Four Brand Lessons from Lululemon

On Monday, Lululemon cut its revenue and earnings guidance sharply. This sent its shares tumbling more than 15%, to a two-year low.

This is the outcome of a pretty awful 2013 for Lulu, which included a product recall and comments from founder and chairman Chip Wilson that were, shall we say, a bit insensitive. (In December, Mr. Wilson announced that he was stepping down as chairman in June of this year.)

Lulu’s struggles offer us all an opportunity to brush up on some key brand lessons. From where I sit, the four most important lessons are these:

Great brands start with great products.

Sometimes “brand” is misunderstood as this magical pixie-dust that just makes everything “feel” better. Certainly, the best brands resonate emotionally, often dominantly so. But let’s not forget that truly great brands stand on superior products and services.

For a brand like Lululemon, which sought to stand for “top quality” (with the price points that accompany it), quality issues are damn near a worst-case scenario. Consumers complained that Lulu’s popular Luon yoga pants were too sheer, prompting a recall in March 2013. A recall always raises other specters; consumers reasonably ask, “If this is the quality of a core product, what else are they skimping on?”

Yes, your brand must resonate emotionally. But that’s not enough. Strong brands work on multiple levels, and that begins with getting the offering right, every time.

The CEO = The CBO

That is to say, the Chief Brand Officer. Too many CEOs still don’t realize that the brand is one of their top priorities. Others, like Chip Wilson, don’t consider the impact of their words and deeds on the brand.

Remember that consumers have jobs too. They’ve worked for CEOs. They know that that person sets the agenda and the culture for the entire organization. If the CEO acts in a manner that’s out of line with either corporate or consumer values, confusion and disappointment will result. And confusion and disappointment are never good brand strategies.

Sure, Mr. Wilson announced his resignation last month. But the damage had already been done. Many once-loyal Lulunistas have already moved on. And they have plenty of options. Which leads us to our next lesson…

Your competitors will respond. Plan accordingly.

Too many fast-growth companies fail to adequately plan for competitive response. Nike, Under Armour and Gap’s Athleta concept are among those now encroaching on Lululemon’s turf. Should this surprise anyone?

Lulu sells premium-priced products in a narrow niche.They have always been vulnerable. Swift competitive response should have been expected. Lululemon now sounds like a company very much in a reactive, defensive stance. And that’s not the stance of bold strategy and sustained growth.

If you really want to change the conversation, change the experience.

According to AdAge, Lululemon CFO John Currie told investors and analysts: “It’s incumbent upon us to turn the conversation around to be more positive again.” I don’t want to parse Mr. Currie’s semantics too finely, but if he thinks the issue here is “the conversation,” he’s searching for clues in the wrong dumpster.

What should be apparent to everyone at Lulu – and especially its leadership – is that the experience matters most. Your brand is everything you do. A product recall indicates quality control issues. A thoughtless CEO suggests cultural issues. That’s not about any “conversation.” That’s about doing the day-to-day, hard work that makes a brand great. Anything less, to parrot another of Chip Wilson’s famous quotes, will resign your brand to a “state of mediocrity.”

About Matthew Fenton: Matthew helps challenger brands to focus, grow and win.  Since founding his consultancy, Three Deuce Branding, in 1997, he’s helped hundreds of brands to achieve “brand clarity.”  His consulting services and speaking engagements help brands to focus on what matters through positioning, strategy and ideation.  Contact Matthew here.  He calls Chicago home.

Copyright 2014 – Matthew Fenton.  All Rights Reserved.  You may reprint this article with the original, unedited text intact, including the About Matthew Fenton section.

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4 Replies to “Four Brand Lessons from Lululemon”

  1. Another great read Matthew. My little dancer turned me onto Lulu this year and we visited a small boutique when we were in California…what you stated here was felt in the store…you could tell they were trying to be something but the soul was not there…interesting about the product recall…did not know that…

    1. Thanks for your comment! Historically, the stores have been where the “soul” of the brand was really felt, so if that’s slipping, the cracks may be deeper than I thought.

  2. Thank you for sharing this post and great brand lessons learned the hard way. It all gets back to what is your brand promise and values. The brand promise and values should be a daily mantra and brand benchmark(s) and guide post for getting out of a sticky product recall snafu. These brand promises and values should be at the forefront the CEO’s mind to the daily mindset of every employee at every level. If you made a mistake, admit it and correct it immediately to help regain back your customer brand loyalty. If you think that your brand needs to make some adjustments to your brand promise and values, then by all means do it now.

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