Lululemon recently raised the prices on some pants, which infuriated many customers.
The price hikes come at a time when Lululemon is facing more competition than ever, Neil Saunders, managing director of industry research firm Conlumino told Business Insider.
With emerging rivals like rapidly-expanding Under Armour, Gap’s Athleta, and shoe brand New Balance entering the women’s athletic sector, Lululemon will have to stay on its toes to attract customers.
This means offering a value that is better than competitors.
“Five or so years ago, this would not have been so much of a threat,” Saunders explained to Business Insider. “Now, with much greater levels of competition, this is a far riskier move. Higher prices run the risk of alienating some customers who can easily defect other brands.”
Lululemon’s pants were already more expensive than many competitors. Now, most of its pants range from $US88-$US98. That compares with $US31-$US89 for Athleta pants.
The company will likely give hints about its future strategy when it announces earnings tomorrow.
While Lululemon has a stronghold on the majority of rising competition, the athleisure stalwart’s reputation has suffered from several blows.
At the end of the first fiscal quarter this year, the company reported that same-store sales were down.
In 2014, analysts at Sterne Agee told Business Insider that Lululemon was losing its loyal customers.
“Many customers have left and it’s hard to get them back, especially given the focus on the women’s active apparel business from brands such as Nike and Under Armour, and retailers such as Athleta, Sweaty Betty, Victoria’s Secret, and others which have bitten into LULU,” Sterne Agee analyst Sam Poser wrote at the time.
If Lululemon wants to keep its customers, it will need to make a solid case for why they should pay more.
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