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The yoga and fitness gear brand Lululemon Athletica, Inc. (LULU) is another business that has found success in selling a way of life as opposed to a product. Lululemon has found success with this approach as it allows the business to charge a premium for its goods. Consumers are using the company’s items for more than simply working out; they are wearing them as fashion accessories.
The corporation projected a 30% increase in net sales to over $8 billion for the fiscal year 2022, with 29% of the growth occurring in North America and 35% in other regions.
Even if COVID-19 caused a large number of stores to temporarily close during the first two quarters of 2020, Lululemon kept opening additional company-operated locations; by 2022, it had opened 81 locations, 49 of which were outside of North America. There will be 655 company-operated stores worldwide as of 2023.
Why is lululemon so expensive? Although Lululemon’s business tactics have let the firm carve out a space for itself in the athletic wear market, things haven’t always gone as planned for the Canadian shop that Chip Wilson launched in 1998. Throughout the years, Lululemon has faced a good deal of criticism. In early 2013, the company was forced to recall their cheap Luon yoga pants.
What Kind of Items Does Lululemon Produce?
The brand sells apparel items that individuals may wear for exercise-related activities like yoga and jogging, such as shirts, shorts, pants, and jackets. The brand provides accessories like purses, socks, and yoga mats in addition to apparel.
Why is lululemon so expensive? The firm has broadened its customer base by including men and young people, even though the majority of its goods are intended for women who want to lead healthy lifestyles while juggling hectic lives. In fact, the firm launched its first men’s store in New York in 2014. In December 2016, a second men-only shop in Toronto opened for business. However, in 2017 and 2019, respectively, the Toronto and New York locations shuttered. Despite recent expansion in the men’s sector, Lululemon plans to position itself as a dual-gender brand.
In 2022, the firm introduced a membership program with two categories of memberships (one free and one paid) that grant exclusive access to merchandise, events, and fitness courses in an attempt to cultivate a larger base of devoted clients.
How Is Money Made by Lululemon?
In addition to selling directly to consumers online, Lululemon also distributes its goods through a network of stores that it owns and manages. The firm has 655 locations as of January 2023, with 350 of those being in the United States. China (117), Canada (69), Australia (32), and the United Kingdom (20) are the next most popular countries for the company to operate in.
Why is lululemon so expensive? Lululemon feels that by connecting with consumers’ in-person and asking for product feedback, its outlets strengthen their brand. However, clients can utilize mobile applications, including those that run on in-store devices, and buy merchandise on www.lululemon.com or other websites particular to a certain nation or area.
To strengthen its brand image, the firm offers its products to wholesale clients including health clubs, fitness facilities, and yoga studios in addition to e-commerce and digital sales. Sales through showrooms and temporary sites, as well as sales through warehouses, are additional sales channels.
What Is the Source of Lululemon’s Products?
Neither Lululemon nor its affiliates own or run any manufacturing plants. The business depends on a small number of suppliers to make its products and source the textiles.
The items are made by a group of about 45 suppliers as of 2023; five of them produced 56% of the products, with the largest producer producing 15%. In 2022, Vietnam accounted for 39% of Lululemon’s product manufacturing, with the remaining locations producing 14%, 8%, 7%, and 12% of the company’s goods, respectively.
Why Is Lululemon so expensive Such a Hit Brand?
Lululemon employs premium fabrics and high-quality materials that are meant to be comfortable, long-lasting, and resistant. To create a strong brand identity, the corporation also makes significant investments in marketing and research & development. The aforementioned factors all add to the items’ higher price point.
The previous few decades have seen an exponential growth in the demand for athletic apparel, and Lululemon made a concerted effort to be among the first to enter the yoga industry. The firm has progressively expanded into a larger range of categories through innovation and diversification initiatives, maintaining a constant focus on high-quality goods and its consumer insights. It has succeeded in developing a cult-like following over time.
Why Did Lululemon Close Its Stores Exclusively for Men?
The firm opted to concentrate on its more successful locations after trying out the menswear stores in New York and Toronto and seeing that people responded better to the company as a dual-gender brand. Lululemon intends to keep expanding into new markets, including menswear.
Conclusion
Why is lululemon so expensive? Lululemon has been able to stand out in a congested market, due to unique business strategy. The business keeps its earnings in order to finance expansion abroad rather than paying a dividend to shareholders, despite its strong quarterly profitability. Nonetheless, as Lululemon keeps growing, investors need to be aware of the dangers the business confronts from fierce rivalry, erratic customers, and possible problems with suppliers.
