Alo Takes Aim at Segment Giant Lululemon, Attracts Gen Z

There's a new hot player in the world of athleisure apparel, which Lululemon has long dominated.

Alo Yoga is building a following among two key demographics, Gen Zers, loosely defined as those born between 1997 and 2012, and their younger counterparts, Gen Alpha, according to an article in The Wall Street Journal. The company says that its business nearly doubled last year, pushing sales above $1 billion, the Journal reports.

While that sales number is small compared to a company like Lululemon, which saw net revenues of $2 billion in the last quarter alone, it's still notable.

"That was a stat that kind of jumped out. I'd assumed that they were doing pretty well, but that's a pretty big threshold already," Insider Intelligence principal analyst Andrew Lipsman said of Alo. Insider Intelligence is a sister company of Insider.

Lipsman identified the company as an up-and-comer in a 2022 report on digitally connected fitness players.

Alo Yoga started in Los Angeles in 2007. It took off in popularity early in the pandemic with help from celebrity influencers like Hailey Bieber and Bella Haddad, who were seen sporting the brand's distinctive "studio-to-street" fitness wear, the Wall Street Journal reports.

"It's a prestige brand," Lipsman told Insider. "There's something about the aesthetic and the affinity that people who wear the brand have for it that is very attractive, and it brings others into the community through a gravitational pull. I think you have to recognize that in this day and age, influencers are a big part of that, and the fact that you see these brands worn across digital media channels."

Having a digital media component that dates back to its earliest days has worked to Alo's advantage, Lipsman said. He compared it to Peloton, whose success came largely from people using its fitness app rather than just buying a bike.

"The digital media experience is a big part of building that community and loyalty because people can engage with the brand every day," he said.

"We think of ourselves as more of a digital brand than we do a clothing brand or a brick and mortar retailer, " Co-founder and CEO Danny Harris told the Wall Street Journal.

Alo is "more like Tesla," he said, and its competitors are like Ford, GM, and Chrysler.

Alo continues to lean into digital, including creating a wellness space in the metaverse. And the company is diversifying. It branched out into skincare products in 2020. It operates experiential stores, called sanctuaries, that offer yoga classes and wellness bars. It also has focused more on its menswear line in the last year, per the Journal. In one of its latest ventures, Alo rolled out its first "lifestyle" sneaker in May, a $185 unisex, white vegan leather shoe called the Alo X 01 Classic.

Lululemon started rolling out sneakers last year. And the company delighted Wall Street last week with a robust first-quarter earnings report that proved that consumers continue to love its high-end athletic wear, even as they pull back on other kinds of discretionary spending, Reuters reports. The company said it also got a boost from the lifting of COVID restrictions in China.

But the company has struggled some in its digital presence, which began with its $500 million acquisition of the Mirror at-home fitness product in 2020. It's reportedly exploring a sale of the unit, which is now part of its Lululemon Studio platform that features on-demand and live-streamed fitness classes.

Still, Lisman said, "Lululemon created the category from a mainstream consumer perspective. It's created openings for others beyond Alo, but Alo certainly has started to set itself apart as a power brand in its own right."