TORONTO – Canadian retailer Lululemon Athletica Inc. reported a $57.3 million profit in its latest quarter, having grown revenue by 37 per cent.
Despite issuing a warning that it expects slower sales growth for the rest of 2012, the yoga-inspired company seems destined for success with share prices consistently increasing-but why?
Two Canadian marketing experts agree that one of the most important things Lululemon offers is a simple one: a high quality product.
Good product
“Lots of people can make good product, but this is product really specially designed for stretch, fabric, and the age of people who do yoga,” said York University’s Schulich School of Business assistant marketing professor Alan Middleton.
University of Ottawa marketing professor Michael Mulvey says part of this is owed to the company’s attention to detail.
“Their product is known for being high quality, being well-designed, and meticulously engineered,” said Mulvey.
Mulvey champions their retail strategy, including sales teams made up of “savvy enthusiasts” who they refer to as “educators.”
“You get very high customer service, typically, and the target market really responds well to that,” he said. “And they continue the grassroots efforts; they’re not a traditional mass market organization.”
Success in social media
Beyond the high quality, Middleton says Lululemon is a great example of social media working by tapping into the well-connected yoga community.
“In where they their put stores, in how they linked into local yoga clubs where their stores were…and them being engaged in the whole promotion of yoga,” he said. “They’ve got a very nice niche.”
This demographic appeal along with the high quality, fashionable reputation, has allowed the company to expand beyond the yoga community as well.
Avoiding the ‘Starbucks trap’
When it comes to expansion, Middleton says the company has managed to avoid what he refers to as the “Starbucks trap.” This describes when the coffee chain expanded too quickly and aggressively into areas that lacked local demand, ultimately resulting in them pulling back on store openings.
“Lululemon has been a lot more careful….they are going into areas where there is that relationship with yoga and with the community,” he said. “And it’s very appealing.”
Mulvey agrees the retailer has been very careful in terms of expansion, and that it’s especially important for a “luxury brand” to be selective.
He says he wouldn’t be surprised if Lululemon’s next quarter results turn out better than expectations announced Thursday, adding the company has a tendency to “under-promise and over-deliver.”
“But I look at that as sort of a trait of the company-they’re not big braggarts, they like to just get it done…and go about doing their business.”
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