Our Lululemon PESTLE analysis highlights the external factors that impact the operations of Lululemon, such as the economy, politics and technology.
If you like to wear athletic clothes, you must have heard about the brand that is famous for offering athletic clothes, Lululemon. May it be tops, yoga pants, undergarments, whatever. Lululemon is the brand that will offer you all in one store.
You must be excited to hear more about Lululemon since it offers a great variety of clothing products. Well, the brand doesn't only offer clothing products. It also offers various accessories for personal use, such as bags, water bottles, yoga mats, and whatnot.
Besides that, the brand offers several personal care products, such as shampoos and deodorants. At this point, you must be thinking that Lululemon must be a huge brand when it started off. Well, that's actually not true.
Lululemon had a humble beginning; It started off with one shop that used to sell yoga pants only. From there, the brand grew slowly, and today it is considered one of the most popular activewear brands.
Looking at Lululemon's success, we have decided to conduct a Lululemon PESTLE analysis. This PESTLE analysis will highlight the external factors that impact the operations of Lululemon and will complement the Lululemon SWOT analysis we conducted recently.
However, before proceeding further towards the PESTLE analysis, it is essential to look at the history of Lululemon so that we know where this brand originated and how it is currently going.
Lululemon started off like any other small clothing shop. It was founded by a guy named Chip Wilson in 1998. The brand opened its first shop two years later in Vancouver. Initially, the brand only used to sell yoga pants and other yoga wear.
Lululemon got famous due to its soft and comfortable yoga clothing among people who used to exercise. Due to this, Lululemon's customer base increased. Soon the brand realized that it had to expand its portfolio to further increase its customer base.
In 2005, the brand introduced sweaters, tops, jackets, and undergarments to attract more customers. Besides clothing products, it also expanded its portfolio towards personal accessories and personal care.
Lululemon further introduced a fabric named "Luon." This fabric was one of its kind since it was made of more than the usual amount of microfiber and nylon.
After that, the brand introduced different types of fabrics that were admired by the consumers. However, Lululemon's primary reason for fame remained its famous leggings.
As the company kept increasing over the years, it finally decided to go public in 2007. After that, the brand grew even more and opened its first store outside Canada in 2014. Lululemon moved its operations to London, which increased the brand's revenue.
Currently, the brand has 574 stores across the globe. All these stores help Lululemon significantly in generating revenue. In 2022, Lululemon managed to generate revenue of $6.25 billion.
As the brand is growing each year, so is its workforce. In 2022, Lululemon will have a workforce of 29,000 employees.
Now that we have learned enough about Lululemon's history and current operations, let's proceed further and discuss PESTLE analysis. PESTLE analysis is used to identify the external factors that impact any organization.
The purpose of conducting a PESTLE analysis for any organization is to highlight the Political, Economic, Social, Technological, Environmental, and Legal factors that affect the organization.
Since now you are also aware of what a PESTLE analysis is, let's move ahead and conduct a Lululemon PESTLE analysis.
Political Factors Affecting Lululemon
Every organization operates in the presence of a political government. Therefore, it must abide by the rules and regulations the government sets. Hence, all organizations are affected by political factors significantly.
Similarly, Lululemon has also been affected by the actions of the government. Several political factors impact Lululemon. For example, If the government increases taxes on businesses, Lululemon won't be able to generate high revenue. This will impact the brand adversely.
Moreover, Lululemon will also be significantly affected by the government's policies regarding other countries. For example, suppose the Canadian government prohibits local businesses from operating in other countries. Lululemon will have to obey the orders of the government.
Although this will cause the revenue of Lululemon to fall significantly, the brand will have to follow the instructions of the government.
Also, the continued stability and positive trade relations between China and Canada enhance Lululemon's ability to operate smoothly in China, as demonstrated by the big boost in 2024.
Moreover, all businesses require political stability to function, and Lululemon is no exception. Political stability is something that Lululemon really needs since it's the political stability due to which people go out to shop.
People won't go to the markets to shop if riots and protests happen. Hence, Lululemon requires political stability to generate revenue.
Other than that, corruption and incompetent bureaucracy will create hurdles in the way of Lululemon. Moreover, they will also hinder the smooth practices of the brand. This is why Lululemon needs competent governance and a corruption-free environment to function perfectly.
Economic Factors
Businesses are an integral part of an economic system, which is why a number of economic factors impact a business's operations. Similarly, economic factors such as exchange rate, inflation, interest rate, and economic growth significantly impact Lululemon.
Since Lululemon is a renowned clothing brand, people buy the products of Lululemon from all over the globe. One factor that affects the global sales of Lululemon is the exchange rate. For example, suppose the exchange rate of Canada is relatively higher than other countries. In that case, the products of Lululemon will cost more to consumers outside Canada.
This will cause the demand for Lululemon's products to fall. On the contrary, if Canada's exchange rate is relatively low, international customers will find products of Lululemon cheaper, and the sales of Luluemon will rise. Hence, Lululemon's sales are significantly dependent on Canada's exchange rate.
Other than that, inflation is something that really affects Lululemon. Slight inflation is present in every economy. However, if the inflation rate rises above average, this will make the products of Lululemon expensive. As a result, people will stop buying the products of Lululemon.
Besides inflation, the sales of Lululemon are significantly impacted by the interest rate offered by the central bank in the economy. Suppose the central bank increases the rate of interest. In that case, people will reduce their expenditures and save money in the banks. This will cause the demand for Lululemon to fall, and the brand will suffer.
Similarly, if a country is going through a recession, people limit their spending. Therefore, in such a country, Lululemon's revenue will fall since people won't be willing to purchase the products of Lululemon.
Social Factors
Businesses interact with people and find ways to cater to their needs. Therefore, they must deeply analyze people's social norms, culture, and behavior. Since Lululemon produces products whose end users are humans, it has to consider the social factors in the area where it operates.
Several social factors affect Lululemon. For example, the demography of the area where Lululemon operates really impacts the brand's sales.
In an area where most people are young and teenagers, Lululemon will make more revenue compared to a society where most of the population comprises senior citizens.
Moreover, another social factor that highly impacts Lululemon is people's attitude toward fitness. Since the brand offers yoga wear and athletic clothing mainly, the people where the brand operates must be into fitness and exercise.
Recommended Read: Planet Fitness SWOT Analysis
Besides that, the culture of societies really matters when it comes to Lululemon. For example, in some cultures, Lululemon's clothing is not acceptable. In such societies, the brand won't be able to sell its products. Hence, the cultural values of societies really impact the operations of Lululemon.
Technological Factors
Technology plays a significant role in the growth of a business. If a business adopts and embraces the technological changes that are taking place timely, it can gain a competitive advantage.
Just like any other business, technological factors impact Lululemon significantly. However, the recent developments in the eCommerce industry have paved the way for Lululemon to increase its market share and revenue.
Lululemon has been using e-commerce to increase its revenue since 2014; each year, it has increased its online sales. In 2022, Lululemon generated $2.6 billion with the help of e-commerce.
Besides that, other technological developments related to cloth manufacturing really impact Lululemon since the brand is always looking to be more productive and improve its quality.
Besides that, technological change that helps Lululemon automate its functions positively impacts the brand. Adopting automation will help the brand in cutting its operational cost. This will increase the profits earned by Lululemon.
Moreover, technology has helped the brand in marketing. Lululemon excessively uses social media platforms such as Facebook and Instagram for marketing their products. The advertisements on social media have lowered the marketing costs of Lululemon, due to which it is now earning high profits.
Besides that, social media has also cut the recruitment costs of the clothing brand. Lululemon can simply post an advertisement for hiring and employing the best candidate. In this way, social media helps the brand save costs and time.
Recommended Read: Under Armour PESTLE Analysis
Legal Factors
Businesses operate in a society where certain laws apply. Therefore, any business has to abide by the present laws, or it will have to face heavy fines or even suspensions. Lululemon is also one of the businesses that have to follow the laws. Hence, legal factors hold great significance for Lululemon.
Different legal factors affect the brand. For example, the business laws present in the society where it operates will significantly impact Lululemon. As a result, the brand has to monitor its business practices in detail to see if they are in line with the laws.
Lululemon must pay attention to the patent laws of the countries where it operates. Recently, the brand was sued by Nike over patent infringement. As a result, Lululemon must be careful and abide by the patent laws, or it could face serious fines. Moreover, such lawsuits could damage the reputation of the brand.
Moreover, Lululemon must also keep a close eye on labor and consumer laws. The brand will face serious consequences if it doesn't abide by these laws.
Similarly, data protection is something on which the brand should focus. Lululemon should keep its customers' data protected, or it can end up paying millions of dollars as a penalty.
Environmental Factors
Governments and private organizations are taking measures to protect the environment from deterioration. Businesses are also being pressured to pursue environmentally-friendly practices. Lululemon is one of the businesses that are significantly impacted by environmental factors.
Lululemon is a clothing brand, which means it has to manufacture clothes keeping the weather conditions in mind. For example, it offers warm clothes in countries with cool temperatures. However, as a result of global warming, the weather is fluctuating, and unprecedented weather trends are appearing, which is impacting the sales of Lululemon.
Moreover, as the awareness about renewable energy increased, Lululemon faced pressure from consumers and other stakeholders to shift to renewable energy. Although the process of shifting to renewable energy was expensive, Lululemon has signed an agreement to completely shift to renewable energy in North America.
Lululemon PESTLE Analysis: Final Word
Lululemon is a renowned clothing brand famous for producing athletic clothes and yoga wear. Currently, the brand is operating in several countries. However, it started off with a single store in Canada.
In this article, we discussed Lululemon's history and current operations in detail. Then we made our readers aware of what PESTLE analysis is. After that, we proceeded further and conducted a PESTLE analysis on the brand to see what external factors impact the operations of Lululemon.
We discussed in detail what Political, Economic, Social, Technological, Legal, and Environmental factors affect the brand. We hope you would have enjoyed reading this article since it provided insight into Lululemon and made you aware of the framework of PESTLE analysis. However, if you want to know more about the PESTLE analysis technique, here are some examples that can help you understand the amazing tool.
