Retail Case Study: Lululemon’s E-Commerce Journey

Lululemon's e-commerce journey

(Click to view the HD version of the infographic) 

This March, we are introducing a new series – The E-Commerce Journey! In this series, we will be uncovering how retail brands from all over the world have evolved since 2020; in particular their digital efforts in e-commerce. It is well-known that the pandemic-driven shift towards online shopping accelerated the growth of e-commerce last year. Retailers that were reliant on physical stores were forced to strengthen their e-commerce strategies to meet the overwhelming demand online from consumers. 

One of the companies that rose above its competitors in 2020 was Lululemon. In spite of the challenges brought about by the pandemic, the athletic apparel fashion brand achieved multiple milestones throughout the year. Follow us as we take you through the brand’s e-commerce journey! 

March 2020 – Stores closed due to lockdowns are used to fulfill e-commerce orders

In March, Lululemon announced the acceleration of digital efforts on e-commerce as physical stores were forced to close down during the pandemic outbreak. Instead, Lululemon made good use of its physical stores to fulfill its online orders; shifting its focus on its e-commerce operations to cushion the impact to retail sales due to COVID-19. 

In the same quarter, Lululemon reported a 41% jump in digital sales, accounting for $464 million in revenue. 

“Since closing, our digital business has picked up, but it’s obviously not recovering all the volume loss from our store networks being closed, but we have seen our online business accelerate in terms of growth. But obviously, it cannot pick up the entire demand. So it is responding well, and we’ve adjusted our digital marketing initiatives.” – Calvin McDonald, CEO at Lululemon

Source: Lululemon steps up digital efforts, e-commerce as physical stores closed due to COVID-19

May 2020 – Stores reopening post-lockdown

Following China’s footsteps, Lululemon announced its plan to reopen physical stores post-lockdown. Towards the end of May, over 150 stores have reopened across North America, Europe, Asia, New Zealand, and Australia. 

“As we begin to reopen Lululemon stores around the world, we are taking a balanced and thoughtful approach to ensure all necessary precautions are in place and to prioritize the safety and wellbeing of our people, guests and communities.” – Calvin McDonald, CEO at Lululemon

In order to maintain safe distancing, the retail brand closed off its fitting rooms, adopted a cashless payment method, and offered buy online, pick-up in-store services. 

Source: As Lululemon Reopens Hundreds of Stores, Here’s How It’s Keeping Shoppers Safe

June 2020 – Emerging stronger post-lockdown due to wellness and fitness boom

Despite Lululemon reporting a 17% decline in sales in June, analysts were optimistic that the retail brand will continue to accelerate in growth post-lockdown. According to Jeffries analyst Randal Konik, the boom in the wellness and fitness industry during lockdown had put Lululemon in a great position. During the lockdown, consumers were shopping for comfortable and durable fitness wear, which signified the shift towards a healthier lifestyle. 

We expect accelerated consumer gravitation toward fitness/wellness apparel in the wake of COVID-19, of which Lululemon should capture outsized share,” the analyst shared. 

Source: Health and wellness will be a top priority for consumers in a post-COVID world, and analysts say Lululemon is primed to capitalize on this

July 2020 – Acquired home fitness brand, Mirror at $500 million

Lululemon announced its $500 million acquisition of home fitness startup, Mirror. This was the company’s attempt to invest in home fitness as home workouts increased in popularity during the lockdown period. 

Mirror’s responsive software allowed users to access weekly live classes, on-demand workouts, and personal training with a fitness coach. Mirror’s functionality tied in well with Lululemon’s intention to grow its presence in the home workout scene. 

“In 2019, we detailed our vision to be the experiential brand that ignites a community of people living the sweatlife through sweat, grow and connect,” Lululemon CEO Calvin McDonald said.

“The acquisition of MIRROR is an exciting opportunity to build upon that vision, enhance our digital and interactive capabilities, and deepen our roots in the sweatlife.” 

Source: Lululemon Acquires Workout Platform, Mirror

September 2020 – Surge in online sales by 150%

Lululemon’s online sales in Q2 of the fiscal year saw a 150% surge. The company also reported that its direct-to-consumer net revenue contributed 61.4% of total net revenue when compared to its 2019 revenue. In face of the spike in e-commerce demand, Lululemon had prioritized its digital efforts – from site enhancements, omnichannel functionality, and fulfillment capabilities. 

“These… were on our roadmap for the next two years and given our ecommerce business has currently accelerated beyond our expectations we [are prioritizing] and pulling forward these investments,” CEO Calvin McDonald said.

Source: Lululemon is cautiously optimistic as online sales spike more than 150%

December 2020 – Online sales accounted for 43% of total retail sales in Q3

Lululemon Q3 earnings were reportedly a 22% increase in revenue as compared to 2019. Its e-commerce sales also had a 93% year-on-year growth – which by the third quarter had contributed 43% of its total revenue.

“We have been investing in our digital capabilities and enhancing the experience of our e-commerce sites for several years, which enabled us to quickly respond to the accelerated shift to [omnichannel] this year.” Calvin McDonald, CEO. 

Source: Lululemon’s online sales offset declines in-store traffic

January 2021 – Online sales accounted for 51.8% of total retail sales 

In January this year, Lululemon reported that its direct-to-consumer (DTC) sales accounted for 51.8% of total sales in the first nine months of 2020. 

Even before the pandemic, the retail brand had already been investing in digitalization for the past 3 years. This definitely paid off during the pandemic-driven shift towards online shopping.

“COVID has shifted the world in some ways and has allowed us to take advantage of all the investments we’ve made in our digital ecosystem and leaning into our omnichannel strength. That has been one area that we have pushed into leveraging physical and digital,” said Celest Burgoyne, President at Lululemon, Americas. 

Source: Lululemon highlights benefit of physical stores despite online shift

February 2021 – Revenue from China market increased by 45%; China becomes Lululemon’s main growth focus

With Lululemon China’s revenue doubling up during the pandemic, it announced that it will be growing its footprint in the Chinese market. The retail brand will be focusing on China’s market as both the brand and the health and wellness industry in China is experiencing rapid growth.

Source: Lululemon bets on China after revenue from Mainland more than doubles during coronavirus pandemic

2020 was indeed a fruitful year for the retail brand. However, with the current uncertainties surrounding the pandemic, it is difficult to predict how this year might turn out for retailers and e-commerce merchants alike. Nevertheless, we are very much looking forward to Lululemon’s growth in 2021.

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