Lululemon is one of the most expensive athleisure brands in the market today.
It was founded in 1998 by Chip Wilson when he noted that women’s sportswear at the time was made of fabric that was neither comfortable nor suitable for exercise and movement.
However, the question remains, why are its products more costly than similar ones from other brands?
Also, why are consumers willing to part with a small fortune just to own several of these products?
Why Is Lululemon So Expensive? (Top 14 Reasons)
Lululemon stocks a wide variety of activewear, from leggings to sports bras and jackets that typically range from $90 to $130.
The following are some of the reasons this brand’s products are so highly priced.
1. High Cost Of Production
Expensive machines and fabric developing techniques are used in the manufacture of Lululemon apparel.
The company also puts the manufactured products through thorough product testing and quality control to ensure it offers high-quality items to its clients.
The vice president of global product quality once reported that they run 13 to 15 product tests before they proceed with manufacture and that every single fabric has to be tested before leaving the manufacturing facility.
Some of the factors to consider for cost during the entire production process are the price of machines and their maintenance and the human resources required throughout the process.
The machines used must be quality machines and top of the line.
The machines will also, of course, need technicians who operate and maintain them from time to time, which leads to salary expenses.
Each company will also have a large team of executives and different departments.
Just think of the managers, sales teams, marketing teams, procurement teams, and customer support teams.
These teams also require salaries.
On top of all this, the company does not run its own manufacturing facilities and thus outsources production to facilities in Asian countries.
Therefore, there is an added cost for the transport of apparel to the respective stores once production is complete.
Products that are expensive to make are consequently just as costly to purchase since the company has to realize profits.
All expenses are usually taken into account so that the company can achieve a break-even point and also make a profit.
2. Research And Constant Innovation
Lululemon continually tries to improve its products and upgrade its apparel.
To achieve this, it has to put together an enthusiastic team of design experts and market research teams to experiment on all kinds of clients, materials, and fabrics to constantly come up with better quality products and keep up with current trends.
The irony is that research should delve deeper into making processes and products efficiently to manage costs.
The company invests a lot of money in research to ultimately improve its functionality, performance, comfort, and style.
It has a lab in Vancouver, Canada, known as the Whitespace lab, which serves this purpose.
This facility is equipped with high-quality exercise machines, humidity-controlled chambers, and dunk pools for running these experiments and coming up with superior items.
As a rule of thumb, to do something new and maintain constant innovation, you have to push the boundaries of technology, reach advanced energies, acquire extremely high precision, increase durability, and make computational tasks more sophisticated.
This means that the tools and machines to achieve such daunting tasks can be pretty expensive to run and operate.
For Lululemon to stay ahead of its competitors, it means they have to spend millions of dollars for research.
The machines are operated by research personnel who also need to be compensated
Research is a labor-intensive activity that calls for highly educated, skilled, and experienced workers to whom you cannot pay minimum wages.
Now, if you were to multiply a team of 20 researchers by their annual salaries, you would quickly stack up millions of dollars.
The end products thus become considerably pricey since the sale of their products has to cover the expenditures at the lab.
They also offer discounted products for R&D athletic members.
This is another factor they consider while costing their products.
3. Quality Fabric
Lululemon strives to make clothes that individuals can comfortably wear while exercising, stretching, or even carrying out day-to-day activities.
It strives to use quality fabric that is elastic, breathable, does not easily fade after several washes, and does not pill.
Therefore, it invests a lot of money in carrying out experiments to improve these fabrics.
It uses various fabrics such as nulu, nylon, everlus, and lycra, depending on the purpose of the product being manufactured.
However, it mainly uses one known as luon, a combination of 86% nylon and 14% lycra, which they import from Taiwan.
The fabric is meant to wick away moisture when you sweat as you work out.
Products such as luon pants are made by Eclat Textile Co. in Taiwan.
They use special yarn techniques for fabric development and even claim that they had to synthesize fabric in 55 different ways before they eventually developed their current one.
The majority of people who have purchased these products attest to the durability and performance of these clothes.
Higher quality materials, however, translate to more expensive products.
4. Exclusive Retail
Lululemon almost entirely sells its merchandise through its physical stores or its official online store, Lululemon.com.
Exclusive retailing benefits the brand in various ways, such as:
- It ensures product authenticity. Therefore, customers can be sure that they are getting legitimate items from Lululemon’s own sites.
- It eliminates competitive influence. When consumers visit these sites and stores looking for a particular item, they do not have the option to purchase from other brands since they only stock Lululemon products.
- It prevents its products from being sold on clearance racks at department stores, thus enabling the brand to uphold its high prices constantly.
- It limits the accessibility of products to consumers and thus generates competition to acquire the products, increasing product demand, and value.
This translates to costs incurred while creating and maintaining these physical and online stores in terms of staff, branding, advertising, and security.
We also have to consider that the business is an empire that runs its services internationally.
Coordinating such a large retail network is no mean feat and definitely requires a lot of money.
5. Scarcity Model
Lululemon typically produces a limited quantity of a certain item.
This, in turn, results in higher competition among consumers to acquire the products once they are released in the market.
Producing a finite number of items keeps the demand higher than the supply, which warrants an increase in product prices as they are now considered scarce and therefore more valuable.
This is because consumers place a high value on scarce items rather than largely available items.
Scarcity is an artificial method meant to jack up prices, and it is a strategy used by some of the world’s most exclusive brands.
According to CEO Ms. Day:
“The goal is to sell gear at full price and to condition customers to buy when they see an item rather than wait. Our guest knows that there’s a limited supply, and it creates these fanatical shoppers.”
6. Brand Image
On top of the high production costs, higher quality, and all the other factors that may increase product cost overall, Lululemon also maintains high prices for its items to uphold its image as a luxury brand.
People are willing to spend more money on luxury brands because they are also paying for the brand name, which comes with exclusivity and symbolizes a higher socio-economic status.
This generates social approval and achievement, which can give most people the satisfaction that they crave.
Branding also involves a huge cost, especially since brands are not created overnight.
Businesses have to spend huge amounts of funds on publicity and advertising.
Quality also has to be maintained since that’s what customers will expect from Lululemon.
7. High-Quality Apparel
Since Lululemon uses quality fabrics and manufacturing techniques, the end products are of a higher standard and more durable.
Consumers are more willing to spend more than a hundred dollars on a single pair of leggings that are bound to remain in mint condition for several years despite multiple wears and washes than spend way less money on similar products from other brands which they will have to replace every few months due to rapid wear and tear.
A majority of individuals who own Lululemon products swear by the brand due to the superior quality of products and their durability.
Therefore, even though they have to part with a small fortune every time they purchase these products, they are more than willing to do so because they claim the products are worth the extravagant price.
Knowing that they offer quality products, Lululemon does not hesitate to sell expensive athleticwear.
Therefore, they need to maintain quality products to keep the best brand image and create scarcity.
The quality can be backed by their quality promise, which promises to take back any of Lululemon’s items that don’t perform as expected.
8. Minimal Discounts
Frequent discounts can be detrimental to a brand’s image.
Lululemon strives to keep its product prices high and highly sought after.
It achieves this by limiting the number of discounts offered to consumers.
However, they still have a few discounts on several less popular items on their “We made too much” section of their online site and have several offers on their products during shopping events like Black Friday.
Avoiding having sales and discounts means that customers have to shop items at their full prices.
9. Expensive Marketing
Lululemon is well known for its vigor in promoting its products and its excellent marketing strategy.
The brand uses popular social media influencers and collaborates with globally recognized celebrities to promote its apparel.
Having celebrities people look up to as brand ambassadors who constantly praise and wear its merchandise increases product demand and value since these influencers create a cult-like community of consumers, always ready to purchase items worn by them.
However, hiring these celebrities and influencers is not cheap and ultimately translates to the higher price tag on Lululemon’s gear.
10. Media Scandals
The founder of Lululemon, Chad Wilson, is well-known for his controversial views on several topics that created media scandals and public criticism.
Some might argue that these scandals were intentional and well-crafted to attract media attention to the brand.
For example, he is reported to have claimed that some women’s bodies were not suitable for his products, perpetuating fat-shaming.
He supported child labor in third-world countries, claiming it was a way for them to earn wages.
He also claimed that smoking and birth control were some of the factors that have led to the increase in divorce rates.
These are just some of the controversial statements he has made publicly, and as much as they angered people, they also created free media coverage for his brand.
This attracted more public attention and increased product demand and value despite the criticism.
As they say, no publicity is bad publicity.
Product cost rises with a product’s demand.
11. Growth Strategy
The Lululemon team continually seeks growth as an organization.
They are constantly developing new products and setting ambitious goals for the company they work tirelessly to meet.
Some of their current goals include quadrupling their international revenue by 2023, doubling their digital revenue by 2023, doubling their revenue from men’s wear by 2023, and expanding their market to include new regions.
By constantly staying on top of the game in the fashion and activewear industry, they are able to uphold the brand name and extravagant prices.
Lululemon is also acquiring other companies, such as the in-home workout platform Mirror, which was acquired for $500M.
12. Psychology
Lululemon has taught clients to buy items rather than wait through the creation of scarcity.
Unfortunately, there is also a mindset created that people perceive Lululemon products as luxurious, high-end, and worth the price.
Lululemon is exploiting this mindset to price items expensively since the customers won’t complain.
13. IP Protection
Lululemon specifically deals with designer wear which means that they have to file patents every time they come up with a new design.
The legal team also files and manages lawsuits targeted at Lululemon or against other brands that infringe on their intellectual property.
For example, they filed a lawsuit against Calvin Klein and G-III Apparel Group for infringing three of its yoga pants design patents.
Settling such issues can be costly, and legal counsel teams also have to be paid.
14. Product Recalls And Returns Policies
Product recalls can be very expensive but are not an activity that you can ignore if you want to maintain a good public image.
The brand is also normally affected when recalls are made, such as recalling women’s yoga pants for being too sheer.
This recall also generated some expensive lawsuits, such as one from Louisiana Sheriffs’ Pension & Relief Fund, which owned stocks worth around $1.3 million.
Goods recalled can also not be resold if the quality of products is maintained, even with discounts.
The material also goes to waste, and delivery costs back to the warehouses can be very expensive.
The strict return policy also has some expenses tied to it because of the team that handles and coordinates returns, the cost of regulating returned items, and the time spent handling returns.
How Can I Save Money On Lululemon Products?
Well, no one likes to spend a lot on something that could cost less.
As much as Lululemon sells expensive and exclusive products, different strategies can get you the product you want, however expensive it may be.
These methods, however, may change from time to time, depending on the season.
- You could try shopping during the holidays. During Boxing Day (the day after Christmas), the discounts may go up to 50% depending on the item.
- Using a local running club, you could apply for the Lululemon sweat collective, which has exclusive deals. If you do not have a running club, you could try creating one yourself. The sweat collective can save you up to 25%. As a sweat collective member, you may access discounted products. Lululemon benefits from this by using it as a feedback channel concerning its products.
- Lululemon also offers Military/First Responders & Health Care Worker Discounts. A 25% discount is being offered for North American active and reserve military members, military spouses, dependents, veterans, active emergency first responders, as well as nurses, doctors, and support workers who are working in hospitals, acute care facilities, and long-term care facilities. The discount is only offered for in-store purchases, and a valid ID should be presented for the same.
- Athletic teams and sports groups can also gain access to the Lululemon team program portal to shop for products and exclusive prices. The program assortment also has perks such as access to core styles with technical features that help teams’ training and travel experiences. Ensure your participation in the Lululemon team program does not affect your eligibility as an amateur athlete by checking with your amateur athletic association.
- Lululemon does all shipping for free and in-store shopping can get you a free bag. The returns are also processed free of charge.
- All tops and pants can be given a complimentary hemming service at any Lululemon store without any required receipt or tags according to the hemming policy.
- As a Lululemon employee, you can be eligible for a discount. Full-time Lululemon employees get a 60% employee discount. For markdowns, employees can save up to 75% on the original price. Part-time employees under 25 hours get a 40% discount.
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