Lululemon Boosts Digital Sales 30% Through Global Focus

Need to Know

• Lululemon reported a 30% growth in online sales in its recent Q3 earnings report, compared to 11% in-store growth.
• International growth rose by 35%, fuelled by new websites and online experiences.
• By 2023, lululemon plans to double online sales and quadruple international revenue.
• ‘Buy online pick up in-store’ is now live in almost every North American store.

Analysis

Despite a competitive retail marketplace, business is booming for Canadian athletic retailer lululemon. A Q3 earnings report boasted increases in three key areas: product innovation, omnichannel development, and guest experiences, with e-commerce revenue seeing an impressive 30% increase. 

The brand, known for its sports bras, leggings, and yoga wear, has begun pushing into other markets. Most notably the brand has made strides in the running market, employing celebrity global ambassadors and hosting one-of-a-kind experiential marketing events and races around the world. Not satisfied with just the women’s market, the retailer has also begun tapping into men’s with men’s specific stores and product lines. 

Earlier this year the retailer announced plans to double its online sales over the next five years and quadruple international revenue by 2023. The recent Q3 report has the brand correctly positioned to do just that. In a recent call with analysts, lululemon Chief Financial Officer, PJ Guido said that digital comps accounted for $247 million of revenue or close to 27%. 

Buy online and pick up in-store options are steadily growing for lululemon. Close to 80% of purchases ordered for in-store pickup is ready in under one hour, while 20% of those guests picking up orders will make an additional purchase in-store.

The brand’s online growth can be attributed to part to their recent expansion into international markets. Of the 45 to 50 stores the retailer projected it will open this year, almost 30 of are outside North America. Along with the physical retail stores, lululemon also created customized websites for each market, including France, South Korea, Germany, and Japan.

“The expanding base, coupled with our local e-commerce sites and brand activations, is increasing our guest awareness in each market and, importantly, our traffic,” said Calvin McDonald, lululemon’s CEO. “This is fueling our strong revenue momentum across our international markets and we’re all pleased by our 35% increase in quarter three.”

The focus on e-commerce and international growth led to a 35% gain in revenue outside North America. 

Also contributing to the overall growth and brand awareness is lululemon’s new customer loyalty program. Tested last year, the program saw a slow rollout from city to city with the brand making adjustments and changes as they went. For a fee, customers had access to workout classes, special curated offers and events, and most importantly, free expedited shipping on all online orders. 

The expedited shipping makes sense considering the retailer’s high focus on investing in digital growth such as website improvements, user experience enhancements, and high-quality product information.

Lululemon has also taken a unique approach to the supply chain—currently, the company owns and operates only one distribution center, leasing others. 

Founded in Vancouver, Canada in 1998, lululemon first entered the market with yoga tights and related apparel. The retailer now has over 460 international stores including experiential megastores in the Mall of America and Chicago.