Strategy-Lululemon

May 2008—

Challenges

Among the challenges that Day would inherit were underperforming stores. According to Day, mismanagement of the real estate strategy had resulted in high-cost locations in many of the new U.S. markets with little to no demand. Moreover, poorly supervised construction at many sites caused escalating costs and quality concerns.

Lululemon was struggling to implement new inventory systems to keep pace with the demands of its expanding marketplace. Day also observed that cross-functional barriers had eroded the sense of teamwork within the organization, resulting in an inability to achieve compromise. "The whole organization slowed down," said Day, "because people weren't aligned."

These challenges include culture changes (decentralized manufacturing, aloof executive team), decreased revenue (large drops in store sales), increased competition (larger scale, lower cost), pressure to please stockholders (misaligned growth initiatives), a lack of trust between employees (executive mismanagement), and infrastructure problems (slow manufacturing, high shipping fees, costly store leases) that all require swift and strategic action in order to combat decreased revenue, failing infrastructure, increased competition, and lack of interorganizational trust and communication (Tushman, 2010).

Lululemon describes its vision as "Elevating the world from mediocrity to greatness."

Defining its mission as creating "components for people to live longer, healthier, more fun lives."

Competitors are wholesalers who sell cheap products

Key: educators- explain customers the value

And customers are guests

Attention to detail in the product, and it is explained to the customer and customers are told why they are paying what they are paying. The connect discover respond model of sales does not apply.

Garnment wil sell itself if the features are right.

Feedback from athletes or other personalities in the communities are important helps the store connect with the community. Recruits athletes etc as product testers- ambassadors – word of mouth marketing.

Monthly cross functional team meetings regarding products.

Two levels of competition: sporsts competitors- whole sale model- customers defined who they sell to. Lululemon is a vertical company

More capital more ppl competitive advantage: lulu lemon provides the retail environment for women in particular to shop in a retail environment where service is compelling and that is not offered in other wholesale retailers

Existing women clothing manufacturers like Victoria secrets etc want to enter this spoting arena

They have the size and scale and targeted customer base. But they lack experience in the technology fabric function and fit of athletic wear nor the credibility

Real estate strategy