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Strategic Analysis of Lululemon Athletica, Inc.

Hanna Jo Kosbab
hk122528@umconnect.umt.edu

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 Lululemon Athletica Inc.

Strategic
Analysis of
Lululemon
Athletica Inc.
HANNA KOSBAB | UMCUR 2021

Photo by Ginny Rose Stewart on Unsplash

 Lululemon Athletica Inc. HANNA KOSBAB | UMCUR 2021

Introduction
Strategic
1 Assess Industry 2 Evaluate Company 3 Recommendation

Opportunities and Threats Strengths and competencies Implement sports specific

within the athletic apparel within Lululemon's current lines that allow for
industry strategy partnerships with teams and
athletes

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 HANNA KOSBAB | UMCUR 2021
Lululemon Athletica Inc.

Incorporated: 1998 in Canada

What Is Founder: Chip Wilson

Current CEO: Calvin McDonald

Lululemon? Company Values: Honesty,

Courage, Personal Responsibility,

Lululemon is an athletic apparel company
that focuses on fitness as a lifestyle. The
company began creating workout clothes Connection, Entrepreneurship and
specifically for women's yoga, but now
produces a wide variety of fitness apparel Fun (Lululemon, 2021)
and accessories for men and women.
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Lululemon Athletica Inc.

Industry Porter's 5 Forces Key Findings

Analysis
Threat of new entrants
Establishment growth (US Industry and Market Report, 2019)
Deterred by brand loyalty (Bush, 2016)
Rivalry among competitors
Athletic Apparel Manufacturing Differentiation to compete with top companies (Mergent
Mature industry (CFI, n.d.) Online, Lululemon, 2021)
Segmentation Environmental Trends
activity Economic
geographic location COVID-19 (Patton, 2020)
Major Competitors Social
Lululemon Athletica, Inc Online shopping (Deloitte Digital, 2020)
Under Armour Technological
Columbia Sportswear Co. Importance of online interfacing (Dewald, 2020)
Nike Inc. Environmental
04 Adidas AG Emphasis of sustainability (Haanaes, 2016)
 HANNA KOSBAB | UMCUR 2021
Lululemon Athletica Inc.

of materials

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 HANNA KOSBAB | UMCUR 2021
Lululemon Athletica Inc.

Core Competency

Lululemon
Company Culture is at the center of Lululemon's
strategic choices. Promoting an active lifestyle, rather
than simply products is what creates buy-in from

Evaluation customers and employees (Adams, 2019).

Sources of Competitive Advantage
Intellectual Property
Patents for fabrics and designs (Paul, 2014)
Brand Loyalty
Inherently inimitable, because customers will
avoid switching away from their favorite
brands (Lutz, 2015)

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 HANNA KOSBAB | UMCUR 2021
Lululemon Athletica Inc.

Financial Analysis

07 *Industry averages account for "Apparel and other finished prodcuts made from fabrics and similar materialsl" industry (Ready Ratios, 2021)
**Lululemon key performance ratios from Mergent Online (2021)
 HANNA KOSBAB | UMCUR 2021
Lululemon Athletica Inc.

Strategic Alternatives
Marketing Shift: Price Backward Vertical Integration
Reducing prices through more frequent sales Acquiring a production firm for creating
promotions apparel
Pros Pros
Opens target market to price-sensitive Allow for emphasis on sustainability
customers and quality control (Haanaes, 2016)
Compete with lower-priced brands in the Expand international strategy (Saibil,
industry 2020)
Cons Cons
Lower profit margin Substantial capital investment
Loss of "prestige" associated with Competency development
Lululemon's brand
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Lululemon Athletica Inc.

Strategic Recommendation
Related Diversification
Create athletic wear specifically for cycling
Pros
Partnerships with professional athletes (Drummond, 2020)
Expanded target market
Easily implemented within current infrastructure
Growing industry (Grand View Research, 2020)
Cons
Switching costs for athletes
This is the best option for Lululemon, because it provides new opportunities,
without drastically altering the company's current financial strategy.

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 HANNA KOSBAB | UMCUR 2021
Lululemon Athletica Inc.

Strategic
Implementation
1 Identify Opportunities 2 Develop Product Line 3 Market with Athletes

Differentiate from big brands
like Lumiere Cycling, Gyro
Sports Design and Rapha
Racing Limited (Grand View
Research, 2020)
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Partner with reputable Enter brand partnerships with
designers to overcome cyclists to promote the new
brand-association related line through athlete-
hesitations associations
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Lululemon Athletica Inc.

Conclusion 1 The athletic apparel industry offers opportunities to

differentiate in order to compete with top companies and
take advantage of macro-environmental trends

2 Lululemon's strong financial position and company

culture are strengths that allow it to expand into new
ventures

3 Lululemon could expand its target market and create new

revenues streams by starting a cycling specific line and
partnering with athletes to promote it

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Lululemon Athletica Inc.

References
Adams, L. (19 March 2019). How Lululemon builds a more engaged service team. Stella Connect. from
https://stellaconnect.com/resources/creating-a-culture-of-engagement-with-lululemon/

CFI. (n.d.) Mature Industry. Corporate Finance Institute. from

https://corporatefinanceinstitute.com/resources/knowledge/strategy/mature-industry/

Drummond, I. (7 February 2020). How an athletic brand sports team partnership increases sales. Hollywood Branded. from
https://blog.hollywoodbranded.com/how-an-athletic-brand-sports-team-partnership-increases-sales

Grand View Research. (June 2020). Cycling wear market size, share & trends analysis report by product (cycle wear
apparel, cycle wear accessories), by distribution channel, by region, and segment forecasts, 2020-2027. Grand View
Research. from https://www.grandviewresearch.com/industry-analysis/cycling-wear-market

Haanaes, K. (November 2016). Why all Businesses Should Embrace Sustainability. IMD. from https://www.imd.org/research-
knowledge/articles/why-all-businesses-should-embrace-sustainability/

Lululemon. (2021). About lululemon athletica. Indeed. from https://ca.indeed.com/cmp/Lululemon-Athletica/about

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Lululemon Athletica Inc.

References
Lutz, A. (21 May 2015). Lululemon’s effective technique for hooking customers. Insider. from
https://www.businessinsider.com/how-lululemon-gets-customers-2015-5

Mergent Online. (2021b). Lululemon Athletica Inc.: Company financial ratios. Mergent Online. from https://www-mergentonline-
com.weblib.lib.umt.edu:2443/companyfinancials.php?pagetype=ratios&compnumber=119897

Paul, M.E. (15 September 2014). Lululemon a warrior in protecting its intellectual property. Trademarkology. from
https://www.stites.com/resources/trademarkology/lululemon-a-warrior-in-protecting-its-intellectual-
property#:~:text=Lululemon%20has%20even%20sought%20trademark,%2C%20LUON%2C%20SILVERESCENT%20and%20L
UXCHANGE.&text=In%20addition%20to%20taking%20advantage,portfolio%20of%20thirty%2Done%20patents.

Ready Ratios. (2021). Apparel and other finished products made from fabrics and similar materials: average industry financial
ratio for U.S. listed companies. Ready Ratios. from https://www.readyratios.com/sec/industry/23/

Saibil, J. (2 February 2020). 3 reasons why Lululemon will continue to gain in 2020. Nasdaq. from
https://www.nasdaq.com/articles/3-reasons-why-lululemon-will-continue-to-gain-in-2020-2020-02-02
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Lululemon Athletica Inc.

Thank You!

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