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Lululemon Launches a New Store Concept/Fitness Studio

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(Bloomberg)—Lululemon Athletica Inc. is flexing its muscles.

On Thursday, the high-end yoga pants maker will open a Chicago store where shoppers can work out like at a traditional fitness studio. And if visitors forget their own gear, they can borrow a Lululemon outfit to sweat in and return—it’s washed between each use—in hope they’ll end up buying (an unworn version) of the item when the workout’s over.

With two exercise rooms, a meditation area and a cafe serving smoothies, salads, kombucha and beer, the new location will offer six to 10 classes a day for $25 apiece. Lululemon has always leaned into fitness—with many of its existing stores offering free running clubs or yoga classes—but this expansion lets it monetize its workout offerings. If the experiment works, Lululemon may dedicate 10% of its store fleet to the new concept by 2023.

Located in the tony neighborhood of Lincoln Park near a Whole Foods Market, Peet’s Coffee and West Elm, the 20,000-square-foot (1,860 square-meter) space is the latest attempt by a retailer to lure customers with experiences that online shopping simply can’t offer. In a Chicago suburb a few miles away, Crate & Barrel is opening a full-service in-store restaurant this month in the hope diners will buy their stemware after lunch. American Eagle Outfitters Inc. has a Manhattan location where students can do laundry for free, while DSW has added nail services inside some stores.

There’s still traditional retail at the new two-story Lululemon concept, its biggest store yet. The bottom floor is devoted to women’s tops, pants and bras. Reflecting Lululemon’s ongoing effort to attract male shoppers, the location features a large men’s apparel area on the second floor with hats, running shirts and black-pepper sandalwood deodorant for $12. The gym classes have been designed to appeal to men as well, and include hip-hop yoga, weight lifting and high-intensity interval training.

“We feel really, really good about the men’s demand we’re seeing,” says Celeste Burgoyne, executive vice president of the Americas.

Not all of Lululemon’s previous retail experiments have flourished. The Vancouver-based company quietly closed men’s stores in New York and Toronto recently even as it tries to more than double revenue from that segment by 2023. Instead, the company is looking to roughly double the size of its traditional locations to include more men’s clothing, according to Burgoyne.

Even as the company expands overseas, including in China, it needs to find ways to keep the domestic business humming. North America is a more mature market where about 355 of Lululemon stores—78% of the total—are located. Investors have so far backed Chief Executive Officer Calvin McDonald’s strategy, sending the shares up 44% over the past 12 months.

–With assistance from Jordyn Holman.

To contact the authors of this story: Leslie Patton in Chicago at [email protected]; Sandrine Rastello in Montreal at [email protected].

To contact the editor responsible for this story: Robin Ajello at [email protected]

Nick Turner

© 2019 Bloomberg L.P.

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