New Leadership, New Challenges
Laurent Potdevin brings new ideas and fresh leadership to Lululemon. What is he doing for the company?
Limiting the Influence of Chip Wilson:
Chip Wilson resigned as Chairman effective June 2014. This was a huge step in moving the company forward. Although Wilson will no longer be in an operational role, he remains on the board. He and his wife, Michelle, remain the co-founders of Lululemon. While this could lead to problems, Potdevin has a history of successfully working with founders at both TOMS and Burton Snowboards. Founders are important to a company. I believe he will be able to work with the Wilsons without allowing them to interfere with the company’s marketing and operational needs.
Fast-paced Response to Issues:
Potdevin is building cross-functional teams to more quickly address issues. The latest issue he has to address is the stock analyst’s criticism the company lacks a “detailed, constructive strategy” for improving sales.
Last year the company listened to its customers and effectively addressed quality issues. While Potdevin has only been on board for a few months, in my view the company failed to complete the communication cycle with its customers on the quality assurance changes.
The company hasn’t effectively communicated it listened to its customers. The customers weren’t “thanked” with effective merchandising like enhanced customer loyalty promotions and targeted public relations programs to educate the customers. The company hasn’t used every media outlet available, such as television, radio, the internet, or YouTube, to communicate to its customers what was done for quality assurance. This needs to change.
Challenges for Growth in the Women’s Market
Macy’s, Nordstrom, American Eagle, Athleta, Gap Body... You name it, and they’re trying to sell yoga wear. The difference for Lululemon is that it is a luxury brand with a higher price point and customer loyalty. Many issues could have caused permanent damage last year but it doesn’t appear the brand has suffered long-term damage. Yet, while I see Lululemon enjoying customer loyalty and steady sales, I don’t see a lot of room for growth with the women’s market. Where will the growth come from?
New Global Markets
Potdevin has a passion for building brands around the world. His career began with Louis Vuitton, which is one of the world’s most recognized luxury brands. Later he led the global expansion of both Burton and TOMS. He broadened TOMS’ cultural identity with its “One for One” business model where the company donates one pair of shoes to a child in need for each pair it sells.
Lululemon is poised for global expansion. It presently operates over 200 stores in the U.S., Canada, Australia, and New Zealand. Potdevin can drive greater international growth in both Europe and Asia. Particularly prime for expansion is the Asian market, which has an affiliation for the strong brand identity of a company like Lululemon.
Growth for the “Lulule-Man” Market?
TOMS products are unisex and as TOMS’ CEO, Potdevin successfully eliminated a gender base bias for its products. Lululemon wants to grow its men’s products, which currently represent only 12% of the company’s sales. Potdevin can do the same for Lululemon although the challenges are more formidable:
- Lululemon has a unique culture and language that may not appeal to men. Potdevin built trust in the male market at TOMS. He needs to use his reputation to change the culture and language so men are comfortable buying Lululemon.
- Lululemon is not just a sport brand. It is a crossover brand in which women use the products as a daily lifestyle choice. Women’s broadened use of the products has helped drive sales at Lululemon. Men may or may not make the same lifestyle choice.
- While men may like the quality of Lululemon’s products, they may not be willing to pay $64 for Lululemon shorts instead of dishing out only $24 for a pair of Nike shorts.
Lululemon might have a hard time breaking into the men's market. Even if they go up a few percentage points in their overall company sales, that is still a lot of money.
Lululemon is a Great Brand
Lululemon is a great brand. People love the products. My wife loves the products. They have some real stickiness.
They have effectively addressed their operational and quality issues. Potdevin is the right guy to bring back the company’s mojo, improve the marketing and sales plan, find new global markets, and make further headway in the men’s market.
I’m confident that Potdevin will lead them to where they need to go.