Josefina Santambrogio (F7143857)

EMA
PART 1

PART A

The retailer I have chosen to focus on for this EMA is Lululemon athletica, a Canadian fitness apparel
retailer, self-described as a yoga-inspired athletic apparel company for both men and women. The
company makes a variety of types of athletic wear, including performance shirts, shorts, and pants,
as well as lifestyle apparel and yoga accessories. Lululemon also offers free exercise classes such as
yoga or HIIT sessions to its customers and members of staff as they believe in healthy living,
mindfulness and living a life of possibility.
I have chosen this particular retailer because I think it is a very interesting brand that has
accomplished a lot since founded in 1998. Also, I chose to focus on this brand for this EMA because I
can have the opportunity to have a deeper look into it and assess how it is doing as a brand, review
and learn about its strategies as a business and what its strengths and weaknesses are as well as
how it manages its supply chain and marketing channels. Another reason why I like Lululemon is
because I am interested in fitness, health and fashion and I think this brand represents these three
things quite well.

PART B

Lululemon operates in a intratype retail competition with Athleta, Nike and Under Armour as the
company’s main competitors. These competitors, together with Lululemon use the same cotton feel,
four-way stretch, and moisture wicking technology. As per Casteneda, (2014, p. 880), on top of
producing high-tech yoga clothes, Athleta, Nike and Under Armour sell at a cheaper cost for their
clients and yet they have failed to position themselves in the market firmly as Lululemon has done.
However, Lululemon's culture of understanding its target market has been difficult for the
competitors to duplicate. Lululemon's ability to remain loyal to the clients and the close relationship
it commands is inimitable for likes of Nike, Adidas, and Under Armour.
The ability of the competing firms to sell the same product to the customers at a lower price creates
pressure on the company's sustainability in the market. However, Lululemon's product sell fast in
the market, and this high demand for the business's products creates pressure in its stores when it
comes to keeping new lines in stock.
Lululemon's has an excellent source of sustainable competitive advantage in the market. The
evidence to this argument is that, despite the fact that the company sells its products at high prices,
the customers and guest for Lululemon keep on referring other clients to the enterprise. The
competitor's approach to reducing down prices does not seem to affect the company's sales.
According to Adamson, (2015, p. 50), Lululemon's ability to connect with its guests on a deeper level
than just establishing productive customers relationship creates an opportunity for a competitive
advantage in the market for its products over the rivaling enterprises.
Another way in which Lululemon differentiate itself from its competitors is by using social
media including Facebook, Twitter and Instagram as one of its main methods of marketing the
company and its products. The company holds live discussions with designers from the brand via
posts and comments. It also features photos and advertisements for its ‘products of the day,’ to
keep its followers interested and actively thinking about the brand.
 PART 2

A. The global and international retailing environment

Companies intending to expand their businesses in emerging markets face many challenges in the
new global business environment. A flexible approach is particularly important for international
companies to survive in an increasingly dynamic and competitive environment.
For example, foreign retailers need to be flexible and agile, adapting to the Chinese market
environment in many ways in order to succeed. China is “awash with foreign niche brands ... so
they’ve got to plan for maintaining their longevity and not just be a flash in the pan. If you look at
the major sports brands in China, they’ve all had problems at some stage” said Matthew Crabbe,
Asia-Pacific research director at Mintel International Group, a London-based global market research
firm. Lululemon has held grassroots events, like yoga classes, in Shanghai and is eager to launch test
stores in mainland China. According to Credit Suisse’s Buss, translating Lululemon’s popular style to
international markets will be a big challenge because of the cultural and language difference
however, he pointed out that the company has done so successfully in Hong Kong.
Another possible problem for Lululemon in its steps to grow internationally is likely to be the
regulatory frameworks employed by the multinational companies by the targeted state (Lululemon
Athletica, 2012, p. 293). The law requires licensing of global players who are expensive for
Lululemon to comply. Further, the corporate tax rate applied domestically use for Lululemon as it
tries to operate in the international markets. In addition, the high cost of conducting market
research in the international market is another challenge that Lululemon is likely to face. Companies
need to understand the culture, language, and demands of the target market so that they can find a
suitable location for the business; this may be costly for Lululemon (Roy & Banerjee, 2014, p. 219).
Since the company seeks to offer high standards products for its suppliers, this requires a significant
investment. Therefore, the cost may act as a challenge for Lululemon to expand internationally.

B. Sustainability and ethical concerns

Brands need to study how to gather customer information in order to be able to build long-term,
trusting relationships. In order to do this, they need to operate as sustainable and ethical as possible
due to both points being an increasing big concern for more and more people these days. This
includes the prohibition of forced labour, provision of good working conditions, fair treatment,
reasonable rates of pay and working hours, prevention of discrimination, health and safety training
and compliance. Another thing to be aware of is the pricing because cheap clothing made in
sweatshops is a vote for worker exploitation so knowing the supply chain as much as possible and
making sure suppliers and subcontracted production adheres to code standards is a must. Normally,
ethical gym wear tends to be frumpy, overpriced or lacking good quality design which makes it a
challenge to offer products that attract customer’s attention while staying sustainable.
Lululemon has a Vendor Code of Ethics (VCoE) that all retailers must follow. The Vendor Code of
Ethics explains all the standards that the company considers a must in order to meet top industry
standards. The Vendor Code of Ethics is updated regularly to stay up to date with changing laws and
practices.
In addition, Lululemon is a member of the Sustainable Apparel Coalition and claims sustainability is
one of their main beliefs however, their environmental impact is not as good as the company claims
it to be .
Lululemon uses a low proportion of eco-friendly materials, but they do recycle some off-cuts during
the manufacturing process. They also measure and report on direct and indirect energy usage,
however, they have no guarantee to reducing greenhouse gas emissions or the elimination of
dangerous chemicals even though they comply with a Restricted Substances List and around 60% of
their material are Bluesign certified, a system whose only goal is to find solutions for sustainable
textile production by using approved chemical and processes.
On the sustainability section on their website (https://info.lululemon.com.au/sustainability),
Lululemon talk a lot about ways to improve environmental impact.

C. Technology and retailing developments.

Thanks to multiple technological improvements, life and the internet are now entwined more than
ever before, people are always “on the move” and companies have to adapt to this in order to
promote their products and stay afloat. Consumers nowadays are all about the new technology and
new features and being up to date. They want something new and innovative that will make them
stand out from the crowd. Another important factor to take into account is time, time is gold and
every bit to save it counts massively to consumers. Having a sleek website that has as much
information as possible in a non-overwhelming manner attracts and helps customers a great deal
which guarantees them coming back or spreading the word about it. Another important
development has been the recent growing trends in wearable technology such as fitbits, allowing
fitness brands to expand beyond just clothing and break into a new market.
Lululemon has taken advantage of the above mentioned and also by focusing on innovation and
originality as the core of everything the company does when it comes to creating the best possible
product and in-store experience has majorly helped the company to expand. From a global business
perspective, Lululemon is investing in technology that supports this commitment to customers and
the communities. Fabric technology is a major factor for these kind of brands because they need to
guarantee the consumer’s satisfaction while performing the task the garments were made for. For
example Boolux is part of Lululemon’s natural blends that is a blend of rayon derived from bamboo.
This allows for fabrics to be lightweight, warm, soft, and breathable. Nulux is a fabric that fits against
your skin using light compression, the fabric dries super-fast so you do not feel as if sweat is weighing
you down.

Advances in replenishment systems have also made a huge difference to help keep up with stock
levels and avoiding stockouts in order to improve customer satisfaction and reducing costs to the
retailer.

PART 3

A. Suggest how your chosen retailer might respond to each of these three
themes.

When it comes to the global and international retail environment, I think Lululemon would do its
research before jumping into any conclusions and have a flexible approach about it, especially when
expanding to the East Asia, China precisely. Fitness companies poured resources into China to take
advantage of the excitement around the 2008 Beijing Olympic Games but once this ended, the public
moved onto outdoor wear for activities such as hiking and skiing. Some retailers misconceived the
market and quickly run out of small clothing sizes making them unable to cater for the consumers’
needs. If Lululemon doesn’t do an extensive research of the new market they are trying to enter, the
consequences could be very harmful in terms of cost providing they would have to close shops and
give up tackling this particular market. A recommendation would be to venture the business
operations in international locations where products are in high demand and where the people’s
culture is in conformity with the firm. This can only be found by conducting a strategic global market
research.

In regards to the sustainability and ethical concerns, Lululemon is trying its best to be as ethical as
possible and it is taking confident steps towards being a model for community-led sustainability. They
are taking action in improving the company’s energy use and carbon footprint as well as they waste
impact. If Lululemon doesn’t improve on these concers or didn’t show any interest on the
environment and their worries about having a responsible supply chain, they could face some serious
penalties which could damage the company’s reputation and lead to losing customers and therefore
sales. A recommendation would be that Lululemon needs to be as transparent as possible and
embody the values it promotes by working on the reduction of their gas emissions and dangerous
chemicals.

To conclude, when talking about technology and retailing developments, Lululemon has taken notice
of these changes and applied them into the company’s core functions. These changes are allowing
the company to enter another market sector by making them able to develop wearable technology.
However, if the new product is not right and doesn’t meet the consumer’s needs, it could mean they
are not competent enough and therefore the company’s failure in that sector.They developed a
phone app which allows customers to view and purchase products easily in a short amount of time.
Lululemon launched the app in order to compete against rivals such as Athleta, Nike and Under
Armour who already had apps in the market. Lululemon needs to do indepth research of the
technological market in order to be able to compete in it before trying to launch any products as
there are already big competitors that have the customer’s loyalty, such as Fitbit.

REFERENCES

Ellis-Chadwick (2011) An introduction to retail management and marketing Book 1-5, The Open
University

https://shop.lululemon.com/

https://goodonyou.eco/bluesign-standard/

https://www.reuters.com/article/us-lululemon-outlook-analysis/analysis-lululemons-next-challenge-
overseas-growth-idUSBRE99712S20131008