Wednesday, October 17, 2007

The Paper

In the financial post today...

Lululemon's sales outlook is zen-like

"[Lululemon's] not just a retailer; it's a mass cult," Jim Cramer, host of CNBC's Mad Money TV program, said this month after repeatedly making it one of his top picks. Lululemon's shares have more than doubled since going public.

Richard Talbot, president of Toronto-based retail consultancy Talbot Consultants International Inc., said the retailer has navigated the tricky divide of appealing to a wide demographic, from active youths to Baby Boomers.

"They have created a hot product and it seems to be working for them and they have also done a good job of branding," he said. But Mr. Talbot cautioned that the company's rapid expansion into the United States has yet to face the truest test of a retailer's fortitude: time.

"That is the big test for all Canadian retailers, and it is early days for Lululemon. You always get an initial buzz with retailers, but then what starts to happen is the competitor starts to copy what you've got and that's really where the battle starts. Will people remain loyal to the brand?"

I have recently read Lululemon and Starbucks in the same sentence somewhere. While the investor me is wondering if I should get in on this stock because it might just turn out to the next Starbucks, the consumer me is saying I’d never buy something so very pricey.

The last paragraph in the article says it well. When competitors start to offer similar things for lower prices, will people remain loyal to brand? What about new customers?

Actually this has already happened with me. When I was buying new work out clothes, I did consider Lululemon because it was just all the rage. At the same time Le Senza had just started promoting their line of exercise wear. The styles look very similar to me. I finally bought a pair of yoga pants at Le Senza for $12 on sale.

They look great and feel great. All for a lot less than I would have paid at Lululemon. Though I feel like I'm in the minority because everywhere I go I see people sporting Lululemon.

4 comments:

Emm said...

I live in Vancouver, where Lululemon started; do you live there (here?) too? It's definitely everywhere. For work this summer, I almost bought a pair. Last Christmas, some friends were working there seasonally; i didn't take advantage of their discounts though because i was out of the country. One did start working there again, so I may just be lucky this year.

I still can't justify spending $80+ on pants (although they enhance so much and make you feel great), or their hoodies (although they are the most comfortable). So I settled for their cheapest thing: waterbottle. Haha. It just sucks because you see girl after girl (and even guy!) wearing Lululemon, and though I'm perfectly happy without any of their items, some days I just really want it...

SavingDiva said...

I think people will go with the trend...like Juicy a few years ago (who really pays $100 for sweatpants?)....

Esme said...

Really I love my La Senza pants. Of course they are more expensive if not on sale. But I think La Senza has more sales than Lululemon. I've been to a sale for Lululemon once. There was a line-up a mile long. I didn't bother because what are the chances of me finding something I like in my size after all those people in front have gone through?

centsprout said...

to me the main appeal of lululemon was that it was a canadian company and the clothes were made in vancouver. i could justify the higher prices because it was supporting the apparel industry in canada, which understandably costs more than buying things made in china. but i've read interviews with chip wilson (the founder) where he says that it's going to be necessary to move production to china to keep up with the demand. i understand that's the price of business, but seriously, i'm not interested in paying way more for something made in china that i could buy cheaper from somewhere like lasenza because it's also made in china.