The active wear market is on fire! And now the big kids are coming out to play. Looking to break into the $31-billion market, Gap Inc. has announced plans to buy Athleta Inc. for $150 million, a bargain when you consider how much cash they can end up making in this deal. And since Athleta has been around for 11 years already, they’re also buying a pre-fab consumer base. Bonus! Why build from scratch when you can buy customers ready-made? Apparently one finance dude even suggested that the Gap band of accountants approached Lululemon itself in a bid to buy its way into the market, to which, we assume, the Lulus responded, “pfffflllbbt.”
However, because of the Gap’s merciless ubiquity, Athleta will surely be a major competitor, eating into the Lulubird’s profits with price points 15-20% lower. Plus J Crew’s newly launched yoga line and mega brands like Nike and Adidas digging into the yoga world hard, will only make for greater threats. Hooray for diversity in over-priced yoga pants!
Oh, and Athleta’s business, currently existing through catalog and online sales, will be folded into the new Gap website that combines all the brands -Old Navy, Banana Republic, Piperlime- and shipping costs. Yes, the internet, that elusive and profoundly lucrative frontier Lulu has avoided all this time, but will soon give in to next year – a move we predict will boost short-term sales, but will ultimately tarnish the Lulu “secret club” intrigue which has been it’s appeal thus far – when the yogarazzi drop the brand for the next elitist trend.
Gap Buys Its Way Into Athletic Wear [The Globe and Mail]
I’ve had just about enough of your Lululemon bashing, YogaDork. I’m not a “yogarazzi,” I don’t chase elitist trends. I just wear clothes that fit my curvy, long torsoed body. I’ve tried a slew of other brands, but the shirts just end up exposing my midsection within five minutes of class. I find it frustrating to be prejudged by the clothes I wear.
Hey Sarah, understood. We totally get that Lulu’s clothes do seem to have that extra special fit for some yogis. But these are not the ‘yogarazzi’ we are referring to (natch). We’re talking the fervent adopters who blindly follow trends and taunt and rave the wonders of an expensive garment, with an inflated price tag not for those light in the wallet, that seems very little more than spandex and lycra. (Again, just our opinion!) Some like the fit, some revel in the image. Simple as that. Right now Lululemon sure has the image machine working really hard. And if we held back from grilling the fat cats, well then we just wouldn’t be doing our jobs. And the fat cats would just get fatter.
Thanks for your comment. We welcome any and all opinions, especially if you think we’re being jerks.