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Country Assignment: Sweden
Choose and Country and Apparel Brand Product
The dynamic, iconic, Canadian company of lululemon athletica has experienced
consistent rapid growth over the past decade, through the implementation of
ambitious expansion strategies. This has resulted in the domination of the
national athletic apparel market. The company has set its sights high for future
growth with aspirations of European market penetration over the next ten years.
Sweden will serve as the entrance point into the European market, as it provides
ideal conditions for lululemon’s characteristic product mix. This report contains
a detailed analysis of Sweden’s current state and potential as a lululemon target
market, as well as the redesign specifications of existing lululemon products to
be tailored for maximum success in this international business endeavor.
Country Research
Population Overview
Sweden is listed as the 88th most populated country in the world with an
estimated 9,658,301 inhabitants, a much smaller demographic than that of
Canada, sitting at number 37 with 35,344,962. Although the population may be
small relative to other nations, as an untapped resource for lululemon, entrance
into this country represents a huge expansion opportunity. The age split of the
population is depicted in the chart to the right. As you can see there is a
significant portion of the population between
0 - 14 years
16.9%
the ages of 25 and 54 years old. Assuming a
15 - 24 years
12.3%
relatively stable distribution in that range,
25 - 54 years
39.2%
there are roughly 26.13% between the ages of
55 - 64 years
19.8%
25 and 44, the ideal demographics for
65 years and over
20.5%
lululemon’s target market.
The introduction of the new line of lululemon apparel will most likely only reach
an audience consisting of Swedes living in urban areas, and therefore close to
shopping centers. The number of Sweden inhabitants living in urban areas to
date is 8,209,555, roughly 85% of the total population. The total number of urban
households can be estimated at 3,871,600 (as 85% of 4,554,824 households in the
entire country). The major urban area in Sweden is the capital of Stockholm,
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with a population of approximately 1,279,000. Due to the large number of
inhabitants, this city would be an ideal location to begin the introduction of
lululemon’s product to Sweden.
“The World Fact Book: Sweden.” CIA Library. Retrieved April 2, 2014 from
https://www.cia.gov/library/publications/the-world-factbook/geos/sw.html
“Number of Private Households by Household Composition.” Eurostat. March
27, 2014. Retrieved April 3, 2014 from
http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=lfst_hhnhtych&lang=en
Consumption Capacity
Sweden’s Gross Domestic Product is estimated at $552 billion USD at the official
exchange rate, and roughly $393.8 billion USD based on the purchasing power
parity. Compared to other countries in the world, this places Sweden with the
35th largest GDP. The real growth rate of Sweden’s GDP is 0.9% for 2013, which
has decreased from the previous two years of 1% in 2012 and 2.9% in 2011.
Although the number is still positive, which means that the GDP figure is still
increasing, the downward trend will be a factor to keep an eye on in the future.
The GDP per capita is $40,900 for 2013, and has remained stable with a steady
increase from the previous few years. Household consumption as a percentage
of GDP is noted at 48.6%, higher any other expenditure in the country, including
government and investments in fixed capital. As the purchase of clothing is
classified under household consumption this number is favourable for
lululemon’s interest in the marketplace.
The inequality of income distribution is an issue that the Swedish government is
currently focused on correcting. As it stands now the lowest 10% of households
receive 3.6% of the countries income, and the highest 10% hold 22.2%. This gives
Sweden a Gini Coefficient of 0.23, keep in mind a Gini Index of zero is perfect
equality. On the following page is a graph indicating the Gini Coefficients of
various countries over the past 60 years. Sweden sits in the lower-middle
quadrant, similar to Canada.
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Despite the rapid surge of income inequality since the early 1990s Sweden still
remains one of the nine most equal OECD countries in the world. The
government is currently utilizing income taxes and cash benefits to redistribute
income throughout the country, successfully reducing inequality by nearly 30%
to date. To the left is a pie chart
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breaking down the Swedish
11%
population into quintiles and
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demonstrating the complete income
36%
15%
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distribution.
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18%
The differences between the 2nd, 3rd,
5
and 4th quintile are not substantial,
20%
but when comparing the lowest and
the highest quintile there is
significant inequality. With the
current price point of lululemon products the lower quintile will be out of the
scope of the target market, and therefore lululemon will be relying on the
potential customers residing in the 2nd, 3rd, 4th, and 5th quintiles for customers.
Salmon, Felix. “Swedish Inequality Data Point of the Day.” Reuters. March 25,
2011. Retrieved April 1, 2014 from
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http://blogs.reuters.com/felix-salmon/2011/03/25/swedish-inequality-datapointof-the-day/
“Social and Welfare Issues: OECD work on Income Distribution and Poverty.”
OECD. February 2014. Retrieved March 30, 2014 from
www.oecd.org/els/social/inequality
“The World Fact Book: Sweden.” CIA Library. March 27, 2014. Retrieved April
2, 2014 from
https://www.cia.gov/library/publications/the-world-factbook/geos/sw.html
Level of Development
Within the global spectrum, Sweden has established itself as a developed
country.
Ranking according to the HDI
Sweden is ranked 7th in the human development index. This illustrates that the
country has placed a large significance on aiding its population in betterment
and seeking development among its citizens.
Life expectancy
2009
81 years
2010
81 years
2011
82 years
2012
82 years
Sweden’s average life expectancy has risen from 81
years in 2009 to 82 years in 2012. This shows that
healthcare is readily available to the population and
has improved. This has allowed for the average life
span of individuals to rise.
Education
The following data are statistics that show the average enrolment in primary,
secondary and tertiary learning institutions within Sweden. It is clear that
education is extremely important at the primary level, by having a near perfect
enrolment rate of 99%. It seems that the importance placed on education
continues into the secondary phase of schooling, with a 91% enrolment in 2011.
In the tertiary phase the importance placed on education becomes less relevant as
enrolment drops to 74%. It is clear that the population gains a basic education,
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showing that they have an average level of intellectual and infers that literacy
levels are high for the population.
School enrollment, primary (% net)
Below is the ratio of children of the official primary school age who are enrolled
in primary school to the total population of the official primary school age.
 From 2009-2011: 99%
School enrollment, secondary (% net)
Below is the ratio of children of the official secondary school age who are
enrolled in secondary school to the population of the official secondary school
age.
 In 2009: 95%
 In 2010: 93%
 In 2011: 91%
School enrollment, tertiary (% gross)
Below is the enrollment in tertiary education (ISCED 5 and 6), regardless of age,
expressed as a percentage of the total population of the five-year age group
following on from leaving secondary school.
 In 2009: 71%
 In 2010: 75%
 In 2011: 74%
Average education
This statistic showcases the average enrollment in primary education was 101%
in 2011.
This number is based on a gross enrolment ratio. The complete number is the
total enrollment in primary education, regardless of age, expressed as a
percentage of the population of official primary education age. GER can exceed
100% due to the inclusion of over-aged and under-aged students because of early
or late school entrance and grade repetition.
"Indicators: Data." The World Bank. World Bank Group, Retrieved April 8, 2014
from http://data.worldbank.org/indicator/
Human Security
Human rights are actively supported in Sweden and are supported and
implemented by the Swedish armed forces. The armed forces are managed by
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the Swedish government. When Sweden's borders are violated, it is the task of
the Armed Forces to repel the violating party from Swedish territory. If Sweden
falls under attack from a foreign power, it is the task of the Armed Forces to
defend the country and repel the aggressor. During catastrophes, such as
flooding or storms, it is the task of the Armed Forces to assist through different
forms of support missions. The Swedish Armed Forces also have the task of
working for peace and security beyond our borders. The country does this by
sending troops on peacekeeping and peace enforcing missions around the world.
The government maintains human rights and the armed forces maintain human
security within and beyond the borders of Sweden.
"The Swedish Armed Forces." Forsvarsmakten. Retrieved April 8, 2014 from
http://www.forsvarsmakten.se/en/
Market Receptivity
Currently the annual total exports from Canada into Sweden are valued at
$22,906,680 and inversely the annual total imports into Canada from Sweden are
valued at $146,670,637. This partnership is severely unbalanced as Sweden is
exporting much more product to Canada than they are receiving in return.
However when you remove the items unrelated to the apparel industry from
consideration you are left with the following data: Canada Exports: $605,221
and Sweden Exports: $355,781. Please see Appendix I for the raw data collected
from Statistics Canada. This data shows that Canada currently exports more
apparel industry products to Sweden than Sweden does in return. In the past ten
years the total exports from Canada into Sweden have risen by roughly
$8,000,000 with roughly a $100,000 increase in ‘textiles and textiles articles’. Over
the same ten years there has been a 72.65% decrease in rawhides, skins, leather
and furskins as an export from Canada to Sweden. This data exemplifies
Sweden’s trend towards natural and recycled fibers, and fewer animal products
used in the production of their clothing. It would appear that the market for
Canadian apparel imported to Sweden is growing, but specifically the items that
refrain from the use of animal products.
Sweden is a member of the European Union, and is therefore required to
participate as a member of the World Trade Organization. It officially joined the
WTO in January 1995. The most recent interaction between Sweden and the
WTO was documented in December 2013 when the country pledged $3,000,000
USD to the Enhanced Integrated Framework for trade facilitation. This donation
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brings Sweden’s total contribution to the EIF to $14,000,000. This program is a
partnership between Least Developed Countries, Donors and International
Organizations to help countries become more active in the global trading system.
Sweden’s participation and generosity over the years reinforces the conclusion
that they are in fact engaged in fair trade practices and encouraging the growth
of additional fair trade among other countries.
Canada-Sweden bilateral relations are close, positive and constructive. ‘The
countries have like-minded values that are reflected in a strong commitment to
free trade, protection of human rights, peacekeeping, UN reform and
environmental protection.’ ‘Canada and Sweden also enjoy a strong commercial
relationship, with significant trade flows, two-way investment and science and
technology cooperation.’ Most recently the Canada-EU Trade Agreement
(CETA) is being organized to further the trade relations between the two bodies.
With the establishment of this agreement in 2015 total EU exports to Canada are
expected to increase by 24% and Canadian exports to the EU are predicted to
increase by 21%. CETA is one of Canada’s most ambitious trade initiatives, even
deeper and broader in scope than NAFTA, and will result in the elimination of
duties on all non-agricultural goods (98% of all Canadian tariff lines) on its first
day in force. The implementation of this new trade agreement provides a very
positive outlook for trade relations between Sweden and Canada, and will only
further enhance the already increasing apparel imports between the countries (a
huge incentive for lululemon to enter the Swedish market).
As of now, without the advantages that CETA will bring, the HS codes for the
lululemon product to be introduced (621132.31 and 621142.31; men’s and
women’s respectively) will garner a 12% duty upon import to Sweden. Once
CETA is in full effect the duty should reduce to zero, however the amount of 12%
of the CIF is a manageable cost. Please see Appendix II for an exhibit from the
EU Tariff Schedule dictating required the 12% duty.
“Sweden pledges USD 3 million to the Enhanced Integrated Framework for trade
facilitation.” World Trade Organization. December 5, 2013. Retrieved March 30,
2014 from
http://www.wto.org/english/news_e/pres13_e/pr712_e.htm
“CETA - a new Economic and Trade Agreement between Canada and EU.”
Embassy of Sweden: Ottawa. Retrieved April 3, 2014 from
http://www.swedenabroad.com/en-GB/Embassies/Ottawa/Business/Canada-andEU-CETA-Negotiations/
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“Policy Areas: Trade Negotiation and Agreements.” Canada International.
October 25, 2013. Retrieved April 2, 2014 from
http://www.canadainternational.gc.ca/eu-ue/policiespolitiques/trade_agreements-accords_commerciaux.aspx?lang=eng
“Understanding the WTO: The Organization.” World Trade Organization.
March 2, 2013. Retrieved April 2, 2014 from
http://www.wto.org/english/thewto_e/whatis_e/tif_e/org6_e.htm
“Merchandise imports and exports between ‘Canada’ and ‘Sweden’, by
Harmonized System section, customs basis, January 2013.” Canadian
International Merchandise Trade Database. April 6, 2014. Retrieved April 6,
2014 from
http://www5.statcan.gc.ca/cimt-cicm/sectionsection?lang=eng&dataTransformation=0&refYr=2013&refMonth=1&freq=6&cou
ntryId=185&usaState=0&provId=1&retrieve=Retrieve&save=null&trade=null
Apparel Industry Overview
To examine the apparel industry and its current state in Sweden there are a few
factors to consider: the economy, the competitors, and the customers. The
economic climate in recent years has demonstrated weakness and insecurity,
therefore lowering the demand for apparel products. This makes Sweden appear
as a poor choice for lululemon’s newest market but when you examine the
repercussions of the changing economy new potential surfaces. The decrease in
consumer demand for apparel products is because of tighter household budgets,
not distaste for the products. This has resulted in isolated growth revenues and
niche markets where consumers are willing to spend their money. A rapidly
growing market for organic clothing and environmentally sustainable products
is materializing, and apparel producers who can deliver products to meet these
qualifications have the potential to do very well in the Swedish markets.
The competitive environment in the Sweden apparel industry is concentrated,
with a hand full of companies controlling 25% of the industry’s sales. However,
the introduction of a smaller more flexible company, one that can cater to the
emerging needs of the Swedish consumer, may be able to provide a better to
product these days. Therefore, lululemon may be able to change its product
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offering and cater the line more directly to the concerns of a new generation of
value conscious consumers. By completing the market research and providing a
valuable product to the Swedish consumers, lululemon will be able to decrease
barriers to entry and create a competitive advantage for itself.
As mentioned previously, the Swedish consumer is more value (not price)
conscious than ever before, and companies must be more in tune with the
necessity to maintain loyalty while continuing to drive sales. High spending
customers are interested in foreign brands for luxury goods, and all levels of
customers are requiring a strong online presence from their retailers. These two
trends provide an opening for new brands that wish to enter the Swedish
market. Know the customer, and deliver a product they value through the
distribution channel that they want.
There are multiple trends surfacing in the Swedish apparel industry that can be
beneficial for lululemon and its product offering. As the economy is finally
recovering from the 2008 recession there are recorded increases in demand for
apparel products, most specifically sporting goods stores and sportswear. This is
a market that lululemon understands and one that provides a lot of opportunity
in Sweden. Lululemon’s design aesthetic also fits comfortably into the Swedish
style of ‘less is more’, and design as an integral component of every garment and
not merely an afterthought. Customers are also demanding acts of corporate
social responsibility from their retailers, increasing the reach of their
sustainability requests. All of these trends confirm that by targeting the right
demographic lululemon could have great success in this new market.
Many world-renowned brands have come from Sweden, and as a country they
have a very established apparel market. H&M has brought the Swedish style
across the globe, and local designers such as ‘Uniforms for the Dedicated’ are
beginning to pick up on the sustainable clothing trends. The demand for
clothing imports is present, and Swedish importers and agents are interested in
forming long-term, committed relationships with foreign companies. As
Sweden-based brands begin to pick up in popularity they become more of a
threat to new entrants, so this is the best time for foreign companies to enter the
Swedish market and still be able to compete on the same level.
“Country Report: Apparel in Sweden.” Euromonitor International. April 2013.
Retrieved April 2, 2014 from http://www.euromonitor.com/apparel-insweden/report
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“Swedish Fashion – From Catwalk to Sidewalk.” Sweden.se. November 27,
2013. Retrieved April 2, 2014 from http://sweden.se/culture/swedish-fashionfrom-catwalk-to-sidewalk/
Walmsley, David. “The Swedish Fashion Economy.” The Genteel. April 17,
2012. Retrieved April 1, 2014 from
http://www.thegenteel.com/articles/business/swedish-fashion-economy
“Sweden – Industry.” Encyclopedia of the Nations. Retrieved April 6, 2014 from
http://www.nationsencyclopedia.com/economies/Europe/SwedenINDUSTRY.html
Country Risks
Economic Risks
Listed below are the economic risk factors that are currently a concern for
Sweden.
Central government debt, total (% of GDP)
Debt is the entire stock of direct government fixed2009
42.1% term contractual obligations to others outstanding on a
2010
38.7% particular date. It includes domestic and foreign
2011
38.5% liabilities such as currency and money deposits,
securities other than shares, and loans. It is the gross
2012
36.6%
amount of government liabilities reduced by the
amount of equity and financial derivatives held by the government. As debt is a
stock rather than a flow, it is measured as of a given date, usually the last day of
the fiscal year.
Sweden has been able to effectively reduce its debt over the course of four years.
By reducing debt and making it manageable, the country has able to develop
further and reach a more positive position on the international platform.
Exports handicapped by slowing demand and the high Swedish krona exchange
rate
Swedish exports represent half of GDP and are mainly directed to Europe (70%),
with Germany, the United Kingdom, Denmark and Finland together totaling a
third of these sales. Exports slowed significantly in 2012 as a result of the
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recession in the euro-zone and the unfavorable Swedish krona exchange rate,
which reached a peak against the euro in mid-2012. They will be undermined by
the expected continuation of the cyclical trough in most Northern European
countries in 2013. Moreover, the currency’s exchange rate will remain high and
continue to adversely affect businesses’ price/competitiveness, although the
Swedish economy’s fundamentals continue to attract investors. Additional
details on Sweden’s exports and currency stability will be explored further in this
report.
Significant increase in bankruptcies
The banking sector could be weakened, particularly by the property sector. At
the moment the house price adjustment is gradual. Access to bank credit is not
expected to tighten but demand could be less sustained in a context of household
and business caution. Among the exporting sectors, which will suffer most from
the fall in orders and the Swedish krona’s high exchange rate, mechanical
engineering, cars and chemical products will be the most affected while
confidence has also declined in construction and distribution. These difficulties
are reflected in the number of bankruptcies: they increased by over 18% in the
third quarter of 2012, compared with the same period in 2011 and their number
is over 25% higher than that recorded before the crisis.
Gross savings (% of GDP)
2009
24.0%
2010
26.0%
Gross savings are calculated as gross national income
less total consumption, plus net transfers.
The gross savings percentage has remained relatively
constant for Sweden as well, decreasing slightly in
2012
25.0%
2012. If the trend of saving ability remains then the
country may lose significant savings limiting the ability to pay debts. This shows
that they may need a backup strategy in place to fix any small economic issues
that may occur in the future.
2011
26.0%
“Doing Business: Measuring Business Regulations.” The World Bank.
Retrieved April 6, 2014 from http://www.doingbusiness.org/rankings
"Indicators: Data." The World Bank. Retrieved April 6, 2014 from
http://data.worldbank.org/indicator/
"Sweden." The World Bank. Retrieved April 4, 2014 from
http://data.worldbank.org/country/sweden
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"Sweden Economy." Global Edge: Michigan State University. Retrieved April
4, 2014 from http://globaledge.msu.edu/countries/sweden/economy.
"Sweden Risk Assessment." Global Edge: Michigan State University. Retrieved
April 4, 2014 from http://globaledge.msu.edu/countries/sweden/risk
Economic Freedom Index(ranking)
The World Bank ranked Sweden 18th in “ease of doing business” and 43rd in “ease
of starting a business” in 2010. Starting a business in Sweden takes 15 days and
costs roughly 0.57% of GNI per capita. The World Bank ranking data set
included 183 economies worldwide, including 27 Organization for Economic
Cooperation and Development (OECD) high-income economies. Currently,
Sweden is ranked at 14th in the Economic Freedom Index. This is an extremely
high rank and proves that the country’s infrastructure promotes business
development and promotes economic growth. Sweden is also ranked number 6
in ease of trading across borders. In all factors of doing business with ease,
Sweden is in the top 65.
Refer to the charts below to see Sweden’s ranking within its own country and in
comparisons to others within the other top 15 countries that have ease of doing
business.
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"Ease of Doing Business in Sweden: Measuring Business Regulations.” The
World Bank. Retrived April 6, 2014 from
http://www.doingbusiness.org/data/exploreeconomies/sweden/
"Sweden: 2014 Index of Economic Freedom.” The Heritage Foundation.
Retrieved April 2, 2014 from http://www.heritage.org/index/country/sweden
GNI or GDP Growth Rate
The present GDP (PPP) for Sweden is: $393.8 billion and has sustained an
impressive 5-year compound annual growth of 1.0%.
Corruption Index Ranking Transparency International
Out of a total 177 countries, Sweden is ranked 3rd, tied with Finland, in the
Corruption Index. The score that Sweden received, 89, indicates that the country
is relatively uncorrupt. The closer that the score is to 100, then the increasingly
clean and uncorrupt the country is perceived. Therefore, Sweden’s ranking
illustrates that the country is extremely safe, lacks crime and has a political and
economic environment relatively free of corruption. Please see Appendix III for
a chart showcasing Sweden’s Corruption Index Ranking in relations to the other
top ranking countries.
Worldwide Governance Indicators
Agriculture, value added (% of GDP)
The total percentage of Sweden’s entire population that resides in rural segments
of the country is 15%. Agriculture corresponds to ISIC divisions 1-5 and includes
forestry, hunting, and fishing, as well as cultivation of crops and livestock
production. Value added is the net output of a sector after adding up all outputs
and subtracting intermediate inputs. It is calculated without making deductions
for depreciation of fabricated assets or depletion and degradation of natural
resources. The origin of value added is determined by the International
Standard Industrial Classification (ISIC), revision 3. Note: For VAB countries,
gross value added at factor cost is used as the denominator.
 From 2009-2012: 2%
Employment in agriculture (% of total employment)
Employees are people who work for a public or private employer and receive
remuneration in wages, salary, commission, tips, piece rates, or pay in kind.
From 2009-2012: 2%
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Food production index (2004-2006 = 100)
Food production index covers food crops that are considered edible and that
contain nutrients. Coffee and tea are excluded because, although edible, they
have no nutritive value.
 In 2009: 97.5%
 In 2010: 95.2%
 In 2011: 95.3%
 In 2012: 94.2%
Livestock production index (2004-2006 = 100)
Livestock production index includes meat and milk from all sources, dairy
products such as cheese, and eggs, honey, raw silk, wool, and hides and skins.
 In 2009: 95.8%
 In 2010: 95.5%
 In 2011: 94.9%
 In 2012: 91.7%
Health
Sweden has demonstrated that its health care is relatively impeccable. Statistics
from 2010 show how effective, technologically advanced and constantly evolving
the health care system in Sweden is, and they are listed below. Out of the
population of 12-23 years old, 98% receive all immunizations including for the
measles. The maternal mortality ratio, per 100, 000 births, is 3. The health
expenditure per capita, in US$, that Sweden allocates is $50,000.
Aid Effectiveness
Sweden has been able to successfully combat HIV and AIDS advancement within
the country. In 2010, the total percentage of the population from ages 15-49 that
were HIV positive was 0.2%.
Infrastructure
Since Sweden is a developed country, the manufacturing and agricultural
developments are technological, advanced and well maintained. Some statistics
that illustrate the development of the country’s infrastructure include:
 In Sweden, for every 100 people 94 of them are utilizing the internet.
 In 2011, the total amount of annual fresh water withdrawals in billion
cubic meters was 2.6.
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

The electric power consumption of Sweden in 2011 was 14, 030 (kWh per
capita) this shows that the country has been able to provide enough
electricity to its global population on a consistent basis.
525 people per 1000 in 2011, owned motor vehicles in Sweden. This
illustrated that about half the population can afford and own cars,
allowing for the internal developments of roads to be a primary concern
for the government.
Climate Change
Sweden’s CO2 emissions (metric tons per capita) were 4.7 in 2009, and rose to 5.6
in 2010. Other greenhouse gas emissions, HFC, PFC and SF6 (thousand metric
tons of CO2 equivalent) were 2198 in 2010. Nitrous oxide emissions (thousand
metric tons of CO2 equivalent) were 5629 in 2010. Methane emissions (kt of CO2
equivalent) were 10,845 in 2010. Due to Sweden’s domestic population CO2
emmissions, along with gases, are relatively high, allowing for climate change to
effect the country negatively. Below is a graph that illustrates the temperature
and rainfall variation in Sweden by month from 1900 to 2009.
Economy & Growth (2012)
The success of economy and growth in Sweden can be measured through the
following statistics:
 Imports of goods and services (% of GDP): 43%
 Industry, value added (% of GDP): 25%
 Gross capital formation (% of GDP): 19%
 Services, (Wholesale and retail trade) etc., value added (% of GDP): 73%
 Trade in services (% of GDP): 22.3%
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It seems as though Services provide the most growth of Sweden’s economy and
have allowed the country to proper as this percentage has risen steadily since
2009. Trade is also a significant factor in the growth of the Swedish economy as
well.
Private Sector
The private sector can be measured by analyzing the improvement in the DTF
percentage in regards to the ease of doing business chart. This takes into account
the ability for the private sector paying taxes, starting a business, registering
property and many other elements of the private sector. The 2013 DTF was
82.84% and in 2014 it rose to 82.96%. This allowed for a 0.12% increase, and leads
to the conclusion that the private sector of Sweden is striving.
Energy & Mining
In 2012 Sweden produced 34, 932.2 of energy (kt of oil equivalent). This is a
source of substantial revenue for the country and ensures the well-being of the
domestic population be providing them with a sufficient energy source as well as
creating a commodity.
Science & Technology
Sweden spent 3.37% of total GDP in 2011 on research and development. This
illustrates that Sweden is actively participating in scientific and technological
advancements.
Environment
Sweden maintains its environmental duties by trying to reduce CO2 emissions
and maintaining untouched forest land within the country. In 2010 Sweden had
4.9 CO2 emissions per metric tons per capita. They have also maintained 68.7%
of land area as untouched forest as recorded in 2011. By adhering to
environmental responsibilities, Sweden is able to maintain a cleanly lifestyle,
creating a healthy environment within the country and maintaining their natural
resources.
Social Development
In Sweden there is no indication that child labour occurs. As of 2012 the labour
participation of males 15 years old and over is 77%. Women of the same age in
the workforce were 50%. Women are actively engaging more in the workforce
and their participation has risen. This allows for social development to occur,
especially for the female population.
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Financial Sector
Below is an image that outlines the participation of the public population in
Sweden within the financial sector. This illustrates that in 2011, there was
extremely active participation in accounts at formal institutions, debit card
usage, and those who had a low income level were the most avid user of
financial institutions.
The Swedish banking sector is highly concentrated, with the four large banking
groups (Nordea, Svenska Handelsbanken, Swedbank, and SEB) accounting for
roughly 80% of sector assets. Swedish banks are heavily invested in the Baltic
states, and the Swedish banking industry in general is strong. All Swedish banks
have passed EU stress tests with wide margins. In addition Swedish banks are
far less exposed to the current financial crisis because they do not hold large
amounts of debt from Greece, Spain, Portugal, and Italy.
Trade
In total the EU imports 20% of its merchandise from other countries (2011),
showing that not an extreme amount of import trading is done. Sweden in
particular has a binding coverage of manufactured products percentage of 100%
illustrating that trade is significantly important for Sweden for gains in revenue.
Gender
The ratio of women to men in primary enrollment per 100 people in 2011 was 9102. In 2011, women made of 50% of the non-agricultural segment of the labour
force. The proportion of women that held seat in parliament was 45% in 2013.
Therefore, it is clear that Sweden supports gender equity and seeks to give
women the same advantages as the male population.
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Urban Development
Sweden’s urban population has reached 85% as of 2012. Therefore, it is in its best
interest to continue investing in infrastructure and urban development as the
population continues to expand.
Political Freedom Index
On a scale of 1-7 (1 being the most free, and 7 being the least) Sweden has
achieved a 1.0 score establishing it as a free status country. This means that there
is political, public, private and press freedom unhindered by censorship and
corruption.
Economy
The Swedish economy emerged from the financial crisis as one of the strongest in
Europe. A high-tech economy and a comprehensive system of welfare benefits
allow Sweden to enjoy one of the highest standards of living in the world.
Sweden has one of the most globalized and competitive economies today.
From the early 1990s until 2008, Sweden enjoyed a sustained economic upswing
fueled by strong exports and rising domestic demand. Exports account for 50%
of Swedish GDP. Heavily dependent on exports of autos, telecommunications,
construction equipment, and other investment goods, Sweden was hit hard by
the contraction in external demand due to the global financial and economic
crisis. As a result, GDP fell 4.9% in 2009. The Swedish Government is currently
expanding its export base to grow in Asia, South America, and the United States.
Sweden’s GDP grew by 5.5% in 2010, surpassing expectations and setting new
growth records. The Swedish economy maintained a similar pace in 2011 with
third-quarter growth at 4.6%. However, growth projections for the next couple
of years were revised downward throughout 2011 as the European economy
(Sweden’s main export market) contracted. As of February 2012, the Central
Bank was projecting growth of only 0.7% for 2012. Both the government and
Central Bank expect normal growth rates to return in 2013, assuming the
eurozone financial crisis abates. (As of February 2012, the Central Bank projected
2.1% growth in 2013 and 3.2% growth in 2014.)
Central Bank policy is guided by inflation targeting to keep the Consumer Price
Index (CPI) at or around 2% on an annual basis. The Central Bank has been
19
steadily lowering rates over the past 6 months to stimulate the economy. The
rate currently sits at 1.5%.
One of Sweden’s tools in maintaining solid public finances is a budget process
that calls for parliamentary-designated spending ceilings. While spending
ceilings can technically be surpassed, they represent a promise the government
makes to the people, and they are adhered to.
Unemployment is slowly falling, and was at 7.1% as of December 2011. The
government projects a small increase in unemployment in 2012 and 2013
followed by a leveling off of the rate at 5.5% by 2015. Youth unemployment is
high, around 20.8%, for those between 15 and 24 years.
Over 70% of the Swedish labor force is unionized, and membership is decreasing.
The unions and employer organizations are independent of both the government
and political parties, although the largest federation of unions, the National
Swedish Confederation of Trade Unions (LO), always has maintained close links
to the largest political party, the Social Democrats. There is no national
minimum wage; instead wages are set by collective bargaining.
"Economy Rankings: Measuring Business Regulations.” The World Bank.
Retrieved April 2, 2014 from http://www.doingbusiness.org/rankings
"Sweden Economy." Global Edge. Retrieved April 2, 2014 from
http://globaledge.msu.edu/countries/sweden/economy
Other Country Risks
Household consumption, investment, public spending and exports slowed in
2012, wiping 2.6 percentage points off the growth rate. The erosion of household
and business confidence throughout 2012 suggests that there will be a slight
slowdown in private spending and investment, which will remain drivers of
activity in 2013.
Modest growth in household consumption and investment have been supported
by public spending
Despite a slight increase in their disposable income and a high savings level
(nearly 10% of disposable income), households will increase their spending only
20
slightly in 2013. The sluggish labor market and rising unemployment (8% of the
active population) affecting 23% of young people will encourage households to
be cautious. Falling house prices (an expected fall of 7% in 2013 after a decline of
5% in 2012) will also affect consumption negatively, all the more so as
households have high debt levels (170% of disposable income).
Faced with a reduction of the production capacity utilization rate and of orders
recorded on the domestic and international markets at the end of 2012,
businesses will exercise caution when investing. Investment, however, receive a
boost as a result of the government’s decision to devote a package of 23 billion
Swedish krona (0.6% of GDP) to funding, in particular, mining infrastructures.
In this context, the aim of returning to fiscal surplus in 2013 is unlikely to be
achieved, however public debt is expected to fall as a result of various
privatization projects.
Strengths
 Open, diversified and competitive economy
 Specialisation in high-tech products and green economy
 Sound public finances
 Political consensus around the Scandinavian model
 Tax cutting programme
 Strong banking sector
 Significant net household wealth
Weaknesses
 There are not hindrances on intellectual property
"Economy Rankings: Measuring Business Regulations.” The World Bank.
Retrieved April 6, 2014 from http://www.doingbusiness.org/rankings
"Indicators: Data." The World Bank. Retrieved April 2, 2014 from
http://data.worldbank.org/indicator/
"Sweden." The World Bank. Retrieved from April 2, 2014 from
http://data.worldbank.org/country/sweden
"Sweden Economy." Global Edge. Retrieved April 3, 2014 from
http://globaledge.msu.edu/countries/sweden/economy
21
"Sweden Risk Assessment." Global Edge. Retrieved April 2, 2014 from
http://globaledge.msu.edu/countries/sweden/risk
Taxation
When exporting goods from Canada the determination of whether or not taxes
are charged depends on where the ownership of the product is being transferred
and the products themselves that are being shipped. ‘According to the Canada
Revenue Agency, goods (other than excisable goods such as beer and tobacco)
may be taxed at 0% if being exported’. Therefore no GST or HST taxes apply on
sales if you deliver the goods, or make them available to a purchaser outside of
Canada. As lululemon would be selling its apparel to Swedish buyers there will
be no taxes paid to the Canadian government.
The standard taxation for imports into Sweden is the Value Added Tax (VAT).
This is a type of consumption tax that is placed on a product whenever value is
added at a stage of production and at the final sale. The purpose of the VAT is to
generate tax revenues to the government similar to the corporate income tax or
the personal income tax. Imports are taxed to keep the system fair for EU
producers so that they can compete on equal terms in the European market with
suppliers situated outside the Union. For lululemon apparel imported from
Canada, the VAT will be 25% of the CIF. The VAT must be paid at the moment
the goods are imported so they are immediately placed on the same footing as
equivalent goods produced in the community. Please see Appendix III for an
example of the cost breakdown on an imported consumer product (apparel
item), assuming a 25% VAT and the previously determined 12% duty.
The greatest risk associated with Sweden’s economic environment is its
integration with the global economy. Sweden is financed heavily by the United
States, and analysts are uneasy about trusting that market right now. The
Riksbank, Sweden’s national bank, continues to hike interest rates to stabilize
inflation, however the market is starting to doubt that this practice can continue
given the uncertain global outlook. Sweden’s Finance Minister has admitted that
the nation’s finances will be affected by market turmoil and the government is
expecting to lower its growth forecasts for the future. One of the greatest control
mechanisms Sweden has to steady its economy is monetary policy, and whether
or not the country will be able to stabilize its finances will be determined with
time.
22
“Importing Goods.” Swedish Customs. August 2012. Retrieved April 4, 2014
from
http://www.tullverket.se/download/18.3cc1940611667e5db7f80005546/137103259
8892/Importing+goods.pdf
“Definition of Value Added Tax.” Investopedia. Retrieved April 2, 2014 from
http://www.investopedia.com/terms/v/valueaddedtax.asp
“General Overview: What is VAT?” Taxation and Customs Union: European
Union. April 2, 2014. Retrieved April 6, 2014 from
http://ec.europa.eu/taxation_customs/taxation/vat/how_vat_works/index_en.htm
“Export Planning: Customs, duties and taxes on export sales.” BDC,
Entrepreneurs First. Retrieved April 6, 2014 from
http://www.bdc.ca/EN/advice_centre/ask_professionnal/going_global/Pages/exp
ort_planning_.aspx?question=6
Lesova, Polya. “Sweden’s Economy Shines but Faces Global Risk.” The Wall
Street Journal. August 26, 2011. Retrieved March 30, 2014 from
http://www.marketwatch.com/story/swedens-economy-shines-but-faces-globalrisks-2011-08-26
Exchange Rates
Although a member state of the EU for almost 20 years, the Swedish currency is
the Swedish Krona (SEK), not the Euro. ‘According to the 1995 accession treaty,
Sweden is required to join the Eurozone and therefore must convert to the Euro
at some point. After a recent referendum 56% of Swedish voters are still
opposed to the adoption of the Euro and the government has agreed to not
pursue it at this time.’ Please see the chart below for details on the current
exchange rates between the SEK, USD and CAD.
1 USD
6.48155 SEK
Since November 1992 Sweden has maintained a
1 CAD 5.96097 CAD
managed float regimen for the SEK, and the
1 SEK
0.154291 USD
exchange rate has therefore been dependent on the
1 SEK
0.167781 CAD
monetary policy pursued by the country at the
time.
23
From when the Euro was introduced in 2002 the SEK has remained relatively
stable, with a slight decline around the 2008 economic downturn. The two
graphs below depict the value of the SEK to the USD and CAD over the past five
years.
From the above graphs it appears that the SEK was able to stabilize from the 2008
decrease by 2011 and has had low volatility since then. The fluctuations present
in the comparison to the CAD can be explained by the recent CAD’s volatility
and not necessarily the SEK’s willingness to fluctuate. Although there is the
possibility that Sweden will convert to the Euro, the SEK appears to be
functioning quite well, with minimal volatility, and has allowed the country to
maintain control over its monetary policy.
The greatest risks associated with Sweden’s exchange rates are perhaps the
repercussions of the country’s potential conversion to the Euro. Some have fared
better than others, but there is no doubt that the Euro has set forth unintended
consequences resulting in the inability of some country’s to manage their
economic environment. The Swedish Krona presently sits as the 11th most traded
currency in the world, and if it decided to convert to the Euro that entire trading
market would be lost. The unknown risks that may come with Sweden’s
adaptation of the Euro makes the decision to stay with the current currency, SEK,
the most favourable for importers.
“Currency Converter.” XE. April 6, 2014. Retrieved April 6, 2014 from
http://www.xe.com/currencyconverter/convert/?Amount=1&From=SEK&To=CA
D
“SEK – Swedish krona predictions and volatility data.” Rates FX. April 6, 2014.
Retrieved April 6, 2014 from http://www.ratesfx.com/predictions/pred-sek.html
24
“The Inflation Target.” The Riksbank. September 30, 2011. Retrieved March 30,
2014 from http://www.riksbank.se/sv/Penningpolitik/Inflation/Inflationsmalet/
“Currency Charts.” XE. April 6, 2014. Retrieved April 6, 2014 from
http://www.xe.com/currencycharts/?from=CAD&to=SEK&view=5Y
Sustainability and Fair Trade
Sustainability
In the European Union, Sweden ranks 1st in consumption of organic food,
recycling, and using the highest percentage of renewable energy. In Europe, the
organic food market is growing by 5-7% annually. A study by the European
Commission found that 40% of Swedes purchase eco-labels. This is higher than
the European average. Recycling is very important in Sweden. In 2010, 88% of
all aluminum cans and PET bottles were recycled. The goal is to recycle over 90%
of bottles and cans.
Returpack, a Swedish recycling company, released the statistic that Swedes
returned on average 146 can and bottles per person for deposit. Returpack has
taken measures such as doubling the deposit on containers to encourage Swedes
to recycle more. They also introduced the innovative advertising campaign
Pantamera. (Visit http://www.pantamera.nu/ for additional information on the
project)
“Award-winning Swedish company Plantagon works with urban agriculture
and specializes in what is known as vertical cultivation.” Plantago’s vertical
greenhouse reduced the need for energy, water, and pesticides. Additional
vertical greenhouses are
planning to be built in
Linköping and
Botkyrka, south of
Stockholm. The
buildings aim to
contribute to climatesmart solutions to the
future demands for
food.
25
Technology
The Swedish government has committed 400 million SEK (67 million CAD) for
research and development of environmental technology. From 2011-2014, 100
million will be allocated each year. Sweden’s environment technology sector has
revenues of approximately 120 billion SEK annually, (20 billion CAD), and
employs approximately 40,000 Swedes, according to Statistics Sweden and the
Swedish Environmental Technology Council.
In 2011, the Swedish Government announced a new environmental
technology strategy. Its aim was to establish positive conditions for the
growth and development of environmental technology companies. There
were three main objectives:
1. “Promote the export of Swedish environmental technology and thus
contribute to sustainable economic growth in Sweden and globally.”
2. “Promote research and innovation in environmental technology and
create the conditions required for green technology companies to
flourish in Sweden.”
3. “Make it easier to commercialize innovations.”
(Swedish Institute)
Fashion
Sweden values renewable clothing. Recently more and more stores with organic
apparel have opened, and established brands are now using organic fabrics in
their collections. The Swedish retailer H&M is a world leader in the use of
organic cotton, according to the organization Textile Exchange.
There is a growing second-hand clothing market in Sweden, both in stores and
online. Vintage fashions are so popular that established chains are also selling
second-hand items . For example the Swedish apparel companies Weekday and
Grandpa, sells vintage pieces as well as newly produced clothing.
In 2008 Sweden started its vintage clothing fair, Vintagemässan, in Stockholm.
This is an annual fair attended by over 6,000 sustainable minded individuals
annually.
26
Sustainable Transportation
Bike – In 2011, the Swedish government appointed a special investigation to
review regulations that affect cycling. The Swedish Transport Agency in
cooperation with other government agencies developed action plans to
increase cycling. “Malmö was named Cycling Promotion City of the Year by
the Swedish cycling organization Cykelfrämjandet. One out of four trips in
Malmö is by bike” (Swedish Institute).
Electric Trains – SJ, the government-owned train operator, powers its trains
by electricity. SJ buys only renewable electricity from hydropower or wind
power, for its trains in Sweden. This causes minimal emissions for the
production of electricity for trains. “All trips using SJ’s electric trains meet
the Swedish Society for Nature Conservation’s requirements for “Good
Environmental Choice,” the organization’s most stringent eco-label” (Swedish
Institute).
Stockholm Public Transport (SL) – SL operated Stockholm’s subways, buses,
trams and commuter trains. New trams are 98% recyclable. The subway
system is runs only on green electricity. In the fleet of green buses, 80 buses
run on biogas, and 127 buses run on ethanol. By 2025 the goal is to have all
buses running on renewable, environmentally-friendly fuel.
Fair Trade & Ethics
Production and services will respect human rights and strictly follow the UN
Declaration on Human Rights, and the International Labour Organization.
Working conditions will promote a safe, and healthy work environment,
prohibiting forced labour. Workers must be legal, over 16, and will be paid
minimum wage and higher. Lululemon follows suit as an equal opportunity
employer.
Lululemon is responsible for the environmental and social responsibility within
the entire supply chain. This includes the direct and indirect effects on people
and the environment. We aspire to be as environmentally friendly as possible
and limit our environmental impact. Lululemon will abide by all Swedish
import regulations and provide a fair exchange, and trade will promote
development possibilities for both parties. For further assurance of fair practices
27
lululemon will provide consumers information on the production of goods, and
materials.
Sustainable Efforts Incorporated into the Development of Product for Sweden:
Research shows that Sweden is a very sustainable and environmentally friendly
nation. Swedes prefer the use of organic and recycled material. Due to the large
number of cyclists, a cycle pant was chosen to develop for the Swedish market
place.
"FTC in English." Fair Trade Center. N.p., n.d. Web. 09 Apr. 2014.
<http://www.fairtradecenter.se/english>.
"Pantamera | Att återvinna är En Hit!" Pantamera | Att återvinna är En Hit!
N.p., n.d. Web. 09 Apr. 2014. < http://www.pantamera.nu/>.
Swedish Institute. "Sustainable Living in Sweden." Sweden.se. Sweden, 2013-2014.
Web. 09 Apr. 2014. < http://sweden.se/nature/sustainable-living/>.
Culture and People
If we explore the
Swedish culture through
the lens of the 6-D
Model, we can get a
overview of the deep
drivers of Swedish
culture relative to other
world cultures.
Power distance
Power distance is defined as the extent to which the less powerful members of
institutions and organizations within a country expect and accept that power is
distributed unequally.
Sweden scores low on this dimension (score of 31) which means that the
following characterizes the Swedish style: Being independent, hierarchy for
convenience only, equal rights, superiors accessible, coaching leader,
28
management facilitates and empowers. Power is decentralized and managers
count on the experience of their team members. Employees expect to be
consulted. Control is disliked and attitude towards managers are informal and
on first name basis. Communication is direct and participative.
Individualism
The fundamental issue addressed by this dimension is the degree of
interdependence a society maintains among its members. It looks at whether
people´s self-image is defined by “I” or “We”. In Individualist societies people
are supposed to look after themselves. In Collectivist society’s people belong to
groups that take care of them for loyalty.
Sweden, with a score of 71 is an Individualistic society. This means there is a
high preference for a loosely knit social framework in which individuals are
expected to take care of themselves and their immediate families only. In
individualistic society’s offence causes guilt and a loss of self-esteem, the
employer/employee relationship is a contract based on mutual advantage; hiring
and promotion decisions are supposed to be based on merit only; management is
the management of individuals.
Masculinity
A high score (masculine) on this dimension indicates that the society will be
driven by competition, achievement and success, with success being defined by
the winner / best in field – a value system that starts in school and continues
throughout organizational behaviour.
A low score (feminine) on the dimension means that the dominant values in
society are caring for others and quality of life. A feminine society is one where
quality of life is the sign of success and standing out from the crowd is not
admirable.
Sweden scores 5 on this dimension and is a feminine society. In feminine
countries it is important to keep the life/work balance and ensure that all are
included. An effective manager is supportive to his/her people, and decision
making is achieved through involvement. Managers strive for consensus and
people value equality, solidarity and quality in their working lives. Conflicts are
resolved by compromise and negotiation and Swedes are known for their long
discussions until consensus has been reached. Incentives such as free time and
flexible work hours and place are favoured. The whole culture is based around
'lagom', which means everything in moderation
29
Uncertainty avoidance
The dimension Uncertainty Avoidance has to do with the way that a society
deals with the fact that the future can never be known: should we try to control
the future or just let it happen?
Sweden scores 29 on this dimension and thus has a very low preference for
avoiding uncertainty. Sweden has a more relaxed attitude in which practice
counts more than principles and deviance from the norm is easily tolerated.
People believe there should be no more rules than are necessary and if they are
ambiguous or do not work they should be abandoned or changed. Schedules are
flexible, hard work is undertaken when necessary but not for its own sake,
precision and punctuality do not come naturally, innovation is not seen as
threatening.
Pragmatism
This dimension describes how people in the past as well as today relate to the
fact that so much that happens around us cannot be explained. In societies with
a normative orientation, most people have a strong desire to explain as much as
possible. In societies with a pragmatic orientation most people don’t have a need
to explain everything, as they believe that it is impossible to understand fully the
complexity of life.
With an intermediate score of 53 Sweden is seen to not express a clear preference
on this dimension.
Indulgence
This dimension is defined as the extent to which people try to control their
desires and impulses, based on the way they were raised. Relatively weak
control is called “indulgence” and relatively strong control is called “restraint”.
Cultures can, therefore, be described as indulgent or restrained.
A high score of 78 indicates that Swedish culture is one of indulgence. People in
societies classified by a high score in indulgence generally exhibit a willingness
to realize their impulses and desires with regard to enjoying life and having fun.
They possess a positive attitude and have a tendency towards optimism. In
addition, they place a higher degree of importance on leisure time, act as they
please and spend money as they wish.
30
Cultural Trends
Swedish behavior characteristics are strongly balanced towards ‘lagom’ or,
‘everything in moderation’. Excess, flashiness and boasting are abhorred in
Sweden and individuals strive towards the middle way. As an example, work
hard and play hard are not common concepts in Sweden. People work hard but
not too hard, they go out and enjoy themselves, but without participating in
anything extreme.
Sweden is seen as an indulgent culture and this is reflected in what individuals
spend money on. The Swedish like to spend money on leisure activities
including shopping, entertainment, outdoor activities, and food. The Swedish
people find things such as coffee, casual and active lifestyle activities, gender
equality, food, tradition, environmental awareness and fashion extremely
important within their daily life.
Market Opportunities
Target markets, in regards to retail specifically, that would be viable in Sweden
would be young men and women, either in regards to high fashion street style
with a casual vibe, or also targeting the same age group but with casual athletic
wear due to the active lifestyle that Swedish people have.
Sweden houses many high fashion brands that have gone global. The styles that
are highly valued are casual, business casual, and include jeans. Street style is
also very popular in Sweden as well.
Popular clothing items in Sweden include:
 Casual summer clothes
 Medium-weight sweaters
 Light jackets
 Raincoats
 Overcoats
 Jeans
Swedes like fashion; they avoid glitzy attire and will never abandon their jeans
for very long. As a general rule for Swedish fashion it can be said that despite
being aggressively fashion and trend-conscious, Swedes have a very practical
approach to clothes. When they dress up, they do not go overboard. There’s not
31
such a difference between how they dress at work, in their time off, and at
parties.
The Swedish see shopping as a casual and leisure pass time. It is done out of
enjoyment and pleasure, to facilitate a casual lifestyle with a fashionable
approach. They view fashion as a commodity and love it, promote it (many
designers and brands are from Sweden) and they see apparel as a means to
promote self-image and personality.
"20 THINGS TO KNOW BEFORE MOVING TO SWEDEN." Swedish Institute.
Retrieved April 3, 2014 from http://sweden.se/society/20-things-to-know-beforemoving-to-sweden/
"SWEDISH FASHION – FROM CATWALK TO SIDEWALK." Swedish Institute.
Retrieved April 6, 2014 from http://sweden.se/culture/swedish-fashion-fromcatwalk-to-sidewalk/
“Swedish Fashion.” Visit Sweden. Retreived April 6, 2014 from
http://www.visitsweden.com/sweden/things-to-do/shopping/swedish-fashion/
"Sweden." The Hofstede Center. Retrieved April 3, 2014 from http://geerthofstede.com/sweden.html
"Sweden - Language, Culture, Customs and Etiquette." Kwintessential.
Kwintessential. Retreived April 6, 2014 from
http://www.kwintessential.co.uk/resources/global-etiquette/sweden.html
"What to Wear in Sweden." Visit Sweden. Retrieved April 3, 2014 from
http://www.visitsweden.com/sweden/Sweden-Facts/How-you-do-things-inSweden/What-to-wear/
Conclusion
The market and economy in Sweden, although met with its fair share of risk, has
been evaluated to be favourable as a new market for lululemon athletic apparel.
The market receptivity to Canadian imports is high Sweden, with the country
being quite receptive to trade in apparel merchandise. The implementation of
the Canada-EU Trade Agreement will be favorable for lululemon, making trade
32
even more reasonable and easy within the next few years. This will allow for an
ease of importing Canadian apparel into the Swedish market furthering their
already solid trading relationship further.
Sweden’s currency is stable; the exchange rate is favorable for Canadian trade.
Taxation is also favorable for Canada, even though taxes are not paid to the
Canadian government, it will make the merchandise more appealing to the
Swedish market.
The economic climate in recent years has demonstrated weakness and insecurity,
therefore lowering the demand for apparel products, but the decrease in
consumer demand for apparel products is not due to distaste for the products.
The economy has begun to recover, meaning that extra cash flow of the
population can be used on leisure items. This has allowed for the apparel
industry to begin recovering.
A rapidly growing market for organic clothing and environmentally sustainable
products is materializing, and apparel producers who can deliver products to
meet these qualifications have the potential to do very well in the Swedish
markets. Lululemon will be able to add merchandise that supports the active
lifestyle of the Swedish population. With a stylish spin on athletic wear, the
product will be received well within the Swedish market as it lacks “glitz,” but
still has an appealing image.
As the economy is finally recovering from the 2008 recession there are recorded
increases in demand for apparel products, most specifically sporting goods
stores and sportswear. This is a market that lululemon understands and one that
provides a lot of opportunity in Sweden. Lululemon’s design aesthetic also fits
comfortably into the Swedish style of ‘less is more.’
By completing the market research, remaining competitive, finding a niche
market, evaluating the economy and providing a valuable product to the
Swedish consumers, lululemon will be able to decrease barriers to entry and
create a competitive advantage for itself within the Swedish apparel industry.
33
Designing the Product
Choosing a Target Market
Based on the information found in ‘Country Research’, the target market with the
highest potential for the lululemon product are men and women aged 25-44.
This captures approximately 30% of the Swedish population. The Swedes are
very active, with 47% of the population riding bikes as regular means of
transportation. The target market rides their bike to work often, leisurely, as well
as for fitness. They are professionals who are active and value the environment.
They are single, or recently married with or without children. They value
durability, practically, and are brand loyal.
Target Market Profile:
Geographic:
 Sweden
o Population: 9.658 million
o Target Market Population: 2.54
million
 Urban and Suburban (85% of population)
o Access to retail stores
Demographic:
 Age: 25-44
 Gender: Male & Female
 Family Size: 1-3
 Family Lifecycle: Single, Married
 Generation: Generation X, Generation Y
 Income: 63,312 CAD
 Occupation: Professionals
 Education: University, Masters, PHD
 Ethnicity: Swedes, Finns, Sami
 Nationality: Swedish
 Language: Swedish (Svenska)
 Religion: Lutheran, Christian
o Low religious participation
34
Psychographic:
 Activities: Outdoors, Athletics, Biking, Skiing, Hiking
 Interests: Design, Architecture, Film
 Opinions: Environmentally Conscious, Ecofriendly, Recycle
 Values: Environment, Health, Family
Behavioralistic:
 Benefits Sought: Quality, Machine Washable,
Comfort, Practicality, Safety, Style
 Usage rate: Daily-Weekly
 Brand Loyalty: Strong
 User Status: Potential, First-Time, Regular
 Readiness to Buy: High
 Occasions: Daily Transportation, Fitness, Leisure Biking
Competitive Climate
Swedes live an active lifestyle. Therefore there are established athletic apparel
companies in the Swedish Market. The two most popular Swedish athletic
apparel companies are Craft and Casall.
Craft is a professional training company for runners and bikers. They offer high
quality performance wear for athletes training and competing. Avid bikers
would likely wear Craft’s high performance bike shorts for riding. Our product
is more of a relaxed fit, to incorporate into everyday lifestyles of those who
compute by bike.
35
Craft’s selection of Men’s bike pants:
Casall is another popular Swedish athletics brand. Their product line is tailored
to runners and gym users. They have a wide variety of products available for
men and women and are sold at multiple Swedish retailers. Casall is a similar to
lululemon, also offering yoga wear, and many athletic accessories. They have
not ventured into the market of athletic every day wear, or multi purposes
apparel.
36
Casall’s Women’s Sculpture Tights:
Swedish powerhouse H&M announced in December of 2013 that it will
introduce an athletics line. They have a popular market share in their home
country Sweden. It will be interesting to see if Swedes are enticed by H&M’s
sports line or if they still prefer high-end, quality athletic apparel.
"Casall." Casall. Retrieved March 30, 2014 from http://www.casall.com/
"Craft: CRAFT." Craft. Retrieved March 30, 2014 from http://www.craft.se/
Parker, Ashley J. "H&M To Introduce New Sports Line." Fashion Times RSS.
December 5, 2013. Retrieved March 30, 2014 from
http://www.fashiontimes.com/articles/1605/20131205/h-m-to-introduce-newsports-line.htm
Clothing Trends wrt Target Market
‘Less is more’ accurately describes Swedish
Fashion. Swedes are very practical and like
to wear discreet colours, and pared-down,
refined looks. Don’t mistake this for a lack of
creativity though! (Swedish Fashion)
37
Recently, clothing expenditure in Sweden has increased. Swedes are known for
their fashionable style, and purchase new clothing often. The average Swedish
woman spends $845 USD on clothing each year, the average Swedish women in
her twenties spends close to $1,200 USD annually on clothing. Swedish men
typically spend about half of that amount; $400 USD. (Euromonitor)
For every day wear the Swedes dress
moderately casual. Swedes love their jeans,
and is home to the popular jean brands,
Acne, and Cheap Monday. They dress up to
go out in the evening or for special occasions.
“The Swedish apparel industry also excels at
retailing and creating mid-priced clothing.
High-spending Swedish consumers often
look to foreign brands for luxury goods and
high fashion for both adults and children.”
(Euromonitor). Sporting goods and athletic
apparel stores are also very popular for both
men and women’s fashions to suit their active lifestyle.
Swedes are concerned with the manufacturing of their garments. Poor labour
conditions gain a lot of media attention in Sweden. They also highly value
corporate social responsibility initiatives by companies.
Renowned Swedish brands include: Filippa K, Anna Holtblad, Acne Jeans,
Cheap Monday, H&M, WeSC, Nudie Jeans, Whyred, Hope, Carin Rodebjer,
Carin Wester, V Ave Shoe Repair, Sandra Backlund, Tiger of Sweden, Dagmar,
and Common. (Swedish Fashion)
There is a new development by Swedish
engineers is the ‘Invisible Bike Helmet’, by
Hövding, which has gained international
recognition. Founded by Anna Haupt, and
Terese Alstin, “the idea of developing a new
type of cycle helmet was a response to the
introduction of a law on mandatory helmet use
for children up to the age of 15 in Sweden,
which triggered a debate on whether cycle
helmets should be mandatory for adults too.”
There helmet simply looks like a scarf. It is
38
attached around the wearer’s neck, and deploys upon impact, similar to an
airbag, to protect the riders head. (Hovding) Watch the video at:
https://www.youtube.com/watch?v=CMAhptqk-4Q .
"Apparel in Sweden." Euromonitor International. April 2013. Retrieved March
20, 2014 from http://www.euromonitor.com/apparel-in-sweden/report
Gardelius, Birgitta. "Apparel Industry Overview." The U.S. Commercial Service.
June 2009. Retrieved March 20, 2014 from
http%3A%2F%2Fwww.nam.org%2FStatistics-And-Data%2FExportPromotion%2FMarket-Research%2FMarketResearch%2F~%2Fmedia%2F16CA2B7DF92347519555FC918CDDF353.ashx
“Airbag for cyclists.” Hovding. Retrieved March 30, 2014 from
http://hovding.com/
“Swedish Fashion from Catwalk to Sidewalk.” Sweden.se. Retieved March 30,
2014 from http://sweden.se/culture/swedish-fashion-from-catwalk-to-sidewalk/
Designing the Product
Overview
As the aforementioned research shows, the Swedish population would be greatly
receptive to the product being introduced. The proposed product would be a
lightweight, versatile bicycling pant rendered from a similar-style pant currently
offered in North America by lululemon. This pant will be offered for both men
and women with slight variances for both offerings; these differences would
include fit and style, but would be made of the same materials and sourced
ethically and without animal byproducts. The Swedish population is strongly
opposed to animal and animal byproducts and shows great support for natural
and recycled fibers. For this these reasons and several more outlined above, it is
believed that lululemon would succeed with this product in the Swedish market.
With regards to the brand name and logo, it was agreed upon that both
components of the brand would be kept as-is while entering the Swedish market.
The garments being introduced are not heavily branded, nor does the actual
print “lululemon athletica” appear anywhere on the outside of the garments.
Initially the brand name was of concern especially when targeting men.
39
However, given the success of these products for men in the North American
market, it was reasonable to leave branding the same. Also, considering cost, it
was beneficial to not incur the added expense of rebranding, especially seeing as
the European market is more fashion forward than the North American market,
and would be highly receptive to this product.
The following pages contain detailed information for the redesign of the
lululemon Bike Pant for both men and women.
40
Apparel Company: lululemon athletica
Product: Lululemon Biking Pant – Women’s version
Pictures of Original Design:
41
Specifications of Redesign
42
Rationale of Women’s Redesign









Redesigned for comfort, optimal performance and convenience while
biking
Allows wearer to be comfortable while providing flexibility and
versatility when riding a bike
3M coating to make it water-repellant
4-way stretch for mobility and comfort
Back zipper pocket for convenient storage and security while riding
outlined with reflective strips
Buttons added under the knee to fold pants up to keep away from
bicycle chain
Reflective strips woven into the fabric, running down the side of leg
and at the rear for safety
Button snap closure at ankle to prevent excess fabric from getting
caught (in case wearer leaves them down)
Zippers with recycled materials (plastic and rubber)
43
Apparel Company: lululemon athletica
Product: lululemon Biking Pant – Men’s version
Images of Original Design:
44
Specifications for Redesign
45
Rationale of Men’s Redesign









Redesigned for comfort, optimal performance and convenience while
biking
Allows wearer to be comfortable while providing flexibility and versatility
when riding a bike
3M coating to make it water-repellant
4-way stretch for mobility and comfort
Back zipper pocket for convenient storage and security while riding
outlined with reflective strips
Buttons added under the knee to fold pants up to keep away from bicycle
chain
Reflective strips woven into the fabric, running down the side of leg and
at the rear for safety
Button snap closure at ankle to prevent excess fabric from getting caught
(in case wearer leaves them down)
Zippers with recycled materials (plastic and rubber)
Fabrication, Sourcing, Production and Colours:
As mentioned in the above research, in the European Union, Sweden ranks first
in consumption of organic food, recycling, and using the highest percentage of
renewable energy. Guided by these statistics it was decided that fabrication of
these products would continue to be produced where lululemon currently
produces garments. Researching lululemon’s fabrication process, souring and
moral and ethical commitments, it was felt that production of this company
meets the expectations of the Swedish population and the garments would have
an added benefit of being ethically sourced produced. Again, as mentioned in
earlier research, the European organic food market is growing by 5-7% annually.
A study by the European Commission found that 40% of Swedes purchase ecolabels. This is higher than the European average. Recycling is very important in
Sweden.
Lululemon currently works with factories in Canada, the United States, Peru,
China, Taiwan, South Korea, Israel, India, Bangladesh, Indonesia, Malaysia,
Cambodia, Sri Lanka, Vietnam and Switzerland. Lululemon takes great care in
selecting factories that share their commitment to quality, ethics and technical
capabilities. Sourcing will take place in Canada and the United States; though
expensive, the quality is evident and the prices will not be much of an issue
46
when entering the market in Sweden as consumers are well aware of the costs
included with ethically-sources materials, natural and recycled materials, and are
accustomed to the price points that accompany such goods.
Production and fabrication will stay in Canada, the United States, Switzerland,
and Sweden as lululemon strictly monitors production of all goods. Keeping
production and fabrication in Canada and the United States will allow for
lululemon to oversee these practices and ensure they are constantly and
consistently in-line with the company’s best practices. Opening a new factory in
Sweden for this new European expansion will reduce the carbon footprint and
eliminate logistical costs associated with transporting final products from North
America. The Swedish facility will be overseen by lululemon and will meet all
environmental, ethical and humane standards set out by both the Swedish
government and lululemon’s guidelines for best practice. In keeping with the
research provided, the Swedish factory will utilize renewable energy sources and
be as eco-friendly as possible. As stated in lululemon’s commitment to quality,
ethical sourcing and manufacturing; the company only works with factories and
vendors who share its values of integrity, social and environmental commitment
and humane ethical standards. Switzerland was chosen as it is in Europe and
can offer quicker lead-times for core products that may need quicker
replenishment, as we anticipate high sell-thru rates for these garments. It is also a
great fabrication location as lululemon often sources and manufactures product
from there.
In terms of material, the original rendering of the trademarked, “Luon” fabric;
86% nylon and 14% Lycra, the composition will be adjusted. The composition of
the new fabric, designed to meet the needs of the Swedish cycling community
will take into account climate, water-repellency, moisture wicking and 4-way
stretch.
The fabric blend components and rationale are as follows:
 82% Nylon woven with 3M water repellency technology
o features 4-way stretch, comfort and versatility, water repellency
 12% Lycra
o Added stretch and comfort, combined with Nylon offers water
wicking ability and breathability
 6% Cotton (ethically grown and environmentally conscious- “CottonInc.”
Logo on garment)
o Provides insulation, comfort and durability
o Ensures opacity when garment is stretched
47



o Avoids transparency when wet
Garment is preshrunk, tested for colour-fastness, and meets all regulations
set out by Lululemon’s testing facilities
Cotton is ethically sourced and workers are paid fair wages for harvesting
Lululemon strives to be as transparent as possible and therefore only
engages with companies, vendors, suppliers and manufacturers that meet
our strict ethical, environment and humane standards
The colour ways will initially only be offered in core colours; black, navy blue
and olive green for both men and women. Colours were decided based on initial
market penetration; not scaring consumers by loud or off-putting colours.
Easing into the market with colours that are bold and strong but also hint at the
company’s natural and ethical practices (earth tone: olive green). Testing market
receptivity, more colours will be offered as expansion allows. However, based
on an analysis of the country’s trends and consumer behavior patterns, it is felt
that these colours will do well.
“'Bring Back The Track Pant.” Lululemon Athletica. Retrieved April 3, 2014 from
http://shop.lululemon.com/products/clothes-accessories/pants-run/BringBack-The-Track-Pant?cc=13274&skuId=3536879&catId=pants-run
“Abc Pant.” Lululemon Athletica. Retrieved April 3, 2014 from
http://shop.lululemon.com/products/clothes-accessories/mens-pants-toand-from/ABC-Pant-Regular?cc=8903&skuId=3533671&catId=mens-pantsto-and-from
“Frequently Asked Questions.” Lululemon Athletica. Retrieved April 3, 2014
from http://www.lululemon.com/faq/?icid=hpheadfaq?mnid=ftr;faqs
"FTC in English." Fair Trade Center. Retrieved April 6, 2014 from
http://www.fairtrade-deutschland.de/bot/fairtrade-in-english/
48
Women’s Redesign
49
Men’s Redesign
50
Appendix
Appendix I
Merchandise imports and exports between "Canada" and "Sweden", by
Harmonized System section, customs basis, January 2013 summary
Sections
Domestic
exports
Re-exports
Imports
CAN$
Total merchandise trade
22,906,680
2,568,784
146,670,637
3,789
6,424
17,553
XI - Textiles and Textile Articles
427,016
37,129
245,631
XII - Footwear, headgear, umbrellas, sun umbrellas, walking-sticks, seatsticks, whips, riding-crops and parts thereof; prepared feathers and
articles made therewith; artificial flowers; articles of human hair.
174,416
8,191
92,597
VIII - Raw hides and skins, leather, furskins and articles thereof;
saddlery and harness; travel goods, handbags and similar containers;
articles of animal gut (other than silk-worm gut).
Merchandise imports and exports between "Canada" and "Sweden", by
Harmonized System section, customs basis, January 2004 summary
Sections
Domestic
exports
Re-exports
Imports
CAN$
Total merchandise trade
14,916,739
1,923,381
152,697,186
13,879
962
354,621
XI - Textiles and Textile Articles
310,151
381
587,338
XII - Footwear, headgear, umbrellas, sun umbrellas, walking-sticks, seatsticks, whips, riding-crops and parts thereof; prepared feathers and
articles made therewith; artificial flowers; articles of human hair.
202,351
68
114,026
VIII - Raw hides and skins, leather, furskins and articles thereof; saddlery
and harness; travel goods, handbags and similar containers; articles of
animal gut (other than silk-worm gut).
“Merchandise imports and exports between ‘Canada’ and ‘Sweden’, by
Harmonized System section, customs basis, January 2013.” Canadian
International Merchandise Trade Database. April 6, 2014. Retrieved April 6,
2014 from
http://www5.statcan.gc.ca/cimt-cicm/sectionsection?lang=eng&dataTransformation=0&refYr=2013&refMonth=1&freq=6&cou
ntryId=185&usaState=0&provId=1&retrieve=Retrieve&save=null&trade=null
51
Appendix II
“Harmonized System Database Online.” World Customs Organization.
Retrieved April 2, 2014 from
http://www.wcoomd.org/en/topics/nomenclature/instrument-and-tools/hsonline.aspx
52
Appendix III
"Corruptions Perceptions Index 2013." Transparency International. Retrieved
April 4, 2014 from http://cpi.transparency.org/cpi2013/results/
53
Appendix IV
“VAT – Basic Rules.” Europa.eu. April 2013. Retrieved March 30, 2014 from
http://europa.eu/youreurope/business/vat-customs/buy-sell/index_en.htm#