Gap Inc. wants in on the Namaste market
Back in April, though, Gap Inc. sent out a different kind of email. "Introducing the newest addition to our Gap Inc. family: Athleta," it read. Beneath a photo of a woman cross-legged on a yoga mat, arms twisted towards the sky, the text continued: "Celebrating the beauty of strength with feminine, performance-driven apparel for your entire active life."
Since I've been periodically perusing the site since that email, let me debunk that flowery tagline for you. Athleta is a line of workout apparel. The bedrock of the brand is yogawear -- slim-fitting, stretchy racerback tanks and cotton-spandex capri pants. There's even a selection of goods for hot yoga, if you're so inclined to torture yourself that way. Beyond the yogawear, there are training-friendly swimsuits, cycling shorts, breathable hiking tops and more.
Looking over the henna printed designs and mellow colors, the first thing I thought of was Lululemon, to which Athleta is obviously an answer. Lululemon is an athleticwear retailer with stores across the country, many of them concentrated in urban areas. If you live in any city with a yoga studio and a public transportation system, I'm sure you've looked up during your commute and seen someone carrying a Lululemon bag before -- does this motif look familiar?
Lululemon did $354 million in sales volume last year and recently launched e-commerce -- so of course a behemoth like The Gap would want to launch a competitor. The Gap bought the catalog-based Athleta for $150 million in September 2008 (Lululemon was rumored to also be interested) and reinvented it in the vein of luxe yoga chic. It also priced the line to match Lululemon's upscale bracket. Lululemon's bottoms range from $58 to $96; tops are $48 to $128.
I think it's going to be interesting to watch Gap stick its neck out on this one. Analysts were optimistic about Gap's purchase of Athleta. Common sense would dictate that naturally, Lululemon needs a real competitor. But I'm not sure the market's big enough yet. Lululemon has just 65 stores, and while its wares may be catching on at a wildfire pace, its appeal is the intimate, clubby affection customers have for the company and its products.
Athleta's at a disadvantage in a few other ways, too. First of all, while women undoubtedly make up most of Lululemon's clientele, it does have a men's line, and Athleta doesn't. Secondly -- and more crucially -- Athleta is strictly online, and Lululemon has brick and mortar outposts. The pilates-loving urbanites who are willing to shell out for pricey workout clothing value that in-person shopping experience -- it's all part of Lululemon's aforementioned cultlike spirit.
Lastly: the biggest threats to Athleta may be its neighbors on Gap Inc.'s e-commerce network. Gap and Old Navy both sell activewear, too, and at price points $15-$30 lower than Athleta's. Even the most performance-driven yoga devotee might be tempted by cheaper clothes just a click or two away. Interestingly, Gap Inc. seems to have opted not to use its QuickLinks technology -- browse dresses on gap.com, and in the bottom right-hand corner links to Old Navy and Banana Republic's frocks will appear -- for activewear, so while you're checking out Athleta's stuff, you won't be distracted by the less expensive goods at its sister stores.
Athleta's just a few months old, so we'll have to wait until later this year to see if it's gaining on Lululemon despite these challenges. Gap Inc. hasn't been really pressed on how it will compete with the store yet, and so it hasn't said much on the topic. And who can blame them? All that talk about cutthroat sales strategies is terrible for one's aura.