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How Lululemon Is Able To Avoid The ‘Athleisure Slowdown’

"Guests are drawn toward the brand focus that reflects who they are and who they want to be," says Lululemon CEO Laurent Potdevin.

Amid a slowdown in sales at athletic apparel, Lululemon appears to be standing out, as the Vancouver-based retailer’s earnings beat Wall St. analysts’ expectations with sales rising a healthy 8 percent over Q3 2016.

The brand’s positive news stands in contrast to its “athleisure” peers: As Bloomberg’s Sarah Halzack notes, “Dick’s Sporting Goods Inc. is cranking up the discounts to lure shoppers back to its struggling stores. Nike Inc. is scrambling to offer more innovative products and reduce its dependence on “mediocre” retailers. The stock prices of Under Armour Inc., Foot Locker Inc., and Finish Line Inc. have been slammed this year, each tumbling precipitously in response to disappointing sales.”

In eMarketer’s view, “the question isn’t really about whether the athleisure trend is over. Rather, it’s about which retailers are speaking to customers in the right way, not just in terms of products.

“The retail landscape is experiencing unprecedented disruption characterized by increasingly commoditized transaction and short-term focus,” Lululemon CEO Laurent Potdevin said in a during the analyst call on Wednesday. “Across the globe there was a [consumer] behavioral shift to leave an active mindful lifestyle. Guests are drawn toward the brand focus that reflects who they are and who they want to be.”

Hyperlocal Brand Ambassadors

While marketing budgets in the athleisure space remain relatively high, according to Bloomberg, with spending generally 10-12 percent of sales, Lululemon appears to be doing something different than its competitors: it relies heavily on local yoga instructors and athletic trainers to serve as brand ambassadors.

“As more retailers seek to feature experiences in the store to engage shoppers, Lululemon—a pioneer of free, in-store yoga classes and a brand ambassadors model that has been replicated by other athletic fashion retailers—has continued to attract consumers through new variations and localized experiences, one example being its ‘Mindfulosophy’ meditation space in its New York flagship location,” eMarketer concludes.

In addition, Lululemon has also made sure to strike a careful balance between its 345 brick-and-mortar locations and its e-commerce sales.

During the company’s Q3 earnings call this past week, Lululemon CFO Stuart Haselden said the brand would introduce a “buy online/pick up in-store” option next year.

“We’re thrilled that we’ve seen on other omnichannel initiatives, ship from store has been very successful,” Haselden. “Our business model continues to become more and more omnichannel. Our stores and digital business has become more and more every day. So we’re excited that we’re able to recognize demand in one channel and somewhat in another in a more and more seamless manner as we develop these capabilities.”

“What I guess the most excited about is how first of all agile our stores are in terms of really been able to adapt and to be able to integrate omni into everything they do,” Celeste Burgoyne, Lululemon’s VP, Retail, Americas, added. “The way I really look at is, obviously, omni and digital go hand in hand with stores and its becoming more of a way as we operate and every touch point is really touch point that we own and we’re leveraging those channels for what their best able to delivery for us. As we look at our store portfolio rollout, as well as our digital business we see kind of all those rise and our ability to be easy channel strategically allows for that.”