Lululemon is testing an Amazon Prime-style membership as athleisure competition heats up

Lululemon is testing a new membership program.

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Lululemon is testing a new membership program.
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Facebook/Lululemon

  • Lululemon announced on Thursday that it has been testing a new loyalty program in Edmonton, Canada.
  • For a $128 annual fee, members are given a free pair of training pants or shorts, access to classes, and free shipping for online orders.
  • CEO Calvin McDonald said this new program will be rolled out to more markets in 2019.

Lululemon might have been the pioneer of the athleisure movement, but as competition heats up in the space, it has had to get creative in how it attracts and retains customers.

In a call with investors after reporting third-quarter earnings on Thursday, Lululemon’s new CEO, Calvin McDonald, announced that the company has been testing a new loyalty program in Edmonton, Canada, during the quarter.

McDonald said that for a $128 annual fee, members are treated to a pair of pants or shorts, access to Lululemon’s classes and events, and free shipping on online orders. He said that the company plans to roll this service out to more places in 2019, though a spokesperson for Lululemon declined to comment on where this would be.

“The response was very strong,” McDonald said on the call.

He continued: “Guests are seeing value in this curation of services and content to beyond just our product and in buying into the program and driving value to the loyalty.”

Lululemon reported a 17% increase in same-store sales during the quarter.

Loyalty programs have become a major trend in retail as more stores look to recreate one of the industry’s leading memberships: Amazon Prime. Amazon’s $119-a -year service now has over 100 million paying members globally.

Read more: Amazon is making it harder and harder to quit Prime

These programs are designed to make customers more loyal to the brand and, ultimately, encourage them to spend more money at these stores. This is especially important for Lululemon as the athletics wear market has increasingly been flooded with more options and new brands such as Outdoor Voices, Bandier, and Kate Hudson’s Fabletics have taken market share.

“Once a customer is enrolled in a great loyalty program, such as Amazon Prime, they become far more likely to first turn to that retailer to meet their shopping needs,” Jared Wiesel, a partner at consulting firm Revenue Analytics, told Business Insider’s Kate Taylor in 2016.

Amazon’s Prime members are estimated to spend more than double what non-Prime members spend.

Memberships also allow the company to gather more information on that customer. In the new program, Lululemon will be able to see which classes customers take and what they are shopping for.

McDonald told analysts on Thursday that he also sees potential in raising the price of the membership.

“We actually feel we can increase the price to the value of the program and the additional services they offer,” he said.