lululemon athletica (NASDAQ:LULU), Coach (NYSE:TPR), and Best Buy (NYSE:BBY) are vastly different retail companies. However, all three of these brands are desperately in need of a makeover today in the eyes of the consumer. That's why lulu, Coach, and Best Buy can't afford to miss out on the next big trend, and that means hopping aboard the wearable technology train before it leaves the station.
Best Buy stocks up on wearables
The market for wearable technology is on track to hit $10 billion over the next two years, according to research from Gartner. This creates a "can't miss" opportunity for struggling retailers such as lululemon, Coach, and Best Buy. As it stands, the big box retail chain is best positioned to capitalize on this trend. That's because Best Buy already sells a wide variety of wearable devices online including smart watches, fitness trackers, and wearable cameras.
In fact, Best Buy's online store now features 18 separate wearable tech brands, which is significantly more than its closest rivals. For comparison, Target currently sells wearable devices from just four brands including Fitbit, Garmin, Samsung, and Pebble. Meanwhile, Wal-Mart features only two wearable tech brands: Fitbit and Samsung.
Best Buy's decision to stock up on wearables is a smart plan, because it could fuel sales during the upcoming holiday shopping period. The consumer electronics chain has experienced weak traffic both online and in its stores, as well as declining same-store sales recently. However, new product releases and the rise of wearable tech could help put Best Buy back on track.
A fashion forward approach to boosting sales
Unlike Best Buy, lululemon, and Coach are fashion retailers. This means they won't benefit from the wearables market by simply selling another brand's products. Instead, they need to team up with a company such as Fitbit or Intel to create lululemon and Coach branded "smart fashion." This isn't a new approach. High-end retailers including Ralph Lauren and Tory Burch have already launched smart fashion pieces as part of their upcoming Fall collections.
Tory Burch, for example, teamed up with Fitbit to create a metal-hinged bracelet and other jewelry accessories that house Fitbit's flex fitness tracker. Coach could benefit from a similar partnership. The handbag and accessories retailer has suffered lately because of increased competition from Michael Kors. However, if Coach were to introduce smart accessories like the Tory Burch Fitbit fret necklace, the new product mix could help reverse the company's profit declines and boost same-store sales. Not to mention, Kors hasn't yet announced any wearable tech gear, which creates an opportunity for Coach to get ahead of the curve.
Moving into smart fashion and wearables is also a natural fit for lululemon. After all, the yoga-inspired apparel maker is known for its technical fabrics and sweat-wicking apparel. Moreover, the technology is already here. "Advances in nanotechnology, which allow manufacturers to control materials on a molecular scale, have enabled researchers to develop smart textiles," writes the Business of Fashion magazine.
Today, the technology to create jackets with tiny built-in sensors that could heat or cool the material based on current weather conditions exists. Now it's up to forward-thinking fashion brands such as lululemon and Coach to take advantage of this tech. Retailers from Coach and lululemon to Best Buy now have an opportunity to boost sales by refreshing their product mix to include wearable tech. This is the future, and if these companies want to prove they are still relevant, they need to get onboard.
Tamara Rutter owns shares of Lululemon Athletica. The Motley Fool recommends Coach and Lululemon Athletica. The Motley Fool owns shares of Coach. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.