The news is in frenzy about the Lululemon “transparency issue” affecting 17% of its yoga pants. And I think the story is overblown. There is no way this mistake is the end of the company, and I don’t believe that the GAP or any other retailer will successfully be able to take over a significant share of Lululemon’s market.
The news would have us believe that Lululemon is dead. I believe that their current situation is temporary, simple, and will play out in the following manner:
1. Lululemon had a problem with manufacturing which they have owned up to.
2. Refunds are being given for the faulty pants.
3. The problem is being solved.
4. Customers will reward the brand with increase sales
While there is a going to be a short term dip in sales and market valuation, Lululemon will be back. I anticipate that by the end of the year sales will exceed expectations but by Mothers Day sales will start to increase again.
Lululemon is an uber-lifstyle store with a cult brand following of yoga enthusiasts. They have created a community of instructors and practitioners not unlike Apple. In fact we could make a comparison.
Remember when Apple i-phones had a “dropped call” problem because of a poorly designed internal antenna? Sure, it too hurt sales temporarily but:
Did Apple come back? Yes
Do many of us remember that incident? Hardly at all.
Have they exceeded expectations since? Absolutely.
You heard it here first. Lululemon’s situation as reported in the media is overblown short term and temporary.