Channel Strategy – Lululemon

This project was a semester long project to find a companies currant channel strategy and marketing channel strategy and attempt to remake it. I chose Lululemon, because they are a company that I have always enjoyed researching and trying to make them more efficient. The second reason, I chose Lululemon, is because I currently work for one of the outlet retail stores, and mainly in the back of house, with shipment and find the different strategies that possible could work. With this project, there wasn’t any time for implementation, and I have no idea if this would or would not work. This project was fun because, I am an insider or the company and it was interesting to think of how they could work and how it could help the company.

***Final Project***

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Lululemon Athletica

Company Background

Lululemon was founded by Chip Wilson in Vancouver, Canada in 1998. Lululemon is yoga-inspired apparel company for women and men. Lululemon was started as a design studio by day and a yoga studio by night. By 2000, it became the first standing store. The vision for the store was to create more than just a store with customers, it was designed to become a community for people to learn and discuss the physical aspects of healthy living, mindfulness and living a life of possibility. Creating a relationship with the guests, for their passions, how they liked to seat and celebrating the goals they have made and accomplished.

The first designs of the products were made for women to wear during yoga. Since the first designs came out, Lululemon has expanded to apparel products for yoga, running, cycling, training, and many other ways to sweat for both women and men. Keeping in mind the guests when designing the products. There is a constant desire to empower people to reach their full potential through providing the right tools and resources, and encouraging a culture of leaders, goal settings, and personal responsibility for their employees and guests.

Executive Summary

Lululemon is an up and coming company, with a fresh new design for what it means to have a healthy and sweaty lifestyle. They design to move through life and to have clothing products that will keep up with you. Lululemon innovative design to help you go from any type of work out to lunch with friends. Keeping up with the latest and newest workouts in the latest and newest design of clothing, with the technology that will keep you moving. Lululemon current marketing strategy will inform you on how to keep your lifestyle moving.

Current Market Strategy

#thesweatlife

Situation – #thesweatlife, is a campaign rolled out by Lululemon to provide a community outreach by retail stores to get out and sweating in their communities. By getting involved in the community, with different types of sweats, this allows for that connection between educators (associates) and people that are sweating around the stores. The perspiration is the inspiration around this campaign. Lululemon wants to see people living the sweat life, for a happy and rounded lifestyle, but also doing it in the Lululemon products.

Strategy – The strategy for this campaign was made for employees of Lululemon to go out and sweat with the community but also the consumers that are in the gym with them. This allows for a deeper connection with consumers who come into stores and they can recognize the others who were in the class, or gym they were at. For the consumer, this campaign was made for the consumer to post on social media, how they are using the products that they purchased, and what the feedback is, after the workout.

Current Channel Strategy

Lululemon’s current channel strategy is made up of a small channel. Lululemon currently only sells the products through their own retail stores, retail factory outlets, and straight from their distribution center, through online orders. Through getting their products to each stand-alone store and to the consumer, Lululemon uses Fedex and UPS to ship their products.  Lululemon has a desire to keep their relationship with their consumer strong and the to fulfill those goals, having their own space to educate and have the face to face connection will accomplish those ongoing goals.

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Customer: Lululemon’s current customer base started by targeting women, who saw yoga as a lifestyle and they wanted to have clothing that was there for both in the studio, as well as outside the studio. Their main focus for their customer, was efficiency for style, going from a yoga flow to lunch in the city. Soon as the company and products grew, Lululemon grew to working towards different sweat lifestyles, with running, lifting, and cross-training clothing’s. In 2005, Lululemon started producing men’s products and towards younger aged girls. Their main focus continues to be women and teen girls, but are focused on growing their men’s brand.

Company: Lululemon is a growing company in their field of products. With their yoga based design, they are reinventing clothing products that will take you from your workout to the rest of your day. Clothing that can keep up with your busy lifestyle and having the different product to keep up. By having about 3,000 employees and 354 stores on 4 different continents, Lululemon move up on their revenue of about $1.79 million and total assets of about $1.29 million. Trading on the NASDAQ: LULU, Lululemon is making their connections with their guests, employees, collaborators, and investors.

Competition: Nike – originally known as Blue Ribbon Sports (RBS), was founded by the University of Oregon track athlete Phil Knight and his coach Bill Bowerman in January 1964. The company initially operated as a distributor for Japanese shoe maker Onituska Tiger (now ASICS), making most sales at track meets out of Knight’s automobile. Nike is now the front runner in their current market. Known for their “Nike Swoosh,” and having products for many professional athletes. They performance driven design is what keeps them ahead of their competitors.

Under Armor – Founded in 1996 by Kevin Plank, a then 23-year-old former special teams captain of the University of Maryland grandmother’s basement in Washington, D.C. Plank named his company after extensive fabrics, he designed the first Under Armor t-shirt, which he named the HeatGear. By the end of 1996, Plank made his first team sale, and Under Armour generated $17,000 in sales. For their competition with Nike and their main focus on team sports.

Athleta – Opened by Gab in San Francisco Store from an web based company. Athleta was acquired by Gap in 2008 for $150 million. It features sportswear, like yoga pants, shorts and “to/from” dresses to throw on around the town or on the way to the gym. Finding their new-found consumer base, Athleta grows their yoga base company with women clothing as their base.

Fabletics – Founded by Adam Goldenberg, Done Ressler, and Kate Hudson in July 2013 and officially launched on October 1, 2013. In June 2015, Fabletics launched FL2, its men’s active wear line with Kate Hudson’s brother and actor, Oliver Hudson. An online startup company to purchase and shop for athletic clothing pieces. Growing from their online basis to now stand-alone retail stores.

Collaborators: APL Shoes, Athletic Propulsion Labs, is a unique sportswear is the intersection of technology, performance and fashion enabling athletes to maximize their potential in all aspects of their life. APL was founded in March 2009, by a then 23-year-old identical twins Adam and Ryan Goldston. As former two sport collegiate athletes, playing both basketball and football at the University of Southern California, Adam and Ryan wanted to provide revolutionary product symbolizing the ultimate intersection. In 2017, Lululemon started retailing APL shoes, in a select number of full price retail stores, as a trial period. By the end 2017, APL shoes in a number different styles and both in men’s and women’s shoes in 40 Lululemon full price retail stores, in the U.S. and in Canada.

Context (Political, Economic, Social, Technological, Environmental, Legal):

Political: Lululemon has their views up front and loud for their consumers to see. There “Who is John Galt?” shopping bags promote their views of the right-wing Ayn Rand. They keep their political views front and center, allows for their guests to understand what kind of company they are.

Economic: Lululemon needs to maintain what is currently trending on all guest minds. This will include how the economy is doing and how each guest can spend their money. Lululemon is looked at for having expensive clothing and products, but with their products, each guest receives a lifetime quality control of products.

Social: Having a strong online basis is important for Lululemon because many sales go through their online site, to the distribution center, and finally to the consumer. Lululemon only has 354 stores throughout the United States, Canada, Asia, Europe, and Oceania. This does not make up a lot of area that people want Lululemon products but aren’t able to get to a store.

Along with their online store, each major city that has a large fan base of Lululemon consumers has an Instagram account. Maintained by a marketing head of the company, in that particular city. With a growing number of stores, each major city is fighting for their own but with that each full priced retail store and retail factory outlet has a Facebook page, to continue to have that community engagement and for updates on what the employees are doing and what special events are going on throughout the company and each store.

Technological: Their main focus for their clothing is their Silverescent technology line. “You work out, you sweat, you smell – right?” campaign allows the silver, that runs through the cloths, to stop the stink-causing bacteria that occurs when you sweat to continue reproducing, parentally. Silver releases positive ions that are attracted to the bacteria’s negatively charged ions. When they all combine, the bacteria stop reproducing and kicking up a big stink. The X-Static technology embedded in the Silverescent fabric bonds 99.9% pure silver to the surface of every fiber. This means that there’s stink-free technology woven into the fabric. The silver will never wash out of the products you buy, because of how small it is.

Environmental: Sourcing and manufacturing, efficiency and waste reduction, and green building spaces contribute to Lululemon’s sustainability efforts. Efficiency and waste reduction involves the company fostering relationships with environmental experts, implementing an environmental guide, and reducing its environmental footprint. Green building spaces involves the company’s efforts in design and build spaces that create little or no waste.

            Legal: In August 2012, Lululemon filed suit against Calvin Klein and supplier G-III Apparel Group for infringement of three Lululemon design patents for yoga pants. The lawsuit was unusual as it involved a designer seeking intellectual property protection in clothing through patent rights. On November 20, 2012, Lululemon filed a notice of voluntary dismissal in the Delaware courts based upon a private settlement agreement reached between parties that dismissed the suit.

In 2011, an employee murdered a colleague the Lululemon retail store in Bethesda, Maryland. The case received intense media attention and became known as the “Lululemon Murder.” This altercation began when the employee attempted to steal a pair do Lululemon yoga pants. The scene quickly escalated and ultimately ended in the use of five weapons and the victim receiving 331 different wounds, leading to death.

Founder Chip Wilson had made numerous controversial statements, that the company doesn’t make cloths from plus-size women because it cost too much money. He blamed some customers for wearing Lululemon’s cloths improperly or having body shapes inconsistent with the cloths. During his interview for Bloomberg TV in November 2013, he stated, “Frankly some women’s bodies just don’t actually work for it. It’s really about the rubbing through the thighs, how much pressure is there over a period of time, how much they used it.” Comments such as these led to Wilson’s resignation.

There were complaints about Lululemon’s clothing being poor quality with some items being, “too sheer,” as well as having holes appear and falling apart after a few uses. In December 2010, Lululemon recalled some of the store’s reusable bags that were made in China from polypropylene based on high levels of concerns about possible lead poisoning. In March 2013, Lululemon was hit by a large recall of its black yoga pants that were unintentionally transparent and “too thin.” They recalled about 17% of all women’s pants sold in store and impacted the financial results.

In November 2007, The New York Times reported that Lululemon made false claims about its Vitasea clothing product, the firm had claimed that its Vitasea clothing, made from seaweed. Laboratory tests failed to find significant differences in mineral levels between cotton T-shirts and the fabric Vitasea. Lululemon was forced to remove all health claims from its seaweed-based products marketed in Canada. A report in 2009, suggested that some yoga devotees saw the company’s yoga image as an “annoying phony-baloney symbol.”


SWOT

Strengths

·      Targeting niche market

·      High quality market

·      Community Involvement

·      Strong brand identifies

·      Good employee involvement

·      Strong sweat technology

·      Young company allowing for growth

·      Fresh new ideas everyday through new and young employees

 

Opportunities

·      Expand product line

·      Repeat customers/ customer loyalty

·      Collaboration with new companies

·      Moving units to different store around the world

·      Growth

Weaknesses

·      Only stand-alone stores

·      Expensive

·      Narrow Product Line

·      No region-specific products

·      All products get sent all over the world

 

Threats

·      Strong competition

·      Trends fade

·      Units sitting

 

Marketing Mix

 

Price –

For the proposed channel strategy and proposed marketing strategy, it would cost extra time for the channel managers to consider what products go to what region and which are based products. The cost of production will increase, due to predictably a high number of sales a specific product.

 

Promotion –

Promoting the different regions products through their different climate patterns, will allow for Lululemon to grow with their different products. Promoting that products are in different areas but also online will grow the different products popularity.

 

Product –

Having a region channel strategy for the new product strategy, will allow of more units to move to and from distribution center and from store to store. This will allow for larger quantities of product to get to the consumer faster and more efficiently.

 

Place –

Continue having the full price retail stores, but having the distribution center, ship many region-specific products but also the base products to all full price retail stores. Once the retail stores have been sitting on products and units, those units will then be shipped to the specific retail factory outlets in their regions.

 

Proposed Strategy Options

  • Moving products that are sitting for long periods of time, from retail factory outlets to other retail factory outlets around the country that will sell.
  • Market specific sweats towards specific regions of the country, with specific products
  • Advertise on social media how products work in different weather condition
  • Ship from outlet to retail factory outlet, at retail factory outlet prices
  • Cut the marketing for the young girl’s brand and move it towards the men’s
  • Moving units from the distribution center to retail factory outlets, from their hot sellers list

Situation – Combining four of the proposed strategy options, it will allow for more units to move from retail stores to consumer, retail outlets to consumers, and from the distribution center to consumer and to stores. Moving product to stores that are more likely to sell products for their specific climate are. Product that is to be moved, would be product that is sitting on store showroom floor for long periods of time, with no turnaround time. When advertising the specific type of clothing towards specific areas of the country, it will increase the amount to units that are turned over inside the retail store. This will allow for the online basis to grow for specific units that aren’t found in their region of the country. This will also allow for shipping to and from outlet to outlet with specific units and products. Growing a community within the specific region and growing the different sweats throughout the community and region.

Strategy – To implement this proposed strategy, would be to take each individual unit and find which region it sells best in. This could mean that it sells through in multiple different regions. For example, black wonder under high rise pant, sells well throughout the entire country and Canada. This would be an item that would continue to be distributed through all full priced retailed stores. Currently, the only store to store shipping that is being done, is from full priced retail stores to retail outlets. This is being done by shipping product that the full price retail store has marketed way below market price and the full price retail store doesn’t want to be sitting on. This is done by different regions of the U.S. For the Albertville Outlet, their “sister” store would include any stores throughout the Midwest. They are currently allowed to accept shipment from other regions, but the Midwest stores are the only ones they are able to send without getting an approval. If the Midwest full price retail stores have a large quantity of swim, after the summer months, they send the Albertville Outlet that swim products. Shipping all products to individual regions will make for more sales through the distribution center and moving a larger quantity of product through the manufacturer.

Proposed Action Plan – The proposed action plan is to have different regions retail outlets have “sister” outlets, in different sections of the U.S. to send product that would fit their climate, and consumer market. If the Albertville Outlet continues to keep sitting on that swim product, through the winter months, they would be able to send it the Las Vegas Lululemon retail outlet. This will allow for a specific segmented market to have a larger quantity of products. On the other side of this action plan, is if the Las Vegas Lululemon retail outlet has a large quantity of winter jackets, they stop moving through the door, they are able to send those jackets, to the Albertville Lululemon, where they would sell. Along with having “sister” stores, having the distribution center have specific regions get specific products go through and will be sold through online sales but also through those specific regions. By placing all products into north, south, east, west regions, but also into a base product sector. This will allow for different products to be made for the regions particular weather patterns and what is the most popular sweat lifestyles to the people who live there. For the base products, it will be some reoccurring products that will be shipped to each full price retail store and be sold in each region.

Desired Outcome – The desired outcome of this proposed strategy would be to push more units and quantity of units out each retail store’s door’s. By sending specific products and items to the specific regions, it will allow for the retail stores to have items that would be selected for different types of climates. This will build the online basis of selling units through the distribution center and marketing the specific products to different parts of the country. By selling specific units through different regions of the country, it will push larger quantities of products and units through the manufacturer and down through the channel strategy.

 

Final Proposed Strategy statement

  • Moving products that are sitting for long periods of time, from retail factory outlets to other retail factory outlets around the country that will sell.
  • Market specific sweats towards specific regions of the country, with specific products
  • Advertise on social media how products work in different weather condition
  • Ship from outlet to retail factory outlet, at retail factory outlet prices

Lululemon should have a markup of different regions for their current and upcoming stores, to sell specific units of product to, based on their current weather patterns. This will allow for a larger quanitity of prodcuts sold through different seasons, and want for specific products. By having those specific products go through their full price retail store, then to their retail factory outlets, it will allow for outlet to outlet shipment through different regions. Producing products to particular regions, and weather patterns, will help build the community around their current standing stores.

 

Balanced Score Card

Themes Initiative Methods of Measurement Targets
Customer Quality and service demand Customer satisfaction Overall feedback Implement annually
Financial Financial plan Financial growth for retail factory outlets Revenue and unit growth Higher unit goals
Internal Operations Measure unit goals per retail factory outlet Number of units per transaction Daily, weekly, monthly, yearly

 

Employee Improve want for connection Improve community outreach Survey’s throughout all levels of employees Monthly for the first year

 

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