Athletic Shoe: Nike vs Lululemon

The term “athleisure” refers to fashionable and informal clothing that is intended to be used for both everyday and athletic purposes. Because of its versatility, this athlete wear has grown in popularity over the years, and businesses have jumped into manufacturing and distributing it. This assignment compares the Lululemon Corporation to the Nike Company, both of which focus on producing and marketing athleisure as rivals in the product.

Chip Wilson formed Lululemon Athletica, a Canadian athletic clothing chain, in 1998. To date, the company has expanded to other parts of the world and is currently actively serving North America, Oceania, Columbia, and British. It is specializing in men and women’s athletic apparel such as shorts, pants and performance pants among others. The company uses three main channels including wholesale, direct-to-customer (DTC) and corporate-owned retail stores channels (Soni, 2014). Lululemon as at 2015, it had a revenue of US$1.79 billion and a net income of 239.03 million. Through the three main channels the company mainly targets adult men and women in the regions that it serves.

Nike on the other hand as an upcoming competitor of Lululemon in designing and selling of athleisure is a multinational corporation based in Beaverton, Oregon, United States. It was founded in 1964 by Phil Knight and Bill Bowerman. The products that the company deals in are mainly apparel accessories that include sports equipment, recreational and athletic products. The company also uses three major distribution channels to have its products reach customers. The channels include: direct-to-consumer (DTC) sales, selling to global brand division and selling products to wholesalers (Soni, 2014). As per 2015, the company had a revenue of US$30.601 billion and a net income of US$3.273 billion. Nike Company serves all parts of the world with its products hence it targets all age groups who are in a position to use its products.

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Section 2: Strategic Elements

The six strategies that the two companies (Lululemon and Nike) are using include the 6P’s of retail which are product, promotion, place, price, presentation, and personnel (Salehudin, 2013). These when used successful lead to profit for the company. The two companies make use of these elements to their advantage as follows: for the products, they ensure that they design them to the satisfaction of clients include such elements as brands, labels, price, and quality. The aspect of promotion as used by the two companies involves public relations, direct marketing, publicity and advertisement among others. Thirdly, the two companies ensure that they put in place their upcoming retailing shops in strategic places where potential customers are able to access them without much trouble.

The fourth aspect is pricing where the two companies ensure that the products match the pricing and the products hence avoiding both overpricing and underpricing. Fifthly, the aspect of promotion as used by the two companies is to ensure that their respective products are made known o all the potential clients and make them go to look out for them. Hence they have indulged in advertising their products by the use of various means and strategies including online through websites and through use of posters. Finally, the aspect of personnel as used by the two companies include ensuring that the there are enough workers at any given time in different parts of their stores. Through maximizing the six P’s of retail trading, the two companies are able to compete fairly with other companies and in some cases, do even better.

From the six P’s elements of retailing, the two companies have to be careful when implementing them lest they fail in their activities because of poor implementation (Salehudin, 2013). The following are some of the six elements that might lead to the two companies failing when not applied appropriately: firstly, the element of price is a sensitive issue and clients will go to other competing companies in the event that they do not get the value of their money when the products sold to them are substandard. Secondly, the aspect of personnel also has a lot to be considered by the two companies. For example, understaffing some of their stores in various parts of the world has adverse effects on their prosperity. On the other hand, overstaffing for the stores will automatically result in losses to the company in paying them for little or no work done.

How Omni-channel can be of experience to the two companies

The Omni-Channel retail concept according to Wallace, (2017), is a modern approach to commerce where the focus is put on coming up with experience that is cohesive in terms of user experience at every touch-point. It is a different approach in comparison to the traditional marketing involving optimization of individual channels with little or no taking of the user experience in mind. Through this approach, if applied by the two companies, they will increase the number of clients because through the Omni-channel retail method they will be addressing the needs of the clients hence encouraging them to come back as well as invite other potential customers. For the Nike Company, it will have more clients than Lululemon because it has a great customer base given that it has stayed for long on the earth.

Section 3: Sustainable Competitive Advantage

Lululemon Company has been recorded to have a competitive advantage over its competitors and this has been attributed to the company’s retail-oriented model in comparison to its competitors like Nike and Adidas. In this respect, the company sells through wholesale channel approach marginally while most of its products (above 95%) get to be sold either through its websites and or retail outlets (Soni, 2014). This has lead to the wholesale channel earning lower margins but this is compensated by the other approach.

On the other hand, Nike Company has a competitive advantage that seems to be sustainable and it is called the click-meets-bricks marketplace strategy which is the direct-to-customer approach. This approach is having three ways of execution where the first is the company’s factory stores, followed by an online sale and lastly, Nike brands (Soni, 2014). This approach to selling its products has to lead to its involvement in athleisure being stable and still is promising in future given that the company had joined it not long ago.

The key issues that are impacting the future of the company

As the popularity of athleisure wears continues to grow, more companies will be opening up to embracing the concept up to a point where the market will be saturated. At this point it will be only the best in terms of quality and price will have a competitive advantage. This will cause a great challenge to both Nike’s and Lululemon’s success over other competitors. Another issue can be the development of an alternative for the athleisure that might lead to a very stiff competition that would threaten the popularity of both Nike and Lululemon Companies.

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References

Salehudin, N. (2013). 6P’s of Retail leading to 7th P - Profit. Ashutoshjhureley.blogspot.co.ke. Retrieved 9 November 2017, from http://ashutoshjhureley.blogspot.co.ke/2010/09/6ps-of-retail-leading-to-7th-p-profit.html

Soni, P. (2014). NIKE’s Distribution Channels: How Products Reach Customers - Market Realist. Marketrealist.com. Retrieved 9 November 2017, from http://marketrealist.com/2014/12/nikes-distribution-channels-products-reach-customers/

Soni, P. (2014). Why Lululemon’s Distribution Channels Are A Competitive Advantage - Market Realist. Marketrealist.com. Retrieved 9 November 2017, from http://marketrealist.com/2014/12/lululemons-distribution-channels-competitive-advantage/

Wallace, T. (2017). Omni-Channel Retail and The Future of Commerce [2017 Data]. The BigCommerce Blog. Retrieved 9 November 2017, from https://www.bigcommerce.com/blog/omni-channel-retail/