proportion of lululemon's revenue.

However, there is a ceiling in the female market after all. Looking at the entire sportswear industry, there is almost no successful brand that can completely ignore the needs of the male market. Faced with this reality, lululemon has not stopped.

Lululemon began its layout in the men's market in 2013. It quickly gained market recognition by launching the ABC series of high-quality yoga pants designed specifically for men, and gradually expanded to multiple product lines such as shoes, tennis, golf and hiking series.

In terms of sales, men's products achieved significant year-on-year revenue growth in the second quarter of 2023, accounting for 23.9% of the company's total revenue, showing strong growth momentum.

In terms of development, lululemon plans to double the revenue of its men's business by 2026, and accelerate expansion in key regions such as the Chinese market to gain its market position in the men's sports and leisure apparel field.

SuperGirls gave lululemon a brilliant start, but if it wants to continue to be brilliant, it must conquer the male market. In the future, whether lululemon can win this crucial battle, let us wait and see.

Author: Xunkong

Source: WeChat official account: "Xunkong's Marketing Revelation (ID: xunkong2005)"