Daryl is currently an Investor at Trihill Capital, investing in early-stage startups across South-East Asia & Founder of The Next Batch.
He was previously at Hypotenuse AI (YC S20) and Deskimo (YC S21), wearing multiple hats across Growth, Product, Partnerships, Marketing and Analytics.
Guest Author: Daryl Lim
🔥 What makes Lululemon so successful?
Headquartered in Vancouver, Canada & home to >650 total stores globally, the company is often credited with inventing yoga pants.
If there’s a company that embodies the athleisure trend & reaps the associated profits, it’s Lululemon. While it may come with a relatively high price tag — starting at a min of $90 for leggings (their most popular item) — for devoted fans, the appeal goes beyond mere cost considerations.
👀 What makes Lululemon unique?
1. Versatility & Quality – It has successfully positioned its activewear as catering not only to traditional workout settings but seamlessly integrating into day-to-day wear. The use of high-quality, performance-driven fabrics ensures that the clothing is not only stylish but also comfortable for various activities.
🙌 Btw, big fan of their Warpstreme fabric in the men’s ABC pants
2. Cultural shifts – As people prioritize comfort while working from home, the brand’s comfortable yet stylish athleisure pieces have become a go-to choice for many. The brand’s clothing seamlessly bridges the gap between formal & casual, offering pieces that are suitable for work meetings & leisure activities.
3. Customer experience – Free alteration service & hospitable customer service whenever one walks into the store. This service not only reflects the brand’s dedication to ensuring customers are satisfied with their purchases but also demonstrates a level of flexibility & customer-centricity uncommon in retail.
👀 How then do they capture value?
In the wholesale model, products are sold to intermediary retailers, like World Of Sports & Foot Locker, at a discounted rate. They then mark up the prices before selling them to end consumers.
In contrast, Lululemon’s DTC model cuts out these intermediaries, enabling the company to directly sell its products to consumers at the markup price. This streamlined approach allows them to retain a larger share of the revenue.
Notably, their commitment to the DTC model predates the widespread adoption of e-commerce. Their DTC segment has consistently accounted for ~90% of total sales every year since 2008, before the company ventured into online retail.
During an era when many sports brands relied heavily on wholesalers, they exclusively operated through its own physical retail stores. This provides Lululemon with control over the entire supply chain, from design & production to sales.
Often referred to as “vertical retail,” this strategy has been touted by Lululemon’s founder, Chip Wilson, as pioneering. He claims that industry giants like Apple/Tesla have since adopted elements of this approach from them, emphasizing the brand’s influence on the retail landscape.
As we reflect on the elements that contribute to their success, one must wonder: How will the brand continue to innovate & shape the future of activewear & what new trends will it pioneer in the ever-evolving retail industry?
hashtag#consumer hashtag#retail hashtag#d2c hashtag#lululemon
