Over the past ten years, women’s athletic apparel retailer Lululemon has grown from a single store in Vancouver to 120 stores in North America and an additional 10 in Australia. While other sportswear stores struggle with intense competition and the economic downturn, Lululemon’s sales per square foot leave most other fitness apparel retailers in the dust.

Integral to the company’s success is a commitment to providing workout wear especially designed for women, a $15 million market niche also occupied by Title Nine and VF Corp.’s Lucy brand. Lululemon focuses on outfits for yoga and Pilates, two types of exercise that are extremely popular among women. However, as women’s fitness interests have grown, Lululemon apparel has begun showing up on women involved in kick-boxing, weight-training, road running, and even at social events. Recently the company has added a menswear line that appears destined for success.

Unlike Nike, which spends millions of dollars for celebrity endorsements, Lululemon relies on the influence of unpaid “ambassadors” — local fitness instructors who wear the apparel in their regular classes or during free classes held in Lululemon stores. These ambassadors also provide valuable feedback to Lululemon on new fitness fashions. Ambassadors receive up to $1000 of free clothing for modeling the Lululemon apparel and gain clients for regular classes in return for the store sessions. These promotional efforts are bolstered by minimal print advertising in yoga and running magazines.

While Lululemon is one of the few retailers currently enjoying robust growth, its position is assailable. Imitators could copy styles and offer them at a lower price. Infrastructure investment required for growth could make the company vulnerable to competitors, especially if the market for expensive sports apparel collapses.

Discussion Questions:

1. Who is Lululemon’s target market?
2. What, if any, are its bases for sustainable competitive advantage?

Kevin Helliker, “Lululemon Grows Fast on a Slim Budget,” The Wall Street Journal, September 13, 2010.