Note: We’re launching a periodic new blog post called “Situational strategy” in which we’ll do a brief review of an item in the news and some ways that someone in the decision-maker’s shoes might approach. Please provide any feedback or let us know if there are any topics you would like us to review.
We have talked about the power of competitive intelligence as a “hack” to jumpstart innovation or product launches. An offshoot of this idea is the application of prior, successful go-to-market strategies for new launches. A famous example is the “razor and blade” strategy that Gillette pioneered and that became a business model that many emulated. To get more specific on this concept, we wanted to take this idea and apply it through the lens of a topic that has been in the news: the launch of lululemon’s new selfcare line.
lululemon has been on a tear with revenue and margin increases that continue to impress, resulting in record highs for the stock price. On the most recent earnings call, lululemon’s CEO, Calvin McDonald, announced that the company was starting a new product line centered on selfcare (health & beauty). While most of what lululemon has touched has turned to gold, the health & beauty category poses different challenges given how unique the product development and sourcing is to the business as well as being a different shopping occasion than their apparel line. That said, the risk is low and lululemon has a loyal following that presents opportunities for the company to expand its relationship with customers.
So, what is a way that lululemon could enter the health & beauty market in a big way? A key asset stands out: the hundreds of relationships it has with partners from premium yoga studios to fitness centers through which it sells wholesale apparel and studio essentials. lululemon has a significant opportunity to provide its health & beauty products – such as basic balm and dry shampoo – to the studios where consumers would regularly use the product before and after workouts. In this way, lululemon would be front and center for consumers with approved partners and provide an easy pathway for consumers to try the product. Moreover, the studios would benefit from such an arrangement since the selection of products for the “locker room” are a way for the studios to differentiate themselves.
Where has this idea worked in the past? Aesop, a high-end brand in the health & beauty space, followed a similar path to growth by hand-picking boutique hotels and restaurants to whom it provided its soaps and lotions. By associating the soaps and lotions with high-end establishments, Aesop was able to introduce customers to its brand in an environment that aligned with its brand vision (while allowing it to charge luxury prices!)
In expanding the relationship with its partners beyond apparel and studio essentials to include selfcare items, lululemon can introduce the product to customers quickly and grow the product line into a resonant offering beyond its apparel. Now we just wait to see if customers pick up the scent.
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