Talk to any lululemon customer and he or she will be the first to tell you that lululemon is a community, a club, an affinity group – anything other than a retailer. Calvin McDonald’s ability to not just sustain but to grow its already high level of customer engagement, revenues,and profits is a testament to understanding what customers want and need … and delivering on that consistently. whether it’s outfitting customers to work from home, run errands in town, attend in-store yoga classes or stream fitness workouts from its Studio partners, customers can look good while staying in shape… It fits the performance and street-style needs of its loyal customer base.
A Club, an Addiction
Lulu was a pioneer in creating an experiential environment that made customers feel they mattered. Lulu’s customers give back in kind what they get from the brand, and that’s what makes lulu truly radical.
McDonald and his team are always pushing for higher performance. Product innovation is driven by proprietary research and a scientific approach to developing apparel that meets the needs of customers’ active lifestyles.
Other brands strive for brand loyalty,and all too rarely achieve it. But lulu has taken loyalty to the next level – lululemon is virtually addictive through the very real dopamine release customers get when they engage in the lululemon experience.
Dopamine is a feel-good brand chemical that is released every time we have a fun, engaging, joyful experience. Dopamine provides feelings of euphoria, self-satisfaction, wellbeing, and can lead to addiction because people crave to get those feelings again. Exercise is a surefire way to get a dopamine rush, as is finding a great outfit to wear while doing so.
Lululemon excels through a three-pronged strategy of product innovation, omni guest experience, and international growth. “We believe lululemon has a unique opportunity to push beyond traditional expectations to develop innovative products and become a fully experiential brand that creates compelling experiences for guests,” McDonald said in explaining his vision of the brand as an interconnected ecosystem with customers at its core.
Pushing beyond traditional expectations for an athleisurewear clothing brand is what McDonald did in 2020 when lulu acquired the high-tech, in-home exercise company Mirror with its interactive workout platform. Today it sells the Mirror hardware along with a membership program, called lululemon Studio Mirror. The platform enables customers to choose from over 1,000 workouts to stream, see their reflection alongside their trainer on a full HD display, access the Community Camera for live feedback and real-time heart-rate data via Bluetooth. Stores transform themselves into yoga studios, reinforcing the lulu community spirit.
True to his word, McDonald said, “Our strengths continue to be broad and balanced across channels, categories, activities, genders, and geographies.”
As for all great retailers, lulu’s workforce community is as important as its customers. Multiyear commitments across many social areas continue to drive positive change. The company expanded its employee benefits, including raising the minimum base pay in North America and introducing more mental health, mentorship, and leadership programs for personal and career development. The company is committed to IDEA—Inclusion, Diversity, Equity, and Action. The lululemon Centre for Social Impact invested $5 million to further advance equity and wellbeing in their communities. As I said, the brand is not a traditional retailer, it is an omni-experience for a customer who is insanely loyal.
And lulu’s community is broad-based. Sustainability initiatives include participation in the MyloTM Consortium and strategic multiyear partnerships with industry leaders such as LanzaTech and Genomatica to create and use lower-impact fabrics and materials. The company launched its first re-commerce program lululemon Like New and plans to expand this throughout the U.S. market. Lululemon also has an ongoing partnership with the Canadian Olympic and Paralympic Committees. McDonald and his team are always pushing for higher performance. Product innovation is driven by proprietary research and a scientific approach to developing apparel that meets the needs of customers’ active lifestyles.
McDonald has been on a path of growth since the pandemic and Lulu was one of the nonessential companies that quickly adapted to an aggressive hybrid model when most stores were closed. In 2021, the company surpassed $6 billion in revenue achieving nearly 60 percent more sales than in 2019. Lululemon opened 53 net-new stores in 2021 and introduced Studio Mirror shop-in-shops in about 200 lululemon stores in North America. While international only represents 15 percent of the total business, the company sales growth in 2021 was over 50 percent.
Lululemon rode the pandemic-closure wave when demand for easy-wearing comfort went through the roof. Lulu filled the bill with the added benefit of style. That brought new customers into the fold especially as health and wellbeing become a priority, plus they had a little more money to splurge on lululemon since they weren’t going out. Now that new contingent of customers is adding to its mix and will continue to power the company forward as many other retailers that enjoyed a brief Covid-burst have fallen by the wayside.
Lululemon has experienced substantial growth since the pandemic with sales up 57 percent compared to 2019. The company has done an excellent job using the assets of the business to drive profits which were 15.6 percent higher than last year. The return on assets was an astounding 21.4 percent.
The company has an aggressive growth plan over the next five years including doubling both its men’s and digital business. Women’s category and physical store business will show double-digit growth. International is projected to quadruple by 2026. Total revenue is projected to grow from $6.3 billion to $12.5 billion by 2026. McDonald stated that the company’s focus is on its long-term advantages of employee culture, guest experience, and innovative product creation. And for these reasons, lululemon has been named a 2022 Robin Report Radical.