2020 has reset our expectations for what is possible.
Under the circumstances, that’s a commendably understated remark from Calvin McDonald, CEO of ‘athleisure wear’ retailer lulelemon. As diginomica noted a couple of months back, the firm has had the proverbial ‘good war’ during the pandemic, benefitting from increased traction among locked-down gym bunnies under effective house arrest. At the time, Celeste Burgoyne, lululemon President, Americas and Global Guest Innovation said:
COVID has shifted the world in some ways and really allowed us to take advantage of all the investment we've made in our digital ecosystem, really leaning into our omni-channel strength.
Flash forward to today and those strengths have become all the more apparent as the retailer achieves a stated goal of doubling its e-commerce business from its 2018 levels, but does so three years ahead of target. Online sales now make up more than half (52%) of total revenue, contributing some $900 million to the overall bottom line. For McDonald, it’s validation of earlier omni-investment that’s paying off:
The fundamental drivers of our performance have been the same for the past three years and the pandemic has only accelerated their importance in the lives of our guests. In addition, the trends that existed before the pandemic are even more important now and will only continue to grow post the pandemic.
But 2020 was undoubtedly a year of massive acceleration for e-commerce, he adds, one that has caused the firm to re-evaluate its ambitions for digital growth, particularly in non-US markets:
We now have a very meaningful e-commerce business that is driving both new guest acquisition as well as strengthening our omni-guest relationships. Our channel investments will continue to focus on elevating the guest experience and further strengthening our foundation while we also test and learn new capabilities. The relationship we have with our guests in-store is unique and special for our brand. Our e-commerce vision is to create our online version of that relationship as well.
For 2021, the immediate e-commerce goal is to elevate that guest experience, investing in more immersive category and franchise shops, as well as the product details page, he explains:
We will continue to drive conversion by continuing to optimize the guest experience with further enhancements to search, browse, checkout, personalization and payment methods. We will accelerate our investments into the strength of our international business as we expand our omni capabilities and localize the guest experience through local payment and delivery options. And we will keep investing to scale our foundation and enhance the guest experience by evolving our BOPIS [Buy Online, Pick-up In Store] and curb pickup capabilities, piloting same-day delivery from our stores in nine key markets and refining and scaling our digital educator program.
Another digital success story of 2020 has come from the firm’s acquisition of home e-fitness platform Mirror last summer. The performance here has exceeded expectations to date, says McDonald, and there’s more to come in what he calls the "at-home sweat industry”. It’s a belief that isn’t just a response to COVID, although clearly being shut up at home is conducive to exploring at home fitness regimes:
We started the process to purchase Mirror before the global pandemic began because we believe in the opportunity to strengthen our community, further connect with our guests in their homes and provide new solutions for their workout needs. I don't expect the pandemic tailwinds to disappear once mass vaccinations have occurred. Guests were seeking more convenient at-home options before COVID-19, and they will continue to seek these options post the pandemic.
Mirror is the most versatile at-home fitness platform available, he boasts:
We offer more live classes across more workouts than any other product. And our guests are responding with more than two users per household and the average member taking over six different types of workouts each month. This versatility drives frequent engagement and truly positions Mirror as having something for everyone within every household. This unique position will continue to translate into meaningful growth as we strengthen our member relations, further engage with our community and drive financial performance.
But as lockdowns ease and real-world gyms re-open, the trick now is to add more incentives for customers to remain engaged. That means more investment, says McDonald:
We are adding two more production studios, so that by the end of the year we will have three studios, allowing us to triple the number of live classes compared to our current offering. We now have 15 instructors on Mirror with plans to add up to seven more across multiple workout activities and all instructors are lululemon ambassadors.
We'll continue to launch community engagement initiatives. We recently added the community camera feature, allowing members and instructors to see each other during the workout. This month, we added the face-off feature, which allows two members to compete head-to-head during the class. We are kicking off our international expansion plans, starting with Canada, launching in time for the holiday period this year.
And we will continue to leverage the lululemon ecosystem to raise awareness for Mirror, which remains one of our biggest opportunities.
Amid all this digital enthusiasm, the store component of the omni-channel mix isn’t being forgotten. Dar from it, insists McDonald:
Our stores and the physical connection they provide to our guests remain incredibly important to us and are an integral part of our omni-vision. In 2021, we'll be implementing a number of exciting initiatives, starting with the initiative to kick-start our stores. As operating constraints are removed, our teams are focused on accelerating our store productivity. We have a number of guests that only shop our stores and we are focused on re-engaging with them at the frequency they shopped with us before COVID-19.
New stores will be opening up, he adds:
We continue to be under-penetrated from a brick-and-mortar perspective across all our markets, including North America and around the world. We will continue to enhance our omni-capabilities. I'm excited to build upon the success of these new strategies we've rolled out towards the end of last year, including curbside pickup, virtual waitlist and the appointment shopping. These became guest favorites that elevated our in-store experience and demonstrated an area of opportunity going forward.
And there will also be new challenge as COVID restrictions lift, he concludes, in the shape of getting the digital newcomers engaged with the physical brand:
We have a significant number of new guests who engaged with us for the first time online last year. We are focused on extending our omni-relationship with them, so they can more fully experience the brand and community connection our stores offer.
An absolutely fabulous omni-channel retail story that builds on prior digital investment, enabling it not only to ride out the COVID crisis, but to flourish on the conducive market conditions that the pandemic has created. Worth cracking open a bottle of fizzy stuff in the boardroom, I’d imagine.