With its acquisition of Mirror, the sportswear company, Lululemon reflects the influence of direct connections with consumers on what the sports market now is, as fitness cements its place in the home.
Lululemon, a favourite of Wall Street and a company that is showing little sign of slowing, announced last week that it was buying a fitness startup, Mirror, which sells wall-mounted screens ($1,495) through which users can access fitness classes for $39 a month, similar to Peloton, the internet connected static bike and fitness content company.
Creating or acquiring a startup was not imperative for a company that had performed well despite a tough retail market, partly due to the high-profile of its fans (Meghan Markle has been pictured in a pair of the firm’s leggings) coupled with the encroachment of athleisure as a style as appropriate for getting a post-class coffee, as it is for the class itself.
In the pandemic, the brand has found the closing of its extensive Main Street retail presence – 490 stores in 17 countries – tough, but not unbearable. Sales were down in the quarter ending May 3 by 17%, though online sales rocketed by 125% in April alone. Before Covid, e-commerce brought in just 26.8% of total revenues in Q1 2019, whereas that rate jumped to 54%.
This is hardly a grim picture of a company casting about for new sources of growth, though it indicates how it anticipates the home fitness market becoming a key element of its (and all of our) future.
A digital offering is now key to major sport apparel brands looking to cement their future (and the confidence of their investors). These are areas that have seen incredible growth since societies around the world have locked down: Peloton reported sales increasing by 66% in the last quarter, while Mirror reported average workouts per month growing by half.
What’s even more interesting about how Peloton has chosen to proceed is its integration with Roku, which has allowed it to expand its user base to those open to a $12.99 monthly subscription even though they may not yet be ready to spend thousands on a bike. It’s a more stable relationship than the occasional-date form that apparel retailers typically employ.
But one company looms large over many of these ideas: Nike. In 2017, the company, which had already undertaken some digital heavy lifting, announced that digital products would form an axiom of its Triple Double strategy, which would bring the company closer to consumers both to understand them better, make products according to their needs, and sell them those products faster. Doubly fast, in fact.
Lululemon will hope to reap just a handful of these benefits, whether that’s a closer relationship or more predictable subscription revenues. Analysts predict that this isn’t a flash in the pan, however, and that the wellness economy has been steadily growing for some years now.
Covid has brought on multiple accelerations in business and society. Lululemon’s next steps will be fascinating to watch.
Sourced from the Financial Times, Mirror, Business Insider, Yahoo Finance, Nike; additional content by WARC staff