The Three Keys to Success at lululemon

lululemon athletica remains on track with its five-year plan of doubling revenue and more than doubling earnings as it continues to execute against long-term growth strategies ranging from product innovation, expanding international footprint, building a $1 billion men’s category, and connecting its global collective to its digital ecosystem.
The ongoing focus on supply chain, upgrading sourcing and logistic structure is driving positive margins. This gross margin expansion is a key element in the earnings recovery that the retailer is enjoying today and expects to continue to enjoy going forward.
Key strategies that will drive the success of the five-year plan, include product innovation, international expansion, building a digital ecosystem, and maximizing the retailer’s North American operation. Below are the highlights of progress on each of these strategies:
Product Innovation: The design vision continues to cut through with the application of more innovation grounded in function. These details are what sets the retailer apart and what guests continue to expect. lululemon introduced new outerwear and textures in its restless series, which is an expansion of the women’s seamless assortments.
“While I cannot completely show the full plan with you, what I can tell is that we will be coming out with fantastic innovation in the bra category in 2017,” said Laurent Potdevin, CEO, lululemon on a recent call with analysts. “Earlier this year, we opened our second lab concept on Bond Street in New York. Bringing our lab innovation to a broader audience for the first time, we launched the splatter reflective run collection both in our lab and online in October.”
Digital Strategy: The focus has been on bringing to life a design vision through a combination of engaging storytelling, personalization and product assortment, while making the commerce experience scalable, easy and frictionless. The retailer continues to leverage its CRM engine to drive digital marketing campaigns, local store activities and events with deeper segmentation and knowledge of guests, further enhancing guest loyalty and experience.
“By using a channel agnostic model, digital continues to boost the success of all of our channels,” Potdevin said. “In Q3, we launched store inventory look-up on our mobile app and websites, allowing our guest to see what inventory is in our stores, as well as the ability to ship from stores. We have also extended our platform globally having completed our website redesign with the launch in EMEA and Asia Pacific giving our guests a seamless experience.”
North American Business: The retailer continues to optimize and grow its store portfolio through a combination of standard store, expanded co-located stores and locals that are uniquely tailored to their market and community. The first three locals have been opened, which are locations under 2,000 square feet that allow the retailer to enter intimate communities, create unique and curated experiences, and build the brand. Thus far, there has been tremendous success on the local concept and the retailer plans for additional locals next year.
“We believe that this is a strategy that can apply anywhere in the world and is an exciting evolution of our showroom model,” Potdevin said. “As is evident with our locals, engaging with our community and our guests in a unique and relevant way, remains a powerful tool and differentiator for us in the marketplace. We are staying connected with our guests in unique ways. Our SWEATBOX in New York City, which is a mobile pop-up complete with a treadmill, provided new guests with an opportunity to test our new run specific technical gear.”
During the third quarter, lululemon maintained a measured level of clearance activity across its channels to ensure a healthy inventory position entering Q4. There was also great success in the expansion of the ship-from-store program that reflects the evolution of the omnichannel model.
To learn more about lululemon’s initiatives, join EVP of digital Miguel Almeida at NRF 2017 on Tuesday, January 17 to understand how data intelligence makes it all possible in his “Moving From Transactions to Relationships: Omni-Channel Data Holds the Key” presentation. Or later in the afternoon hear from director of IT, store tech ops and RFID program director Jonathan Aitken to learn how an omnichannel strategy drives a seamless customer experience in “RFID as a Key Enabler of Omni-Channel Success.”
For more on NRF 2017 be sure to check out RIS’ preview guide here