Lululemon Redefines Its Retail Strategy in Mexico, Seeking to Take Control of 40% of Its Franchises Globally

Lululemon's strategic decision to purchase and assume control of the company-franchised stores in Mexico is a significant step towards strengthening its position in the national retail market. This move is a key part of its expansion plans in Latin America and North America. The firm anticipates a promising future in these regions following its impressive double-digit sales growth post-pandemic.

Since 2017, the Canadian sportswear firm has operated in Mexico through third parties. According to data gathered by SiiLA, Lululemon's franchised partners currently hold over 2,000 square meters of gross leasable area (GLA) in the country, distributed across Mexico City, Jalisco, Monterrey, Puebla, Queretaro, and Sinaloa.

For Lululemon, Mexico represents a compelling investment opportunity, standing out as one of Latin America's most dynamic consumer markets. According to Euromonitor International, a business intelligence and analysis firm, it is also a leading global luxury shopping and hospitality market, accounting for about 60% of such sales in Latin America. This presents a promising landscape for Lululemon's growth and expansion.

Mexico's economic vigor is one of the main attractions for foreign investors. Since January 2023, the Canadian apparel and footwear company has expanded from 12 to 17 stores operated by third parties nationwide, including the recent opening (May 25, 2024) of a store in Perisur.  Currently, the Mexican market hosts the largest Lululemon franchised stores internationally, accounting for around 40% of all third-party-operated locations in seven countries under the company's license and supply agreements. These outlets contribute to a network of 711 stores managed directly by the company worldwide, which include outlets, pop-ups, and temporary locations of various sizes.

It's important to note that Lululemon has not only increased its number of stores in Mexico but has also strengthened its license and supply agreements in the country, the Middle East, and other international markets. These agreements allow the provision of products and training to partners, ensuring a consistent and high-quality brand experience.

The brand's commercial operations are bolstered by an omnichannel strategy that includes digital sales and wholesale agreements with yoga and fitness studios, university campus retailers, and other strategically selected partners. This diversified and customer-service-oriented business model reinforces the company's presence in Mexico and the Americas, supporting its growth and expansion in key markets.

Diversified sales strategies are essential for competing in a retail market as competitive as Mexico's. According to data from SiiLA Market Analytics, over 4,300 apparel, footwear, and accessory firms—including Lululemon—compete in the country's major retail markets, in a context where this productive sector represents 16% of the GLA occupied in shopping centers.

Lululemon is establishing its presence in Mexico as an expansion measure and a strategic reinforcement of its global structure. By taking direct control of its franchised stores and strengthening its operational and commercial agreements, the company positions itself to capitalize on the dynamism of the Mexican market and establish a more robust and resilient business model that can serve as a benchmark for its operations in other international markets. This proactive approach will enhance its competitiveness in the retail sector and solidify its position as a leader in the sportswear industry.

For more information about the retail market performance in Mexico, explore SiiLA REsource or contact us at contacto@siila.com.mx.