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. About lululemon
From 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. Situational Overview
Our 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. lululemon’s current Mission and Vision
“Creating components for people to live
longer, healthier, more fun lives.”
“Elevating the world from mediocrity to
greatness.”
7. Who are lululemon’s core customers?
• 32 year old woman (18-65 range)
• Sophisticated
• Educated
• Active Lifestyle
• Balances Career and Family
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 Wear
M(ASS) APPEAL! (so to speak)
9. What do lululemon customers need?
Fashion
Quality Availability
Yoga-
Inspired
Function Athletic Education
Apparel
10. Customers need “Function”
• Appropriate for sports
• Compression garments
• Moisture-wicking
• Remains in place in Yoga poses
14. Customers need “Education”
• Model driven by Yoga enthusiasts
• Word of mouth promotion
• Why spend $100+ on sweats?
• Benefits of athletic wear
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. 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
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. 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. 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. 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 inventory
Items / Purchase Defect Rate % R&D $ / Sales
available
Forecast Cost / Quoted %FTE for
Yield / Foot traffic
Accuracy Cost Innovation
eCommerece % Distribution Lead Tendered Q$ / Products /
of Sales Time Preferred Q$ Concepts %
22. Conclusion
Aligning 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
