Lululemon: Building an omnichannel empire from scratch

Lululemon: the company behind the athleisure trend sweeping over the world

My experience in a Lululemon store one early spring day inspired a lengthy story about this unique company and it’s grassroots starts. It was more out of function than fashion that I decided to stop in the Lululemon store again on Newbury street in Boston. I realized this might be a great gift for an upcoming family members birthday, and thought this could be just the place. It was only after I stepped inside and started to familiarize myself with what they had done that I became a bit more obsessed with how this company came to be. My shopping experience was, like I mentioned, more because of function (getting a present) than fashion (shopping for me), but this did not deter me from diving deeper. From the moment you step into one of their stores, you feel a part of something bigger. This was the experience I felt and it captivated me right off, as I can only imagine happens to millions of other shoppers all around the world. In this story, I’d like to share the experience I had and how this one of a kind brand has created a cult-like following with the right clothing technology, the right omnichannel capacity, and a super effective grassroots campaign to get the most loyal of audiences.

As mostly an outsider to the Lululemon fad, my experience left me wondering what was behind the scenes here? Not only did Lululemon build a great product, but they created a whole shopping experience and culture revolving around the community. Looking back on this it’s easy to see how the (mostly) women shoppers could be good friends with other Lululemon team members. It was clear to me they really thrived on combining the right product, centered around yoga, and the right market of an already active fitness related audience. If you’ve ever been to a Lululemon store, you probably got the feeling of high energy, fun and inviting community. This is mainly because their managers are likely active yoga students or teachers, and are regularly purchasing Lululemon clothing simply for themselves. For me one of the ladies helped to get something I knew she would want. I was confident she knew what would suit my needs. As we conversed about a few options, she helped me understand there was free Yoga daily in the Lululemon stores. In addition, she informed me of a couple clubs and active yoga communities nearby. I found this all very helpful, even if I had already known about the places, at least she helped me feel like there was a vibrant community around. As for her salesmanship, it was a subtle nudge in our conversation to some of the items she likes the best. I’m quite attentive when shopping so I don’t find myself falling trap to the upsell, and this was as smooth an upsell attempt I had seen. At this point, I gathered the Lululemon shirt, headed to the register and checked out. It was all very slick.

The Early Days and Chip Wilson

To understand Lululemon takes an understanding of Chip Wilson, the ambitious lifelong entrepreneur, and outdoorsman from Vancouver, British Columbia. Chip grew up with a mother who was a sewing machine operator, and his grandmother, a business women and early influence on Chip and his will to succeed. Given the opportunity to learn how to sew, Chip started building his own clothes. Before long Chip was selling pairs of his self-described “longer board shorts” to friends and others around the skate park. His early success building clothes and selling them out of his trunk eventually led to the creation of Westbeach Snowboard Company selling surf, skate, and snowboard apparel. Through the rise, stumble and eventual sale of Westbeach for $15 million, Mr. Wilson was able to accumulate $1 million in startup funding and most importantly 18 years of knowing what he didn’t want to do. What Chip realized in starting Lululemon was this widening gap in the market for a product specifically designed to be technical, while capturing the active wear capability, hence the category of athleisure. As Chip stated in a recent TedxVancouver talk “I knew in my mind there going to be a market segment of customer who had ever existed before, and I call that I’m going to get very specific like a 32-year-old athletically fit, well travelled, her own condo, and just about to get married.” As you can imagine, this market segment, developed through this exact profile, began to catch, primarily through word of mouth yoga moms, and younger athletically fit millennials who bought the brand because of the endorsements, functionality, and community behind the company. Not only did Chip build Lululemon to be one of the top employers of female executives, but throughout the whole entire company women are helping design and grow the business through a still very strong grassroots campaign in the community.

Lululemon Culture

Throughout building Lululemon, Chip was instrumental in making the culture of Lululemon unlike anything which has been done before. This was enhanced by the business model Lululemon incorporated, which kept their supply chain tight, cutting out middlemen and creating a vertically integrated clothing retailer. Not only this, but the management and control of each store is far more decentralized. By this I mean each store manager has the control needed to operate, market and advertise and they see fit. While this does fall under some guidelines, these are put in place at a high level to keep everyone moving in one direction, while attracting and acting as needed to succeed. By design it seems, the business itself has attracted the very people who buy their products, to come in a run key spots within the company. Chip Wilson did a great job building the very tools into the company that simultaneously sold the product and ensured he had the right people working. In the early days, and even still today Lululemon spread products by building a network of ambassadors, all who either worked in or were around the Yoga, Pilates, or Zoomba industry. This served as a near-perfect test for the market. Because of the incredible network of ambassadors, and I’m sure some crafty dealmaking with the instructors, Lululemon built up a community and reputation as the world’s premier athleisure brand. With this exposure and culture of a community, is there something to be said for community and culture as an omnichannel offering?

Grassroots as Omnichannel

Most won’t argue that operating as an omnichannel retailer means reaching your customers where and when they want to shop from you. Most of the times we are talking about the technology as a means of achieving omnichannel success, however, what if this means using the local networks of people as one of the channels? Mostly known as word of mouth marketing, Lululemon put an interesting spin on it, as the people using the product were actually the ones who were involved in selling the product. Ingeniously set up by Lululemon was a way of translating the people on who could spread the trend with the people who were willing to stock and organize the products in their own shops. Lululemon fashioned the first example of what became known as an “in-house” supply chain because their product passes through no distributors or wholesalers. Instead, Lululemon developed a partnership with Mas Active a premium supplier of design to delivery activewear, based out of Sri Lanka. Through this partnership, Lululemon takes delivery of it’s product directly to stores rather than having it distributed. This provides an interesting challenge from a technology perspective, as it must cope with the missing elements of the supply chain. A lot of what Lululemon achieved was from a technical perspective to have clear, real-time figures on the inventory directly from the manufacturer to stores. This involved true omnichannel sophistication with a network of independently operated clothing stores. In similar fashion to how Lululemon was built the first place their grassroots approach to marketing also worked in recruitment, and thus began an ownership responsibility in updating/ordering the inventory required to run the store. Through this flexibility, they achieved a truly efficient and cost-saving approach to managing the supply chain. This scalable platform has enabled a future which is bright with international expansion, extended product line, and new innovation.

Growth

In light of their success, the growth plans for Lululemon are nothing short of ambitious. On the short term horizon is their plans for colonizing the Lululemon story within countries such as China, Singapore, UK, and South Korea. The markets here are rapidly expanding and ever increasingly following the United States model of becoming healthier and more fit nations. Their product, which started with a functional aspect and grew the design after, will become a staple in other countries where they can sustainably build out their model of retail. Places where yoga is still an avid practice, and one in which women are more willing to pay more for a higher priced product if it means the brand behind it is really something that makes it stand out. In addition, you can see their international expansion becoming a bigger push within the company, coming straight from the current CEO Laurent Potdevin, who says “I do believe that to build a great culture, it’s not about Vancouver (where the company was founded). It’s about having the right people who are incredibly knowledgeable of the market and who are aligned with the culture, that’s when we succeed.” With the foundation laid in the women’s line, Lululemon will also begin to focus on another line which is their men’s line. As more and more men embrace the cultural and fitness aspect of what Lululemon represents, it has potential to become a $1 billion business as Laurent has mentioned in the past. They will use relatively the same system in place to push the men’s product, though keeping it geared more toward the active man rather than the active yoga man. This new line will represent and interesting challenge to a company who has almost always had a sole focus on women (which was clear to me as I shopped the store). Part of their men’s initiative comes from the company’s design and innovation labs, currently in Vancouver and NYC. These labs are responsible for the new product development and testing. Each lab includes 3 designers, 9 sample makers, and 5 sales people. Through this, the company is able to churn out unique product all led by their commitment to function first, design second, though this is a misnomer because both are of equal importance they simply integrate them so smooth you cannot tell where one leaves off and one begins. The Lululemon we have come to love is evolving, they have been through some rough patches but generally have remained the same company all the way through.

What the future holds for Lululemon will be an interesting one to watch as more brands enter the market and more trends come and go. They have worked hard and made an impression on this guy. From a retail technologist point of view, I have to admit it opened my eyes up to the possibilities of building the differentiating factor into the brand through the experience and culture. Lululemon has established a whole new category for itself, on the back of a pure grassroots campaign to drive a following for the brand. The takeaways for any brand should be to establish the base, as in your people selling your product. If you can create an efficient distribution, cutting out the middle man while still maintaining the core strength of your people in the process, you have a winning strategy. The culture of Lululemon is so strong that nearly anyone walking in off the street will be able to recognize it right away. I hope you will be able to grab some take aways from this article, and perhaps even reading between the lines you will be able to establish your own uniqueness as Lululemon has within their brand.