Download - Fashion Buying Project Final
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Table of Contents INTRODUCTION: ......................................................................................................................... 3
STORE LOCATION: ........................................................................................................................ 3 TARGET MARKET: ........................................................................................................................ 3 MISSION STATEMENT: .................................................................................................................. 4
ECONOMIC OVERVIEW: .......................................................................................................... 4 COMPETITIVE ANALYSIS: ....................................................................................................... 5
RETAIL INDUSTRY OVERVIEW: .................................................................................................... 5 COMPETITION: .............................................................................................................................. 7 POSITIONING MAP: ..................................................................................................................... 13 SWOT ANALYSIS: ...................................................................................................................... 14 STRATEGIC MOVES: ................................................................................................................... 16
PROMOTIONAL CALENDAR ................................................................................................. 17 PROMOTIONAL CALENDAR DETAILS BY MONTH: ...................................................... 24
FEBRUARY: ................................................................................................................................. 24 MARCH: ...................................................................................................................................... 25 APRIL: ......................................................................................................................................... 26 MAY: .......................................................................................................................................... 27 JUNE: .......................................................................................................................................... 28 JULY: .......................................................................................................................................... 29
MERCHANDISE PLAN .............................................................................................................. 31 MERCHANDISE PLAN JUSTIFICATIONS: .......................................................................... 34
SALES: ........................................................................................................................................ 34 MARKDOWNS: ............................................................................................................................ 36 MARKUP: .................................................................................................................................... 36
CLASSIFICATION LIST/INVESTMENT SUMMARY ......................................................... 38 MODEL STOCK PLANS ............................................................................................................ 40 MODEL STOCK PLAN EXPLANATION: .............................................................................. 45 WORKS CITED ........................................................................................................................... 46 APPENDIX ................................................................................................................................... 49
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Introduction: Store Location: The Eaton Centre
Target Market: In an article for the Montreal Gazette, Zoe McKnight claims that while the
menswear line is, in fact, growing, the “target market remains women – from teens to
those in their mid-60s – who are interested in staying healthy and fit.” (McKnight B.4)
McKnight made an interesting point in noting the vast age range that lululemon targets.
Hollie Shaw, of the Edmonton Journal, solidified this point in her article about the up and
coming new brand that lululemon has put out for its younger market. They created this
new sister brand, called Ivivva, for the athletically inclined female aged four to fourteen.
(Shaw B.2) However, as McKnight points out, the original lululemon athletica brand is
designed with a very specific female customer in mind. Quoting Laura Klauberg, vice-
president of global brand and community, McKnight relays to us that the target customer
is “someone who is ‘super athletic, who is probably in (her) early 30s, who practices
yoga, who probably is a runner, [and is] very successful in her career.’” (Mcknight B.4)
With the average price point of lululemon goods falling between $80-130, it seems
necessary that the target market be relatively successful with a moderate-high income
level in order to adequately afford this price. (lululemon athletica, inc.) Looking at the
psychographic factors affecting lululemon’s target market, Klauberg, as relayed by
McKnight, gives a very insightful and apt description of the lifestyle and attitude one can
expect from a lululemon shopper: she values a healthy, balanced, and physically active
lifestyle and takes a positive attitude towards actively pursuing this state. (McKnight B.4)
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Mission Statement: With an original intent to “elevate the world from mediocrity to greatness,”
lululemon athletica, inc. defines our mission as “creating components for people to live
longer, healthier, fun lives.” (“About Us”)
Economic Overview: For the majority of 2015, we have been hearing that the Canadian Economy has
been in crisis, with unemployment rates rising, consumer spending dropping alongside
consumer confidence, and a dollar that is lower than it has been in years. (Olive) Despite
this, economists are now recognizing a gradual switch back to the more stable economy
we are used to. We are seeing a rise in Canada’s real GDP projected at 1.2 per cent this
year, with growth rising to 2.2 per cent in 2016, our sales forecasting year. (“Good Signs
for Economy”) We have also seen a huge jump in Canadian retail sales in the second
quarter of 2015, with growth of 25% over the first quarter of 2015 according to Statistics
Canada. Given that there was not only growth between these two quarters, but also an
increase of 2.2% from the 2014 second quarter, we are confident that we will continue to
see this rise in retail sales for the 2016 Spring/Summer season. It must be noted that there
was a 0.8 per cent decrease in the sports and leisure sector, however. (“StatsCan”)
Though lululemon athletica, inc. does play a small role in this portion of retail sales, our
primary market of active-living apparel will remain largely unaffected. Despite these
areas of growth, there is one economic indicator that remains in jeopardy: Canada’s
unemployment rate. Unemployment rose to 7.1 per cent in September, the highest it has
been in over a year. (Younglai) This will have an important effect on consumer spending,
which we will consider closely when determining our planned sales. Overall, given that
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the Canadian Economy is in a period of recovery, with second-quarter retail sales results
rising by 2.2%, it follows that a moderate increase in sales can be expected for lululemon
athletica, inc.
Competitive Analysis: Retail Industry Overview: Industry Size and Growth:
As of July 2015, clothing stores account for $1,978 million of the Canadian retail
sector, or 4.56% of Canadian retail trade as a whole. This demonstrates a 2.5% growth
from the previous month of June 2015, and a 6.5% growth historically from July 2014.
(StatsCan.)
Major Competitors and Their Impact on Retail Industry:
With consumer trends moving towards an active-living lifestyle more and more
each day, lululemon athletica, inc. has come up against some tough competition. Recent
years have brought a surplus of new entrants to the market ranging anywhere from
established brands, such as The Gap, diversifying their offerings to include yoga wear, to
new specialty companies, such as Soybu, who are focusing solely on active wear to
ensure high depth and breadth in their offering. (Lutz) This influx of entry to the market
will have an inevitable effect on lululemon. It has called into question their market share,
which had been dropping steadily through the last half of 2013. (Brooke) However,
market analysts are suggesting that lululemon is on the rise once more, with revenues
15.6% higher at the end of the fourth quarter of fiscal 2015. (Soni) Though competition
will always be an important factor to consider in any strategic decisions, at present
lululemon athletica, inc.’s competitors have not bridged the gap to becoming consumer’s
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top-of-mind response to active-living wear, a position lululemon continues to hold dear.
Consumer Trends:
The biggest consumer trend to note right now is the move by Millennials towards
“low-cost, fast fashion retailers.” (Kopun) Millennials represent a huge share of the
market, accounting for upwards of 30% of total retail sales. (Accenture) While lululemon
has marketed themselves well to the Millennial market, they will need to continue to
monitor the level of importance that this integral customer places on the quality of their
active wear versus the price it costs to obtain. Another important consumer trend to note
is the move towards e-commerce. This switch from traditional ‘brick and mortar’
shopping towards the convenience of shopping online has been prevalent over the past
five years, however it is within the last year that e-commerce sales have truly begun to
soar. (FirstData) Lululemon has done an exceptionally good job at embracing this
omnichannel approach to retailing, investing heavily not only in their in-store experience,
but also making their consumer’s online experience integrated and satisfying. They
maintain the sense of community that is their point of differentiation amongst both
channels, a feat that few others have been able to replicate. (Shaw)
Industry Trends:
Lululemon has always been regarded as innovative, due largely in part to their
proprietary technical textiles. Having this advantage in a market where consumers are
constantly questioning what added value they will gain from purchasing your product
over a competitors’ has been crucial to lululemon’s success. (“About Us”) This level of
innovation has become an important industry trend in the development of products.
Consumers are demanding a product unlike any other on the market to ensure their
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satisfaction, and our industry is dutifully responding to this demand with lululemon
athletica, inc. maintaining their position at the forefront of this movement. Another
important industry trend to note is the influx and growth of private label branding as a
point of differentiation. The best way to differentiate oneself in they eyes of consumers is
to carry a product that they cannot get anywhere else. Unfortunately, with the prevalence
of trade in our market, the only way to ensure exclusivity is to become vertically
integrated. (“Canada’s Changing Retail Market”)
Competition: Direct Competitors:
1. Athleta, by The Gap
2. Nike
3. Soybu
4. Zella, by Nordstrom
Positioning Strategies and Key Strengths by Competitor:
Athleta, by The Gap:
Athleta is the new moderately priced active-wear and lifestyle brand put forth by
The Gap and is one of lululemon’s biggest direct competitors. Similar to lululemon, their
merchandise assortment ranges from their yoga- and sport-wear offerings, to their
comfortable lifestyle apprel in the form of dresses, outerwear, and accessories. (Athleta)
Their pricing is reasonable, with comparable garments 20-30% less than their
counterparts at lululemon. For example, a pair of yoga pants from Athleta retail starting
at $50, where a similar pair at lululemon will start at $80 minimum. (Athleta)(lululemon
athletica, inc.) Athleta currently has 100 locations across North America, as well as a
strong online presence. Their customer service level remains high across both channels,
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with live chat available online to ensure you find your perfect fit. Similar to lululemon,
they are striving to build a community by offering free fitness classes and a professional
discount for fitness instructors. (Athleta) Their in-store design and the environment of
their stores suggest an active-living culture, which their target market can appreciate.
The primary strength of Athleta is their association with the already successful
Gap brand. Clients of The Gap that are looking to make the switch to an active lifestyle,
or to try yoga for the first time, will be inclined to shop with a brand they already know
and trust. Athleta offers a wide variety of free fitness classes available through their
locations, limiting themselves not only to yoga, but including interval training and pilates
as well. (Athleta) Athleta has chosen to take on the plus-size market, which accounts for
67% of the apparel purchasing populace. (Lutz) Considering the negative backlash
lululemon has received in terms of its accessibility to female consumers over size 12,
Athleta stands to gain a huge following in this sector of the market. Finally, Athleta’s
customer service mentality remains a point of difference for them in a market that so
heavily values service. They do this through their one-of-a-kind return policy, boasting
the ability to return any garment, at any time, in any condition, and receive a full return if
you are in any way unsatisfied with the performance. They also ensure that if you cannot
find your desired size or style at one location, they will search other locations and their
online system to find it and ship it to you free of charge anywhere in the world. (Lutz) It
is these distinct strengths that make Athleta one of lululemon’s most dynamic
competitors.
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Nike:
For decades Nike has been the go-to for athletes across the globe. Though
creating a name for themselves primarily with runners, Nike has never been shy about
showcasing their versatility amongst all athletic channels. One of their most recent
endeavours is their diversification into yoga-wear and accessories. (Nike) The
merchandise assortment of Nike stretches from the top and bottom aspect of yoga-wear,
to the accessories required for the activity such as mats, bags, and specialty footwear.
Their price point is comparable to lululemon with most offerings on par. For example, a
yoga mat with Nike starts at $60, with lululemon mats starting at $55. (Nike)(lululemon
athletica, inc) Nike communicates with their clientele through their already existing
community of sponsored athletes and athletic events. Nike products are available in
countless retail stores across the globe, as well as in their flagship locations across
Canada and the U.S. However, though they are currently in the process of developing an
online shopping experience for the Canadian consumer, at present their ecommerce site is
unavailable to Canadians. (Nike)
The yoga-wear sector of Nike has a similar key strength to Athleta in their
association to an already widely regarded brand. However, in this case it is due to the
athletic community Nike has already built for itself. Athletes of all kinds flock to Nike for
their apparel, footwear, and accessories. It is no wonder that when they introduced their
yoga line, they garnered followers that were already using other Nike products in their
respective athletic pursuits. Seen as perhaps a more serious athletics brand, consumers
who are highly involved in the active lifestyle may choose Nike over lululemon for their
more leisure activities, such as yoga. One of Nike’s main strengths, as mentioned before,
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is the community that they have created with their products. Their main added value is
the idea of “hope” that they bring to people, whether it is those looking to start running
for the first time, or their sponsored athletes competing at in some of the world’s most
challenging marathons and events. (Nike) Nike also offers a wide assortment of specialty
accessories for yoga lovers, such as their Studio Wrap shoe, which is designed
specifically for precise control on otherwise slippery yoga mats. (Nike) This level of
innovation mixed with a product that is solely theirs puts Nike ahead of its competitors
when it comes to product comparison. Finally, Nike is one of the most accessible brands
for consumers, being found in countless retailers across the globe, whereas lululemon is
solely available in their own stores and online. (Nike)
Soybu:
Soybu is a relatively new competitor for lululemon, boasting a line of yoga-
centric apparel made entirely from soy, organic cotton, bamboo, and recycled materials.
(Lutz) Though their main focus is on yoga-wear, they do offer a small assortment of
dresses, outerwear, and swimwear, however it maintains the same athletic aesthetic. Their
price point is lower than that of lululemon, with one of their yoga tops retailing for $36
versus a comparable option at lululemon for $66. (Soybu)(lululemon athletica, inc.) Their
apparel is currently offered in select retail stores across Canada and the U.S., as well as
on their online shop. Though they are not as diversified as lululemon, they do appeal to
the same target of consumers who lead an active lifestyle and seek sustainable fashions.
Soybu’s key strength is their sustainability factor. Made from all-natural textiles,
the brand garners attraction from consumers who are environmentally minded. Since the
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yoga lifestyle is often equated with peace, harmony, and a respect for ones environment,
it suggests that consumers who practice yoga will gravitate to a brand boasting these
features. (Soybu) Since Soybu is still relatively small and is only offered in specialty
stores and online, it creates an air of exclusivity to the product line, which is what
original followers of lululemon sought. With lululemon’s extreme growth, many of these
boutique shoppers have left to look elsewhere for their lifestyle fashions. (Lutz)
Considering the quality of the materials being used, as well as in comparison to their
direct competitors, Soybu is one of the most affordable yoga-wear alternatives on the
market. In a niche that is known for attracting a higher-end client, Soybu presents
themselves as an accessible and affordable alternative. (Soybu) Finally, since Soybu has
opted to focus solely on yoga wear, they’ve allowed themselves to develop a strong
assortment within their products, which allows customers to have repeat purchases on the
items they come to love most. (Soybu)
Zella, by Nordstrom:
Though Nordstorm is still in its infancy in the Canadian market, they are
forecasted to take it completely by storm. Known for their exceptionally high level of
customer service, it is no doubt that the brand and their kin, such as Zella, will represent a
new challenge for Canadian retailers like lululemon. (Nordstrom) The Zella brand offers
an assortment similar to that of lululemon, however they have branched off to include the
highly important plus-size market, as well as the children’s market. (Zella) Their pricing
strategy is moderate for the high quality of the brand, though it is still lower than that of
lululemon. For example, a zip-up sweatshirt from Zella retails at $130, where a similar
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counterpart at lululemon starts at $170 and up. As mentioned previously the Nordstrom
brand is known primarily for customer service, which is important in the yoga
community. Though only available in Nordstrom stores which have yet to expand fully
into Canada, Zella is available online to the Canadian consumer with free shipping
Canada-wide. (Zella)
Diversifying away from their typical high-end department store offerings,
Nordstrom came up with their active-wear brand, Zella. Being associated with Nordstrom
is one of the biggest key strengths for Zella. The brand is offered on their website as well
as in stores, allowing the typical Nordstrom shopper to meet all their needs in one place.
Similarly to Athleta, Zella has decided to tackle both the plus size, as well as the
children’s market, making them more accessible to a wider range of consumers. (Zella)
Perhaps their biggest strength, however, is their developing connection to the fitness
community. One their website, Zella connects you to their “Zella PROs,” or the fitness
experts they’ve identified in your area that can assist you in achieving your athletic
pursuits. This level of integration with their consumer’s lives is what will set Zella apart
from their competitors. (Zella)
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Positioning Map:
Athletic Performance and Luxury
Fashion Appeal are used as the basis of
comparison in this positioning map, as
they are two of the leading qualities that
shape consumer’s impression of the
lululemon athletica, inc. brand.
Similarly, they are qualities that their
competitors emulate to some degree or
another. In this case, Athletic
Performance refers to a consumer’s
perception of the level at which the
apparel is expected to perform during the
activity it was intended for. Luxury
Fashion Appeal refers to the brand’s
ability to provide fashionable and
luxurious fitness apparel in an industry
with few truly premium options.
ATHLETIC PERFORMANCE
Moderate High Very High
Lux
ury
Fash
ion
App
eal
Mod
erat
eH
igh
Very
Hig
h
lululemon
Nike
Zella by Nordstrom
Soybu
Athleta byThe Gap
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SWOT Analysis: Strengths:
- Strong relationships with fitness professionals created through their fitness
ambassador program where feedback is then received to improve product (“Our
Ambassadors”)
- Ambassador program emphasizes community outreach through the offering of
free yoga classes that are open to the public, which in turn builds a community of
loyal lululemon followers (“Our Ambassadors”)
- lululemon athletica, inc. developed and copyrighted textiles such as “Luon” to
differentiate themselves from their competitors (“Textiles”)
- Strong brand identity within the yoga community, but the average consumer also
has top-of-mind recognition if they were to seek out active-wear or lifestyle
apparel
- The quality of the garments is backed up with a guarantee that if the product is not
performing to the extent you believed it would, you can bring it back to any
location at any time (“Our Quality Promise”)
Weaknesses:
- Widely perceived as overpriced with quality that does not match consumer’s
expectations (Peterson, 2014)
- Faced largely publicized criticism and controversy over “sheer pants” and the
subsequent comments made by founder and former CEO, Chip Wilson. It has
been hard for the brand to recover from these issues (Suddath) (Peterson, 2013)
- Limited sizing with no maternity or plus sizes, current size offering of 2-12 and
no differentiation between petite or tall (lululemon athletica, inc.)
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- lululemon athletica, inc. encountered a number of supply chain issues due to
quality control, resulting in a shortage of inventory for sale (Lutz)
- lululemon is perceived as having a largely female focus, which leads them to miss
out on the men’s apparel market, which is growing exponentially (StatsCan)
Opportunities:
- Extended sizing to expand customer base
- Extend categories of active-wear outside of yoga and running
- Collaboration with non-athletic brands to increase their overall retail market share
- Extend the ambassador program to those who are indirectly involved in the fitness
community
- Manufacture products rather than relying on third-party manufacturing, thus
establishing consistent quality control through total quality management (TQM)
Threats:
- Stock prices have fallen dramatically in recent times, scaring off potential
investors (Caplinger)
- Competitors such as Nike offer a wider set of athletic apparel goods, such as
swimwear and skiing apparel which may entice consumers to shop with them for
all their athletic goods needs (Nike)
- Threat of new entrants to the market with similar products at a much more
competitive and affordable price-point, such as Athleta (Peterson, 2014)
- While the sporting goods industry is currently booming, this is largely an
unprecedented trend with risk associated that the trend will reach stagnancy at
some point, leaving lululemon with little to provide to their customers (StatsCan)
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- Competition from not only new active-wear entrants, but also from established
luxury brands that introduce a higher-end client, such as that of Nordstrom and
their Zella subsidiary
Strategic Moves: lululemon athletica, inc. has made many strategic moves to get where they are
today, ranging from the development of proprietary textiles, to their ambassador initiative
mentioned above. However, it is their move towards the younger generation that is
garnering attention at present. With their introduction of Ivivva, lululemon has positioned
themselves to gain a greater market share, as well as to implant themselves in the entire
household of their consumer. (Shaw B.2)
Though lululemon is relatively accessible today with numerous locations across
major cities in North America, they are still cognizant of the fact that in order to retain
their market share, they must be as accessible as possible. As a result, they have made the
strategic decision to invest heavily in ecommerce, as well as to utilize warehouses,
showrooms, and temporary locations to broaden their sales avenues and increase brand
awareness. (Investopedia)
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Promotional Calendar Details by Month:
February: • Fashion must-haves for this month include our signature legging that has been
outfitted with a full fleece lining to keep you warm in the coldest months. We’re
also featuring our transitional parka designed in an Anorack style with a
removable hood.
• The above items have been bought in volume and will be featured during the
month as indicated by their position on the February calendar. We will also be
increasing our purchases for women’s sports bras for this month to accommodate
the needs of our Valentine’s Day promotion.
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• The month of February will see our first promotion for the Spring/Summer 2016
season. We will be featuring all women’s sports bras in a “Buy One, Get One
Half Price” promotion. Limit of four sports bras per customer.
March: • Fashion must-haves for March include our top-selling convertible long-sleeve top.
This top can be worn in three styles: full long-sleeve, tank top, or long-sleeve
crop. The latter half of the month will see a feature on our cinched-waist rain
jacket with removable hood.
• Both styles shown above will be bought in volume for this month and will need to
be featured according to allocation shown March calendar.
• There will be no sales promotions for the month of March outside of regular
markdowns.
26
April: • April’s fashion must-haves are dedicated to our top-selling running wear: the
ankle-cuff jogging pant and our water-resistant hooded wind-breaker that folds
down into a compactible 2x4 pouch with attached carbineer that can be attached
to the belt loop of the jogging pants. These pieces are designed to keep you dry
while still remaining lightweight and versatile as the weather warms.
• Both of the above-mentioned styles are bought in volume for the month of April,
as well as an increase in purchases for our women’s accessories. Women’s
accessories are on promotion for the last weekend of April for Mother’s Day.
• Sales promotions for the month of April include our Mother’s Day promotion,
where all women’s accessories will see a 20% discount with a minimum purchase
of $40. Accessories included are our signature wrap scarves and tote bags.
27
May: • Fashion must-haves in May are all about functional layers: our sleeveless puffy
vest to add just the right amount of warmth on your morning jog, as well as our
hooded racer-back sweater which is the perfect layer over any of our sports-bras
while at the gym or practicing yoga outdoors.
• Layering merchandise shown above will be bought in volume and featured
according to the promotional calendar.
• There will be no sales promotions for the month of May.
28
June: • June is our highest sales month of the season, as it includes three features during
the month on all of our top-selling summer merchandise, as well as our Father’s
Day promotion and our Semi-Annual Sale. Fashion must-haves for June include
our customer favourite backless yoga tank, our classic sport short, and a brand
new style for this season, our loose and airy blouson maxi-romper. All of these
pieces are perfect for the warm weather.
29
• Volume buys for the month of June include all of the aforementioned
merchandise, as well as an increase in purchases on our men’s yoga pants to
support our Father’s Day promotion. We will also see leader-priced goods during
our semi-annual sale in the fourth week of June. These goods will not remain at a
permanent markdown and will return to their regular price at the end of the week.
Feature will be taken on these goods during this week, shortening the feature life
of our sport short.
• Sales promotions are in full effect in June as we near the end of our
Spring/Summer 2016 season. Items included in our semi-annual sale are: our
classic high-rise and low-rise leggings, ladies zip-up and hoodies, ladies
intimates, select top styles, and remaining coats and jackets from earlier in the
season. We will also see a promotion earlier in the month from the men’s
department on yoga pants for Father’s Day. The promotion will run for the
weekend and will see 30% off with minimum purchase of $50.
July: • The end of the season sees fashion must-haves that are necessities year-round,
such as our cropped layering hoodie that can be worn on it’s own in the summer
months, or over a long sleeve knit as the weather starts to cool again. We also see
a feature on our women’s intimates, as these remain one of our top-selling items
regardless of season.
30
• The above merchandise will be purchased in volume for the month of July and
will be featured according to the monthly promotional calendar.
• There will be no sales promotions for the month of July, save for regularly
scheduled markdowns on slow moving summer merchandise.
32
%$
%$
BOS
54.5%
93,708
///////////
54.5%
84,993
//////////
Purchases
54.5%
424,908
/////////
54.5%
401,420
////////
EOS
54.5%
518,616
/////////
54.5%
486,413
////////
25%
151,250
/////////
30%
165,000
2.5%
15,125
///////////
2.5%
13,750
//////////
1%6,050
//////////////
1%5,500
////////////
40.99%
247,990
/////////
38.71%
212,905
////////
3.1
3.1
/////////////////
Aug
Sept
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Last/Year
77,000
94,600
83,600
94,600
136,400
63,800
550,000
Plan
84,700
//////////
104,060
////////
91,960
/////////
104,060
/////////
150,040
////////
70,180
//////////
605,000
//////////////
10.00%
T/D/L/Year
77,000
171,600
255,200
349,800
486,200
550,000
T/D/Plan
84,700
//////////
188,760
////////
280,720
///////
384,780
/////////
534,820
////////
605,000
////////
August
Avg./Stock
Last/Year
155,950
172,000
////////
167,000
186,500
205,500
176,000
177,500
177,207
////////
Plan
171,941
////////
189,389
////////
183,920
///////
204,998
/////////
226,560
////////
193,697
////////
195,339
195,121
////////
Last/Year
19,310
21,200
16,000
18,970
59,320
30,200
165,000
30%
Plan
17,696
//////////
19,436
//////////
14,671
/////////
17,394
///////////
54,374
//////////
27,679
//////////
151,250
//////////////
25%
T/D/L/Year
19,310
40,510
56,510
75,480
134,800
165,000
T/D/Plan
17,696
//////////
37,132
//////////
51,803
/////////
69,197
///////////
123,571
////////
151,250
////////
Last/Year
112,360
////////
110,800
////////
119,100
///////
132,570
/////////
166,220
////////
95,500
//////////
736,550
//////////////
Plan
119,844
////////
118,026
////////
127,709
///////
143,016
/////////
171,551
////////
99,501
//////////
779,648
//////////////
5.85%
T/D/L/Year
112,360
////////
223,160
////////
342,260
///////
474,830
/////////
641,050
////////
736,550
////////
T/D/Plan
119,844
////////
237,871
////////
365,580
///////
508,596
/////////
680,147
////////
779,648
////////
Last/Year/%
54.5%
54.5%
54.5%
54.5%
54.5%
54.5%
54.5%
Last/Year/$
61,236
//////////
60,386
//////////
64,910
/////////
72,251
///////////
90,590
//////////
52,048
//////////
401,420
//////////////
Plan/%
54.5%
54.5%
54.5%
54.5%
54.5%
54.5%
54.5%
Plan/$
61,236
//////////
64,324
//////////
69,602
/////////
77,944
///////////
93,495
//////////
54,228
//////////
424,908
//////////////
SixRMon
th/
Merchandisin
g/Plan
Departmen
t:/Lululemon
/Wom
en's/Wear
Results/fo
r/Season
Plan/This/Y
ear
Buyer:/Kati/Woo
d
Actual/La
st/Year
Remarks
Sales/+
10%////////////////
Markdow
ns/R5
%/of/Sales/
Purchases/+
5.85%////////////
Markup/remains/th
e/same/on
/pu
rchases/////////////////////////////
Gross/P
rofit/+2.28%
Sprin
g/Summer/Season
Markup Markdow
nsStock/Shortage
Workroo
mGross/P
rofit
Turnover
Initial/
Markup
Season
/Total
%/Change
Fall/Winter
Sprin
g/Summer
Sales
Retail/Stock/
(BOM)
Markdow
ns
Retail/
Purchases
33
%$
%$
BOS
0.545
=C20*E
50.5
45=G
5*C19
Purcha
ses0.5
45=I2
6*E6
0.545
=I25*G
6EO
S0.5
45=F5
+F60.5
45=H
5+H6
0.25
=I22
0.3=I2
10.0
25=I1
6*E9
0.025
=I15*G
90.0
1=E1
0*I16
0.01
=G10*
I15=I3
1@(((J2
2+E9)*
(1@I31
))+E10
)=0.409
9*I16
=I29@(
((J21+G
9)*(1@
I29)+G
10))=0.387
1*I15
=I16/J
20=I1
5/J19
Aug
Sept
OctNo
vDe
cJan
FebMa
rAp
rMa
yJun
JulLas
tUYear
77000
94600
83600
94600
136400
63800
=C15+D
15+E15
+F15+G
15+H1
5Pla
n=0.
14*I16
=0.172
*I16
=0.152
*I16
=0.172
*I16
=0.248
*I16
=0.116
*I16
=(J16*
I15)+I1
50.1
T/DUL/Y
ear=C1
5=C1
5+D15
=D17+
E15=E1
7+F15
=F17+G
15=G
17+H1
5T/D
UPlan
=C16
=C18+D
16=D
18+E16
=E18+F
16=F1
8+G16
=G18+
H16
Augus
tAvg
.UStock
LastUYe
ar155
950172
000167
000186
500205
500176
000177
500=(C
19+D1
9+E19+
F19+G
19+H1
9+I19)
/7Pla
n=2.
03*C16
=1.82*
D16
=2*E16
=1.97*
F16=1.
51*G1
6=2.
76*H1
6195
339=(C
20+D2
0+E20+
F20+G
20+H2
0+I20)
/7Las
tUYear
19310
21200
16000
18970
59320
30200
=C21+D
21+E21
+F21+G
21+H2
10.3Pla
n=0.
117*I2
2=0.
1285*I
22=0.
097*I2
2=0.
115*I2
2=I2
2*0.35
95=I2
2*0.18
3=I1
6*J22
0.25
T/DUL/Y
ear=C2
1=C2
3+D21
=D23+
E21=E2
3+F21
=F23+G
21=G
23+H2
1T/D
UPlan
=C22
=C24+D
22=D
24+E22
=E24+F
22=F2
4+G22
=G24+
H22
LastUYe
ar=C1
5+D19+
C21@C1
9=D
15+E19
+D21@
D19
=E15+F
19+E21
@E19
=F15+G
19+F21
@F19
=G15+
H19+G
21@G1
9=H
15+I19
+H21@
H19
=SUM(
C25:H2
5)Pla
n=C1
8+D20+
C22@C2
0=D
16+E20
+D22@
D20
=E16+F
20+E22
@E20
=F16+G
20+F22
@F20
=G16+
H20+G
22@G2
0=H
16+I20
+H22@
H20
=SUM(
C26:H2
6)=(I2
6@I25)/
I25T/D
UL/Year
=C25
=C27+D
25=D
27+E25
=E27+F
25=F2
7+G25
=G27+
H25
T/DUPla
n=C2
6=C2
8+D26
=D28+
E26=E2
8+F26
=F28+G
26=G
28+H2
6Las
tUYearU%
0.545
0.545
0.545
0.545
0.545
0.545
0.545
LastUYe
arU$=C2
9*C25
=D29*
D25
=E29*E
25=F2
9*F25
=G29*
G25
=H29*
H25
=I29*I
25Pla
nU%0.5
450.5
450.5
450.5
450.5
450.5
450.5
45Pla
nU$=C3
1*C27
=D31*
D26
=E31*E
26=F3
1*F26
=G31*
G26
=H31*
H26
=I31*I
26
RetailU
Purcha
ses
InitialU
Marku
p
Season
UTotal
%UChan
geSpr
ing/Su
mmer
Sales
RetailU
StockU
(BOM)
Markd
owns
Markd
owns
StockU
Shorta
geWo
rkroom
GrossUP
rofit
Turnov
erFal
l/Winte
r
Six@M
onthUM
erchan
dising
UPlan
Depar
tment
:ULulule
monUW
omen'
sUWear
Buyer:
UKatiUW
ood
Results
UforUSe
ason
PlanUT
hisUYe
arAct
ualULa
stUYear
Remark
sSal
esU+10
%UUUUUUU
UUUUUUUUUM
arkdow
nsU@5%
UofUSal
esUPur
chases
U+5.85
%UUUUUUU
UUUUUMa
rkupUre
mains
UtheUsam
eUonU
purcha
sesUUUUU
UUUUUUUUUU
UUUUUUUUUU
UUUUGros
sUProf
itU+2.2
8%
Spring
/Summ
erUSeas
on
Marku
p
34
Merchandise Plan Justifications:
Sales: • Though the actual percentage of growth has been dropping incrementally over the
last three years, we are still seeing between a 12-16% growth in sales annually
from 2013-15. This historical data helps to justify the 10% increase in sales we
are forecasting for this Spring/Summer season (Annual Report, p.18)
• Canadian retail sales in general are up for the second quarter of 2015, with growth
of 25% over the first quarter of 2015 according to Stats Canada (“StatsCan”)
• Instead of maintaining our 12% growth increase from last year, we chose to
temper this and decrease our growth to only 10%, which was largely decided
based on the current rise in Canadian unemployment rates and the inevitable
effect this has on consumer spending (Younglai)
• The consumer trend towards researching goods via online sources will play a role
in our sales as well this season. We have invested heavily in e-commerce as one
of our strategic moves, which market research shows consumers are depending on
more and more prior to making a buying decision in-store (Thangavelu)
• Our success in building relationships with fitness professionals will continue to
drive our sales, especially during these summer months when our running
programs are at their peak and consumers are looking to get back into shape (“Our
Ambassadors”)
• Introduction of the new Ivivva line for the younger generation will bring a
secondary target consumer into our already existing locations, improving the
likelihood of cross-selling and thus increasing our sales overall (Shaw B.2)
35
• Net revenue increase for the last two years was driven by sales from new stores
and the growth of our direct to consumer segment, as well as increased sales at
locations in comparable stores. Knowing this, our prediction that this trend will
continue is well founded (Annual Report, p.24)
• Internally, we recognize that our ability to properly anticipate and respond
effectively to our customer preferences for technical athletic apparel is one of our
biggest attributing factors to our consistent sales growth annually (Annual Report,
p.28)
• Gross profit increased for fiscal 2014 by 9%, allowing for more cash flows and
increased buying potential. This will allow us to increase our purchases, which
directly correlates with an increase in sales (Annual Report, p. 20)
• Lululemon athletica inc. has always maintained a strong brand identity within the
yoga community, however with the growth in the activewear market we are now
seeing top-of-mind recognition from our secondary market as well, such as
lifestyle consumers and other athletic enthusiasts, which will increase our market
reach and thus our sales
• Fiscal 2014 saw a focus on our product assortment, guest experiences, and our
“go-to-market process” for our products. This improved our product assortment
and helped to enhance our guest experience, contributing to improved total
comparative sales performance. With plans in motion for these initiatives to
continue, it follows that our sales growth can be predicted as well (Annual Report,
p. 19)
• Monthly sales distribution will remain the same, with our highest sales percentage
36
falling in June, consistent with our semi-annual sale
Markdowns: • Markdowns will see a 5% decrease, from 30% of sales in 2015, to 25% of sales in
the 2016 Spring/Summer season. This decrease is attributed to a number of
factors both internally, and externally, such as the increase in retail spending by
Canadians. Given the surge in retail spending in the second quarter of 2015, we
know that Canadians buying power is up, allowing for a decreased necessity of
markdowns to combat low consumer spending (“StatsCan”)
• Internally, we were affected last year by distribution issues with our top-selling
women’s bottoms. The bottoms were recalled due to quality issues, resulting in a
need for quick reproduction and reintroduction to market, however they missed
their prime selling season and resulted in higher markdowns for the season (Lutz)
• Though we are forecasting an increase in sales of 10%, we are only raising our
purchases budget incrementally by 5.85% over the season. This will ensure that
we are not over-buying, which is the number one reason for increased markdowns
(Carter)
• Monthly distribution of markdown dollars will remain the same, with the highest
percentage allocated to June at 35.95% to accommodate our semi-annual sale
Markup: • We will be keeping our markup percentage the same at 54.5%. We will not be
affected this year by an increase in the cost of our goods, so our retail prices will
be able to remain the same
• We must remain competitive in this growing athleisure market, ensuring our
37
competitive position remains high. If we raise our prices without demonstrating a
new added value, our customer will seek new alternatives
• Increasing markup percent can have a negative effect on resulting markdown
dollars, as customers will not be willing to pay the higher price. Similarly, if we
were to decrease our initial markup, customers may become suspicious that our
value would be decreasing, which may lead them to turn to our competitors
• The most effective way for us to continue to achieve this markup percentage is by
ensuring our customer always sees the added value in purchasing our
merchandise. This will consist of quality control in all areas of our business to
ensure customer perception of high-quality goods, as well as maintaining the
social community that our brand has created that drives our sales exponentially
each season. It will also mean that we will need to manage our markdowns
carefully, while ensuring that we keep our operating expenses to a minimum
41
%#
%#
%#
%#
XS10%
1250%
650%
6S
20%
2455%
1345%
11M
35%
4160%
2540%
17L
25%
3070%
2130%
9XL
10%
1275%
925%
3100%
118
62%
7338%
45
Colour&Se
lections
Solid
Patte
rnSiz
e<Qu
antity<
118<Un
its<
Mod
el&St
ock&P
lan
Departm
ent:<Wom
en's<Wear
Style
:<Fleece<Lin
ed<Le
ggings
Retal<Price:<$129
Buyer:<Kati<Woo
dClassifica
tion:<Bottoms
Season
:<Spring/Summer<2016
42
%#
%#
%#
%#
XS15%
1940%
835%
725%
5S
20%
2640%
1030%
830%
8M
30%
3845%
1725%
1030%
12L
25%
3250%
1625%
825%
8XL
10%
1360%
815%
225%
3100%
128
46%
5927%
3428%
35
1281Un
its1
Size1
Quantity1
Colour&Se
lections
Solid
Patte
rnCo
lour1Block
Season
:1Spring/Summer12016
Buyer:1Kati1Woo
d
Mod
el&St
ock&P
lan
Departm
ent:1Wom
en's1Wear
Style
:1Yoga1C
rop
Classifica
tion:1Bottoms
Retal1Price:1$99
43
%#
%#
%#
%#
XS5%
645%
355%
3S
10%
1250%
650%
6M
40%
4650%
2350%
23L
25%
2960%
1740%
12XL
20%
2370%
1630%
7100%
116
56%
6544%
51
1160Units0
Size0
Quantity
0Co
lour&Selectio
nsSolid
Colour0Block
Season
:0Spring/Summer02016
Buyer:0Kati0W
ood
Mod
el&Stock&Plan
Dep
artm
ent:0W
omen
's0W
ear
Style:0High0Rise0Leggings
Classification:0Bottoms
Retal0Price:0$109
44
%#
%#
%#
%#
XS20%
1945%
855%
10S
40%
3750%
1950%
19M
25%
2355%
1345%
10L
10%
965%
635%
3XL
5%5
75%
325%
1100%
9353%
4947%
44
931Units
Size1
Quantity1
Colour&Se
lections
Solid
Patte
rn
Season
:1Spring/Summer12016
Buyer:1Kati1Woo
d
Mod
el&St
ock&P
lan
Departm
ent:1Wom
en's1Wear
Style
:1Low
1Rise
1Leggings
Classifica
tion:1Bottoms
Retal1Price:1$129
45
Model Stock Plan Explanation: The four styles that were chosen to be purchased for the month of February are
our two classic lifestyle styles, the high-rise and low-rise leggings, our most popular yoga
style, the yoga crop, and our top-selling cold-weather style, the full-fleece legging. The
classic high- and low-rise leggings remain our top-selling bottom, as they are the most
versatile in our collection. They can be worn in everyday life, and then transition
seamlessly to any type of exercise you choose to do. They are also available in two
different rises, the high or low, to accommodate a wide range of body types and comfort
preferences. The yoga crop was purchased in the February budget, as it is our top-selling
yoga-specific pant. The cropped length allows for freedom of movement in all yoga
positions, and ensures the wearer will not overheat if she chooses to practice hot yoga or
higher intensity classes. Finally, our seasonal full-fleece legging, which is modeled after
our original high-rise legging, is stocked in February to allow the lululemon woman to
wear her favourite legging style while still combatting the elements in the colder months
of the year. We recognize that her busy lifestyle keeps her on the go, necessitating a style
that can take her through her whole day with ease.
46
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Lululemon athletica, inc. “Our Ambassadors.” lululemon athletica, inc. lululemon
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48
Shaw, Hollie. "Wooing Young Shoppers Pays Off for Lululemon; Yogawear Company's
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