New Lululemon CEO sets 2014 game plan: A fresh voice and a pullback of the scarcity model

After four months on the job, Laurent Potdevin outlines his strategy for one of yoga’s leading brands. He calls 2014 an investment year.
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Few could argue against the idea that Lululemon needed a change in tone following last year’s yoga pants debacle that led to founder Chip Wilson stepping down as chairman.

LaurentPotdevin_Lululemon

The new voice up top is former Burton CEO and Toms President Laurent Potdevin, who, after four months on the job at Lululemon, recently outlined to investors his strategy for one of yoga’s leading brands. He calls 2014 an investment year.

“We’ve been voiceless for too long, and I’m anxious to have all of us share more broadly who we are and what we stand for, with confidence and humility,” Laurent said during the company’s March 27 conference call.

He explained that when the company got mired in the headlines, it failed to respond with its strongest asset. “We have a set of 900 ambassadors that we support in North America, some outside of North America, and we just haven’t given these people their voice.”

To that end, Potdevin said Lululemon will double down on its previous successful efforts in grassroots marketing instead of large-scale ad campaigns. “Now is the time to amplify our grassroots approach and ensure that we claim back our share of the voice in the market we created.”

The message, Potdevin said, will be that Lululemon is returning to its roots of being design-led without compromise. It’s no secret that Lululemon has many more competitors than it did a few years ago (including from many outdoor and fitness brands), he added, so the brand must go back to being “a relevant disrupter … inventing the future.”

The new mission could also bring change to one of Lululemon’s iconic business strategies — the scarcity model, where a deliberate shortage of products are created to generate a buzz and increased demand.

“While we don’t mind our guests being hungry for our product, we don’t want them to starve for it,” Potdevin said. Lululemon plans to invest in technology that will help it better understand what their customers want and present an improved, seamless experience across the vertical business model that creates “a direct response with every guest.”

The brand also sees opportunity on expanding its presence in Europe and Asia, where it will spend money in 2014 to build infrastructure.

All of those investments could eat into some of the company’s margins in 2014, Potdevin acknowledged. The company estimates an 11 to 14 to percent rise in annual sales to $1.82 billion in 2014, compared to a 16 percent rise in 2013.

--David Clucas

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