Athleta’s Strategy & Growth, What You Need to Know
If you thought athleisure was just another fad, you were wrong. Consumers can’t get enough of the stretchy tights and tops that let you go from brunch, to the gym, to an afternoon Zoom call with ease. Athelta, owned by Gap Inc. is one of many retailers from Nike to lululemon trying to grab more share in this hot category. Despite the competition Athleta has been able to carve out its own place in this sector, growing from a brand generating $37 million in sales in 2008 to a billion dollar brand today. If you are curious about Athleta’s growth and strategy within the highly competitive athleisure sector then consider these six factors.
1. Athleta is seen as the future of Gap Inc. Gap Inc. is betting its future on Athleta a brand it bought in 2008 for $150 million. While its namesake Gap brand is struggling with foot traffic down 22% in June of this year compared with the same period in 2019 Athleta’s traffic was up 8.5%. Gap Inc. is now aiming to have 70% of its sales come from its Athleta and Old Navy brands by 2023 up from 55% in 2020, signalling a large shift in the direction of the company. “Athleta is going to be the new crown jewel” of Gap, said Simeon Siegel, analyst at Nomura Instinet. “Athleta will pose the shiny object that is driving sales growth.”
Athleta like many retailers is trying to grab a larger piece of the fast growing athleisure market which represented 33% of apparel sales last year up from 27% in 1999. One of the ways Athleta is trying to grow its customer base is by pricing its merchandise approximately 20% cheaper than the merchandise sold by athleisure stalwart lululemon.
2. Athelta isn’t trying to be all things to all people. Instead Athleta is squarely focused on women. “It’s the only female-only, women-supporting-other-women active lifestyle brand,” Sonya Syngal, CEO of Gap Inc. said of Athleta. “It’s a time when people are wanting human connection, and that’s where people are relating to Athleta and its unique positioning.” 97% of Athleta’s employees are women and the company is also run by a woman, Mary Beth Laugton.
3. Athleta sees wellness as a whole as a growth opportunity. In addition to focusing on women Athleta is trying to differentiate itself by positioning itself as more than an apparel maker but as a wellness brand. Earlier this year Athleta launched AhtletaWell which is an online platform that provides members of Athleta’s loyalty program access to wellness experts, free workouts, workshops and classes. “At its core, AthletaWell is really providing a safe space for women to navigate the complexities of modern-day womanhood and get expert advice on topics all rooted in female wellbeing,” said Kim Waldmann, Athleta’s chief digital officer. “[Topics] we’re afraid to ask for fear of embarrassment, or maybe they’re taboo, or we don’t want to look like we’re different than everybody else. Like, what are tips for sleep? Or fertility. Or even simple things, like I’m a DD, is there a good bra that doesn’t chafe endlessly?”
“There are Q&A platforms out there; there are blogs on fertility and yoga. And there are plenty of fitness apps,” Waldmann said. “But there really isn’t a place for women to get access to vetted experts across the whole spectrum of female well-being. AthletaWell is about physical well-being. But Athleta is also interested in mental well-being, emotional well-being and environmental well-being.”
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4. Athleta is focusing on diversity and inclusion, from merchandise to stores. Athleta has started to make more of its apparel available in plus sizes with the goal of having its entire collection available in all straight and extended sizes by 2022. Over 5,000 Athleta employees have to go through extended sizing and unconscious bias training to ensure they are communicating internally and externally in a proper manner.
Athleta stores now have inclusive mannequins so women of all body types can see themselves represented while they shop. Unlike many retailers that place plus sized clothing in a different part of the store customers shopping in an Athleta store will find plus sized clothing merchandized alongside straight sized clothing. But Athleta has been criticized for not using enough plus sized models on its website.
5. Athleta focuses on female empowerment through key sponsorships. Athleta sponsors gymnast Simon Biles and sprinter Allyson Felix. To attract athletes of this caliber who were both previously sponsored by Nike, Athleta focuses on athletes as whole individuals instead of focusing only on their professional accolades. It is commonplace for large fitness companies like Nike to have contracts with athletes that are purely based on accomplishments such as the number of medals the athletes wins as well as track times or rankings. There are often reductions in compensation if athletes do not meet certain thresholds which places a lot of pressure on the athlete to perform. Speaking about why she signed with Athleta Biles said: “I felt like it wasn’t just about my achievements, it’s what I stood for and how they were going to help me use my voice and also be a voice for females and kids.” “I feel like they also support me, not just as an athlete, but just as an individual outside of the gym and the change that I want to create, which is so refreshing.”
Felix echoed a similar sentiment when she said: “it’s a very pressured situation to be sponsored traditionally in track and field — it’s about numbers if you don’t perform, reductions and all of these things.” “[But with Athleta] I felt like I had more value as a person, and that was something I hadn’t experienced before.”
6. Athleta is doubling down on growth. Athleta is ambitious with plans to grow into a $2 billion brand by 2023, after Athleta’s sales passed $1 billion for the first time last year. Among its many planned growth initiatives Athleta is leaning into store expansion as well as selling its products in partnership with other retailers. One of those retailers is REI Co-op which sells a curated selection of Athleta merchandise on REI’s website and inside of its stores. “We’re constantly looking at new ways to bring Athleta to more customers and meet her where she is, which is an important component of our growth strategy,” said Laughton, President and CEO, Athleta. “This expanded partnership with REI is an example of how we can extend our reach through a like-minded brand and empower a new community of active women consumers.”
Athletica also sell its merchandise on Zalando a leading online retailer in Europe. “International expansion is a key part of Athleta’s growth strategy, and there is significant potential to grow this incredible, relevant, purpose-driven brand in Europe.” “Zalando’s extensive digital reach and personalized customer experience gives us real opportunity to build brand awareness and begin to scale the business across 23 new markets,” said Adrienne Gernand, head of Gap Inc. strategic alliances, licensing and real estate. Athleta expanded into Canada earlier this year with two new stores and is planning to open 20-30 stores this year alone across North America.