Lululemon is losing the matcha girlies, this is why

Lululemon has seen slower growth in recent years, and I believe that is because it is losing its connection to the consumer group that launched it in the first place.

TLDR;

Lululemon has seen slower growth in recent years, and I believe that is because it is losing connection to the consumer group that launched it in the first place: the matcha girlies. In this essay I explain what led me to that theory, and what Lulu is doing wrong.

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Narrowing scope

By ‘Matcha Girlies’ I’m referring to the boutique fitness set. Women aged 18 - 35, who love a Sunday morning pilates, Wednesday evening Soul Cycle, Friday afternoon Barry’s Bootcamp. We prioritise our health and wellness. Our days are spent traversing between school, work, the yoga studio, brunch or dinner; we love our coffee dates and we want to look cute af doing it all.

Which is why the brands we will be discussing in this essay are the ones that resonate most with this set: Lululemon, Alo Yoga, Vouri, Varley. We will not be discussing other activewear giants like Nike, Gymshark, and the like.

Disclaimer: I don’t have any data to prove that the former are the only brands we wear, because I don’t want to pay for customer segmentation data, I am speaking off an educated understanding because I am one of the girls and I know the rest of the girls. So academically speaking this paper may not be eligible for any scholarly publications, but it’s fun, so let’s go.

To give you a visual of the vibe: ‘matcha girlie wellness aesthetic’ on pinterest haha

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Scene Setting

Couple weeks ago I was feeling an athleisure drawer refresh, so took myself over to Selfridge’s hoping to pick up some new things from Lulu, thinking that surely, in the nearly over five years since I set foot into one of their stores, there would be fun new styles to pick out.

You may already have guessed, judging by the title of this essay, that I was a little disappointed. The product offering did not look much different than what it did five, maybe even ten years ago. The same colourways, materials, tired cropped cuts and legging styles. Their loungewear offering was also underwhelming.

For a brand that introduced athleisure into our collective consciousness and single-handedly carved out a whole new market segment for itself by perfecting stylish, multifunctional apparel that could take its wearer out to both Sunday yoga and brunch after, Lululemon suddenly felt out of touch with what launched it in the first place. I did not doubt the quality of their clothes, but I also did not feel inspired to wear any of it.

Standing there in its grey-toned section of the shop floor, I realised that Lululemon was losing me. *cue Taylor >

Walking home that day with new sets from Varley and Vouri (so cute btw), I wondered to myself if Lululemon wasn’t starting to lose the rest of the girlies too. I couldn’t get it out of my head, that’s why we are here today:

Why is this worth exploring?

Because while Lulu is prob not going to go anywhere as a company, losing its connection to women and how we want to feel and live in our clothes is a red flag it should not ignore. According to its year-ended Jan 2022 (FY22) annual report, as much as 65% of its USD $8 billion in revenue came from, you guessed it, the girls.

That’s 65% of $8 billion btw, which is = $5,200,000,000.

So I need to know if my theory is true, and to get there, we will start by looking at what the numbers are telling us, whether or not these numbers are linked at all to disconnection with its primary customer base, and if so, then why Lulu is losing the matcha girlies.

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In numbers

Slower growth @ Lulu

Lululemon started 2023 off by downgrading the forecast for its Q4 2022 profit outlook, causing its share price to fall by as much as 12 percent. Despite a hopeful forward-looking CEO statement in its FY22 annual report (released c. Mar 2023), it closed out the year with stock downgrades from three equity analysts; entering 2024 with a steady decline in its share price from Jan - Mar (c.7%).

Covid and the ensuing worldwide supply chain crisis spelled hardship for many retailers, it’s true, so some of Lulu’s slower growth over the past three years can surely be attributed to that,

And yet, meanwhile, smaller incumbents like Vouri & Alo Yoga were out there having a stellar time.

Stellar growth @ competition

Vouri, founded in 2015, has seen spectacular growth in just a few short years, reporting profit by 2017, and by 2021 securing $400 million in venture funding that skyrocketed them to $4 billion in valuation. Btw, to put that into perspective, Uber has been around for eons and is still making a loss. Vouri is now gearing for an IPO within the year.

Alo Yoga similarly has consistently seen high double, even triple (200% YOY from 2019 - 2020) digit growth over the last five years, and building along with it a cool-girl reputation, its studio-to-street cachet elevated by a supermodel fanbase including the likes of Kendall Jenner, Kaia Gerber, Hailey Bieber.

Cool girls in Alo

Both have plans for world domination to expand their physical presence by opening between 50 - 100 stores across the globe by this year 2024. This will take Vouri and Alo to c.150 stores respectively, which is still meagre compared to Lululemon’s c.600 and growing number of stores, yes, but research has shown that footfall in Lululemon stores fell as much as 20% when competitors like Alo or Vouri opened nearby

😬 awks

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Connecting to the Girls, and why Lululemon just isn’t anymore

Before we go into what Lulu is not doing so well anymore, I have a confession: for the last ten years, my sportswear drawer has been pretty much 100% Lululemon. I did not even BLINK when Alo, Vouri, Varley, Adanola, LND, etc all these sexier newer younger start ups started making waves in the athleisure scene. I was loyal, I was a Lululemon girl through and through okay. Maybe that’s why I’m spending my weekend writing this instead of going frolicking about somewhere - I am actually sad that Lulu is no longer my number one!!! hahah

Lulu knows its connection to women isn’t what it used to be

And maybe heartbroken that I’m not their number one anymore either :( I think Lulu knows it is losing its ladies to cooler, younger players. I say this because one key pillar of their Power of Three five-year growth plan, announced in 2019, was to shift gears on target demographic and double down attention on its male customers. Men are traditionally a pretty neglected market so there is opportunity there, true, but also likely to alleviate financial risk from getting dumped by the girls.

Btw, another reason why Lulu Losing the Matcha Girlies is a problem worth exploring: the male market opportunity actually turned out not to be as lucrative as they must have expected, because three years later in 2022 they went back to the drawing board and established three new pillars for a Power of Three v.2 growth strategy haha. Doubling down on the male customer is no longer a key pillar of the new strategy.

Girls have purchasing power, man.

The reasons I think Lululemon just isn’t resonating anymore are 2-fold. One,

1. Confused product portfolio

Fact is: They are just not making things women want to wear anymore!

Exhibit A in the above Scene Setting section where I outlined why I began to explore this topic in the first place, Exhibit B here:

Exhibit C, comparing loungewear bestsellers between Lulu and some other competitors.

I know this is super subjective and there are relatively minimal differences across each brand and maybe it’s just me but everybody else’s collection has something to give. A clearer brand vision, silhouette, flow, idk.

Say you were looking to buy some new loungewear. Looking at the options below, would you really still go for Lululemon?

Exhibit C: snippets of loungewear bestsellers across different brands

2. Brand experience

Like it or not, these days, there is an aspirational lifestyle aspect to every consumer purchase. When someone makes a purchase from a brand, they are buying into the full ethos, community, values and lifestyle choices that the brand reflects in them.

Alo Yoga has built its business around the slow-living aspect of wellness; their stores are called sanctuaries, their Alo Move portal offers guided breathwork meditations alongside yoga and pilates, they sell skincare, candles, crystal bracelets even.

Varley is playing into that timeless, quiet confidence (read: quiet luxury) aesthetic with its muted neutrals and capsule Alpine ski collections (I’m guessing someone’s rich mom loves this brand).

Lulu’s competitors have a very sharp, specific brand vision. They know what their values are, they know what their customer’s values are, and they know how to marry those values. They are in tune with their clientele in a way that is absolutely crucial in today’s high saturated landscape, in a way that Lululemon no longer is.

I don’t really know who the Lululemon girl is anymore, I’m not sure that they do either?

Varley store in London

The age of the founder

On the topic of connection and brand experience, we are also living in a world where a brand’s founder is absolutely tied to his brand. People want to know the man (or woman) behind the brand, they want to hear how it was built and what moves it is making and why. They want to want a brand to thrive because they want the founder to do well. Suffice to say Chip Wilson and his myriad controversy over the years … doesn’t exactly make people want to root for him. He’s left the company now yeah but I’m not sure if the new leaders are doing a great job of turning Lulu’s anti-diversity ‘anti-fat’ reputation around?

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Wrapping up

I could go on but think this is getting a little long now… all said and done I will reiterate that Lulu is still huge and a leader in its industry, for sure, but I think it has lost its way a little over the years, allowing space for competition to spring up. I hope it finds its way again, and personally I think the way to do that is to reconnect with its roots: the girls, and how we want to live and feel in our clothes.

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Yooo if you made it this far, thank you for sticking with me! I’d love to know what your thoughts are on the above, even if just to know I’m not shouting into the void haha. Wonder if I should have gone more into what other brands are doing right that Lulu is not?

As always, open to a discussion so feel free to drop me a DM or leave a comment.

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