Lululemon looks to digital to combat slow sales
Lululemon announced solid Q4 results, with net revenue increasing 12% year-over-year (YoY) to $790 million.
E-commerce net revenue also increased 12% YoY, to $164 million. For the fiscal year ended January 29, the athleisure retailer brought in $2.3 billion in net revenue, an increase of 14% YoY.
Despite the positive Q4 and full-year results in 2016, CEO Laurent Potdevin said he expects sluggish demand to result in a same-store sales decrease in Q1, while also having an acute effect on online sales.
Lululemon announced several initiatives aimed at boosting e-commerce sales in the first half of 2017.
The company plans to improve its site performance, and introduce a new mobile app to address functionality and performance issues.
It's piloting a click-and-collect option — a highly successful offering among legacy retailers. Lululemon also plans on increasing the number of stores with ship-from-store from 85 to 145 by the end of Q2, and will add the option to its outlet stores.
The retailer is building out its team and infrastructure in Shanghai to capitalize on the digital opportunity in Asia. APAC has been the fastest-growing region for the company, which opened stores in China last year following the success of its flagship store on Tmall in 2015.
Athleisure is a saturated space, so Lululemon cannot risk losing customers due to a poor digital experience, or limited omnichannel offerings. As more competitors like Sweaty Betty gain market share in this niche space, Lululemon won’t be able to rely on its merchandise to draw customers in, and digital will become an even more important differentiator. Click-and-collect, in particular, is a highly popular feature that most retailers currently offer, and deploying this service quickly will be crucial for Lululemon to stay competitive. As consumers increasingly shift online for all of their shopping needs, it's vital that even those with strong brand loyalty stay ahead of the digital curve, or they risk being left behind.