[Growth Study] Lululemon Athletica – How to Beat Nike by Creating a New Category

Part 1: The Levers of Lululemon’s Growth and Success

“There is a company that makes yoga pants that are so tight, they cut off a circulation to the part of the brain that decides how much money it’s ok to spend on yoga pants,” - Jimmy Kimmel Click To Tweet

Lululemon Athletica went from 0 to 3.57 billion dollar company in 12 different countries around the globe. Lululemon went from one tiny yoga studio, which was converted into a store in Vancouver’s Kitsilano neighborhood in November, 2000, to a cultural icon behemoth it is today. In NPR’s interview “How I Built It” the company is worth over 14 billion dollars.

How can an unknown apparel company reach such brand recognition and revenue worth in one of the most competitive industry — clothing retail?

I’ve written this guide in two parts. In the first part, I am going to break down the EXACT pieces of the puzzles that put Lululemon Athletica as one of the most recognized brands in athletic apparel.

In the second part, I am identifying few missed opportunities that Lululemon’s hasn’t fully engaged and/or optimized yet.

If you’re in a hurry, just click on one of the titles to skip to the most intriguing part:

[learn_more caption=”Part 1: Lululemon’s Pillars of Success” state=”open”]
Chapter #1 – In retail, experience matters and the most important element in the retail business is cashflow

Chapter #2 – It helps when you are in an emerging trend

Chapter #3 – How the product perfection attracts and gets customers addicted to the brand

Chapter #4 – Lululemon’s used the Law of Category to completely dominate the market 

Chapter #5 – Nailing the Target Profile (you won’t stand a chance if you skip this step)

Chapter #6 – Lululemon keeps  their staff happy – so should you.

Chapter #7 – The Branding Perfection – the Lululemon All-In Play

Chapter #8 – Create the Most Memorable Retail User Experience

Chapter #9 – Lululemon’s Secret Sauce – The Hyper-Local Ambassador Program

Chapter #10 – Embrace the Social Media Channels and Craft a Perfect Message[/learn_more]

In case you want to skip to the Lululemon’s growth gaps:

[learn_more caption=”Part 2: Identifying Marketing Opportunities” state=”close”]

1. YouTube and Instagram Influencer Marketing

2. Personalized Quiz and Better Email Onboarding

3. Stop Airing Dirty Laundry in Public

4. Create another Sub-Niche

5. Outdoor Out-Of-Home Marketing Channel[/learn_more]

Chapter 1: The Retail Experience

Founder Chip Wilson has had 18 years of retail experience behind him when the idea of Lululemon came into existence. He has already built a surfing and snowboarding apparel company Westbeach in 1979 already.

Chip Wilson — Founder of Lululemon Athletica
Chip Wilson — Founder of Lululemon Athletica | Source: cnbc.com

The company was relatively successful in the early days; mostly because of the market in Japan. The sub-brand Homeless did particularly well (Chip believed it was because of the letter L in the brand’s name, which is a clear sign of American brand authenticity to the Japanese.)

But it was struggling nonetheless (in 1987 they barely made payroll). Chip decided to sell the company for $15 million from which he was able to keep $1M. That was the basis of Lululemon.

“In Westbeach I made 2 millions in two small vertical retail stores and I lost a million dollars on this global wholesale business. If I can deliver through vertical business at a price women will buy in volume. Click To Tweet

Since the founder has had the experience in snowboarding, skateboarding, and niche fitness apparel, he did not only learn from previous mistakes in the field but also gained access to journalists in the same field. Being one of the first in the fiel, gave him the permission to become a sort of a de-facto person in all things related to surf, ski, skateboard, and yoga business.

According to Wilson, the biggest lesson he learned was a steady cashflow (if you’ve read Shoe Dog, you could imagine how important it is). Steady cashflow allowed Wilson to pay the suppliers who delivered the best quality product on time, making sure the stores are stocked.

During the year, Chip also learned the key lessons of educating their staff. More on that in a later chapter.

Key Takeaway #1 – Healthy cashflow will give you the freedom to source the best materials and develop a relationship with distributors who will respect deadlines.

Chapter 2: Emerging Trend

Business meetings with cigars and steak dinners have been repla