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Strategic Review of Lululemon Athletica


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Strategic Review of Lululemon Athletica

  1. 1. lululemon athletica
  2. 2. Agenda• About lululemon• Situational overview• Lululemon’s current mission and vision• Company mantra• Customer profiles• Customer needs• Vision reviewed• The lululemon value proposition• Company challenges• Critical Success Factors• Key Results Indicators• Key Performance Indicators
  3. 3. About lululemonFrom a hobby to an athletic-apparel powerhouse• Founded in 1998• Determined the create more appropriate yoga apparel• Started as combined yoga studio and clothing store• Shifted to apparel store with staff as yoga educators• 2011 sales of $710M• 133 Stores in the US, Canada and Australia
  4. 4. Situational OverviewOur observations as management consultants• Lululemon has been experiencing growing pains• Professional management has taken over from the founder• Due to demand the company has lost profit due to back-orders• A reevaluation of the company’s vision is required• The company’s current strategies have been developed despite a poorly articulated vision but hold merit
  5. 5. lululemon’s current Mission and Vision“Creating components for people to live longer, healthier, more fun lives.”“Elevating the world from mediocrity to greatness.”
  6. 6. lululemon’s values
  7. 7. Who are lululemon’s core customers?• 32 year old woman (18-65 range)• Sophisticated• Educated• Active Lifestyle• Balances Career and Family
  8. 8. The actual lululemon customer Women • 18-65 years • Original Target + • Street wear inclined • “Badonkadonk” Improvement • Middle-Class to Affluent • Fashion Conscious • Young Urban Professionals • Tweens & Teens Men • 18-45 years old • Legitimate Athletes / Yogis • Street WearM(ASS) APPEAL! (so to speak)
  9. 9. What do lululemon customers need? Fashion Quality Availability Yoga- InspiredFunction Athletic Education Apparel
  10. 10. Customers need “Function”• Appropriate for sports• Compression garments• Moisture-wicking• Remains in place in Yoga poses
  11. 11. Customers need “Quality”• Durable product• Will resist strenuous use• Low-maintenance
  12. 12. Customers need “Fashion”• Fashion-forward garment• Aura of athleticism• Improves body appearance
  13. 13. Customers need “Availability”• Should have stock available• Sufficient colors and sizes• Avoid turning away customers
  14. 14. Customers need “Education”• Model driven by Yoga enthusiasts• Word of mouth promotion• Why spend $100+ on sweats?• Benefits of athletic wear
  15. 15. Updating lululemon’s Mission and Vision“Creating components for people to live “Creating components for people to live longer, healthier, more fun lives.” longer, healthier, more fun lives.”“Elevating the world from mediocrity to “To become the number one women’s greatness.” athletic apparel brand”
  16. 16. Current lululemon challenges• Unable to meet sales demand• Hasty expansion to new locations with insufficient research• Profit-margin erosion due to supply pressure• Word-of-mouth promotion restricts speed of growth
  17. 17. The value propositionReinforced by Mission:“Creating components for people tolive longer, healthier, more fun lives.”
  18. 18. Finding Critical Success Factors Strengths Weaknesses- Innovative Product - Brand recognition restricted- Cult-Like Brand Loyalty - Sourcing cost pressures- High profit margins - Distribution challenges SWOT Opportunities Threats- Untapped Markets - Strong Rivals- New Sports Focii - Can be imitated- Street wear - Small, Faddish Market
  19. 19. lululemon’s strategic initiatives • Improve same-store sales Sales Growth • Add 20-25 new high-productivity stores • Evolve ecommerce channel to hybrid model Operational • Invest in Human Resource Information Systems • Implementation of Business Intelligence Systems Improvement • Vendor/Manufacturing Management Systems Cost • Manage Sourcing Cost Pressure Containment Product • Hot Yoga Product Line / Yoga Accessories • Running Line Innovation • Bras and Tops
  20. 20. Proposed Key Result Indicators Number of Stores Opened (Growth in Sq Ft) Employee Satisfaction Survey Aggregate $ per Sq Ft Brand Awareness – Multi-Dimensional Customer Survey Gross Margins SG&A as a % of Sales Sales (annual, quarterly, monthly, same store sales) Operating Margin Return on Invested Capital
  21. 21. Proposed Key Performance Indicators Sales Operational Cost Product Growth Improvement Containment Innovation Mfg Schedule New Product / Sales/ Sq Ft Sell Through % Adherence Store Inventory % On-Time Delivery Time to Market $ / Purchase Safety Stock % (days) % of inventoryItems / Purchase Defect Rate % R&D $ / Sales available Forecast Cost / Quoted %FTE forYield / Foot traffic Accuracy Cost InnovationeCommerece % Distribution Lead Tendered Q$ / Products / of Sales Time Preferred Q$ Concepts %
  22. 22. ConclusionAligning Mission, Vision, Strategies and Indicators• Maturing Company• Evolve to Professionally Managed• From healthy lifestyle to healthy business practices• Alignment is simple but highly effective and relatable• Happy healthy customers lead to happy healthy financials• Reinforce what makes us successful• Measurable goals