Question

What opportunities did Lululemon see in what was an already crowded apparel market? The larger question is how does a new company make a breakthrough in mature markets?

Answer 1

The yoga and fitness apparel company Lululemon Athletica, Inc. (LULU) is another example of a company that has found success in selling a lifestyle rather than a commodity. The business strategy of the company is based on promoting its branded products "Lululemon Athletica" and "Ivivva Athletica" as stepping-stones towards an active and enjoyable lifestyle. With Lululemon this has been a successful strategy, as the company may sell its goods at a premium. Customers also wear the products of the business as trendy clothing, and not just for exercise.

Growth is the real challenge: Most companies have ambitious growth targets. The trouble is there are just so many sources of growth in the market. Markets are flat and increasingly commoditized in many countries and industries; it is expensive to achieve market share growth; and acquisitions often do not work. And so innovation in product and service becomes the logical source of that development. The wide range of opportunities and threats needs strategic direction with a clear focus to manage. There is room for change in almost every organization in this way.

Innovation must be encouraged from the top of the organization, in order to further improve the innovation potential of a business. The top executives therefore need to make use of resources to effectively form the direction and content of these programmes. There are serious risks for the medium-to long-term competitiveness of established corporations in the light of digitization and related trends. Many of these businesses have no choice but to stay creative because in the long run, competing solely on quality against firms with superior digital solutions is not usually an option.