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Lululemon Makes The Case For Experiential Retail

by 
Ethan Chernofsky
 on 
July 30, 2019
Lululemon Makes The Case For Experiential Retail

There are few retail brands as exciting to watch and monitor as Lululemon. The activewear giant is coming off an incredibly strong Q1 with promises of an innovative approach to the expansion of their retail footprint. So it is no surprise that major interest surrounded the launch of a massive concept site in Chicago that would be the brand's largest ever.

And with the opening happening earlier this month, we knew it was time to dive into the data to see if the early returns on the 20,000-square-foot property met up to expectations. The location, which included classic retail space, a workout center, a meditation area, and even a restaurant offered a glimpse into what the future of retail could look like.

But did audiences respond?

Quick Rise

Impressively, the location immediately saw large numbers of visits in the first two weeks of operation with over 2,000 visits and nearly 3,000 visits, respectively. But as important as the rise itself is checking for the presence of the unique characteristics one would expect from an experiential location.

Comparing the new branch with an existing strong Chicago performer shows all of the signs of a powerhouse. The new branch (blue) managed to drive visits in off-hours with major increases in the percentage of visitors in the morning and evening. It also showed a greater proclivity for driving traffic during weekdays and off-peak shopping days.

Yet, most importantly, it demonstrated a capacity to keep visitors in the location longer thereby increasing earning potential. Visitors to the new branch spent 16% more time in the location than at the other high performing site. This difference is massive not just for the extended abilities to drive revenue, but also in deepening the relationship between Lululemon and its customers. The exceptionally ambitious attempt to create a full and rich experience in an apparel store is showing early signs of paying off.

The Risk

Yet, as with any success there are bound to be areas of concern that need to be managed effectively. Looking at weekly traffic from the start of 2019 as compared to the baseline sees the launch of Lululemon’s new flagship negatively impact a store that was previously one of the strongest performers in the area.

This was precisely the one concern identified after the company celebrated its successful Q1 with talks of a more aggressive expansion. Adding new locations in too close a proximity increases the risk of inevitable cannibalization - and there are signs this could be happening with Lululemon.

But all is not lost. The reality simply places an added importance on the brands plan to roll out a variety of different store formats. If they can identify a strong mix of store sizes, they can effectively leverage the approach to maximize each location and region.

The Conclusion

There is no luck to the Lululemon story as the brand consistently looks to leverage its position in a ‘niche’ market to its fullest capacity. And a creative approach to in-store concepts and experiences is taking this idea to an exciting level. However, the brand’s expansion is already showing signs of potentially hurting existing stores. The roll-out of new formats is going to be critical to determining whether Lululemon can maximize its retail footprint throughout the country.

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