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Ambassadors on a Mission for Lululemon

Written by Tom Ryan
By Tom Ryan

While Lululemon Athletica eschews big-time celebrity endorsees, it's a big believer in the local celebrity.

Part of the yoga-themed retailer's success is traced to its efforts to turn fitness instructors within each community into brand advocates. Those deemed "ambassadors" -- who often lead local yoga, spinning, Pilates and running classes -- are given up to $1,000 of free apparel a year in exchange for their input into the design of new clothing.  The ambassadors are also featured in communication material such as posters inside each store, as well as in bios and blogs on the Lululemon website. Since they'll likely be wearing Lululemon when they teach, they are also expected to serve as community models for the brand.

"I wear Lululemon, and I'd estimate that 90 percent of my clientele has switched to Lululemon," Michelle Cushing, owner of the Chicago fitness studio, Dare to be Fit, told The Wall Street Journal.

Ambassadors also conduct free yoga, Pilate or conditioning sessions held inside Lululemon stores, or lead many group runs orchestrated at each store. While unpaid, leading such classes helps personal trainers find regular clients.

Lululemon's grassroots' efforts -- including a community board within each store promoting local yoga classes and run groups, as well as the free classes and ambassador efforts -- are seen as integral in supporting the retailer's premium pricing despite minimal advertising. The average ticket price is about $100.

Elena Gallo, a Chicago attorney who takes Pilates and boot-camp classes with Ms. Cushing, told the Journal she only began buying Lululemon merchandise after seeing her instructor wearing it. "I was always adamant that I wouldn't spend a fortune on workout clothes. ... Now Lululemon is all I wear."

Lululemon last week reported second-quarter earnings more than doubled on a 31 percent jump in comparable-store sales. Sales per square foot are now over $1,530. It expects to open 20 to 25 new stores in 2011, up from 14 planned for this year. It ended the quarter with 130 in North American and Australia.

The Journal listed a number of challenges to Lululemon's future success. Besides establishing an infrastructure to support aggressive expansion, the market for higher-price fitness apparel may be more limited than projected, lower-priced imitators may arrive, and a backlash against Lululemon's success may occur within the yoga community. Bigger sporting goods players like Nike or Adidas that spend millions marketing and locking up endorsements from celebrity athletes are also pursuing the emerging women's fitness opportunity.

Discussion Questions: How much of a competitive advantage does  Lululemon gain from initiatives such as its ambassador program, free classes, etc.? What are the main challenges going forward as Lululemon ramps up expansion efforts?

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