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Is There Room for Another Activewear Giant?

A giant investment from Softbank in 2021 turbocharged expansion plans at Vuori, which is now eyeing global expansion and a takeover of its customers’ closets. But Lululemon, Nike and a host of direct-to-consumer competitors stand in its way.
Man and woman sit in middle of tennis court wearing clothing made by Vuori.
Vuori is planning to have 100 stores by 2026. (Vuori)

Key insights

  • Brands like Vuori and Alo Yoga sell a mix of gym and lifestyle gear on the prediction that consumers want stretchy, comfortable clothing for all life activities, not just working out.
  • With a $4 billion valuation, Vuori is now eyeing aggressive retail expansion with the goal of operating 100 stores by 2026, up from its current 41.
  • Activewear boost from the pandemic is over. But quality apparel, marketed well, will still find an audience, experts say.

The future of activewear is not leggings.

At least, that’s the central thesis behind Vuori, an activewear brand that has in recent years expanded beyond workout gear into categories like jackets and pants that are better suited to walking the dog or commuting to work than hitting the gym.

To be sure, the brand sells plenty of leggings too, including pairs made with a new fabric it calls BlissBlend, unveiled last week. But travel is among its fastest-growing categories, and stretchy trousers that look formal enough to wear to the office are a perennial bestseller.

“Brands like Vuori have permission to take more of your closet than ever before,” said Joe Kudla, who founded the brand as a men’s yoga outfitter in Encinitas, Calif. in 2014. “Whereas you used to have your workout clothes and clothes you’d socialise and go out in, today, we’re appealing to people across the spectrum of their lifestyle.”

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There are, of course, many brands like Vuori. Lululemon, Gap Inc.’s Athleta and Nike all sell a mix of gym and lifestyle gear (Lululemon’s popular ABC jogger pants, for instance, are also positioned as ideal for the active commuter). There are countless start-ups trying versions of the same concept, including Rhone, Tracksmith and Outdoor Voices.

Vuori’s edge isn’t so much the idea of an activewear brand selling wardrobes for the office, but the scale on which it’s trying it. The brand took a $400 million investment from SoftBank at a $4 billion valuation in October 2021, at the height of the pandemic activewear boom. At the time, it had nine stores, mostly in California. Today, it’s up to about 40, with locations in London, Las Vegas and the Mall of America in Minneapolis. By 2026, the brand is hoping to have 100 stores, including a pop-up in Shanghai and a permanent outpost in Seoul planned for later this year.

The question is whether Vuori is on track to join Nike and Lululemon in activewear’s top tier, or if it’s destined to join other SoftBank investments — WeWork, Uber and Brandless among them — that expanded fast only to discover the market opportunity wasn’t as big or as lucrative as hoped.

Demand for sporty apparel has softened since SoftBank made its investment. Major sports and activewear retailers saw revenue dip 2 percent in the second quarter of 2023 compared with a year earlier, according to AlixPartners. Athleta’s sales dropped 11 percent in the quarter ending April 29; Gymshark, another workout apparel start-up that received a nine-figure investment from General Atlantic in 2020, laid off 65 employees and scaled back its US expansion plans earlier this year.

But though consumers may have over-indexed on workout clothes during the pandemic, the idea that stretchy, breathable clothes can be worn anywhere is proving stickier. Vuori has seen double- or triple-digit year-on-year monthly sales growth since at least 2019, according to data from Earnest Analytics. Quality apparel, marketed well, will still find an audience, experts say.

“For activewear, we’re seeing an expansion in use case but a contraction in demand,” said Tiffany Hogan, retail analyst at Kantar.

Brand Evangelists

In a saturated market, brand loyalty is more critical than ever.

Leggings, running shorts and stretchy chinos look more or less the same on a website or in a store display, regardless of who makes them. Brands are constantly releasing their clothes in different colours, tweaking minor details and rolling out new fabrics that promise a more flattering profile or to better wick away sweat.

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“Being athletic-focused has given people permission to play, but it doesn’t give you guaranteed success,” said Simeon Siegel, managing director and senior analyst of retail and e-commerce at BMO Capital Markets. “You can’t just rest on your laurels and say you’ve come up with a hit product and you had customer resonance in the pandemic and therefore it will continue.”

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Siegel said the most successful brands turn their customers into “evangelists,” who are not just loyal to their chosen logo, but feel passionate enough to spread the good word. Think yoga classes where Lululemon is the de facto uniform, or Alo Yoga devotees who are happy to wear the brand’s bra tops or bike shorts for a night out as they are to pilates.

Vuori’s evangelists flood social media and online fashion forums with testaments to the brand’s quality, as well as the “second skin” feel of its fabrics.

“I got Vuori clothing for Christmas 2 years ago and they still hold up strong and are super comfortable,” one Reddit user wrote last year in a forum about made-to-last products, placing the brand above Nike and Lululemon.

Brands like Vuori, Lululemon and Alo Yoga also benefit from their premium position in the market. Whereas lower-priced brands like Gymshark and Under Armour saw sales surge during the pandemic, those customers went away as inflation ate away at their buying power. Those who can afford to shop for new clothes these days are more likely to pay extra for higher-quality products, said Kantar’s Hogan.

“Vuori makes really good products, they fit well and they have unique and very comfortable fabrics that look high quality and stand the test of time,” she said. “That’s versus a mindset of, ‘I just need to update my wardrobe for $10.’ That’s not the mood shoppers are in right now.”

Vuori’s quality is signalled by its prices, including $98 leggings and $58 tops. It’s also using new fabrics like BlissBlend, which is made from 75 percent recycled synthetic materials and pitched as extra soft and quick-drying, to try to stand out from the competition.

The Lifestyle Factor

An important point of differentiation for Vuori is its focus on versatility rather than performance, according to Kudla.

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“Vuori was born as a men’s premium active lifestyle brand,” he said. “So while performance is important to us, our primary goal is versatility.”

What he means is that while Vuori’s clothing is designed for athletic purposes and offers technical advantages in its moisture-wicking and lightweight fabrics, its marketing and the way pieces are styled signal that the brand stands for something more than just an affinity for working out: it nods to a certain way of life.

“There’s an overall shift in our collective consciousness toward a more active, healthy lifestyle, where people are taking their wellbeing more seriously,” Kudla added. “This trend is picking up steam.”

It’s a formula that’s also worked well for Alo Yoga, which in addition to the usual leggings sells items like a tie-dye tote bag that is ubiquitous in New York and beyond. The Los Angeles-based brand uses such merchandise to position itself as more than just another retailer.

“Our customers want to wear the bag to signify they’re part of this health and wellness lifestyle,” said Summer Nacewicz, VP of brand and creative marketing at Alo. “We’ve really resonated with the consumer [because] we stand for something bigger.”

For now, Vuori is intently focused on getting its name out there. Its business is profitable, Kudla said, and the future looks bright.

“[Going] public is one of many options,” he said. “I’m relatively young and I have a lot of passion for this business, and I feel like we’re in the early stages of a growth strategy.”

Further Reading

The Athleisure-fication of Everything

Demand for leggings and sweats may have peaked, but the pandemic’s comfort-first aesthetic is hardly dead. It’s simply mutating into something else: a yet-to-be-named category that incorporates stretch and softness into a staggering number of fashion staples, from trousers to jumpsuits.

Activewear’s Biggest Disruptors

Breaking into the $384 billion sports apparel market is no easy task, but fast-growing start-ups are stealing market share by creating specialised, fashion-forward products around underserved interests.

About the author
Cathaleen Chen
Cathaleen Chen

Cathaleen Chen is Retail Correspondent at The Business of Fashion. She is based in New York and drives BoF’s coverage of the retail and direct-to-consumer sectors.

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