It’s all in the Experience: The Future of Fitness Apparel
Walking into a lululemon store can be a bit unnerving for a shopper used to the likes of Nike, Under Armour, and Adidas. Instead of wall-sized posters of Kylie Jenner and LeBron James, the walls of lululemon are plastered with photos of their local ambassadors. Instead of disgruntled employees counting down the minutes until their lunch break, the employees at lululemon are constantly chipper, and know you by name. You may even walk in on a free hot-yoga class, taking place right in the middle of the store. In a world of business increasingly dominated by big brands and celebrities, lululemon has found a way to keep it local.
Clearly, something about the brand’s alternative approach is attractive to customers: lululemon boasts impressive customer loyalty when compared to their competitors. According to a study conducted by Target Research Group, 55% of lululemon shoppers living in the US said that lululemon was their favorite brand. Nike, in comparison, was favored by 45% of its customers, while only 29% of Athleta customers preferred the gap spin-off. The meaning behind these numbers is clear: after going to lululemon once, customers get hooked.
What really sets lululemon apart from its competitors, and what keeps customers coming back for more, is its unique business model. Laurent Potdevin, the CEO of lululemon, said, “My first focus was to be guest-centric. To say yes to our guest.” The brand puts the customer first by focusing on “human connection,” or making customers feel valued. On the retail level, employees achieve this goal by getting to know their customers. The fitting rooms in lululemon stores all have small whiteboards attached to them: salespeople ask customers for their names, and address them by name for the entirety of their visit. The employees are also taught to question customers about what kinds of activities they do and what they hope to get out of their gear. All of this fosters a sense of belonging for the customer, and a sense that they are appreciated. Shoppers are then more likely to return to their local store, since the staff already know their names and gear preferences.
Lululemon even brings customers into the design process. A suggestions chalkboard hangs in every lululemon store, welcoming guests to comment on design feedback and new product ideas. Every month, regional managers visit retail stores and pass the feedback on to headquarters in Vancouver, so the feedback goes directly from the customer to the designers. Of course, if a shopper then sees a product that resembles something they asked for, they will be motivated to buy it.
Beyond treating customers like royalty, lululemon fosters loyalty by networking locally. They utilize an ambassadors program that has enlisted over 2,500 yogis, personal trainers, group instructors, and professional athletes to sponsor their products. Lululemon chooses local ambassadors to provide with gear. They then take professional photos of the ambassadors wearing lululemon apparel, and post them in stores. The publicity helps the ambassadors gain more popularity, which in turn brings more customers to lululemon: clients look to their trainers and instructors as role models, and want to wear what the ambassadors are wearing. The clients are encouraged to shop at the store, where they find a personalized shopping experience waiting for them.
Because of their impressive customer loyalty, lululemon is able to sell goods at full price. Between Cyber Monday and Christmas Day of 2015 – a period when most shops go into heavy discounting mode in order to compete for customers – 90% the items purchased at lululemon were from the full-price section. The store’s sale section is also notoriously small, and rarely ever discounts an item by over 30%. In fact, rather than “sale,” Lululemon calls their discount section “we made too much,” further emphasizing the superior quality of their gear. Nike, on the other hand, has annual Black Friday sales, in which their outlet stores are rampaged by customers searching for deals. Under Armour has an entire “outlet” section of their online store offering discounted gear, and the average discount for Adidas sale items is 50% off.
Lululemon can remain competitive with these brands because it gives younger shoppers the experience they are looking for. According to a recent Mintel survey, the majority of millennials prefer spending money on activities and experiences over physical luxury goods. For this new generation of consumers, more of their disposable income goes towards travel, concerts and performances, and classes. Lululemon stores cater to these needs by offering free fitness classes taught by their employees, giving shoppers a chance to not only invest in goods, but in the experience of yoga or Pilates as well. When you couple these classes with the personalization of in-store shopping and ambassador-based advertisement, lululemon creates an atmosphere where customers feel like they are spending money on an experience: their money buys them a spot in a community, rather than just a product.
Other companies have begun to pick up on the trend towards experience-based marketing. Notably, Reebok plans to move into a new headquarter building in Boston this fall. The 220,000-square-foot building will include a retail store, a two-story gym, and a café with food and drink offerings. Like lululemon, they will offer free fitness classes. The idea behind the new building is to offer customers a place to shop, exercise, and eat: an all-in-one experience that should draw millennials to the brand.
Matthew H. O’Tolle, the CEO of Reebok, said, “I think that the digital world that millennials live in has a big factor in [millennials’ investment in experiences]: people want to share their lives and the experiences of their lives instead of the things they’ve accumulated. I think this is a great thing, and we want to emphasize the importance of that.”
With the emergence of community-based shopping experiences like those pioneered by lululemon, the days of Nike warehouse sales may be over. The next time you find yourself in need of a pair of new leggings, ask yourself if a free yoga class and a pleasant store visit is worth the higher price tag. For more and more shoppers, the answer continues to be yes.