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Lululemon succeeds due to pricing rather than trends

By Robyn Turk

Jul 22, 2019

As the athletic and activewear market continues to grow, consumer-favored athleticwear brand Lululemon rises in success and popularity. The Canadian apparel brand reported a Q1 growth of 80 base points in comparison to last year, on top of its increase in product categories like its new selfcare product and footwear lines.

Following a year of growth in 2018, Lululemon recently announced its five-year "Power of Three" strategic plan to continue its momentum. The strategy speaks to driving product innovation, building integrated omni guest experiences and expanding in key markets globally.

Under the "Power of Three" plan, Lululemon expects to double the size of its men’s revenues by 2023, and grow existing and new product categories.

Lululemon's success could be based on somewhere other than its announced growth strategy. A recent report from retail analysis firm Edited shows that Lululemon's secret weapon is actually rooted in strategic pricing.

Lululemon utilizes strategic pricing model

According to Edited's report, Lululemon's "secret formula" is threefold: functional garments at a high yet consistent price point, minimal discounting and consumers awareness that they will pay full price.

While the brand's competitors regularly promote discounts of at least 40 percent, Lululemon rarely brings its products' base prices down by more than 20 or 30 percent, even during peak sale seasons.

Lululemon has maintained consistent pricing; its core products, leggings and sports bras, have remained at average price points of 90 and 47 dollars respectively since 2017. Edited noted that this consistency leads to a strong shopper awareness of pricing and most will not expect pricing reductions.

Image: Lululemon