Lululemon landed in the marketplace with all the right stuff. It was placed in a high demand segment, offered unique looks and created a fierce fan following almost immediately. In fact, Lululemon fans were compelled to recruit other fans. That’s how their key marketing push worked. And it did work … for a while.
These days, though, things are not looking so bright for Lululemon. Stock dropped 21 percent recently after the company predicted a sales dip this quarter. Why the sharp decline on a simple sales announcement? Apparently, the clothes are not selling well online. Dependent almost entirely on word of mouth advertising, Lululemon is hurting in one of the fastest growing retail market: online shoppers.
Lululemon CEO Laurent Potdevin told CNN, “We have clearly identified the issues: An assortment lacking depth in color for spring, compounded with visual merchandising that did not powerfully translate our design vision…”
This translates into a simpler message: people don’t seem to like their clothes … they have to be talked into them by a friend. Customers might see a person wearing their gear and like the style … but when they let their fingers do the scrolling online, they’re just not doing enough clicking.
There are, of course, other market concerns of which Lululemon knew before they even got off the ground. Other athletic wear companies are bigger, better stocked and better merchandised. Nike and others carry longstanding name recognition Lululemon simply doesn’t have. Sure, being the new kid on the block carries some excitement, but fads fade, and people go back to the familiar … if a solid customer relationship isn’t firmly developed.
Looking back a year, fans and company execs may have scoffed at the notion. Lululemon was growing leaps and bounds in a tight, highly-competitive marketplace. Like Under Armour, it looked like it might have staying power. But the company really can’t afford even a small dip. Even a minimal sales drop, given their total sales and margins, gives a bigger competitor an opportunity to jump back into that spot, picking up that percentage and padding their lead.
The key for the company at this point is to try to recapture that fading magic. To be the new and exciting player once again, to deliver a customer experience and quality that others are not. To be preferred for more reasons that momentary popularity. This will take a concerted PR effort and a more long-term mindset. They had the window, and it’s quickly closing. What happens next will be determined by how well they reconnect with current fans … and strive to create others.
Read more from Ronn Torossian:
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Ronn Torossian on Business Insider
