Big Name Luxury brands vs. Lululemon: Is Lululemon a Luxury Brand?

VS.

Big Name Luxury brands vs. Lululemon: Is Lululemon a Luxury Brand?

Sometimes, when you are mindlessly (not really, just your reasoning mind) attracted or addicted to something, it takes a strong jolt to change.

Neuromarketers tell us that the brain establishes associations based on images and memories which allows it to have kneejerk reactions to stimuli. For example, if I have been buying and drinking the same bourbon for years because my father drank it and the memories of him led me to adopt it as well, what is it going to take for me to change?

Some kind of kick in the ass. What has it been that is leading people to think twice about or stop buying big name luxury brands?

We know that during and after the pandemic luxury brand sales soared, led by China. Then the China economy slowed drastically, led by the real estate collapse, while the US and other Advanced economies were hit by inflation, which saw prices soaring and wealth shrinking.

So what did many luxury brands do? The opposite of what they should have done. Rather than hold their position in an inflationary universe, signaling that they were a good investment after all, they raised prices while not maintaining quality standards.

That was the kick in the ass. Think about it: you are a customer in China who felt free to spend lavishly on luxury brands (maybe you even took a trip to Hong Kong to save duty), now your investments, including your apartment (which was the sign of having arrived or soon to be arriving in China) have crashed. Maybe you graduated from university and you can’t find a job at all, not just the job you hoped for but any job? In order to work, you may have to “lie flat” by taking a job that you would never have considered in the past. What’s your position on buying luxury goods (that you don’t need) now?

Or, you are a customer in the US or Europe who are having to pay multiple times what you did for basic items; it seems nothing is holding price. Even if you are aflluent or a HENRY (High Earner Not Rich Yet), you cannot help but notice what is going on because it affects every part of your life. The worst part is that you have no control over how high the inflation will be or how long it will last; this is complicated by the fact that brands will hold on to high prices after inflation subsides because a. they can and b. they are not in control of it either.

In the midst of all this, some companies brilliantly take advantage of global inflation by creating marketplaces for crap at ridiculous prices. Of course we are talking about Temu and Shein. This not only lowers the floor, but also sends an irresistible signal to everyone that price is the key factor for competition. Now, we are in a 70% off world.

So what do the big luxury brands do in the face of these megatrends? They raise prices and let quality slip.

 Now you are a customer and can’t help but think WTF, what am I doing buying stuff I don’t need for double the price when my eggs also doubled? The growth of Real Real and Vinted shows that there is still a market for these types of goods, but its real value price is lower.

So what happens then? Neurologically, your automatic memory association is broken, and what used to be automatic becomes a serious matter for consideration, and the lizard-brain images are overruled by the cortex, saying nonono not so fast.

Is price and discounting the answer? Certainly raising price is counterintuitive, but how do you keep the memory associations going and avoid becoming irrelevant (the last nail in the coffin for all brands)?

Let’s look at Lululemon for the answer to that question. What? Lululemon? How can I speak of this brand in the same breath as Chanel, Louis Vuitton, Hermes etc.

For the few of you who may not know, Lululemon Athletica was founded in 1998 in Vancouver, BC, Canada by Chip Wilson, who sought to find comfortable athletic wear for women by using better materials, emphasizing quality and functionality. Soon after it entrance into the US market in 2003, the brand took on an iconic image and women started to wear it outside the gym. So a limited-use item gained a tremendous boost in functionality.

The Wall Street Journal reports in January 2025 “that it now expects revenue to be between $3.56 billion and $3.58 billion, representing a growth of between 11% and 12% over the fourth quarter of fiscal 2023.” i

Nice. Compared to anything in 2024. But why?

According to Google’s AI overview in response to the query ‘Lululemon comparative pricing,’ “Lululemon's pricing strategy is to position itself as a premium brand with higher prices than many of its competitors. Lululemon's prices are based on the value that customers place on the quality and functionality of its products.”

Further, in response to the same query, Google reports that, compared to competitors:

• Discounts

Lululemon rarely lowers its base prices by more than 20 or 30%, while its competitors often promote discounts of at least 40%. 

• Price consistency

Lululemon's core products, like leggings and sports bras, have remained at average price points since 2017. 

• Similar products

Other brands, like Nike, Under Armour, Gymshark, and Adidas, have made similar leggings to Lululemon. 

Lululemon's competitive advantages 

• Exclusive materials: Lululemon uses exclusive clothing materials in its products.

• Innovation and research: Lululemon has innovation and research hubs in Vancouver, Canada, and New York, United States, where it develops unique fabric and clothing designs.

And what about Quality? An August, 2024 article by the website Eightception states:

“What Makes lululemon Unique?

In a word? Quality. Their products are born out of rigorous research, innovation, and a relentless focus on meeting customer needs. Stylish? Check. Comfortable? You bet. And these aren’t just for fitness fanatics. You’ll see people rocking lululemon at meetings, grocery stores, even on dates.” ii

Do you smell a formula here? Premium quality. Affordable luxury (there are lots of other similar products on the market buy Lululemon holds serve). Multifunctionality. Honest pricing. 

Can Lululemon be considered a luxury brand it its market? Yes, because it is not necessary to buy Lululemon product in its genre, including from Shein and Temu. But it has customer trust and prestige for what it is. It is not and never will be a Chanel, but it doesn’t need to be. Without compromise, it continues to stand on top of its category. If Lululemon pulled the shenanigans that the luxury brands have, it too would be spurned. 

Customer trust is the key to loyalty.

So what’s the point here? After I brazenly compared Chanel et. al. to Lululemon, how does this portend for the future of luxury and the luxury customer? 

Simple. The basic elements of luxury marketing don’t change: In the luxury market, a good’s price is determined by its value (in the minds of consumers), not the other way around (value determined by price). 

Think about it: Customers who are treasure-hinting at TJX have the same mentality as those who are buying Chanel these days, but on the opposite end of the spectrum. The TJX customer is motivated by how cheap they can find a treasure for, while the Chanel customer figures that because not many people can afford it, an item’s inflated price adds value. Do both of these make sense to you?

The Future and the Hope.

Clear-eyed customers will see what determines value is NOT necessarily price, but all the positive qualities a Lululemon has— the very same as those that we have built Lotus & Michael with.

It’s your future. Your money. What will you spend it on?

 i Wall Street Journal 1/13/2025, “Lululemon Raises Quarterly Revenue, Profit Targets,” https://www.wsj.com/business/retail/lululemon-raises-4q-revenue-profit-targets-45737582?mod=WTRN_pos2&cx_testId=3&cx_testVariant=cx_166&cx_artPos=1

  ii Eightception.com 8/19/2024, “Lululemon’s Competitive Advantages and Strategy,” https://eightception.com/lululemon-competitive-advantages-and-strategy/