Lululemon has been testing an annual subscription plan that would merge its digital and physical footprints, offering users access to discounted shipping for online orders and access to exclusive yoga classes and events in the real world.
During the test, which Lululemon refers to as a “loyalty program,” members were charged a fee of $128 for an annual membership (that’s $10 above the annual price of Amazon Prime). Users were able to choose between an exclusive pair of pants or shorts at sign up and additionally had access to monthly curated work out classes in the local community, facilitated by existing Lululemon ambassadors.
The program also had e-commerce benefits, such as expedited and cheaper shipping, while offering users early access into the brand’s Sweatlife Festival and other in-person events.
The company has been testing the service in Edmonton, Alberta, roughly 750 miles northwest from Lululemon’s headquarters in Vancouver. Lululemon said the response to the program has been strong, exceeding the company’s expectations. It plans to continue piloting and rolling out the service in new markets through the first half of 2019. Lululemon Chief Executive Officer Calvin McDonald said the company is also going to “test and play” with the subscription price, which might include raising fees slightly based on initial engagement and response.
“Most of the first half of 2019 is going to be tinkering, playing with the program, getting the curation of services right,” he said on a call with analysts. “But we are super excited and we’ll continue to lean and then test and learn around the notion of a membership pay for and the curation of services that we offer.”
Lululemon has long had close contact with its customers through its brick-and-mortar stores, some of which have communal spaces for classes, workshops and events. The company has also relied heavily on its ambassadors, many of whom teach classes free-of-charge in some of Lululemon’s stores.
“It’s clear that we can take these relationships to the next level with the loyalty program,” McDonald said.
This test of a membership program comes as Lululemon works to increase its digital footprint. During the company’s most recent earnings report, Lululemon said traffic to its site grew more than 35 percent during the third quarter and its e-mail list increased by 19 percent, which both contributed to an expansion of digital revenue to just over a quarter of the company’s total.
“I believe we will look back on 2018 as a milestone year for Lululemon, where the culmination of our multi-year investments in supply chain, technology and innovation, broadly, have delivered an inflection in our business that has set us on a new trajectory,” said Stuart Haselden, Lululemon’s chief operating officer. “We are committed to building a durable growth story and believe we are just getting started.”
Buoying these digital efforts are aggressive plans to expand outside of North America, particularly within Asia, notably China. The company also recently hosted its first Sweatlife Festival in Europe, where it connected guests in Berlin with local yoga studios and teachers.
Last quarter, Lululemon’s total market growth in Asia and Europe climbed more than 50 percent. Its e-commerce business was particularly strong in China, jumping 76 percent year-over-year thanks in part to the Alibaba-powered shopping day “Singles Day” the first week of November.
“There are over 400 million millennials who are digitally engaged, beginning to invest in health and fitness and looking for brands that bring both great product solutions and experiences,” McDonald said. “The opportunities are considerable, beginning with our digital and retail experiences our brand and community expressions and, of course, our product. We will aim to strike the right balance between leveraging our global strength while acting locally where it matters most to keep winning.”
SportTechie Takeaway
Lululemon is not the only brick-and-mortar retailer attempting to marry the physical and digital worlds. In 2017, Amazon attempted to do this when it purchased Whole Foods, the organic grocery store, and began offering Prime members access to discounts on in-store purchases. Nike has done something similar through its Nike Plus membership program, though unlike Amazon and Lululemon, Nike’s hub is free for end users. This summer, Nike brought some features of its mobile app to life in a new Los Angeles concept store that promised to adapt to consumers’ changing tastes and demands in real time. Lululemon’s attempt is similar to that of Nike’s in that it is hoping to leverage an already existing base of loyal fitness enthusiasts to further build community online and in-person.