Its rise has been nothing short of meteoric. The yoga-inspired athletic-apparel company lululemon athletica, founded in 1998, now has more than 300 stores, 8,000 employees, and yearly revenues of approximately $1.78 billion (as of December 2014). The company’s compounded annual growth over the last five years is just over 30 percent. Still, the Vancouver-based company believes there is significant room for growth, and that conviction has executives setting the stage for the brand’s innovative approach to global expansion. As a company deeply committed to the communities in which it operates, lululemon has a unique grassroots approach to market entry. The method includes building relationships with local brand ambassadors and creating showrooms to seed product, inform store design and real estate, and foster authentic community engagement.
Chris Tham is lululemon athletica’s senior vice president of finance. Born and raised in Vancouver, Tham majored in accounting and started his career at PricewaterhouseCoopers before working at a tech firm and settling at a company that operated ski resorts in North America. There, Tham spent nearly seven years helping that company grow, ultimately leading to its sale and partnership with a private equity fund.
When an opportunity with lululemon proved too attractive, he joined the growing apparel company in 2009. “I had seen lululemon rise in popularity in Vancouver, and I knew the brand’s potential was great,” he says. “I wanted to be a part of what I saw as an exciting and growing company with a strong culture and set of values.” Tham stepped in to join then CFO John Currie and a small strategic team to lead financial planning and analysis for the public company, which then had 100 stores and $350 million in revenue.
Despite a global recession, the company was healthy enough to expand into the United States, and it began a rapid ascent in the athletic-apparel retail market. Tham and his colleagues faced considerable challenges to help grow lululemon’s reach and give it a significant international presence while managing the level of investment required to nurture the business. “We’re a very entrepreneurial company, and we focus on this spirit in the business to prioritize investments and balance various initiatives with our overall business strategy,” he says. While no company can pursue every idea, Tham has found that the secret lies in listening before acting. “It’s not about saying no; it’s about spending time to hear how colleagues present their ideas to truly understand how it will drive business,” he says.
Before & After
Since lululemon’s IPO in 2007, the company has seen significant growth. Here’s a look:
$2,747.5 M $1.78 B
in revenue in revenue
In 2009, Tham worked closely with lululemon’s leadership team to refine the company’s US growth strategy and market-entry approach. For Tham and his team, it was about supporting lululemon’s investments into grassroots market-seeding tactics and building communities together with regional brand awareness. Instead of signing long-term leases, the brand first opens short-term showrooms after identifying a target market. These smaller versions of permanent stores have limited product assortments but keep lululemon unique and community-driven. Managers and their local team spend three or four days running the showroom while using the rest of their time to connect with yoga studios and potential partners, including brand ambassadors.
The strategy enables lululemon to seed the target market, build a strong customer base, and cater its permanent store to the tastes of the community. Permanent stores usually open an average of 12–18 months following a showroom. In-store community events such as on-site yoga classes and running groups help create connections between guests and the brand. In addition, a strong network of more than 1,000 lululemon ambassadors takes the brand deeper into the community.
Instead of writing big checks for flashy commercials or online campaigns, lululemon seeks out and works with a network of local athletes, instructors, and role models in communities where there is a lululemon store. Marketing spend is low, and returns are high. The company’s ambassadors partake in and promote brand events as well as teach classes like yoga and running groups at store locations. In doing so, they bring their whole roster of clients—and potential lululemon customers—along. Additionally, they help inform product development by testing and providing feedback on design, fit, and function, helping create the company’s best-in-market technical apparel. In 2010, lululemon opened 50 showrooms, leading to stores opening “very profitably with a strong payback,” Tham says.
While the in-store experience is critical to the company’s deep roots in community, lululemon has also spent the last five years building a robust e-commerce environment. In 2009, the company partnered with a third-party provider to get a site up and running as fast as possible, but after its initial success, lululemon wanted more control over brand and site experience, so the company took the site in-house in 2011. In just five years, lululemon’s online portal went from zero to $300 million and, as of December 2014, represents 17 percent of total sales.
On the heels of its success in North America, lululemon started planning for international expansion in 2012. After a period of market planning and demographic research, along with data from global e-commerce sales, the company opened showrooms in Hong Kong, Singapore, Australia, and England, followed by more recent additions in Germany and Amsterdam. Tham says lululemon hopes to have 40 full retail locations by the end of 2017.
Over the past five years, the financial planning and analysis team has grown along with the company, and Tham’s own portfolio has grown to include investor relations and procurement. While lululemon has gone from $350 million to more than $1.7 billion, Tham now leads a team of more than 30 employees. When it comes to hiring, Tham and lululemon look for future leaders. “We have a great culture here, and we empower people to make decisions and take ownership of what they do,” he says. “I look for business acumen, strong communication skills, and leadership qualities.” Together, they’ve helped position a growing company for continued success on the world stage.