Saturday, December 21
4.83/5 (36)

Loading

Disclaimer

Lululemon (NASDAQ: LULU) is an athletic activewear company that sells apparel for yoga, running, and fitness activities. Initially, the brand is known for women’s yoga apparel, but it has grown into men, casual, and lifestyle brands.

The stock is listed on the Nasdaq stock exchange and has a market capitalization of $42 billion. The company has an annual revenue of $3.9 billion, with a growth of 18% year-over-year.

The company generates strong earnings during the pandemic after recent expansion into men, digital, and international markets. The popularity has increased as more people work from home and choose more comfortable and stylish apparel than formal attires.

The strategy has propelled the brand into direct competition with Nike, Adidas, and Under Armor. Therefore, it is crucial for managers, investors, employees, and customers to understand industry intensity, competitive advantage, and long-term profitability.

Porter’s Five Forces industry and competition analysis is the best framework to evaluate the business’s competitive advantage. The following is a summary of the framework and the competitive advantage analysis of Lululemon.

What is Porter’s Five Forces Industry and Competition Analysis?

Porter’s Five Forces industry and competition analysis is a qualitative business analysis to evaluate the competitive advantage and long-term profitability. The primary goals are to determine the level of competition, evaluate the strength and weaknesses, and establish the corporate strategy.

Michael Porter developed the framework in 1980 as a Harvard Business School Professor. He published the strategy in a book called “Competitive Strategy: Techniques for Analyzing Industries and Competitors.”

Michael Porter identified the five forces that shape every market and industry. The five forces model analyzes the intensity of the competition, attractiveness, and long-term profitability.

Porter’s Five Forces Industry and Competition Analysis were developed by Harvard Business School professor Michael Porter in 1980 and published in the book called “Competitive Strategy: Techniques for Analyzing Industries and Competitors.”

Lululemon: Porter’s Five Forces Industry and Competition Analysis

The framework provides a qualitative and comprehensive strategic analysis to evaluate the competitive analysis beyond the current competition. Porter’s Five Forces model will help the brand to build a strategic position and create a competitive advantage.

Threat of New Entrants

The barrier of entry for the textile and apparel industry is low. Many brands offer similar yoga and athletic products, such as Sweaty Betty, Athleta, Patagonia, and Fabletics. Big brands like Nike, Under Armour, Puma, and Adidas exploit the trend and saturate the market.

However, Lululemon is the pioneer of the athleisure brand, and the company has a long history of creating innovative products. Lululemon operates an innovation hub called Whitespace in Vancouver and New York City to create a new value proposition for customers and develop effective barriers to protect its competitive advantage [1].

How Lululemon increases the barrier of entry and lowers the threat of new entrance:
  • Innovation is the front and center of Lululemon’s brand and product differentiation strategy.
  • Innovative products increase brand loyalty from the existing customers
  • Novel products give new customers a reason to buy the Lululemon brand.
  • Diversification is crucial to capture a new market segment and extend the brand beyond women.
  • Online sales are essential for creating a new income source in the digital economy.
  • Mirror’s acquisition helped Lululemon enter the fitness equipment market and directly compete with Peloton and Fight Camp.
  • Casual clothing and footwear are the next frontiers for increasing the competitive advantage of the Lululemon brand.

Bargaining Power of Suppliers

The bargaining power of suppliers is high as Lululemon does not operate any manufacturing facility. Lululemon gets the raw material from 65 suppliers, and 30% of Lululemon products are made from trademarked Luon fabric, which comes from a single supplier [2].

Lululemon manufactures its product from 35 companies throughout Asia, China, and North America. It is an important strategy as the highly seasonal fashion industry requires quick responses to new trends.

How Lululemon lowers the bargaining power of suppliers:
  • Lululemon is on the right track to diversify the material source and manufacturing facility to lower the supplier’s bargaining power.
  • Horizontal integration is a better strategy as the apparel industry is highly seasonal and requires no capital cost.
  • An efficient supply chain is crucial to minimize cost, increase quality, and improve delivery speed.
  • Leveraging the Lululemon brand is key to securing suppliers and making them dependent on Lululemon’s orders.

Bargaining Power of Buyers

The bargaining power of buyers is low as Lululemon sells at a premium price. Lululemon’s strategy to target the high-end market has proven successful in maintaining its competitive advantage.

The strong brand association with the luxury athleisure market creates a sustainable competitive advantage. It attracts new buyers who want to be perceived as part of an exclusive social community.

How Lululemon lowers the bargaining power of buyers:
  • Diversification into the casual lifestyle market allows Lululemon to maintain premium prices and lower the buyer’s bargaining power.
  • Expansion into an online store captures revenue during a pandemic and maintains a premium price.
  • Rapid innovation creates strong differentiation from competitors, keeps the brand fresh, and recruits loyal customers.

Threat of Substitutes

The threat of substitutes for the Lululemon brand is high. The big athletic brand produces similar products, and new start-ups saturate the market. The key source of competitive advantage is brand loyalty.

Lululemon has a solid and loyal customer base. The company has many followers that create a unique community for the health and fitness market. After hours, Lululemon converts the store to a yoga studio to maintain solid communities and offer service beyond apparel products.

How Lululemon lowers the threat of substitutes:
  • Lululemon is on the right track to offer more services rather than product-oriented ones.
  • Yoga classes, a strong social media presence, and dedicated Lululemon stores are a source of competitive advantage.
  • Lululemon does not sell its product in non-operated company stores. This strategy creates scarcity and makes Lululemon an exclusive high-end product. It creates a high demand and allows the company to charge premium pricing.

Industry Rivalry

The rivalry among existing players is intense. The competitors use a pricing strategy to drive the price down, gain market share, and decrease overall profitability.

The competitive athleisure market becomes a real threat for Lululemon operating in the high-end market segment. The economic downturn will drive customers away to go for more affordable brands.

How Lululemon lowers the intensive of the industry and competition:
  • Differentiation in the product, place, price, and promotion are the foundation of Lululemon’s competitive advantage in an intense industry.
  • The competitors capture the lower-end markets, but it will take significant time and investment to penetrate Lululemon’s market share.
  • Innovation, Research & Development, and Intellectual Property are the building blocks of Lululemon’s competitive advantage.
  • Supply chain, horizontal integration, and continuous improvement will lower the unit cost to create a buffer during a market downturn.
  • A solid social media presence, community, endorsement, and online marketing will enhance the brand value.

Implication of Porter’s Five Forces Industry and Competition Analysis on Lululemon

Lululemon has a low entry barrier, high bargaining power of suppliers, low bargaining power of buyers, high threat of substitutes, and intense rivalry.

However, Lululemon has strong differentiation and innovation to compete in an intense industry rivalry. Lululemon begins eroding the big brands’ market share in the athleisure and lifestyle segment.

Lululemon has a strong, sustainable competitive advantage as the company is structured as an agile organization. The company can identify a game-changing trend in the apparel industry and manage to venture into emerging opportunities.

Please rate this

Leonardo Hadi, P.Eng., MBA, is a Quantamental Investor and Professional Engineer, holding an MBA from the University of Illinois at Urbana-Champaign.

160 Comments

  1. Pingback: Earnings Calendar (Dec 7 – Dec 11): Lululemon, Broadcom, Oracle, and more | Hivelr. Business Journal

  2. Pingback: Lululemon: Earnings Preview | Hivelr | Business Journal

  3. Pingback: Which is cheaper Lulu or athleta? - How Is What

  4. Pingback: How does Lululemon compete with other brands? - True goodie

  5. Pingback: SWOT Analysis of Lululemon - Academia Analysis

  6. Thank you for some other great article. Where
    else could anyone get that type of information in such a perfect method of writing?
    I’ve a presentation subsequuent week, and I am on the look for
    such info.

  7. Simply want to say your article is as surprising. The clarity on your put up is simply nice and i could
    suppose you are an expert in this subject. Well together with your permission allow me
    to take hold of your feed to stay up to date with impending post.
    Thanks one million and please keep up the gratifying work.

  8. Hello there, I discovered your web site via
    Google while searching for a comparable topic, your site
    came up, it looks good. I have bookmarked it in my google bookmarks.

    Hello there, simply became alert to your blog through Google, and found that it is truly informative.
    I am going to be careful for brussels. I’ll appreciate
    if you proceed this in future. A lot of other folks will be benefited from your writing.
    Cheers!

  9. Pingback: Chapter 5 – Business-Level Strategy – Global Strategic MGMT x Lululemon

  10. I really like your blog.. very nice colors & theme. Did you create this website yourself or did you hire
    someone to do it for you? Plz answer back as I’m looking to design my own blog and would like to find out where u got this from.
    thanks a lot

  11. I like the valuable information you provide in your articles.

    I will bookmark your weblog and check again here regularly.
    I am quite sure I’ll learn plenty of new stuff right
    here! Good luck for the next!

  12. مرتب‌سازی بر اساس: جدیدترین گران‌ترین ارزان‌ترین محبوب‌ترین پلیور بافت یوآر

    برندهای معروفی در ارتباط با
    انواع سویشرت و هودی مردانه
    اقدام به طراحی و تولید کرده‌اند که از جمله آن‌ها به سویشرت مردانه
    آدیداس، جامه پوش آرا، هودی مردانه باینت، جک اند جونز، ساروک، لیلیان مد، ال سی من، پاتن جامه، کوتون و غیره
    می‌توان اشاره کرد.

  13. I’m gone to convey my little brother, that he should also pay a visit this webpage on regular basis to obtain updated from newest information.

  14. Very nice post. I just stumbled upon your weblog and wished to mention that I’ve really enjoyed surfing around your weblog posts.
    After all I will be subscribing on your feed and I am hoping you write again soon!

  15. Hello there, I discovered your site by means of Google while searching for a comparable matter, your site
    came up, it appears good. I’ve bookmarked it in my google bookmarks.

    Hi there, simply became alert to your weblog
    through Google, and located that it is really informative.
    I’m going to be careful for brussels. I’ll be grateful if you proceed this in future.
    Numerous people shall be benefited out of
    your writing. Cheers!

  16. I am now not certain where you are getting your information, however great topic.
    I must spend a while learning much more or figuring out more.
    Thanks for magnificent info I was looking for this information for
    my mission.

  17. Hello, Neat post. There is an issue along with your site in internet
    explorer, would test this? IE still is the market chief and a big component of other folks will omit your great writing due
    to this problem.

  18. Pingback: essay about the help

  19. Pingback: Atorlip-10

  20. Heya! I just wanted to ask if you ever have
    any problems with hackers? My last blog (wordpress) was hacked and I ended up losing months of hard work due to
    no back up. Do you have any solutions to stop hackers?

  21. Hi! Do you know if they make any plugins to help with SEO?
    I’m trying to get my blog to rank for some targeted keywords but I’m not seeing very
    good results. If you know of any please share. Many thanks!

  22. This is really interesting, You’re a very skilled blogger.

    I’ve joined your feed and look forward to seeking more of your magnificent post.
    Also, I have shared your website in my social networks!

  23. I loved as much as you will receive carried out right here.
    The sketch is attractive, your authored material stylish.
    nonetheless, you command get bought an edginess over that you wish be delivering
    the following. unwell unquestionably come further formerly again as exactly the same nearly a lot often inside case you shield this hike.

  24. Great post. I used to be checking constantly this blog and I am inspired!
    Very useful info particularly the final section 🙂 I care for
    such information much. I used to be seeking this certain info for a long time.

    Thank you and good luck.

  25. You actually make it appear really easy together with your
    presentation however I in finding this matter
    to be really something which I think I might by no means understand.
    It kind of feels too complex and very wide for me.
    I’m having a look forward for your next put up, I’ll attempt to get the grasp of it!

  26. I was suggested this website by my cousin. I am not sure whether this post is written by him as
    nobody else know such detailed about my difficulty.
    You’re wonderful! Thanks!

  27. Thanks , I have just been searching for information about this subject for a long time and yours is the greatest
    I’ve discovered till now. However, what about the bottom
    line? Are you certain about the supply?

  28. I was wondering if you ever considered changing the page layout of your website?
    Its very well written; I love what youve got to say.
    But maybe you could a little more in the way of content so people
    could connect with it better. Youve got an awful lot of text for only having 1 or two images.

    Maybe you could space it out better?

  29. Pretty section of content. I just stumbled upon your site and
    in accession capital to assert that I get in fact enjoyed account
    your blog posts. Anyway I’ll be subscribing to your augment and
    even I achievement you access consistently quickly.

  30. Hello! I simply would like to give you a huge thumbs up for the excellent
    information you have got right here on this post. I’ll be returning to your blog for more
    soon.

  31. Can I just say what a relief to find a person that
    actually understands what they are discussing
    online. You actually understand how to bring a problem to light and make it important.
    A lot more people ought to look at this and understand this side of the story.
    It’s surprising you’re not more popular given that you certainly possess the gift.

  32. Simply desire to say your article is as amazing.

    The clearness in your post is simply excellent and
    i could assume you are an expert on this subject.
    Fine with your permission allow me to grab your feed to keep updated with forthcoming post.
    Thanks a million and please continue the rewarding work.

  33. Wonderful article! That is the type of info that should be shared
    around the net. Shame on Google for no longer positioning this put
    up higher! Come on over and consult with my website
    . Thanks =)

  34. A motivating discussion is worth comment. There’s no doubt that that you should write more on this subject,
    it may not be a taboo subject but typically people don’t discuss these topics.
    To the next! Kind regards!!

  35. Very nice post. I just stumbled upon your weblog and wanted to say that I have truly enjoyed
    browsing your blog posts. In any case I’ll be subscribing to your
    rss feed and I hope you write again very soon!

  36. Awesome site you have here but I was curious about if
    you knew of any discussion boards that cover the same topics discussed here?

    I’d really like to be a part of group where I can get feedback from other experienced
    individuals that share the same interest. If you have any
    recommendations, please let me know. Appreciate it!

  37. Thank you, I’ve just been searching for information about this topic for a long time and yours is the best I have
    came upon till now. But, what in regards to the
    conclusion? Are you positive concerning the supply?

  38. whoah this blog is wonderful i love studying
    your articles. Keep up the great work! You understand, lots of individuals are searching round for this information, you can aid them greatly.

  39. I like the valuable information you supply to your articles.
    I’ll bookmark your weblog and test once more right here frequently.
    I’m fairly sure I will be told plenty of new stuff proper here!
    Best of luck for the following!

  40. I’m curious to find out what blog platform you are utilizing?

    I’m having some minor security issues with my latest website
    and I’d like to find something more safe. Do you have any suggestions?

  41. Hi, I do believe this is an excellent blog. I stumbledupon it ;
    ) I am going to revisit once again since i have bookmarked
    it. Money and freedom is the best way to change, may you be rich and continue to help other people.

  42. Have you ever considered creating an e-book or guest authoring on other websites?

    I have a blog based on the same ideas you discuss and would love to have
    you share some stories/information. I know
    my subscribers would value your work. If you are
    even remotely interested, feel free to send me an email.

  43. With havin so much content do you ever run into any
    problems of plagorism or copyright infringement? My blog has a lot
    of unique content I’ve either written myself or outsourced but it looks like a lot of
    it is popping it up all over the internet without my permission.
    Do you know any methods to help protect against content from
    being ripped off? I’d genuinely appreciate it.

  44. I will immediately grasp your rss feed as I can’t find
    your e-mail subscription hyperlink or e-newsletter service.
    Do you’ve any? Please allow me recognize so that I could subscribe.
    Thanks.

  45. Very good site you have here but I was curious if you knew of any user discussion forums that cover the same topics discussed here?
    I’d really like to be a part of group where I can get comments
    from other experienced people that share the same interest.

    If you have any suggestions, please let me know.
    Thank you!

  46. I am extremely impressed with your writing skills and also
    with the layout on your weblog. Is this a paid theme or did you customize it yourself?
    Either way keep up the nice quality writing, it’s rare to see
    a nice blog like this one these days.

  47. Hey! I just wanted to ask if you ever have any trouble with hackers?
    My last blog (wordpress) was hacked and I ended up losing several weeks of hard work due to no back up.
    Do you have any solutions to stop hackers?

  48. Pretty component of content. I simply stumbled upon your weblog and
    in accession capital to claim that I get actually enjoyed account
    your blog posts. Any way I’ll be subscribing to your augment and even I
    fulfillment you access constantly fast.

  49. With havin so much content do you ever run into any issues of plagorism or copyright violation? My blog
    has a lot of completely unique content I’ve either authored
    myself or outsourced but it seems a lot of it is popping it
    up all over the web without my authorization. Do you know any techniques to help protect against
    content from being ripped off? I’d truly appreciate it.

  50. Terrific article! This is the kind of info that are supposed to be shared around
    the internet. Shame on the seek engines for no longer positioning this
    publish higher! Come on over and talk over with my web site .

    Thanks =)

  51. Hi! Someone in my Facebook group shared this website with us so I came to check it out.
    I’m definitely enjoying the information. I’m book-marking and will be tweeting this to my followers!

    Superb blog and amazing style and design.

  52. Howdy! Quick question that’s totally off topic. Do you know
    how to make your site mobile friendly? My weblog looks weird when viewing from my iphone 4.
    I’m trying to find a template or plugin that might be
    able to fix this problem. If you have any suggestions,
    please share. With thanks!

  53. I blog quite often and I genuinely appreciate your content.
    This article has really peaked my interest. I will bookmark your site
    and keep checking for new details about once a week.
    I subscribed to your Feed as well.

  54. Pretty great post. I just stumbled upon your blog and wished to mention that
    I’ve really loved surfing around your blog posts.
    After all I will be subscribing to your feed and I
    am hoping you write once more soon!

  55. Thanks a bunch for sharing this with all of us you really understand what you’re talking about!
    Bookmarked. Please also discuss with my web site =). We may have a link
    change arrangement between us

  56. Hello there! I know this is kinda off topic but I was wondering if you knew where I
    could get a captcha plugin for my comment form? I’m using the same
    blog platform as yours and I’m having problems finding one?

    Thanks a lot!

  57. Very nice post. I just stumbled upon your blog and wished to say
    that I have really enjoyed browsing your blog
    posts. In any case I will be subscribing to your rss feed and I hope you write
    again soon!

  58. Oh my goodness! Incredible article dude! Thanks,
    However I am experiencing problems with your RSS. I don’t understand why
    I cannot subscribe to it. Is there anyone else getting similar RSS issues?

    Anybody who knows the answer can you kindly respond? Thanks!!

  59. I like the helpful information you provide in your articles.
    I’ll bookmark your blog and check again here frequently.
    I am quite certain I’ll learn lots of new
    stuff right here! Good luck for the next!

  60. Have you ever considered publishing an e-book or guest authoring on other blogs?
    I have a blog based on the same information you
    discuss and would really like to have you share some stories/information. I know my visitors would value your work.
    If you’re even remotely interested, feel free to shoot me an e-mail.

  61. Oh my goodness! Impressive article dude! Many
    thanks, However I am having troubles with your
    RSS. I don’t know the reason why I cannot subscribe to it.

    Is there anybody having the same RSS problems? Anybody who knows the solution will you kindly respond?
    Thanx!!

  62. Simply desire to say your article is as astonishing.
    The clearness to your put up is just excellent and that i can think you’re
    an expert in this subject. Fine along with your permission allow me
    to take hold of your RSS feed to stay updated with coming near
    near post. Thanks a million and please continue the enjoyable work.

  63. Pingback: The Final Post: Analysis of Lululemon’s Brand Differentiation Strategy – Lululemon Blog

  64. free blogNice post. I understand some thing much harder on diverse blogs everyday. Most commonly it is stimulating to study content using their company writers and rehearse a little something from their store. I’d would prefer to apply certain with all the content in this little blog regardless of whether you don’t mind. Natually I’ll provide link on your web blog. Many thanks sharing.

  65. free blogNice post. I understand some thing much harder on diverse blogs everyday. Most commonly it is stimulating to study content using their company writers and rehearse a little something from their store. I’d would prefer to apply certain with all the content in this little blog regardless of whether you don’t mind. Natually I’ll provide link on your web blog. Many thanks sharing.

  66. 比特派下载(Bitpie)是一款全球领先的多链数字钱包,专为支持多种区块链资产而设计,如比特币(BTC)、以太坊(ETH)、波场(TRX)、泰达币(USDT)等主流加密货币。通过使用比特派,用户不仅能够轻松便捷地管理和转移数字资产,还可以享受去中心化应用(DApp)等多种区块链服务

Leave A Reply

Hivelr

Better, Smarter, Wealthier.

 

AI-powered platform for investors, CEOs, and policy makers, delivering in-depth, unbiased, thought-provoking, and actionable analysis to guide investment and strategic decisions. Hivelr, stands for “hive-mind learning,” harnesses the power of AI to make the world better, smarter, and wealthier.