Great threads: Why Lululemon is such a success

Smart design plus feel-good ethos equals serious sales.

Lululemon's investors aren't the only ones buying brands in order to capitalize on the growing market for natural, new-age products. Earlier this year, multinational L'Oréal bid on the Body Shop, while Colgate-Palmolive moved to acquire Tom's of Maine on March 21. It's not just the healthy habits or a righteous philosophical stance, however, that makes these companies attractive. It's when the feel-good attitude is married to a superior product.

When Lululemon founder Chip Wilson took up yoga in the mid-1990s, he predicted its future popularity. He also noticed no one in his classes had appropriate attire. So Wilson spent nearly two years working with fabric developers to create Luon, Lululemon's signature performance fabric. At 86% nylon and 14% Lycra, Luon feels a lot like cotton but can wick sweat away while remaining relatively dry. Clothes made from Luon retain their shape and colour, even after numerous washings. And by giving Luon a matte finish and making it thicker than spandex, Lululemon products avoid unsightly shine. Flat seams, tear-out labels and thumb holes on the sleeves and key and credit pockets are other nifty innovations. And it all adds up to estimated annual revenues of $120 million.

Responding to customer demand for a solution to stink, Lululemon recently launched a Silverescent line of products. This line features silver yarn woven or bonded to the threads. The silver makes the clothing anti-bacterial and scent-free. “It is the same kind of thing they use in hospitals,” says Wilson. “Bacteria bind to the silver — and there is no stink.”

Lululemon's newest label, Oqoqo, also relies on new fabrics, but with a twist. The line aims to provide a threshold demand for sustainable textiles, making the use of such fabrics economically feasible all along the supply chain, from farms to fabric mills, to manufacturers and retailers. Committed to using a minimum of 75% natural, organic and/or sustainable fibres, Oqoqo's designers are creating products made from materials like soy, hemp, bamboo and organic cotton.

Product manager Libby Vance says developing the fabrics required “tons of testing,” but she's confident that, after three years and more than $1 million in development costs, the designers at Lululemon have got it right. Next in the pipeline: stain-resistant fabrics (think a wearable form of Teflon), and clothing that can help with skin control (think vitamin moisturizers added to clothes).