Case Analysis LuluLemon

Case Analysis: Lululemon Athletica Sheer Pants Scandal Analysis By Claire Sonksen Comms 235 sec 1 November 3, 2015

Summary In March 2013, Canada-based clothing company Lululemon recalled 17% of its black stretchy yoga pants for appearing see-through due to the fabric being too thin. The company initially responded by offering full refunds for the pants and pulled all affected styles made after March 1. Lululemon said the problem was their “nylon-and-lycra-blend fabric it calls Luon”, and quickly placed blame of the defective batch on Taiwanese supplier, Eclat Textile (Suddath, 2013). The supplier responded that they had followed their instructions to make the product, stating that Lululemon’s expectation vs. market reaction was the problem (Reuters, 2013).

Lululemon then addressed the problem of testing protocols, implementing a new team and policies to improve (Lutz, 2013).

The estimate cost of recall was $40 million in profit that fiscal year (Ho, 2013) and the Lululemon CEO stepped down three months later (Post, 2013). In November a second quality issue surfaced surrounding the yoga pants, and founder Chip Wilson publically blamed wearer’s “thick thighs” for the cause of pants’ sheerness (Canada, 2013).

1) Topic Objectives •

Issue 90% refunds on sheer defective merchandise, while pulling 100% of remaining defective styles from the sales floor

•

Publically inform 90% of customers that a recall of the damaged batch of stretchy black signature yoga pants has been issued

•

Create and implement a new testing protocol for the sheer pants by June 2013

Effectiveness of Objective: Through the three stated objectives, Lululemon was able to accurately inform their customers of what went wrong with the batch of pants. Although sales and stocks initially fell, Lululemon’s response that addressed all key components (brand loyalty, merchandise quality, and production error) involved in the issue.

Recommendations: Although the Founder’s comments were not apart of the PR objectives, they affected the public’s view of the company and response to the problem. An added objective of employee education on how to handle the situation would have been effective.

2) Lululemon Key Publics •

Female health-conscious middle-aged yogis

•

Wealthy women wanting high-quality workout clothes

•

14-28 year old females wearing Lulu for everyday comfort and style

Effectiveness of Key Public: The key publics are the avid customers of the Lululemon brand, and thus those that were most affected by the sheer pant scandal. Each key public was affected by the sheerness based oby their daily activities, thus they were the exact targets for the responses to the problem.

Recommendations: Although the Lululemon brand is not a plus-size brand, those with larger figures were affected by this scandal. The company could have better addressed those who were body bashed as a separate key public (Bhasin, 2013) by stating they are valued as customers, as the sheerness came from failed protocols and a bad fabric batch.

3) Lululemon Messages •

Lululemon is not at fault as the unacceptable level of sheerness was created during the manufacturing process (Reuters, 2013) o Lululemon was at risk for relying on a limited number of suppliers o Fabric in question was supplied by a single manufacturer in Taiwan

•

“The company has fixed the problem and will be increasing its inventory levels for the yoga pants throughout June” (Ho, 2013) o Fabric is ensured to fit the body without being stretched beyond its capability o New fabric has been put through extensive testing (Ho, 2013)

•

“We are 100% committed to doing the right thing for our guest and living our standards” (Alexis, 2013) o We have pulled affected product from our floors and website o If you purchased a product and think it is too sheer, you are welcome to return it for a full refund or exchange (Alexis, 2013)

•

The “testing protocols were incomplete for some of the variables in fabric characteristics, resulting in an end product with an unacceptable level of sheerness” (Lutz, 2013) o CEO will be replaced to ensure a higher quality level of product development (Ng, 2013) o Lululemon is implementing a new team and new policies to prevent the problem from happening again (Lutz, 2013)

Effectiveness of Messages: The messages displayed by the Communications team of Lululemon addressed the aspects of product quality and what had gone wrong, taking responsibility for the mistake in the end. Lululemon clarified that their design-testing procedures have changed, and the pants will be made out of better quality. The company also clearly addressed the customer’s right to a refund if they felt the product was not at desired quality.

Recommendations: Although the statements given by the company are sufficient, I feel as though there are three key ways they could have improved.

One, active statements should have been made in regards to those who had purchased sheer pants. Yes the company refunded them, but they could have increased customer loyalty by publicizing that more heavily, while adding on a gift card or free additional item for their troubles. In the long run this additional cost would be worth the added customer loyalty.

A second way the company could have improved is through making statements in regards to the specific activity the pant is designed for and the sheerness it will accompany. Various

news sources made jokes about the need to bend over before purchasing these pants. Lululemon could have built a campaign off of that, in a sense poking fun at themselves for their mistake, while also helping guarantee the customer added satisfaction in the long run of future purchases.

A third additional message could have been used to address the discrepancy of size.

Though a touchy subject, Lululemon could have made a public statement in regards to the fit of their product being true to size, or even that they run small, encouraging customers to purchase a size up to prevent the sheerness when possible.

4) Lululemon Strategies and Tactics •

Convince the health-conscious middle-aged Yogis through the Lululemon blog that a new testing process has been implemented for the pants o Blogpost addressing that the pants were not up to standard (Alexis, 2013) o Blogpost stating new standards and specifications required, including “15 new tests to make sure you get great ass coverage” (Stacey, 2013)

•

Make aware the wealthy women wanting high-quality workout clothes and those wearing Lulu for daily comfort through the Lululemon blog and Facebook account that a refund has been issued for the overly sheer pants. o Blogpost addressing that the pants were not at standard (Alexis, 20213) o Facebook post linked to blog entry, informing customers of the refund online and in stores.

Effectiveness of strategies & tactics: Lululemon used their blog and social media following to address the issue at hand, providing a refund and explaining how the pants will be remade.

Although effective and convincing in these strategies, Lululemon failed to address the issue any other way.

Recommendations: Lululemon could have been more effective if they had created strategies involving their employees, as well as the supplier that was involved in making the pants.

A memo could have been used to inform employees specifically of what occurred and how the merchandise was to be handled in stores. With various offensive comments made by CEO and employees, a statement or policy could have been made educating the employees on how to handle the angered customers. This would have shown customers how they themselves are valued and how Lululemon employees are fulfilling their established purpose.

Lululemon initially placed blame on Eclat Textile, later stating that the company’s own testing procedures were poor. A strategy involving Eclat could have been beneficial showing that they are both working together to fix the problem. The combined effort to not place blame, but instead quickly and effectively fix the sheer fabric problem broadcasted over various forms of social media would have been more effective then the way it was handled.

References Suddath, C. (2013, March 28). What Lululemon’s Yoga Pants Recall Reveals. Retrieved 28 October 2015, from http://www.bloomberg.com/bw/articles/2013-03-28/what-lululemons-yoga-pants-recall-reveals Reuters. (2013, March 19). Lululemon recalls see-through yoga pants as stock drops, supplier blames company for misjudging women’s tastes. Retrieved 28 October 2015, from http://www.nydailynews.com/lifestyle/fashion/lululemon-recalls-see-through-yoga-pants-article-1.1292651 Murray, R. (2013, December 10). Timeline: How Lululemon got it wrong. Retrieved 29 October 2015, from http://www.nydailynews.com/life-style/fashion/lululemon-wrong-article-1.1543225 Ho, S. (2013, June 03). Lululemon pants back on shelves after see-through blunder fixed. Retrieved 28 October 2015, from http://www.reuters.com/article/2013/06/03/us-lululemon-recall-restockidUSBRE95210R20130603 Post, T. H. (2013, June 10). Lululemon CEO Christine Day to step down. Huffington Post. The Huffington Post.

Retrieved from http://www.huffingtonpost.com/2013/06/10/lululemon-ceo-step-down_n_3417247.html Canada, T. H. P. (2013, November 06). Chip Wilson, Lululemon Founder: ‘Some Women’s Bodies’ Not Right For Our Pants. Retrieved 30 October 2015, from http://www.huffingtonpost.ca/2013/11/06/lululemon-chipwilson-womens-bodies_n_4228113.html Lutz, A. (2013, April 3). Lululemon blames see-through yoga pants on testing mistake. Retrieved 27 October 2015, from http://www.businessinsider.com/lululemon-reveals-why-pants-were-see-through-2013-4 Bhasin, K. (2013, August 9). Inside the Multi-Billion dollar brand that shuns overweight people. (T. H. Post)Huffington Post. The Huffington Post. Retrieved from http://www.huffingtonpost.com/2013/07/31/lululemon-plus-size_n_3675605.html Ng, S. (2013, June 10). CEO bows out at Lululemon. (T. W. S. Journal)The Wall Street Journal. wsj.com. Retrieved from http://www.wsj.com/articles/SB10001424127887324634304578537712064607592 Alexis. (2013, March 18). A letter to our guests. Retrieved 28 October 2015, from http://blog.lululemon.com/aletter-to-our-guests/ Stacey. (2013, May 31). Meet britt: Black is back. Retrieved 28 October 2015, from http://blog.lululemon.com/meet-britt-black-is-back/