From a strategic planning perspective, the well-known Canadian fitness retailer Lululemon has a lot of factors to consider when laying the foundation for a five year plan. There are many opportunities as well as challenges that the company encounters from its external environments. Each of these is outlined in the following paragraphs and must be embraced in order for Lululemon to position itself strategically and successfully in the market.

Economical environment: The economical environment that circles around Lululemon Athletica shows a strong revenue growth. In September 2012 Lululemon posted a 33% increase in revenue to $282.6-million (U.S.) and an increase of 15% in same-store sales (refer to figure 2). Along with that we can observe the company’s stable financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, net income growth and good cash flow from operations. Lululemon was pretty successful among many investors as it consistently raised quarterly profits and revenues in a struggling fitness retail industry (see figure 3). In reference to the article, “Lululemon athletica inc. Stock Quote & Summary Data”, unemployment rate made some effect on the company’s Gross Income as of in 2009 when the unemployment grew to the level of 8.5% company’s Gross Income was only 23.56% (see figure 1 and 2). But in 2011 when the unemployment growth was at a level of 7.2% company’s Gross Income became 77.04%. This also depicts sales growth as 30.95% and 57.14% in 2009 and 2011, respectively. As mentioned in the article, “Annual financials for Lululemon Athletica Inc.”, despite the prosperity in 2011 the company warned in their annual report that it expects slower sales growth in the high single digits from the fourth quarter of 2012. According to Freeman, the leading global financial services company Credit Suisse expects further company’s revenue slowing in 2013, especially at its "mature" stores in Canada that embody 59% of the athletic wear chain's total sales and have already seen a slowdown in growth. But the interest in yoga will still be very high as it keeps increasing every year due to population growth, migration rate, age structure in which the majority of the population falls into the ages of 15-64 years, which makes up 68.5% of the total population in Canada according to the “Statistic Verification” article. But the company faces the most influence from the yoga lifestyle which promotes stress reduction and mood improvement along with good impact on health and it’s not only in North America but worldwide. For example, in the USA the amount spent annually on yoga products reached $27 Billion in 2012. The interest on yoga product spending increased over last 5 years in the USA and reached mark of 87% in 2012. Average annual increase of the number of people who practice yoga in the US is 20%. So the main opportunity in this sphere is expanding influence on the US market due to the high demand of yoga apparel in that country. There are lots of challenges though. As for product materials components like cotton and petroleum may increase due to different reasons the cost of the apparel manufacturing will rise too.

Technological Environment: Lululemon is a company that uses technology as one of the major factors of production. They value functional, durable and beautiful products. Therefore, Research and Development must be one of the main areas that the company invests in to keep their products in sync with these concepts, including a more in depth look at wearable technologies. Besides that, it is very important to take advantage of a vast variety of technologies to spread the products worldwide and to attend to the consumers’ specific needs and expectations. There is ongoing global research trying to introduce new raw materials to fabrics or to change the process of manufacturing them. It is important to be up to date with the use of new raw materials, cheaper costs and with the same quality like by-products from agriculture (according to Costa) or even ways of significantly reducing the use of chemicals, water and energy in the fabric production process by using enzyme and laser technologies – as referenced in “Turning Technologies Into Fashion”. Furthermore, it is important to maintain a close relationship with fashion institutes of technology to always have new ideas and technologies available. For instance, Michael Kors offers a scholarship to students at the Fashion Institute of New York according to Karimzadeh’s article. Nowadays, there is lots of research to develop wearable technology. For example, a British company has developed a dress that is a phone as noted in the article, “Excuse me, but my dress is ringing”. When adapting technology to sports clothing, it is possible to have clothes with heart and calorie monitoring, and some companies are already researching fabrics capable of measure oxygen levels, including fabrics with microcomputer technology, solar panels and energy systems on it like in McGrane’s article. Another important aspect is the need of a strong presence in the internet and mobile environments. Burberry had its event at London Fashion Week streamed live for stores and laptops and the brand is adapting to the new generation, who are born in the technological era as noted in “Burberry goes digital”. Another issue is to know consumers’ interests and purchasing behaviours by analyzing social media. According to Mitchell, retailers are already estimating the demand for their products by using information from social media and producing (or ordering) goods in an ideal quantity, decreasing the grounding.

Political-legal Environment: The political-legal environment within which Lululemon functions reflects the relationship the company has with the government and legal systems in Canada and any other country it expands its business to. There are rules and regulations that the company must abide by in order to maintain its success and position in the market. One example of a political issue dates back to November 2007, when Lululemon’s claims about the therapeutic value of their ‘VitaSea’ fitness line were scrutinized and tested for validity. Lululemon claimed that the “seaweed in the material reduces stress as well as provides anti-inflammatory, antibacterial, hydrating and detoxifying benefits”, as stated in the CBC news article entitled “Lululemon to Remove Claims From Seaweed Clothing Line”. After The New York Times conducted laboratory tests proving that these therapeutic claims were not wholly legitimate, Lululemon was forced to remove their claims regarding the farfetched therapeutic benefits of its VitaSea line, as noted in the Competition Bureau’s article, “Lululemon VitaSea Clothing”. When a company’s product claims are challenged by external organizations, it often has a detrimental effect on brand image, especially if their product claims are politically controversial. When releasing new product lines, Lululemon must be very careful to abide by the laws established by organizations like the Competition Bureau which “contributes to the prosperity of Canadians by protecting and promoting competitive markets and enabling informed consumer choice”, as stated on their website. Lululemon has encountered its fair share of lawsuits, as exemplified in its 2012 suit against Calvin Klein. External factors such as competitor copyright infringements pose large challenges to the value and uniqueness of the brand. In Canada, the government promotes the right (and opportunity) for organizations to take legal actions to protect its brand name value and success from copyright infringement. It would be a good strategy to get all of their product designs patented to uphold the uniqueness of their products as depicted on the United States Patent and Trademark Office website (uspto.gov). Political and governmental regulations vary however from both legality and stability standpoints internationally, which is an important factor for the company to consider when expanding their business globally.

Socio-cultural Environment: Lululemon is highly known for its overall feel-good, community-oriented, grassroots culture that surrounds the company, which promotes fitness (primarily yoga), health and personal growth. Lululemon’s success is in part attributed to the culture that surrounds the workplace. According to the article “Engaged staff deliver high ROI for Lululemon”, the goal is to "teach employees how to create a vision for their life ... in their personal life and their career”. A sincere passion for life is therefore a positive thing for both oneself as well as the company. The corporate culture radiates to consumers who feed off of these inspiring attitudes and perspectives on personal health and fitness and are motivated to become part of this energetic culture themselves. According to Namasta.com, 5.5% of Canadian adults (1.4 million people) practiced yoga in 2005, and this number increased by 15% from the year before and 45% from 2003. Demographically, the primary group that practices yoga are women between the ages of 18-34 years old. The Namasta.com website depicts the growth rate in popularity of yoga and fitness among Canadians, stating that “about 2.1 million Canadians or 1 in 12 non-practitioners say they intend to try yoga within the next 12 months”. As the popularity of yoga and fitness increases in popularity (as well as in necessity due to health reasons), the need for quality fitness products as well as a motivating lifestyle and support system increases respectively. With the prominence of fast food restaurants and busy lifestyles increasing, the necessity for a healthy lifestyle (especially in North America) has increased. Lululemon taps into these needs by organizing community fitness events and holding fitness/yoga classes in store, which also contributes to increased brand awareness. Strategically, Lululemon could establish a stronger cultural connection with their consumers by tapping into mobile technologies (i.e. develop a mobile app) to deliver ways to enhance a healthy lifestyle on the go, to notify consumers of in store yoga classes or to simply provide a motivational quote or image. What makes Lululemon so unique is the culture of the brand and how it markets. The article, "Zen and the Art of Retailing” outlines that, “with the exception of placements in Yoga Journal and local newspaper ads to announce store openings, the company has relied entirely on grassroots, or viral, marketing to spread the word”. This hidden gem approach creates a special and unique community that consumers want to be in on. A challenge Lululemon faces is the fact that the importance of fitness, yoga and a healthy wellbeing are not as important or simply irrelevant to consumers in certain international cultures/demographic groups. For example, the article entitled “Lululemon Eases into Hong Kong”, notes that “there are certain things about Hong Kongers…that don't immediately sit well with the Vancouver-based firm's ethos of ‘creating components for people to live longer, healthier, more fun lives’”. Lululemon’s strategies to relate to customer preferences, values and customs will have to be altered to have a chance for success in international cultures/markets. According to Mavin’s article, “hosting free yoga classes, getting involved in charitable work and having yoga instructors wear Lululemon apparel” are ways to approach future opportunities for creating brand awareness and demand in global markets.

Business Environment: Recently Lululemon had strong sales growth but in order for Lululemon’s opportunities to continue growing, it needs to implement 4 new Strategies:
1) Increasing their number of stores and untapped marketshare in new geographic areas (as stated by Hutchins); Business Development. Also, increasing product lines and target markets for boy’s and men’s products.
2) Developing Fitness Centres for demonstration purposes in main stores with volunteers (Marketing Reputation).
3) Being more actively involved in Internet Marketing. Developing an application for Android and iPhone. (Brand image becomes more visible and presents improvements); “Lululemon’s Secret Sauce” article.
4) Involvement in mobile internet marketing will increase sales for next 5 years, as referenced by the article, “Marketing’s Five Year Plan”.
Threats: In case 1 and 2 there is the possibility for failure, but for case 3 which involves the presence of smart phone applications, Lululemon can improve their visibility online in a very fast way and there is no treat with this. In case 4, maybe it will not be effective as much as another kind of marketing. At this moment outlay for mobile internet marketing is still cheap vis-à-vis other kinds of marketing which is traditional marketing and internet marketing, according to “Brands Search for Higher Level of Reception”.

Global Environment: Retail store expansion is only in the United States, England and Australia. Europe will be the main core of global expansion. Despite this, all of the continents are important, but the main focus is on opening stores in the United State as potential buyers are there for the next 5 years. Brand awareness and marketing before starting an activity in every new region is essential. Expanding can be an excellent opportunity, but at the same time can have challenging parts like what happened recently. Lululemon’s gross margin dropped 40 basis points, due in part to investments in new product lines.

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Fig. 1. “CANADA UNEMPLOYMENT RATE.” TRADING ECONOMICS. STCA. 13 JAN. 2013. <http://www.tradingeconomics.com/canada/unemployment-rate>.
Fig. 2. “Lululemon athletica inc. Stock Quote & Summary Data.” NASDAQ. 15 Jan. 2013 <http://www.nasdaq.com/symbol/lulu>.
Fig. 3. Saaim, Palwasha “What Makes Lululemon, Lululemon?” The Motley Fool. 4 Sept. 2012 The Motley Fool’s blog network. 16 Jan. 2013 <http://beta.fool.com/palwashas/2012/09/04/what-makes-lululemon- lululemon/10707/>.

Fig. 1 Unemployment Rate (% per year)

Fig. 2 Lululemon’s Revenue and Gross Income

Fig. 3 Revenue Growth Comparison (In comparison to competition)