In a world where consumers practically expect 40%-off discounts whenever they shop, Lululemon pulled off an impressive pricing achievement this holiday season.
The athletic-wear brand sold a whopping 90% of its goods at full price in the period between Cyber Monday and Christmas, and 85% for the quarter to date, Lululemon CEO Laurent Potdevin said yesterday at the ICR Conference.
That's particularly impressive given Lululemon's steep prices relative to the competition, which has proliferated in recent years: a typical pair of yoga pants run for $98, while similar items might cost $79 at Athleta and $65 at Nike.
Lululemon has long been known for "never going on sale," but it's notable that this remains the case given how intensely promotional the retail landscape has turned in recent years — and how many competitors have emerged in the athleisure market. Everyone from Tory Burch to Kate Spade to Victoria's Secret are promoting activewear lines — even Beyoncé is planning one with Topshop.
Lululemon also faced a challenging recall of some pants in 2013 for being too-sheer. The saga may have seemed embarrassing at the time, but its customers are clearly still willing to pay top dollar for the brand.
At the same time, consumers have never been fonder of saying "I don't buy anything at full-price." Gap was promising discounts of up to 75% on its homepage last night, while J.Crew proclaimed "Our Sale's On Sale," offering up to 50%-off on those styles.
When they're not using coupon codes, shoppers are flocking to places like T.J. Maxx, Nordstrom Rack and outlet malls, where "Compare At" prices offer a similar thrill.
"Our Sale's On Sale" — J.Crew
It's incredibly hard to bring prices back up once customers begin expecting sales. J.Crew CEO Mickey Drexler said as much last year, as he bemoaned the retail industry's "rampant discounting."
“It’s very hard to hold the line, because you still need to drive traffic, and you still need to sell goods,” Drexler said. “But we have trained the world."
Lululemon's Potdevin said yesterday that the quality of sales "speaks to how well our product is resonating with our guests" and to its store staff who "deliver exceptional experiences that are very unique in the retail landscape today."
He added: "And it speaks to the fact that our go-to market strategy, which is grassroots-driven, which is about creating authentic relationships in the communities that we live in, is a very powerful, sustainable, efficient way to build our business."
The company raised its sales and earnings outlook for its fourth quarter, which ends on Jan. 31.