https://shop.lululemon.com/story/footwear
Lululemon is launching two new sneakers, one designed for men. Fans of the brand will have to download their app to get a first shot at nabbing the upcoming Cityverse casual sneaker landing on February 6th. The Women’s Beyondfeel arrives in March. The Cityverse is Lulu’s first foray into men’s casual footwear, but is this a flawed pursuit? Lululemon has always had the advantage of pairing their apparel with any sneaker brand, but this has changed since they’ve moved into sneakers. Lululemon is an interesting case study and their success, in contrast to Nike which is readily accessible, lies in what could be labeled exclusion marketing. Exclusion marketing is the process of omitting certain groups from brand promotions, an important aspect of this discussion.
The arrival of the Cityverse enters a cooling sneaker retail environment where casual footwear can be purchased from countless alternatives often at a marked down retail price. The arrival of this new casual sneaker is up against an abundance of lifestyle footwear from startup brands like Unless, to long time smaller brands like CLAE, but since Lululemon operates in a different space the slow sneaker market could miss the launch of a new product from the premium sportswear company.
Lululemon’s Reach
Lululemon stores are often in more upscale areas. The brand excels in nurturing the yoga market and their gear is purposefully positioned in the aspirational area of fitness apparel. If Under Armour is the brand of the good ol’ boy and girl, Lululemon’s visual tagline, in contrast, would be akin to a mom popping a dad’s hand for trying to sneak a taste of food for an exclusive party. Lululemon is an “ah! That ain’t for you,” to a bevy of demographics. Which isn’t a bad thing.
Knowing where to distribute is a strategic method of controlling the brand narrative. You won’t find Lulu on Amazon or in urban retail. This has led to a problematic issue with dupes or fakes, which Lulu fended off with an incredible swap out your dupes marketing campaign. If Lulu was smartly and strategically introduced to different potential consumers, dupes would be less likely. However, the brand insists on retaining its exclusionary feel. One look at their website delivers the epitome of beautiful people. To be fair, their YouTube has all body types represented, but click through the site and all the people used as models lack waist bulge or neck dangle. No one has grey hair. Exclusion marketing, intentional or not, limits their reach, but it works.
Losing their Advantage
Lululemon introduced a plan to double their revenue. Sneakers have become an active pursuit for the brand. They initially partnered with APL (Athletic Propulsion Labs) before the introduction of their own women’s trainers: Bliss, Charge and Strong. One of the best things about Lulu was their ability to coexist with every brand. An athlete could buy a pair of Brooks, Hoka, On Running, Altra, Nike, but they could say something totally different about themselves with Lululemon apparel. That ability to pair with any brand is akin to Levi’s, or Canada Goose, a brand that incorrectly entered footwear recently.
Lulu’s pursuit of the “head to toe” look could remove the focus from an extremely successful apparel business. Sneakers have a more noticeable lifecycle which leads to arbitrage and clearance/promotional moments even when a brand is healthy. Lulu has been able to consistently maintain sell through on apparel at SRP. A visit to their shoe page shows how the company is now in strikethrough territory. What is strikethrough? Sale items.
‘Healthy’ Arbitrage
On the Lululemon website, selecting Women’s Clothes displays 1000 items. To reach marked down items requires endless scrolling and tap to load. Visit Women’s Shoes and there are 16 items listed. Markdowns show up at the 10th product. Many at over 50% off SRP. Healthy arbitrage is often discussed on this site as a measurement for the success of a brand and their products. Healthy arbitrage is the natural progression of a product from introduction of that product to that same product reaching the clearance section. Those clearance products find their way onto the third-party sites leading to millions in sales for sellers and it allows brands to clear their shelves. Healthy arbitrage happens in many instances because a product runs its course in a place where it has been available. That product may not have been readily available in other locations. The consumer who didn’t have access helps to move the remaining inventory through the product lifecycle via arbitrage.
For instance, a search on Lululemon+tights in 2023, provides a million dollars in sales on 23,000+ items sold. Add in a search on Lululemon+shirts and almost a million in sales have taken place. While many brands hate the grey market, Nike has gone as far as to removed box tops and limit the number of sneakers which can be purchased to prevent arbitrage, there is a fine line of prevention to control how a brand is sold and allowing for products to be bought in bulk and resold. It’s not an easy thing to do for a brand. Healthy arbitrage may be helpful, but it’s understandable that it’s frowned upon. The flip side is buyers of clearance products can inform future distribution models if done correctly because the data from third-party shows how a product remains in demand even at the end of the lifecycle of product. (Data below)
In contrast, Lululemon’s move into women’s footwear, unlike the healthy arbitrage of Lululemon tights, is producing very little interest. There are only 135 active listings of Lululemon footwear on one of the biggest 3rd party platforms, even as the models are marked down. Sold listings under the search of Women’s+Lululemon+Chargefeel+Blissfeel+Strongfeel (each searched individually) show only 411 sold listings in 2023.
Women’s footwear is a competitive space, and this data shows how limited distribution reduces access and complicates the ability for Lulu to sell sneakers to consumers and fans of the brand. Men’s athletic footwear, performance and casual, is much more difficult than women’s. That battleground is a volatile arms race with Nike playing the role of the United States vs the world. Lululemon has rolled out pants and apparel for men which have a very healthy lifecycle with healthy arbitrage at the end of the product cycle.
Now, the success in menswear could lead the brand to feel that they have an opportunity to compete in men’s casual footwear. The Cityverse has a $138-dollar price tag which has to compete with the classic Nike Air Force 1s $115, adidas Sambas $110 and New Balance trainers marked down and available on sale. The Cityverse, unless it is extremely limited, could find itself languishing on shelves and eventually disrupt the momentum of the brand. Do you think Lululemon is distracting itself from what has grown the brand so much all of these years? There are instances in the sneaker industry where a brand became distracted by introducing new products and strategies. Lulu has been wine throughout the years. They have paired well with different entrees. As they are introducing footwear could they be removing a quiet advantage?