How lululemon Figured Out How to Monetize a Healthy Lifestyle
By Emily McCullough and Tricia McKinnon
Whether its fashionable Sunday brunch attire (think stretchy yoga pants), stress relief (meditation classes), fitness (a store with a gym), smelling good (selfcare products), lululemon has figured out how to monetize a lifestyle. Sounds easy? It’s not. How many brands can say that they have been able to successfully do this? Not many.
A healthy lifestyle is officially on trend. From Beyond Meat to Peloton companies are racing to cater to the needs of consumers that want to be healthier and live longer. The $4.2 trillion global wellness industry grew at a rate of 12.8% between 2016 and 2018 which is a strong growth rate given that it is off such a large base. Some of the key segments in this industry include personal care and beauty valued at $1.1 trillion, healthy eating, nutrition and weight loss valued at $702.1 billion and fitness / mind-body valued at $595.4 billion. Speaking about the trend in health and wellness, Ophelia Yeung, Senior Research Fellow, at the Global Wellness Institute said: “in the last few years, wellness has become a dominant lifestyle value that is profoundly changing consumer behavior.”
Many retailers are focused on health and wellness but at times their approach is a little disjointed. Take Kohl’s. It recently entered into a deal to place ten Planet Fitness gyms adjacent to Kohl’s stores. lululemon placed a gym inside one of its stores. The store in question is lululemon’s new store in Lincoln Park, Chicago which opened last month. At 20,000 sq. ft. it is the brand’s largest store to-date. Over two floors the store has a yoga studio, gym, meditation area and restaurant (where customers can have a beer, wine, juice, burgers or a salad). Customers looking for more than yoga can take weightlifting or high intensity workout classes. The space will also hold community events like movie screenings and concerts.
As you can clearly see from this store’s features lululemon has quietly been creeping into more and more of your lifestyle. First it was clothing you only wore to the gym or yoga class. Now you wear your yoga pants everywhere. Then lululemon got a larger share of your lifestyle by offering classes. For years lululemon has offered free yoga classes. Perhaps the definition of free should be changed to “instilling trust”. After years and years of offering classes for free customers trust lululemon with an additional part of their fitness regime. Now lululemon is monetizing that part of your lifestyle by charging $25 a piece for customers looking to take classes such as hip-hop yoga and guided meditation at its store in Chicago. It is a smart move as more and more people favour experiences over material positions. So much so that the experience economy is expected to reach $8 trillion by 2030. By 2023, approximately 10% of lululemon’s total store fleet will be considered “experiential” similar to its store in Chicago.
Next up, selfcare. In June of this year lululemon started selling selfcare products including dry shampoo and deodorant. The products are gender neutral and they tap into the health and wellness trend by being free of ingredients such as sulfates and parabens and they are cruelty free too (they were tested on athletes and not on animals).
One of the greatest threats from companies like Amazon is the commoditization of products and in some cases entire segments of the retail sector. A way around that is to establish a community. A set of loyal followers that stick with you through thick and thin. Lululemon’s community of loyal customers and fans is one of the best. It was not created overnight. The retailer has made a strategic investment for years into creating a community by sponsoring runs such as 10 Ks and half marathons, holding free mediation and yoga classes and even providing training guides on its website.
The New York Times has said that in the digital era there are three Cs that are important for success: community, conversation and content. lululemon is has excelled in all three areas.
While lululemon’s successful entry into more and more of our healthy lifestyles seems like good business it has only been possible by selling high quality merchandise and building trust within its community of loyal customers which over time have given the company the permission to do more.
What’s next? lululemon has its eyes on expanding its presence in the footwear market. Only time will tell how long it takes before you are wearing a stylish pair of running shoes made by lululemon to brunch.
Sources
https://www.fool.com/investing/2019/07/23/lululemon-experimental-store-hint-future-retail.aspx
https://chicago.curbed.com/2018/5/4/17315408/lululemon-new-store-north-avenue
https://fashionista.com/2019/06/lululemon-self-care-beauty-products-launch-review
https://www.health.com/beauty/lululemon-selfcare-skin-beauty-line
https://www.cnbc.com/2018/12/06/lululemon-expands-test-loyalty-program-with-128-annual-fee--.html
https://www.newyorker.com/magazine/2017/05/22/vice-and-lululemons-brand-innovation
https://www.nytimes.com/2018/11/07/style/glossier-new-store-new-york.html
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