Community Retail — Lululemon's Potent Weapon to Win the Market

For any retailer, the pivotal factor for succeeding in the business is about building customer trust and trust manifests from strong relationships. According to a report by Nielson, about 62% of the consumers consider brand trust as the top influencer in the purchasing decision.

In the modern digital age, it is becoming increasingly challenging to attract potential customers to physical retail space. Some of the common reasons behind this are time, energy, and money investment required to reach the store and get guidance from someone inside the store to make a purchase.

However, if there is something really unique about the store that makes the whole experience worth the trouble, then the retailer is in a great position to drive the business. That's how community retailing comes into the picture and undoubtedly Lululemon has mastered the art in this space.

Just to put the growth of Lululemon into the perspective, CNBC has named this brand as the next Nike. And the sales figure has already crossed $3.3 billion in the latest fiscal year with the sales in the store witnessing an 18% increase.

Not to miss, Lululemon has a luxury-like positioning and they have been able to successfully decouple pricing simply by building sophisticated, new, and innovative products. Check out this $998 puffer coat that can be worn in 26 different ways.

Building a loyal customer base is one of the five key factors for the five-year growth plan which speaks volumes on the importance of loyalty for the retailer. For example, one initiative has been its testing of a new loyalty program, that requires members to pay for an annual subscription for faster delivery and packaged workout sessions.

While loyalty programs are one facet of the retention strategy, what makes Lululemon stand out from the other competitors like Nike and Under Armour is the ability to infuse community in the retail strategy. For example, unlike Nike that works on broadcasting marketing messages via celebrities and ATL campaigns, Lululemon operates more at the grassroots level.

Read on to learn more about how community retail is driving the shopping experience at LULU stores.

Community as a backbone of experiential retail

Experiential retail is a great avenue for companies to differentiate based on customer experience. Essentially it can be termed as the retail experience that a brand can deliver to the customers which are well beyond the traditional experiences. For example, it could be anything from virtual reality and augmented reality to cafés and music.

In the case of LULU, the experiential retail brings in the fitness element via “sweat studio” and healthy eatables via “fuel bar”. Also, perhaps the most intimate form of shopping available for retailers, i.e., try-and-buy method offers a selected set of "gears" that people can simply wear and see how it works during the classes.

Since this is focused on building a deeper relationship with the customers apart from delivering other peripheral experiences, LULU caters to the most innate requirements of people. The combined effect results in a wholesome shopping experience that merges health, welfare and the human need to belong to a group.

Lululemon also merges the ambassador program with the experiential retail by identifying and recruiting the local influencers from the communities formed in the stores. This ability to engage with the influencers at the ground level allows LULU to build an authentic sense of belonging.

The holistic community experience that starts internally

Another critical factor behind the successful community strategy of LULU is the ability to build the culture of the community internally. The company actively works towards building an engaged and lively community of the employees.

Contrary to traditional companies in which the decisions are taken at the top and the implementation process happens at the bottom level, this company is more horizontal and empowers the employees to actively participate in decision-making. This creates a conducive environment for everyone to contribute to new ideas and initiatives.

This means the management role is not simply about making decisions, it is more involved as the managers are required to facilitate the culture of community-driven contribution. Everything from the new product to new content and processes to ideas for the company would be crowd-sourced from the employees.

This ensures that employees feel valued and their voice is truly taken seriously. When they realize they have an impact in the community, they feel valued and work towards implementing the initiatives with the utmost zeal.

Community as a de-facto retail evolution

LULU's approach towards retail is clearly a signal for the future of shopper experience and no doubt, the next stage is focused on the people. The physical stores have the unique ability to engage the customers via multi-sensory experience, but the true engagement lies in uniting the customers via communities.

Thus, brands will be working on building communities and platforms where they can create stronger bonds and unite their peers to form highly cohesive networks geared to help each other. This is a holistic approach for customer loyalty that would have a long-lasting impact on the bottom line of the business.

Translating the physical community to the online experience

It is very interesting as well as disappointing to see that I could not find any online community centered around connecting the audiences of Lululemon. A good example here is the online community (powered by Bettermode) of Decathlon dedicated to bringing the sports enthusiasts together under a single brand.

In the case of Decathlon, apart from facilitating discussions around different sports, in-store activities (e.g., Football shootouts) are brought online to further drive the discussion and gain additional visibility. Similarly, Lululemon can create an online community comprising of focused user groups for "Yoga practitioners in Vancouver", "Runners in Chicago", and topics around "fuel bar", "sweat studio", etc. This will help LULU create content on own property mimicking the popular social media.

Since increasing the online sales is yet another key element of the 5-year growth plan of Lululemon, building buzz around the brand via an online community, promoting the products inside the community, leveraging user-generated content to drive traffic, rewarding the community members with redeemable virtual currency are some of the most exciting initiatives they can take.