Lululemon: The Work of Chip Wilson

While the LuluLemon of today is a well-established, popular, and respected athletic wear brand, it is much younger than most of its competitors. The company was founded in 1998 and since then become one of the largest athletic apparel brands in the world and is hugely popular amongst consumers. The story of Lululemon is one of how important it is with proper product-market fit, and how skilled entrepreneurship is critical when trying to break into a highly competitive field. Join us as we explore the company, its story, and its controversial founder.

• Making a product people love: One key driver of Lululemon's success has been its ability to create loyal customers through excellent products

• Athleisure experts: The company has specialized in athleisure, and has in many ways been a driving force behind the trend.

• A strenuous relationship: Lululemons founder Chip Wilson has been a controversial founder throughout the company's lifespan.

Lululemon was founded by entrepreneur Chip Wilson in 1998. Wilson had previously founded and ran the apparel company Westbeach Snowboard, which he sold in 1997, using the funds to go on to found Lululemon. He started off by producing yoga pants, designed to help women look good in athletic wear, something that was far from being a priority for many brands at the time. Lululemon began selling its yoga pants out of a single store in Vancouver, and quickly saw success and gathered a relatively large following of enthusiastic consumers, while also broadening its product portfolio. Soon enough, the company expanded across Canada and into the U.S., and is today a global brand.

Lululemon is the brainchild of Chip Wilson, but throughout the company's history, he has been an incredibly controversial figure. The number of articles compiling his various controversial takes and thoughts on everything from how a company should be run to his thoughts on broader society are far too many to count. This frequently got the company as a whole into stormy weather, and other members of management frequently butted heads with Wilson in order to get him to tone down his outspokenness. Regardless of the backlash and criticism that was constant around Wilson his company flourished during the first years, and he proved himself to have an acute understanding of what consumers wanted and how to market it to them.

When looking back at the company over the years, the phrase “The Lululemon Cult '' is something that is oftentimes harped on and on about. While going so far as to call the brand following a cult is taking things several steps too far, one thing is for certain: Lululemon managed, and still manages, to build a very loyal following of consumers. Word of mouth combined with great products was a key factor in establishing the company, and many women who tried Lululemon's pants in the early days of the company fell in love with them.

This in turn meant that they were much more likely to buy more pairs, and to recommend them to their friends and family. This loyalty is in large part what helped to establish the brand in earnest during the early days, and there are still many consumers who'll only wear Lululemon apparel for their workouts simply because they like the product that much.

One of the key drivers behind LuluLemon's success has been its ability to ride, and in many ways shape the athleisure trend. As the name suggests, athleisure blends athletic and leisurewear, creating clothing that is functional for exercise while being stylish enough to wear for everyday activities. The trend was (and still is) driven by a cultural shift towards more active and health-conscious lifestyles, as companies such as LuluLemon offer more and more of these types of products. Key features of athleisure include comfort, versatility, and performance.

Fabrics used in athleisure are typically high-tech, incorporating moisture-wicking, stretchability, and breathability. These materials ensure that the clothes are suitable for physical activities like yoga, running, or gym workouts, while also being comfortable for casual wear. The larger athleisure trend took off in earnest in the mid-2010s but is considered by many to be a continuation of the popularity of yoga wear (which Lululemon was a key player in promoting). All in all, Lululemon has become an expert at providing a product that people want to wear regardless of whether they’re lifting weights in the gym or going out for a coffee with friends.

Join 100,000+ other business enthusiasts

Sign up for Edge, our free weekly newsletter.

• Sign up

While this is something we’ve already been over, it’s still worth taking a closer look at. The company sells athletic wear for men, women, and children, but the overarching focus is on women's apparel. When it comes to the types of products sold, it's fairly typical for companies of this kind, with everything from leggings to T-shirts included in the company's portfolio. Almost all products are made out of synthetic materials built to be breathable and easy to move in, therefore fitting into the athleisure aesthetic.

The price point is something that sets the company apart from its competitors. Oftentimes Lululemon's products are priced 10-40% higher than the equivalent from other companies offering similar products. However, consumers haven't been scared away due to this. The brand overall has a very good reputation in regards to its products due to the high quality of fabric and comfortability of the clothes. One of the more interesting things about the company's product portfolio is the fact that its brand and logo are less pronounced than in the design of some of its competitors.

Whereas companies such as Nike and Under Armour are more than happy to incorporate their logos and names into their designs, this is something that Lululemon has traditionally steered clear of. Instead of producing apparel with large logos and the name of the company as a centerpiece, Lululemon opts for more muted designs where the clothing rather than the logo does the talking.

Further Reading: Kevin Plank and the Rise of Under Armour

As we’ve previously discussed in this article, the founder of the company and the broader organization at Lululemon were far from always seeing eye to eye on things. Chip Wilson stepped down as CEO in 2005 in conjunction with selling a large portion of his stake in the company to private equity firms but stayed on as chief innovation and branding officer until 2012. In 2015, he stepped down from all involvement with the company, stating that he had accomplished all that he set out to do and that he left the company in great hands.

However, the relationship between Lululemon and its founder has been all but smooth following his departure. The company has tried to move away from specifically targeting only a specific demographic of people, more specifically upper-middle-class women in good shape, to instead market their products to everyone looking for stylish workout clothes.

This, combined with concerted efforts made in the company structure itself aimed at diversifying its workforce has led to Wilson being critically outspoken. He has argued that the current management is moving too far away from what helped to establish the company in the first place: exclusivity. He has argued that “exclusivity beats inclusivity”, and it is the allure of something semi-luxurious that helped establish the brand in the first place.

While Wilson is no longer involved in the operations of Lululemon he has been vocally outspoken about what he believes to be failings on the part of management in the running of a company he still holds dear. While he has sold a large part of his stock holdings in Lululemon, he is still one of the largest individual stakeholders.

These are just two examples of what the relationship between the current management of Lululemon and its founder is like at the moment, and Wilson has frequently made critical statements about the direction that Lululemon is heading. Spokespeople for the company have on the other hand rebutted, stating on multiple occasions that Wilson no longer has any involvement in the management of Lululemon and that his views and opinions are not reflective of the brands' beliefs and strategies.

Today, Lululemon is one of the largest athletic wear companies in the world globally, being more or less equal with Adidas in market capitalization but far behind the largest company in the sector: Nike.

Further Reading: Swoosh: The Nike Story

However, one of the things that makes Lululemon so interesting in its sector is the fact that its main business segment and the primary driver of its revenue is its apparel, not its footwear. For other companies such as the aforementioned Nike and Adidas, footwear is by far its largest and most important business segment.

Lululemon on the other hand generates the bulk of its revenue through apparel. While it does have a collection of shoes for both men and women, this is far less pronounced than at its competitors, and its focus is more or less hardheartedly on apparel. Another major shift from the company’s early days is that it no longer focuses solely on women. While women's apparel and accessories are by far the largest segment for Lululemon, the company has also started to produce and sell a wide range of different products tailored and marketed toward men.

This is a question that is going to receive different answers depending on who you ask. For some, Lululemon is without a shadow of a doubt a luxury brand. Their prices combined with the quality of its products means that it is worthy of a luxury label, some argue, while others make the point that the prices aren't astronomically higher than competitors. As far as luxury goes in the fitness industry however, Lululemon is one of the more luxurious mass-market brands available.

In summary, Lululemon has carved out a place for itself in the highly competitive athletic apparel industry, proving the power of innovation, customer loyalty, and strategic market positioning. The company's journey from a single yoga pants store in Vancouver to a global athleisure powerhouse is a testament to the importance of understanding consumer needs and staying on top of fashion and lifestyle trends. Lululemon's success is largely attributed to its high-quality products that resonate deeply with a devoted customer base. The brand's ability to blend functionality with style has been a key driver in the athleisure trend, offering consumers versatile clothing that fits both their athletic and everyday lifestyles.