Losing $67 million on a massive recall of one of your signature products is serious business. More sheer than normal products, dye leaking from some of the brightly colored pieces and other quality issues are undeniably serious.
So Lululemon Athletica Inc. has responded very seriously. Chief product officer Sheree Waterson has been let go. The company apologized to customers and investors. It changed its manufacturing and quality control processes.
In short, it responded like it’s Tylenol or Toyota.
But it is not. Lululemon is a yoga lifestyle brand. Inherent in that is some degree of brevity and lightheartedness. I understand that its mission is tied to health and wellness and that it is a significant business, but let’s face it, it’s not a pharmaceutical company.
Through this "transparency" scandal, Lululemon has employed PR 101 practices in an attempt to be truly transparent. It acknowledged the problem, issued mea culpas, attempted to correct the issues and vowed to avoid doing it again. Yet, through the process, it lost the personality that had first made the company successful.
During all this where was the face of Lululemon? Did the recall and write down endear it to loyalists? In my opinion, it has come across as a big, serious business that is aloof and distant.
And now the knives are out. Business Insider posted an article on April 4 attacking the company’s stringent "within two-weeks, never worn" return policy. Lululemon’s CEO Christine Day has defended the policy by saying, “it helped the brand to sell 95 percent of its product at full price by creating the concept of scarcity.”
She may have to reevaluate because when you experience a series of product quality issues like this, you cannot dictate the same terms you once enjoyed.
So what should Lululemon have done? In fact, everything it did was entirely appropriate, but in so doing it revealed the company as a business and not a lifestyle brand. The PR 101 was a sound response, but it lacked customer intimacy and understanding.
Day should have been the most visible CEO in the world these past two weeks. She should have embodied the personality of the brand and been approachable, concerned and involved. She could have visited stores, been seen leading yoga classes, contacted yoga studios and customers and rallied the troops.
Instead we have an image of her behind a big mahogany desk doing damage control with lawyers, bankers and accountants. The biggest result of all this is a chief lieutenant has taken the fall.
This seriousness has been difficult to reconcile given the outright laughable coverage the quality issue has received. How many “downward dog” jokes have you heard since this all began?
The company press release conjured up hilarious images: “Current inventory is being tested by a team of educators and Lululemon store support centre staff by trying on the pants and ensuring that coverage is appropriate while on the mat. We want our guests to down dog and crow with confidence — and the only way to truly test the fabric is to engage it in activities that create that four-way stretch.”
It is like a skit from "Saturday Night Live." Employees bending down in front of each other in the offending garment asking, “Can you see me now?”
The company missed a huge opportunity to reconnect and smooth things over with all constituents. They could have sold the impacted product at a 17 percent discount reflecting the percentage difference in sheerness. I know many loyalists who would have snapped a pair up just for the story. I could just imagine the self-deprecating in-store signs, “The Butt of All Sales.”
And if the company doesn’t sell them off, then what happens? Do they go into a landfill? According to Lululemon's stated waste plan, unsold stock is sold to deBrand. This is a Canadian company that deals with corporate waste by removing logos and then it shreds, resells or repurposes the items.
deBrand has crafted chair cushions out of yoga mats and woven hammocks out of duffle bag straps from past Lululemon discards. This could be the company’s coolest opportunity. Lululemon should hold a contest on what to make out of the too-sheer pants.
It has to do something, anything to communicate it has a personality reflective of the lifestyle it promotes. Otherwise we will all just think of them as LULU — a company on the NASDAQ.
