A typical weekday starts with a school mum hangout followed by bikram yoga. Then it’s a latte with the girls and a spot of boutique shopping. And the dress code for this busy morning? Active-wear!
Jokes aside, the active-apparel industry is big business and fiercely competitive. Canadian player lululemon athletica has been fighting for Australian market share since 2004. Through the lens of lululemon’s unique approach, there is much to learn about market segmentation, targeting and positioning. Keeping ahead of the game is tricky in this trade, where brands rise and fall quicker than you can say “it’s fashion darling”!
Segmentation and inner peace
In 1998, Chip Wilson, yoga enthusiast and lululemon founder, saw an opportunity to develop technical apparel with the functionality and feel that yoga practitioners wanted. Fast forward to 2016 and lululemon has an impressive global presence with 363 stores across nine wealthy countries, thanks to their brand strategy and word-of-mouth marketing.
Market segmentation identifies customer groups who share brand-related preferences. Lululemon employs a tailored segmentation approach by responding to consumer buying behaviour and customising their product lines and marketing interactions to attract specific market segments.
Rather than compete in the same space as general sportswear mega-brands like Nike and Adidas, lululemon primarily target Gen X women, who value quality over cost, and who lululemon describe as ‘a sophisticated and educated woman who understands the importance of an active, healthy lifestyle…. we believe she pursues exercise to achieve physical fitness and inner peace’. If only Kung-Fu Panda knew that finding ‘inner peace’ was so easy! Lululemons’ secondary markets are Gen X men and younger Gen Y females who equally value style, quality, and brand loyalty and have deeper than average pockets.
Targeting: it’s on!
Successful targeting seeks alignment with the market segment’s expected profitability and the company’s strategic fit and capabilities to effectively supply the product or service. It is a function of customer behavior, the market size and its expected growth, and the competitive environment. Industry stats confirm that the 2.2 billion dollar Australian active-apparel market will continue to grow in the coming years.
Despite positive margins and growth, lululemon’s 21-store presence in Australia is overshadowed by local success story Lorna Jane, their main rival which dominates the segment across 215 local stores.
Lululemon must find ways to grow their target markets. A significant hindrance is the lack of industry data on the female active-wear sector. This gap is being addressed with a $140k market research investment by the Australian Sporting Goods Association and Victoria University on consumer purchasing trends, attitudes, and predictions for the fashion category to the year 2026.
In the meantime, Lululemon must focus on what sets their brand apart from Lorna Jane and position themselves accordingly.
Positioning: it’s a mindset
“Our intent behind each store is that it should be a hub for health.”
Market positioning is all about brand identity and value proposition. It compares competitors’ offerings and aligns the attributes of the company’s product design, pricing, position and messaging with the customers’ perceived value.
Both Lululemon and Lorna Jane design products with comfort, style and quality. Lululemon price their clothing higher than Lorna Jane, in keeping with their premium brand and quality claim. Lululemon position their stores in trendy urban hubs amongst their target market. To get ahead in the growing online retail channel, lululemon have partnered with Stylerunner, an innovative and successful home grown e-retailer, to leverage Stylerunner’s credibility, experience, and established customer base.
Lorna Jane doesn’t participate in the male active-wear segment, providing lululemon with a golden opportunity to increase market share in that segment. What also uniquely differentiates lululemon is the messaging used to enrich the customer experience. Walk in to any hip, spacious, brightly lit and immaculately maintained lululemon store and you’ll be greeted as a ‘guest’ by any of the bubbly ‘educators’ (retail assistants), who literally live and breathe their company ethos:
“We are passionate about sweating every day and we want the world to know it. Breathing deeply, drinking water and getting outside also top the list of things we can’t live without.”
Psychology plays a big part in the lululemon brand persona according to brand expert Erich Joachimsthaler:
“Lululemon is about more than just a customer — it’s a mindset.”
This mindset is deeply rooted in its yoga-inspired origins and Zen feelings. Lululemon customers don’t just buy products; they engage in a lifestyle that equips and inspires, through community events such as running groups, retreats and free in-store yoga classes. Social responsibility is also advocated through sustainable and ethical manufacturing processes.
The future challenge for lululemon and their ilk is that fashion is fickle. Having achieved proven success, lululemon must repeatedly eyeball emerging fashion trends and promote their unique value proposition. Through commercial diligence, community engagement and social responsibility, lululemon will continue to find healthy profits, and their customers, inner peace.
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