Claudia Biebel
One brand that has been on the rise since 1998 and blossoming into popularity is Lululemon. The yoga, athleisure company is known for its high prices, along with high-quality items. Lululemon sells workout clothes of all kinds for men and women. From leggings to winter jackets there is an article of clothing for every season. This blog post takes one into the economist’s perspective of the brand Lululemon, and how it gained its economic success throughout the years.
According to Sean Ross of Investopedia, “Economic growth only comes from increasing the quality and quantity of the factors of production, which consist of four broad types: land, labor, capital, and entrepreneurship” (Ross, Investopedia). If economists gauge success based on the number of goods bought, how is Lululemon so successful with it’s high prices? Well, Lululemon customers expect to pay around $40 to $100 dollars for a sports bra and around $100 for a pair of leggings. There are no promotions to look forward to as Lululemon has a flat price that does not change. While this high price might drive some customers away, it also benefits the company because they don’t have to rely on promotions to bring customers in the door; they have consumers who will shop there no matter what. Presently, heavy discounting is hurting retail stores because they rely too heavily on the promotion to bring customers in, and heavy discounts can make certain items appear not as desirable.
When looking at supply and demand--the price regulation based on considerations of product, the desire of buyers, and commodity--Lululemon has consistently had an uptrend as the demand is higher than the supply in most cases. In a CNBC clip, they predicted this gain when discussing the hit retail took from the virus, saying that Lululemon would be one of the few retail companies to gain. Especially in 2019, the stock had a 41.13% gain. Supply and demand are the simple reasoning behind this gain. Why did the demand go up in a year with a global pandemic? Looking at the trends of people, activities like yoga, running, and at-home-workouts erupted during the shutdown. People stopped dressing up formally and switched their outfits to athleisure. People turned to a company that specialized in clothing for their new interests. Mirroring Lululemon’s consistency from previous years, even amid the pandemic Lululemon had their staid prices; there was no need to wait on a promotion or markdown.
Economically Lululemon also succeeds through its market base by targeting communities more locally. Lululemon hosts yoga and pilates sessions at their various store locations. By creating a more local sense, it overrules its athleisure competitors that don’t have local benefits for the people. In addition to complimentary workout sessions held occasionally, Lululemon uses the idea that people want to be educated rather than sold. Business Blueprint describes it as, “The classes could be ‘An Introduction to Yoga’ or ‘Cooking Healthy Food Fast’. To run these classes they use local trainers and experts who volunteer their time. This drives more people into their stores and when they’re there, guess what? They buy stuff” (Business Blueprint). This marketing trick makes consumers feel that the company truly cares about enhancing the people, and proves the company has experts working to provide the best quality products.
Some may call Lululemon overpriced, but the tradeoffs of Lululemon should be noted; sure it’s expensive, but it has high-quality items that can last a long time, and the brand’s high-quality name adds a layer of sophistication. Looking at the consistency of Lululemon, economists pinpoint their successes in price stability and maintaining a competitive marketing strategy. Lululemon is definitely a quality over quantity business.
Works Cited
Downey, Lucas. “Lululemon Shares Stretch Higher on Big Demand in 2019.” Investopedia, Investopedia, 12 Sept. 2020, www.investopedia.com/lululemon-shares-stretch-higher-on-big-demand-in-2019-4690483.
Hanbury, Mary. “Lululemon Keeps Its Prices High, and It's a Brilliant Business Move.” Business Insider, Business Insider, 5 June 2018, www.businessinsider.com/lululemon-expensive-clothing-is-good-for-business-2018-6.
Quiroz, Michael Angelo. “A Growth Strategy for Lululemon 2018.” Medium, Medium, 31 Dec. 2018, medium.com/@michaelangelo_q/a-growth-strategy-for-lululemon-68819680e511.
Ross, Sean. “Why the Factors of Production Are IImportant to Economic Activity.” Investopedia, Investopedia, 28 Aug. 2020, www.investopedia.com/ask/answers/040715/why-are-factors-production-important-economic-growth.asp.
says:, Yoginomics, and Edgar S says: “Eight Secrets to Lululemon's Success.” Business Blueprint, 12 Sept. 2019, businessblueprint.com.au/secrets-to-success-lululemon/.
Great Job Claudia, your blog was very well done. It sounds like Lululemon is a luxury brand that has been very successful in building its brand. You talked about them having flat prices that don’t change and not using discount promotions to get people in the school. Although Lululemon can do that because they are a luxury brand I think it is important to note that their customers love the brand. That is why people keep coming back over and over again. As their brand has a strong customer base, they are able to charge those higher prices because the quality of the goods is superior compared to other companies. From your writing I have learned that Lululemon is a very successful company. One question I have for you assuming that you are an avid Lululemon supporter is what alternative companies are there besides Lululemon that provide a less expensive option? Who are their competitors?
ReplyDeleteI really enjoyed how insightful this was on the economists point of view of Lululemon, and yes I would agree that they're a quality over quantity business. It's interesting that even amidst a pandemic, people were still buying expensive clothing, especially considering many were out of work and were most likely short on spending money. Despite the positives of the company, do you think that they could do a better job at using models of various shapes and sizes instead of only those who are "fit". I know that may sound silly because it's an athletic wear company, but there's no rule stating that you have to appear physically fit to be deemed athletic. I don't know, I just feel it's discouraging to those of bigger sizes that want to be able to feel comfortable in their products and though some may think, "well that's not the companies problem," it is in part. All around good company, but I feel they could do a better job at varying the sizes of models and extending their market to people of all shapes and sizes.
ReplyDeleteI honestly really enjoyed reading this. I ended up having a large obsession with lululemon during quarantine (still do) and it's really interesting to see the economic side and impacts of a store that I often shop at. Like Jade said in her comment, I definitely agree with the quality over quantity point that you bring up within your post. I never thought in depth about why Lulu would be making more money during a pandemic, in fact, I personally thought they wouldn't really be making any money, due to the fact that many people were left without jobs during the last 7 months. Therefore, when reading about how business increased during this global pandemic I was certainly surprised, but at the same time it makes a lot of sense. We're heavily encouraged by health organizations to go out and exercise whether it be inside, outside, running, walking, etc.. So overall the insight given into why sales increased was incorporated quite well into your post. Overall I think you did a pretty great job.
ReplyDeleteI think it speaks to how much usual prices have rotted my view of how much things should cost that I thought Lululemon sounded overpriced at first, however all their quality products and nice services do speak to how nice the company really is. It's also interesting to see how a store like this-- a more sporty store-- has taken a rise during Covid-19. I wonder if more people wanting to exercise during quarantine plays a role in their stocks going up. It's interesting trying to analyze different stock increases and decreases. Overall, this was a very interesting post!
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