Ms. Day learned an important lesson. The retailer had intentionally lightened the top’s fabric because yoga enthusiasts were perspiring in their classes, and more stores were opening in southern climates, she says. “We didn’t do a good enough job of explaining why we made the shift. We’re in the business of sweaty pursuit, so it’s the right decision for us from a technical aspect.”
Ms. Day decided to introduce a “why we changed this” tag for revamped products, as well as to reinstate the former, heavier tank top at the same price.
That experience is a vivid demonstration of the benefit of customer feedback, however negative, she says. “If they aren’t out there complaining, I’d actually worry more because it says they’ve found something else.”
Lululemon learned from other product stumbles in the past year. It ditched its loose-fitting “still” pants only to end up bringing them back months later because customers were so upset they were gone. It had to get colour experts to advise it after the dyes in its neon-coloured clothing bled. In the holiday season, it found some prices had crept too high, and earlier in the year it had to drop prices on items in its “what the fluff” running line to, for example, $158 for a jacket from $198, after customer resistance.
“I thought we were trading a little too much on brand and not enough on value,” she explains.
Even Jennifer Black, retail analyst at Jennifer Black & Associates in Lake Oswego, Ore., and a big fan of Lululemon, says some recent styles at the retailer lack inspiration. She doesn’t like some of the brighter-coloured pants, which can be unflattering to some women, and some of the jackets and tank tops are too short. As a result she’s concerned that some of the merchandise won’t resonate with key customers, which could lead to price markdowns, which cut profit.
Ms. Day says store staff – educators, in the company’s parlance – mingle enough with customers to pick up any vibes. She says she doesn’t invest in market research to track trends because “it will only answer what is, in a lot of ways, not what could be. As an innovative, disruptive company, I’m far more interested in what could be, what’s needed, than I am in what is. By the time there’s evidence, somebody else is already doing it.”
Tracking copy-cat competitors is a bigger priority. Last summer, Lululemon sued Calvin Klein for allegedly copying one of its pants (they settled last fall.) “As long as they’re doing an imitator strategy and they’re competing with us only on price, I don’t really care,” she says, proudly showing off the Lululemon pants she’s wearing by rolling up her top a tad to demonstrate the stretchy waistband.
“What would get me, or keep me up at night, is if they innovated something I think we should have, or start to really differentiate themselves in a way that resonates so we lost our ability to be a market disruptor. Or if they create a product that is so great that it is the peak and pinnacle. None of them have been able to so far – knock on wood.”
Editor's Note: The U.S. stock price, instead of the Canadian price, was listed in an earlier version of this article.