Lululemon Competitors Analysis

With so many sports apparel brands on the market, it’s increasingly difficult for consumers to look past the hype and find high-quality garments at a reasonable price. Sure, there’s a buzz around Lululemon, but is it as good as everyone says?

One thing’s for sure: the numbers never lie. In this Lululemon competitors analysis, I will dive deeper into the clothing industry – paying particular attention to the sports apparel market – to find out which companies are leading the way.

Analysts estimate the global sports apparel market size was $181.51 billion in 2021; they predict it will reach $279.2 billion by 2029. Our changing attitude to clothes will likely accelerate this growth.

In the US and UK, for example, many people wear sports and athleisure apparel daily, even if they aren’t participating in any physical activity. The global pandemic and rise of working from home undoubtedly helped to galvanize the desire for comfort above all else. But how much are consumers willing to pay for this comfort?

Lululemon is an upmarket brand with higher prices than some of its competitors. Whether or not this is the optimal business model remains to be seen.

The Bottom Line Up Front

There’s no doubt that Lululemon’s luxury garments get the balance between stylish and practical right. But in my view, it’s hard to justify the cost, especially when other brands like Under Armour have a wider range of products at (slightly) lower prices.

Lululemon has found a niche and targets it very well. Still, I suspect expanding more broadly into the sportswear market will be a struggle when the brand comes up against well-established giants like Nike and Adidas.

List of Lululemon’s Main Competitors

Sweaty Betty
Nike
Adidas
Under Armour
Gymshark

Lululemon Business Strategy

Lululemon Athletica, Inc. is a U.S.-Canadian apparel retailer specializing in yoga pants and other athletic wear. Its headquarters are in Vancouver, Canada, and the company was founded in 1998.

Lululemon’s business strategy is unique because it focuses on selling a way of life rather than a product. Remember when I said there’s a lot of hype around the brand? Well, this is why.

Lululemon Athletica- and Ivivva Athletica-branded products symbolize the healthy and active lifestyle that many people aspire to. Still, more than that, they also represent a move away from the traditional idea that sport is not glamorous. On the contrary, Lululemon products embody the idea that you can have it all: you can sweat in style and look fantastic doing it.

There are 574 Lululemon stores internationally, and the first store in Europe, located in Covent Garden, London, opened in 2014. The company operates using a production revenue model.

Innovation has always been at the fore of Lululemon’s brand identity. The company runs a research and development lab called Whitespace located at its headquarters, where around 50 people are employed, including physiologists and scientists. I’m sure you’ll agree; this is pretty advanced stuff for a sports apparel company.

Thanks to its strong focus on R&D, Lululemon produces unique clothes of various fabrics, including compression and moisture wicking. In 2005, the company also trademarked its original fabric called Luon, which has a high amount of nylon microfibre.

While Lululemon’s target demographic was traditionally women, the company plans to double its men’s business in the next five years. The luxury streetwear label Lab, launched in 2019, is a key part of this strategy.

In addition to launching a new label, Lululemon also uses “holistic guerilla marketing strategies”, which aim to help customers feel as though they are part of a community by purchasing Lululemon clothes. For example, many stores offer free fitness classes at the weekend, and their eco-friendly bags come decorated with motivational quotes.

By creating a cult-like following, Lululemon is increasingly able to rely on word-of-mouth marketing.

In 2021, the company announced a five-year growth plan to double its revenue from $6.25 billion to $12.5 billion by 2026. This so-called “Power of Three x2” strategy focuses on the following key drivers of success: guest experience, product innovation, and market expansion.

Lululemon competes in the sports apparel market against powerful rivals like Nike and Adidas.

Sweaty Betty

Sweaty Beaty is a British retailer specializing in women’s activewear. Its headquarters are in London, England, and Tamara and Simon Hill-Norton founded it in 1998.

Like Lululemon, the Sweaty Betty brand offers a particularly desirable way of life rather than just clothes. According to its website, the company’s mission is to “empower women through fitness and beyond by creating beautiful, technical activewear.”

As such, Sweaty Betty’s business strategy focuses on designing, manufacturing, and selling high-quality, stylish clothes through US and UK and online boutiques. This approach is known as a production revenue model.

Three core values underpin all of Sweaty Betty’s business activity. Its clothes must always be fitness-friendly, even if they are going to be worn for leisure, the brand must preserve its “cool” London edge, and it should never take itself too seriously.

The company has over 50 boutiques in the UK, and over 60 shops globally, including in the US, Canada, Germany, Hong Kong, Singapore, and Ireland.

Today, Sweaty Betty is one of the most iconic luxury women’s sportswear brands, but how did it achieve this success? The answer lies partly in the global community that the brand has managed to build.

Sweaty Betty looks for staff who share the values and interests of its customers, who are then encouraged to reward the most valuable and influential customers on a store-by-store basis.

In 2021, Wolverine Worldwide – one of the world’s largest clothing and footwear brand portfolios – acquired Sweaty Betty in an all-cash transaction valued at roughly $410 million.

That same year, the company’s annual sales reached £126.5 million (roughly 145.6 million dollars).

Nike

Nike, Inc. is a multinational corporation specializing in sports apparel, including footwear, equipment, and accessories. It was founded in 1964, and its headquarters are in Beaverton, Oregon.

Like its rivals, Nike opts for a production revenue model; it is responsible for designing, developing, manufacturing, and selling its products in-store and online.

Nike’s direct-to-consumer business model has several important benefits. It facilitates greater control over the customer experience and valuable data collection and allows the company to monitor inventory levels closely.

Over the years, Nike has produced countless powerful marketing campaigns, most highly emotive, aiming to inspire people to “just do it”. In addition to emotional advertising, Nike also relies on celebrity endorsements.

It’s unsurprising that one of the company’s most successful ads incorporated both of these tactics. The ad, “Winner Stays”, features teenage boys transforming into world-famous footballers like Ronaldo, and it earned Nike over 107.8 million views.

In 2020, Nike spent $3.59 billion on advertising, but that’s not the only thing the company is willing to invest massive amounts of money in. Research and development are equally important, especially in an industry where your products (particularly running shoes) could make or break an athlete’s career.

Like many people, I eagerly bought a pair of Nike Air Zoom Alphafly Next% shoes when I heard the hype about them being banned from competitions following the world record for a marathon set by someone wearing a pair. (Yes, they were worth every eye-watering dollar.)

What made the Alphafly shoes so revolutionary? The carbon plate trio offers up to 4% extra running efficiency. This innovation was a new development in running shoes (today, it is far more commonplace), thanks to Nike’s dedication to R&D.

In 2021, Nike made $44.5 billion in revenue, a 19% increase compared to 2020.

Adidas

Adidas AG is a German multinational corporation that designs, manufactures, and sells sports apparel, including shoes. It was founded in Herzogenaurach, Bavaria, in 1949, and its headquarters are still there today. Adidas is the second largest clothing manufacturer globally, after Nike, and the largest clothing manufacturer in Europe.

Adidas’s business strategy focuses on three key goals:

Elevating the experience of consumers
Increasing brand credibility
Pushing the boundaries of sustainability

Like Nike, a significant part of Adidas’s marketing activity relies on celebrity endorsements and collaborations with famous people, influencers, and other successful brands. For example, in 2021, Adidas teamed up with Xbox to unveil a limited edition sneaker celebrating the console’s 20th anniversary.

This collaborative marketing approach is vital for Adidas’s current growth strategy, “Own the Game”, which will see the company switching to a direct-to-consumer (D2C) led business model in the hope of significantly increasing sales and profitability by 2025.

Key targets of this strategy include:

E-commerce sales to double
9 out of 10 articles should be sustainable
Digital transformation aided by investments of over 1 billion euros
Revenues to increase at a rate of between 8% and 10% per annum

In 2021, Adidas reported revenue of $25.122 billion, a 10.83% increase compared to the previous year.

Under Armour

Under Armour, Inc. is an American sports apparel and equipment company founded in 1996 with headquarters in Baltimore, Maryland. It has additional offices in Amsterdam – which serves as the company’s European headquarters – Austin, Hong Kong, Mexico City, London, New York City, Munich, and Seoul, among others.

Under Armour’s origin story is one I love reading about, particularly because the founder, Kevin Plank (a former captain at the University of Maryland), began the business from his grandmother’s basement in Washington. Who’d have thought it would grow so big?

Check out this guide for a full explanation of Under Armour’s mission statement.

The company’s big break came in 1990 when Warner Brothers paid Under Armour to outfit two of its films. A year later, Under Armour became the outfitter of the XFL football league, and the rest is history.

In 2018, the company announced a five-year growth plan prioritizing accelerated innovation and greater financial and operational agility. Under Armour’s long-term growth strategy focuses on investing in digitization and its stores to reach consumers directly and sell more inventory at full price.

Under Armour’s marketing activity targets new or previously limited demographics to expand the brand’s reach. For example, the company’s 2014 “I Will What I Want” campaign targeted women who had previously been sidelined by the brand’s predominantly male-centric clothing lines. It was one of Under Armour’s most expansive and successful campaigns.

In 2021, Under Armour generated approximately $5.7 billion in revenue.

Gymshark

Gymshark is a British fitness apparel and accessories brand founded in 2012 and headquartered in Solihull, England. Like most of its rivals, the company opts for a production revenue model, but its method of selling products is different in that it prioritizes digital sales over in-person stores.

Gymshark has 14 online stores but only one physical store on Regent Street in London, opened in 2021. This tells us how the brand became such a massive phenomenon: it relies heavily on social media, word-of-mouth marketing, and influencers.

On Instagram, Gymshark has over 5.8 million followers, and the brand boasts on its website that it has a family of over 10 million employees, athletes, and followers across all social media.

YouTube is another highly successful social media platform for Gymshark. The company regularly posts interesting content like fitness tests that keep people coming back for more.

While Gymshark’s digital strategy has been crucial for the brand’s success, external investment has also helped by allowing it to achieve unicorn status. In 2020, General Atlantic took a minority stake in the company of 21% in an investment that pushed Gymshark’s valuation to over a billion.

In 2021, Gymshark reported a 54% increase in revenue compared to the previous year, resulting in £401.9 million in net revenue.

Lululemon SWOT Analysis

Below, I have included a SWOT analysis detailing Lululemon’s strengths, weaknesses, opportunities, and threats.

Strengths

High-quality products that combine style with practicality
A strong luxury brand identity that is highly desirable, particularly to women
The business model is customer-centric
Successful community-based marketing strategies
Extensive research and development department, including a lab with scientists and physiologists
International reach
Millions of followers on Instagram
Can rely on word-of-mouth marketing to an extent

Weaknesses

Low brand recall compared to some rival brands like Nike
Products have a very high price point, so many consumers cannot afford them
Owner of the brand has made disrespectful comments about plus-size people, negatively impacting Lululemon’s overall reputation
Issues with logistics and inventory

Opportunities

Create a stronger global presence by expanding international operations
Branch into emerging economies
Expand the range of clothes to meet the needs of people with different lifestyles
Focus on the environment to boost brand reputation
Release a more affordable line of products
Take advantage of healthy trends, making more products that meet the current demand

Threats

Sportswear industry can be volatile because it is dependent on current trends
Rival brands like Nike and Adidas are better established and have strong brand recognition
Buyers who are conscious of the price will look elsewhere
Controversies in upper management can have an impact on overall brand reputation and popularity
Global economies are still suffering in the wake of the Covid-19 pandemic

Lululemon Competitors Analysis FAQs

Question: Is Lululemon a luxury brand?

Answer: Lululemon is one of the most iconic luxury sportswear brands in the world. Its products are expensive, but many believe they are worth it because of the high-quality designs and fabric.

Question: Why is Lululemon better than other brands?

Answer: Like all sportswear companies, there are pros and cons to Lululemon and its products. Some things that make Lululemon stand out are its commitment to high-quality materials and its customer-centric approach, which allows for better innovation.

Question: Who is Lululemon’s biggest competitor?

Answer: Nike is the biggest sportswear brand globally, with annual revenue of $44.5 billion, so in financial terms, it is Lululemon’s biggest competitor. However, Sweaty Betty is a serious competitor too because, as a brand, it is very similar to Lululemon.

Conclusion

Lululemon has done something fairly rare for a sportswear brand: it has achieved cult status. But like Peloton, a sport-based company with a similar upward trajectory, success based primarily on hype and the idea of a certain lifestyle can soon go downhill.

The pandemic has pushed global economies into a state of uncertainty, not to mention the war in Ukraine and subsequent energy crises. Will people still be willing to pay high prices for Lululemon’s luxury garments when their wallets are already squeezed? I’m not so sure.