Lululemon, the Vancouver-based yoga gear retailer has been growing steadily for years. In fact, it’s enjoyed 12 consecutive quarters of big growth, nine of them over 30 percent. How does a company that sells $100 yoga pants do it?
According to a recent Wall Street Journal article, Lululemon doesn’t have many sales (they say 95 percent sells for full price) and it intentionally under-stocks popular items.
And instead of traditional methods of customer data collection, the retailer says it relies on its sales staff to listen to customers on the floor—even eavesdrop on them to collect praise and complaints. “Our guest knows that there’s a limited supply, and it creates these fanatical shoppers,” CEO Christine Day told the Journal. This makes investors nervous, of course, but the retailer is making sure that its basics are always in stock.
Pros: Lululemon clearly excels at hiring staff who wear the merchandise and effortlessly evangelize about it. That sort of enthusiasm is priceless. Well-trained staff on the floor get to know the merchandise and the customers. Training floor staff to learn from customers about what’s working and what’s not can help make the products and the assortment better. It also creates smarter, more intuitive and compassionate sellers.
Limited editions are a familiar concept to the menswear world. If your customers know they have to come in often to check for new and rare items, you’re creating a very loyal and enthusiastic following who gladly pay full price.
Cons: If customers don’t see what they want often enough, if those rare items and limited editions sell out too quickly or too frequently, you’re punishing your more casual customers for dropping in. Scarcity is fine, but it has to be limited to certain items. Besides, without a certain amount of existing traffic and brand equity, limited editions are meaningless.
Does eavesdropping really work? How verbal are customers when they’re shopping? There must be a healthy amount of engaging the customers, too. And prodding them; how often does the veil of politeness mask true feelings about assortment, fit, quality, etc.? Customers actually feel more comfortable being honest about all those things in the relative anonymity of the internet—which may be where Lululemon actually gets much of its feedback.
Conclusions: Much of Lululemon’s success can be attributed to the yoga craze, but its dedication to excellent customer service and sales staff who really wear the products have spurred that success to seemingly endless growth. Using calculated scarcity to drive trends is clever. Menswear stores can learn from Lululemon’s mandate that sellers dress the part, and listen—really listen carefully—to customers’ needs.