{"id":13884,"date":"2021-02-10T14:16:59","date_gmt":"2021-02-10T19:16:59","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-digit\/submission\/lululemon-how-2020-legitimized-leggings-as-the-new-business-casual\/"},"modified":"2021-02-10T15:53:09","modified_gmt":"2021-02-10T20:53:09","slug":"how-lululemon-legitimized-leggings-as-the-new-business-casual","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/how-lululemon-legitimized-leggings-as-the-new-business-casual\/","title":{"rendered":"How Lululemon legitimized leggings as the new business casual"},"content":{"rendered":"

When asked \u201cWhat clothes have you been buying during the pandemic?\u201d how many of you would respond \u201cYoga pants and hoodies\u201d? Most likely, many of you! With people working (and working out!) from home, leggings became the new business casual. Activewear was one of the winning industries of 2020, accounting for 40% of all online sales [1]<\/a>.<\/p>\n

Canadian athleisure brand Lululemon Athletica increased its value by 40% in 2020 [2]<\/a>, despite prolonged shop closures and quarantine restrictions. Lululemon reported revenues of $1.12 billion, up 22% from 2019, with online sales accounting for 45% of total revenues, and an e-commerce business growth of 93% [3]<\/a>.<\/p>\n

 <\/p>\n

\"\"<\/a>
Figure 1 – Lululemon store in Newbury Street, Boston (source: Lululemon website https:\/\/shop.lululemon.com\/stores\/us\/boston\/newbury)<\/figcaption><\/figure>\n

Key to Lululemon\u2019s success during the COVID-19 outbreak are a number of interlinked factors.<\/p>\n

Strong financial position.\u00a0<\/em><\/strong>Lululemon strongly benefitted from its strong balance sheet and liquidity. At the beginning of 2020, the company had no long-term debt, $1.1 billion in cash and a $400 million revolving credit facility [4]<\/a>. Therefore, the company was able to invest in innovative technologies and forge new partnerships.<\/p>\n

Leveraging online channels to create an engagement platform.\u00a0<\/em><\/strong>Lululemon has a strong online presence: its customers can shop both on its website and mobile app. The online channels were not only used for sales, but also became an engagement platform. The company recognized the importance of adapting to the new ecosystem, offering lockdown routines to its customers, who could access a range of free home-workouts, such as yoga session, high intensity interval training, pilates and meditation. Lululemon also introduced free sport challenges in partnership with the app Strava, such as the Move and Stay Connected challenge, <\/em>to create a worldwide community.<\/p>\n

Partnerships with ambassadors to engage users and support local businesses.\u00a0<\/em><\/strong>Lululemon relied on its brand ambassador to interact with worldwide users and local community on social media, by organizing wellness classes and workouts on Instagram. By doing so, the company has not only supported its clients, but also provided an economic relief to its ambassadors, who are small business owners forced to close their studios due to the pandemic. Lululemon created a $2 million Ambassador Relief Fund to assist ambassador studio owners in sustaining their businesses worldwide [5]<\/a>.<\/p>\n

 <\/p>\n

\"\"<\/a>
Figure 2 – \u201cWe’ve created #thesweatlife online, a hub where you’ll find workouts and practices for getting grounded and unleashing natural highs\u2014wherever you are\u201d (Source: Lululemon website https:\/\/shop.lululemon.com\/story\/at-home-workouts)<\/figcaption><\/figure>\n

Investments in RFID technologies.\u00a0<\/em><\/strong>Thanks to investments in technology, Lululemon was also able to maximize its inventory, and use its closed stores as ship-from-store locations to meet e-commerce orders. As noted by CFO Frank the investments \u201chave demonstrated the ability to more than handle the anticipated spike in volume\u201d [6]<\/a>. CEO McDonald acknowledged that investments in RFID inventory-tracking technology reduced the need of flushing out inventory [7]<\/a>\u201d.<\/p>\n

Changes in the pricing strategy of best-selling items.\u00a0<\/em><\/strong>Another strategy executed after May 2020 has been to increase prices of top-performing items. For example, leggings\u2019 price increased by 5% and sport bras\u2019 by 12% [8]<\/a>. Notwithstanding the price growth, sales of these items between May and August 2020 were 152% higher than sales between January to April [9]<\/a>. At the same time, Lululemon introduced flexible payment plans, allowing customers to pay for purchased items in four installments [10]<\/a>.<\/p>\n

Acquisition of Mirror to boost omnichannel retailing.\u00a0<\/em><\/strong>In June 2020 Lululemon acquired Mirror, a home-fitness tech startup, which produces an interactive workout machine to stream live and on-demand classes. McDonald commented that the acquisition allows Lululemon to bolster its vision of being \u201cthe experiential brand that ignites a community of people living the sweatlife through sweat, grow and connect\u201d [11]<\/a> while enhancing its Power of Three plan [12]<\/a> and boosting digital and interactive capabilities.<\/p>\n

\"\"<\/a>
Figure 3 – “The nearly invisible home gym that transforms less than two feet of wall space into a cardio class, a yoga studio, a boxing ring, and so much more” Source: Lululemon website https:\/\/shop.lululemon.com\/story\/mirror-home-gym<\/figcaption><\/figure>\n

Reacting fast to the present crisis while \u201cbuilding for the future\u201d.\u00a0<\/strong>Last, but not least, Lululemon developed a two-phase (support and recovery) response plan. The current support phase involves continuing operations, amplifying customers engagement, providing support to ambassadors and compensating employees. Meanwhile, Lululemon, has not \u201cstop building for the future\u201d [13]<\/a>, remains focused on being ready to serve its customers and support its communities [14]<\/a> and will use its balance sheet to \u201clook ahead and continue to plan for growth while managing the business for day-to-day\u201d [15]<\/a>. According to Barclays analysts [16]<\/a>, as there will be an increase of people working from home after the end of the pandemic, Lululemon is well positioned to continue growing.<\/p>\n

In summary, Lululemon took advantage of the crisis to boost digital technologies, strengthen partnerships, acquire a start-up and engage more customers. Its innovation, omni-guest experiences and market expansion made Lululemon a winner during the pandemic.<\/p>\n

 <\/p>\n

 <\/p>\n

Sources<\/strong><\/em>:<\/p>\n

[1]<\/a> Marci, Kayla. 2021. \u201cActivewear market analysis\u201d in Edited.com<\/em>, Jan 12, 2021. https:\/\/edited.com\/resources\/activewear-market-analysis\/<\/a><\/p>\n

[2]<\/a> Kurichenko, Victoria. 2020. \u201cHow Lululemon Increased Their Brand Value by 40% in 2020\u201d in Medium.com<\/em>, Jun 17, 2020. https:\/\/medium.com\/better-marketing\/how-lululemon-increased-their-brand-value-by-40-in-2020-d767b36e4edb<\/a><\/p>\n

[3]<\/a> Crets, Stephanie. 2020. \u201cLululemon\u2019s online sales offset declines in store traffic\u201d in Digital Commerce 360<\/em>, Dec 15, 2020.\u00a0 https:\/\/www.digitalcommerce360.com\/2020\/12\/15\/lululemons-online-sales-offset-declines-in-store-traffic\/<\/a><\/p>\n

[4]<\/a>\u00a0 Market Watch https:\/\/www.marketwatch.com\/story\/lululemon-will-be-in-a-better-position-post-coronavirus-thanks-to-its-strong-balance-sheet-and-online-strategy-analysts-say-2020-03-27<\/a><\/p>\n

[5]<\/a> \u201cSupporting our ambassadors in unprecedented times\u201d in Lululemon website. https:\/\/shop.lululemon.com\/story\/ambassador-relief-fund<\/a><\/p>\n

[6]<\/a> Crets, 2020, cit<\/em>.<\/p>\n

[7]<\/a> Dignan, Larry. 2021. \u201cLululemon steps up digital efforts, e-commerce as physical stores closed due to COVID-19\u201d in ZDNe<\/em>t, March 30, 2020. https:\/\/www.zdnet.com\/article\/lululemon-steps-up-digital-efforts-e-commerce-as-physical-stores-closed-due-to-covid-19\/<\/a><\/p>\n

[8]<\/a> Marci, Kayla, 2020, \u201cSpotlight on Lululemon\u2019s pandemic-proof strategy\u201d in Edited<\/em>, Sep 16, 2020. https:\/\/edited.com\/resources\/lululemons-pricing-strategy\/<\/a><\/p>\n

[9]<\/a> Ibidem<\/em><\/p>\n

[10]<\/a> \u201cPace your payments\u201d in Lululemon website https:\/\/shop.lululemon.com\/story\/installment-payments-buy-now-pay-later?icid=cdp-cdp:mens-clothes;15;promotile;story:afterpay-buy-now-pay-later;campaigns<\/a><\/p>\n

[11]<\/a> \u201cLululemon Athletica inc. to acquire home fitness innovator Mirror\u201d in Businesswire.com<\/em>, June 29, 2020. https:\/\/www.businesswire.com\/news\/home\/20200629005789\/en\/lululemon-athletica-inc.-to-Acquire-Home-Fitness-Innovator-MIRROR<\/a><\/p>\n

[12]<\/a> The Power of Three strategic plan set in 2019 aim at accelerating growth focusing on the company\u2019s three priorities (1) Product Innovation \u2013 to double its men\u2019s revenues by 2023; (2) Omni guest experiences \u2013 to double its digital revenues by 2023; (3) Market expansion \u2013 to quadruple its international revenues by 2023.<\/p>\n

[13]<\/a> Dignan, 2021, cit<\/em>.<\/p>\n

[14]<\/a> Smith, Chloe. 2020. \u201cLululemon takes on COVID-19\u201d in SM Look<\/em>, May 8, 2020. https:\/\/smulook.com\/2020\/05\/08\/lululemon-takes-on-covid-19\/<\/a><\/p>\n

[15]<\/a> Dignan, 2021, cit<\/em>.<\/p>\n

[16]<\/a> Bloomberg and Freund, Janet. 2020. \u201cLululemon shares hit an all-time high on strength of work at home wear\u201d in Fortune<\/em>, May 21, 2020. https:\/\/fortune.com\/2020\/05\/21\/lululemon-stock-lulu-shares-all-time-high-coronavirus-work-at-home-clothing-athleisure-2020-covid-19\/<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

How innovation, omni-guest experiences and market expansion made Lululemon a winner during the pandemic.<\/p>\n","protected":false},"author":18531,"featured_media":13885,"comment_status":"open","ping_status":"closed","template":"","categories":[],"class_list":["post-13884","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","hck-taxonomy-organization-lululemon","hck-taxonomy-industry-fashion","hck-taxonomy-country-canada"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-digit\/assignment\/digital-winners-during-the-pandemic\/","yoast_head":"\nHow Lululemon legitimized leggings as the new business casual - Digital Innovation and Transformation<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-digit\/submission\/how-lululemon-legitimized-leggings-as-the-new-business-casual\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How Lululemon legitimized leggings as the new business casual - 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