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Kramer: Lululemon’s brand loyalty saves company from financial failure

For the past few years I didn’t know the difference between yoga pants and leggings. And before I stepped onto this campus, I definitely didn’t know what a Lululemon Athletica was.

The luxury athletic-wear company Lululemon opened its first store in Vancouver in 1998, and has since opened more than 200 locations across North America. According to Forbes, as of 2012, it reached $1 billion in revenue in a market that was already saturated with other athletic brands.

 

The most interesting thing about Lululemon is that after becoming a success story that did everything right, the retailer took a disastrous turn and has since quickly become known as a blueprint for what not to do. To regain ground in the future, Lululemon will have to move past its sins and rebuild what made it great: brand loyalty.

 



Its omega-like logo fixes itself in pertinent white fabric on the back of the company’s yoga pants that costs up to $108, and I can’t go a day without noticing it somewhere — not that I was looking anywhere I shouldn’t have been in the first place.

Usually I wouldn’t care what brand of yoga pants a girl is wearing. Nike, Victoria’s Secret, GAP — big deal, when does class end?

But I think there’s something special about those pants. Lululemon has done what marketers strive to do every day — it has developed a brand, one that has a cult-like following.  It managed to rake in more than $1 billion a year while facing the giants of the industry like Nike and Under Armour, all while exhibiting a name and style that just didn’t fit with the rest.

But the company’s charming story was short-lived. Mishaps began when the company’s CEO Chip Wilson said in a regrettable interview that certain bodies just “don’t belong” in Lululemon’s clothing — referring to overweight women — in a Nov. 5 interview with Bloomberg TV.

That unfortunate headliner was followed shortly by a recall of 17 percent of the company’s inventory, according to Business Insider, due to a minor issue — some of the yoga pants were just a bit too see-through. In one of the more hilarious press releases the world has seen, Wilson told concerned buyers to put the pants on and “bend over” to inspect if they were functional. He resigned from his position in December.

Lululemon developed a recipe for failure: a perfect mix of inflammatory statements toward a whole class of women and defective pants that failed at their sole intended purpose of concealing parts of the human body.

More reports piled on. Store clerks were reportedly eavesdropping on visitors, and customers who sold the company’s merchandise on eBay were banned from purchasing online through an IP address blacklist. The retailer also continued to show a disregard for larger women, reportedly tossing size 10–12 pants — the largest they carried — into bins in the corner of its stores, taking no time to fold or organize them. It was becoming the clothing line that everyone loved to hate.

Lululemon’s stock responded accordingly. According to a Feb. 21 article on The Street, LULU dropped 13 percent in 2013 and saw a slump in revenue for each quarter. The CFO issued a statement saying that the company had seen sales “decelerate meaningfully” according to a Feb. 17 New Yorker article.

Through all of this, Lululemon remains a relatively popular line. It has regained its footing and can also regain those losses if it avoids having another PR nightmare. With Chip Wilson out of the equation, that shouldn’t be too hard.

Some analysts look at that sales slump and say Lululemon represents the death of brand loyalty. I think it shows that brands are as strong as ever. Lululemon has miraculously crawled through what would normally wreck a company inside and out, and the loyalists to its product and style will be the ones to bring it back to prominence.

Phil Kramer is a freshman advertising and marketing management major. His column appears weekly. You can reach him at [email protected].





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