With a $1 million investment in a start-up company called Mirror, Lululemon tested the waters when it came to building beyond its existing retail offerings of yoga and exercise-related gear and clothing. The waters apparently felt good, because a year later, Lululemon has invested an additional $500 million to purchase the company and thereby become an active participant in a new market, featuring in-home exercise equipment enabled by high-tech streaming and connectivity options.
The Mirror device, installed on walls in consumers’ homes, streams both live and recorded exercise classes. Once consumers purchase the $1500 equipment and have it installed, they pay $39 per month for unlimited access to the offerings. Mirror promises a range of class styles, such as yoga, Pilates, and kickboxing, as well as customized workouts designed to reflect each user’s fitness goals.
In this sense, Mirror does not represent a conventional retail setting, yet Lululemon sees the expansion as a natural and logical next step. By leveraging its popularity and brand image as a desirable, high-end provider of various fashionable exercise outfits and gear, it hopes to expand the reach of the Mirror too. In particular, whereas the start-up thus far has relied mainly on online channels to reach buyers, Mirror devices will likely start popping up in Lululemon stores, enabling exercise-oriented consumers to try out and interact with the tools before plunking down the money to install one in their own homes.
In turn, Lululemon anticipates leveraging Mirror as a novel channel to promote its retail offerings; users likely should expect to see exercise instructors decked out in the brand’s leggings and tanks soon. Although not solely driven by the effects of COVID-19, the pandemic certainly encouraged the partnership. In-store sales of Lululemon apparel had fallen somewhat, as people engaged in social distancing, so finding new options for consumers to engage with its products without leaving their homes held great appeal.
Furthermore, Mirror itself might be a good investment. Many people continue to avoid traditional gyms or yoga studios, such that they might be seeking alternatives for getting in a round of kickboxing moves or a quick Pilates class. That is, beyond the benefits for encouraging sales of its products, purchasing Mirror arguably gives Lululemon a new stream of revenue, earned through the sale of the devices and ongoing subscription payments to access the services. Notably, even before partnering with the better known retail brand, Mirror had earned an estimated $100 million in revenues.
Discussion Questions:
- What potential implications does this new channel have for retail sales of Lululemon-branded products?
- What distinct considerations will Lululemon need to address as it expands beyond conventional retail operations to start working in a new channel and providing a subscription-based service?
Source: Sapna Maheshwari, “Lululemon to Buy Mirror, a Fitness Start-Up, for $500 Million,” The New York Times, June 29, 2020; George Anderson, “Lululemon Moves into In-Home Fitness with $500M Deal for Mirror,” Retail Wire, June 30, 2020