Lululemon SWOT Analysis 2024: Key Points You Should Know

When a company promises to deliver luxury and quality and does precisely that, that company starts making noise and stays at consumers’ top of mind, and Lululemon made that happen. The company has been in the industry for 25 years and has already contributed and grown with trends with its strengths and grabbing the opportunities. On the other hand, there have been some weaknesses and threats that they are constantly battling, which we will get to know from this Lululemon swot analysis.

Lululemon: Company Overview

In 1998, the company started as a yoga studio named “Lululemon” by Chip Wilson in Canada but did not have any physical stores until 2000. But later, it expanded its offerings into a wide range of activewear for men and women.

In 2022, Lululemon reported revenue of $6.257 B, with a growth rate of 42.14% from the previous year. The company has a market share of approximately 6.12 % in the athletic apparel industry.

Lululemon has over 29,000 employees and operates over 650 stores worldwide, including locations in the United States, Canada, Europe, and Asia. The brand has a strong presence on social media and has garnered a loyal following among fitness enthusiasts and fashion-forward consumers.

Product & Services of Lululemon
Yoga Pants | Other Yoga Wear | Athletic Wear | Lifestyle Apparel | Accessories | Personal Care

Lululemon Competitors
Sweat Betty | Nike | Adidas | Under Armour | Gymshark | Puma | Zara | H&M | Patagonia | Athleta

Did You Know?

The name “Lululemon” is derived from the French word “Lululette,” which means a type of fabric.

Strengths – Lululemon SWOT Analysis

Product Variety: Whether it’s leggings, tops, sports bras, jackets, shorts, and accessories like yoga mats and water bottles, you will find every type of apparel in Lululemon. When someone thinks about buying any apparel item, the company offers them, everything in one place, and that’s why they were able to increase foot traffic.

Successful Marketing: Without successful marketing strategies and campaigns, brands couldn’t stay visible and gain market share. In the case of Lululemon, they have been very successful, and it shows in their brand loyalty to the customers. Besides, with their constant effort, their margin has reached up to 22% in the market.

Strong R&D Team: Lululemon was always determined to design and develop products that are not only fashionable but also functional. That way, it ensures that they meet the needs of their customers while staying ahead of the competition. As for the effort, they put a big chunk into the research, which is increasing yearly.

High Quality Control: In a world of counterfeit and low-quality products, Lululemon is on a streak to keep a promise of high-quality products. Because of that promise, the customers got hooked, and when they got what they were promised, they became loyal customers. Strict quality control and constant improvement and providing quality to the customers have helped increase the customer base.

High-Profit Margin: The company has been blessed with solid financials and cash flows, and they have been enjoying a good profit margin. In 2022, the profit margin was around 16%, a 25.25% increase from the last year, and the amount stands at $1.039B. As a result, It helped the company to grow and expand.

Weaknesses – Lululemon SWOT Analysis

Low Presence: As per the latest data, Lululemon has no more than 650 stores globally, and more than 50% of the stores, which is 320, are in the USA alone. Besides, they have stores only in other first-world countries. As a result, most of the revenue comes from these markets and is highly dependent on them. Any minor inconvenience could hurt the revenue and the market.

Weak Logistics: Even though Lululemon once had excellent logistics support. But the logistics have faced more than issues they could handle in the past few years. As a result, the entire supply chain was this close to collapse until they overcame these issues. While many cases have been solved, the problems are still there.

Employee Turnover: According to the reports, Lululemon’s employee turnover rate was approximately 22% for the fiscal year ending 2022, which is comparatively very high. As a result, the company is losing money on hiring more people and the employee assets they built over the years.

High Marketing Cost: The company invests heavily in marketing campaigns to promote its products, establish brand awareness, and build customer loyalty, but that comes at a cost. The overall cost of running marketing campaigns has been bleeding the company’s finances as the overall price is high and has been increasing yearly.

Declining Share: Because of various shares, such as increased competition, changing consumer preferences and trends, etc., the market share has been decreasing over the year. Recently, the percentage has declined by 9%, a new low record for the company and not very good news with the start year of 2023.

Opportunities – Lululemon SWOT Analysis

Market Expansion: As mentioned, Lululemon is only in a few regions and mainly in the USA. But there are still many untapped markets where Lululemon could establish a foothold, like Asia. They have already introduced the “Power of Three x2” strategy to expand the market into other regions.

Extend Product Lines: Diversifying the brand’s product offerings could help Lululemon reach new customer segments and create new revenue streams. If you ask a customer, they primarily know Lululemon for its yoga and athletic wear, but the company could expand into other categories, such as swimwear, accessories, or footwear.

Strategic Collaboration: A brand’s strategic collaborations can help it expand its reach and connect with new audiences. Starting with athlete ambassadors, design collaborations, wellness partnerships, and local market collaborations can position itself for continued growth and success in the industry.

Tech & Innovation: With globalization and digital transformation, companies have started adopting various techs and innovative practices, and Lululemon has already invested in its e-commerce capabilities. But there are more opportunities, such as developing and implementing augmented reality technology to enhance the online shopping experience.

Sustainable Practices: Customers now focus more on prioritizing sustainable and ethical practices of a company. They can start using recycled materials and implementing sustainable sourcing practices as a part of the process. And they even started and aim to make 75% of their products by 2025.

Threats – Lululemon SWOT Analysis

Competitive Market: The apparel industry is highly competitive and filled with giants like Gucci, Adidas, Nike, Zara, etc. These companies have their stronghold in the market and have a massive high brand value. Competing with these brands and keeping a solid position is highly difficult.

Consumer Preference: Changes in consumer preferences or trends, such as a shift away from athleisure or sustainable fashion, could impact the overall financial performance. And it is already starting to happen, and they have to adapt and keep up with changing customer demands to survive in the market.

Controversies: In the past few years, the company’s brand image has been damaged by several controversies. In 2013, CEO Chip Wilson made controversial comments about women’s bodies. And in recent times, worker abuse issues have been raised, and the company faced a massive backlash because of that.

Political Issues: The company has faced political issues and controversies. In 2013 and 2016, the company was criticized for its affiliation with various political donations, child labor issues, and offensive and culturally insensitive marketing. In 2020, the founder Chip Wilson donated to the pro-Trump right-wing group.

Recession: During economic hard times, people stop buying expensive items and focus on having necessary things. As a result, the company might notice downward sales in the upcoming months as the 2023-24 recession might be true.

[Bonus Infographic] SWOT Analysis of Lululemon

Recommendations for Lululemon

In a competitive industry like apparel, Lululemon has been facing some challenging issues, and here are some recommendations for them that they can follow.

• Expanding to new markets will expose the brand, increase foot traffic and sales, and grow the business.
• They should prioritize sustainable practices, such as launching a recycled material program and committing to using renewable energy.
• They should introduce and diversify new product lines to appeal to a broader range of customers.
• Addressing its high employee turnover and marketing costs could help the company maintain profitability and continue to invest in growth opportunities.
• Partnering with influencers and other brands could be expanded to explore new growth opportunities.
• Adopting new techs in the process might efficiently the overall operational strategy.

Frequently Asked Questions (FAQs)

Final Words on Lululemon SWOT Analysis

Lululemon has a loyal following and continues to deliver high-quality, fashionable activewear. Although it has faced some challenges and controversies, Lululemon has shown resilience and innovation in its response to these issues. With its commitment to sustainability, innovation, and customer satisfaction, the company is poised to continue its growth and success in the years to come.

References

• Wikipedia contributors. (n.d.). Lululemon Athletica Wikipedia.
• Valentine, S. (2021, December 21). Lululemon v Athleta: Holiday Shopping Foot Traffic. Unacast.
• What Lululemon’s Latest Campaign Tells Us About Loyalty. (2021, August 31). Forbes.
• Bhasin, K. (2022, June 3). Lululemon Overcomes Supply-Chain Issues to Meet Strong Demand. Bloomberg.
• Vanaik, G. (2023, January 10). Lululemon Athletica sees margin squeeze in holiday quarter; shares slump. Reuters.
• Gentrup, A. (2022, July 6). Lululemon Continues to Expand Internationally. Front Office Sports.
• lululemon Announces Five-Year Growth Plan to Double Revenue by 2026 to $12.5 Billion. (2022, April 20). Lululemon.
• Stevens, B. (2020, July 1). Lululemon buys AR home workout firm Mirror for $500m. Charged Retail.
• Product Sustainability. (n.d.). Lululemon.
• Esmergil, M. (n.d.). Respa Chemicals: Weaving Sustainability Into The Apparel Industry. Asia Business Outlook.
• Lululemon lampooned for “resist capitalism” post. (2020, September 11). BBC News.
• Johal, R. (2022, October 14). Right-Wing Group Funded by Lululemon Founder Helped Promote Film Demonizing Vancouver’s Homeless. PressProgress.