retail

Lululemon Downplaying the Lulu to Keep From Turning Into a Lemon

Posted by Sheila Shayon on April 27, 2012 01:01 PM

Lululemon, the billion-dollar Canadian yoga-inspired athletic apparel brand founded by former surfer Dennis "Chip" Wilson in 1998, continues to cause a stir in retail, lifestyles and its focus on a tight community with bizarre principles. 

In its earnings report last month covering its fiscal year that ended on January 29th, the company's CEO, Christine Day, announced:

"Reaching a billion dollars in revenue is clearly an important milestone that as a company we can all be very proud of. But far more important than the number itself are the beliefs, values, culture and people that achieved it. We really are so much more than our numbers; it is the everyday actions of our dedicated team that translates into an unparalleled guest experience and allows us to achieve our ultimate goal of elevating the world."

The original mission that Wilson set out for the brand, to "elevate the world from mediocrity to greatness," has morphed into "create components for people to live long, healthy, and fun lives."

Wilson says he didn't start Lululemon in Vancouver's hippie-ish Kitsilano Beach area just to sell yoga pants but to inspire his customers, (mostly female) on a journey of self-esteem and empowerment. Indeed, the brand's so-called manifesto, a series of pithy self-empowerment sayings, is visible in signage sprinkled throughout the stores, on its windows and on its website.

“Our primary target customer is a sophisticated and educated woman who understands the importance of an active, healthy lifestyle. She is increasingly tasked with the dual responsibilities of career and family and is constantly challenged to balance her work, life and health. We believe she pursues exercise to achieve physical fitness and inner peace,” states the brand's annual report.

“We coach our store sales associates, whom we refer to as 'educators,' to develop a personal connection with each guest.” That "connection" has been accused of being a tad stalkerish, to the point of eavesdropping on customers. But that's not the only practice that has alarmed observers.

In a "Chip's Musings" post on the company blog in 2009, Wilson cited best-selling self-help tome The Secret: "The law of attraction is the fundamental law that Lululemon was built on from its 1998 inception," he wrote. "It's the first time I've heard of anyone almost directly using the techniques of cults and applying them to their business," commented Douglas Atkin, author of The Culting of Brands.

Every studio/store offers free yoga classes and the company pays for employees and select loyal brand "ambassadors" to attend the controversial Landmark Forum personal development course, the EST descendant that has been accused of being a cult. Wilson has scoffed at cult claims while defending his corporate commitment to Landmark (and also taking a swipe at his fellow Canadians as a "wall of mediocrity.")

For Wall Street, following the company's rise under the LULU stock ticker, it's hard to argue with success. Revenue in 2011 revenues were $1 billion, up from $712 million in 2010, boosted by yoga pants priced at $98 and a new category of casual wear described as "everyday technical apparel" or "technical street." 

Lululemon plans to open up to 30 new stores in the United States in 2012, taking the total close to 200, as well as further international expansion in Australia, New Zealand Asia and Europe, and just recently, quietly, under the radar, moved beyond its North American footprint to London — just in time for the 2012 Summer Olympics. It's been shoring up its board to help that global expansion.

CNBC commented, “How is it possible that a retailer with the fourth-highest sales per square foot in retail (at $2004 per square foot, it ranks only behind Apple, Tiffany and Coach, not to mention same-stores sales growth of 20 percent last year, does not precede an international launch with a splashy marketing campaign? The answer is because they don’t have to.”

Lululemon builds its brand build through grassroots efforts, wooing local brand ambassadors to teach free classes, promote the brand/lifestyle, receiving in return a free kit and the chance to piggyback their own business with the Lululemon local team.

A slideshow by Business Insider this week, titled “12 Utterly Bizarre Facts About The Rise Of Lululemon, The Cult-Like Yoga Brand,” identifies how core beliefs of Wilson, who refers to himself in the third person, have infused the brand:

• Wilson is an Ayn Rand fan and Lululemon takes its values from Atlas Shrugged and last year began printing "Who is John Galt?" on its shopping bags, referencing the central character in the novel that espouses pursuit of self-interest as society's highest ambition.

• Wilson created the name 'Lululemon' because he thinks Japanese people can't pronounce the letter 'L' and he told Canada's National Post, "It's funny to watch them try and say it." (The brand's website states: "The lululemon name was chosen in a survey of 100 people from a list of 20 brand names and 20 logos. The logo is actually a stylized "A" that was made for the first letter in the name "athletically hip", a name which failed to make the grade.")

• Wilson is in favor of child labor in Third World countries and even in Canada, as 12- and 13-year-old street youths should be able to work in local factories rather than panhandle, he argues.

• The birth control pill and smoking are key factors in escalating divorce rates. "Women’s lives changed immediately [after the pill]. ... Men did not know how to relate to the new female. Thus came the era of divorces. With divorce and publicity around equality, women in the 1970′s/80′s found themselves operating as ‘Power Women.’ Ultimately, Lululemon was formed because female education levels, breast cancer, yoga/athletics and the desire to dress feminine came together all at one time."

• In 2007, in its zeal to be perceived as environmentally progressive, falsely claimed its clothes were made with seaweed and was forced to retract the claim.

No surprise that in January Wilson resigned as chief innovation and branding officer of the high-end yoga brand he founded, ceding day-to-day control to CEO Christine Day, in part, due to unfortunate headlines that began interfering with business. He's still chairman of Lululemon (he's described as "founder, chief product designer and chairman of the board"), while expanding his business interests by investing $14 million to bring Canadian startup DAVIDsTEA to the U.S.

Lululemon's executive change and distancing from the "lulu" aspects of Wilson's philosophy comes as competition is ramping up in the active lifestyle category, from Gap’s Athleta brand to VF Corp’s Lucy Activewear business.

Banks like UBS see Lululemon maintaining its edge, commenting: "We believe Lulu's entrenched competitive advantages (product, grass-roots marketing, customer service and store experience, and management) support the on-going strength of the brand and business model, keeping Lulu insulated from increasing competition."

Insulated perhaps, but not isolated from increasing scrutiny of a brand that still sports shopping bags saying: “Our bags are visual reminders for ourselves to live a life we love and conquer the epidemic of mediocrity. We all have a John Galt inside of us, cheering us on. How are we going to live lives we love?”

Comments

Dan Gee United States says:

LULU was smart to distance itself from Wilson and his beliefs. Christine Day has a good head on her shoulders and proved herself with Starbucks in Asia.

April 28, 2012 10:11 PM #

Ashley United States says:

I hope that Day makes lulu a more friendly brand to real women and bodies. If you have any curves at all you have to go up 2-3 sizes. The company claims they don't buy custom blanks for their sizing, but seriously, my skinny husband wears a size large in their sizing? Everywhere else he's at the most a medium. And even as a size 8 I couldn't wear their jackets without having to pull them back down to my waist every 5 minutes. If they're going to succeed in the long run they need to rethink their sizing/fit.

April 29, 2012 02:21 PM #

Comments are closed

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