How Lululemon Is Using Peloton Rival Mirror to Broaden Its Consumer Reach

Key takeaways:

• Lululemon is betting on an increasingly digital future, with its $500 million purchase of in-home fitness brand Mirror.
• As consumers sheltered at home, the yoga retailer has been one of the apparel winners during the pandemic, with net sales up 22% in its most recent quarter.
• Investments in digital growth include tapping its “store instructors” to conduct live video chats with customers at home.

Athleisure retailer Lululemon Athletica Inc. has built its success celebrating what it calls “the sweatlife” – a lifestyle it describes as centered on physical fitness, mental well-being and human connection.

Lately, Lululemon executives have been talking about two kinds of sweat – digital sweat and physical sweat. Both are important to their future, they say, but right now they are betting heavily on the digital kind.

In June, Lululemon announced it had spent $500 million to acquire Mirror, a two-year-old fitness startup that delivers in-home fitness classes through a screen that resembles a full-length mirror. Customers pay $1,495 for the Mirror screen and $39 a month for access to livestreamed fitness content.

Wall Street analysts called the deal a win for both companies, with Mirror benefiting from Lululemon’s marketing clout, and Lululemon gaining a chance to put fitness classes led by Lululemon-clad instructors in customers’ homes.

“We see this at-home fitness trend as really just beginning,” Celeste Burgoyne, president of the Americas and global guest innovation, said at a National Retail Federation presentation attended by CO—. “We’re excited about what Mirror and Lululemon together can create when we think about bringing fitness and mindfulness to homes across the world.”

Burgoyne spoke about how Lululemon leveraged its digital investments amid the pandemic to drive sales during the Federation’s annual Big Show conference and trade show.

Investing in omnichannel growth: ‘Store instructors’ now conduct video chats with customers, too

Lululemon, Burgoyne said, has been investing in its omnichannel strength for the last three years, which allowed the retailer to respond quickly when the pandemic began.

During the holiday season, for example, Lululemon was able to meet buy online, pick up in store orders within a two-hour window. It also created a virtual waitlist system to stagger customers in its stores in order to comply with COVID-19 store capacity rules.

The retailer turned its in-store instructors and salespeople into digital educators who could answer customer questions in video chats. “On Black Friday alone, we had over 4,000 live video appointments with our digital educators,” Burgoyne said.

While other retailers talk about omnichannel, Lululemon talks about the “omni-guest” – the customer who wants to connect with Lululemon online, in stores, in fitness classes and in video chats.

Lululemon has 515 company-owned stores, and it believes that stores remain crucial in an increasingly digital age, Burgoyne said.

“Definitely there’s been a shift to digital that won’t go away, but we believe physical is as important as ever and we will continue to lean into physical,” she said.

The Mirror deal gives Lululemon a new way to leverage its stores as places where potential Mirror customers can see and try out the devices.

Lululemon has begun demonstrating, and selling, Mirror in 18 of its stores and expects to roll it out in many more locations this year. Customers can also buy Mirror through the Lululemon website.

“Our educators and our guests in those stores have really enjoyed having Mirror as part of the guest experience, and we’re learning so much” through the pilot store launch, Burgoyne said.

Mirror was founded by Brynn Putnam, a former New York City ballet dancer and fitness studio owner. Putnam remains chief executive of Mirror, reporting directly to Lululemon CEO Calvin McDonald.

Lululemon had previously invested $1 million in Mirror, and Putnam was a Lululemon ambassador when she owned a fitness studio in New York City.

A pandemic success in a flailing clothing sector

Lululemon was among the clothing retailers best positioned to grow sales during the pandemic, as millions began working — and working out — from home, and sweatpants replaced business suits as everyday attire.

Lululemon’s net sales rose 22% to $1.1 billion in the third quarter, which ended Nov. 1, and during the second quarter, online sales soared by 155% to 61.4% of total revenue.

Location analytics firm Placer.ai reported in January that Lululemon, along with activewear retailers Nike and Under Armour, has out-performed the retail sector at large. Despite seeing significant declines in store traffic during the pandemic, Lululemon saw improvements in store traffic at the end of December and into January 2021, according to Placer.ai.

“Before COVID, Lululemon was one of the most exciting brands in apparel, but as a leader within the increasingly exciting athleisure sector, the potential for the brand may actually be more exciting today than it was pre-pandemic,” Ethan Chernofsky, vice president of marketing at Placer.ai told CO—.

“Alongside the growth the brand had already been seeing, there is a clear shift in consumer behavior that privileges Lululemon’s offering,” Chernofsky said. “They are oriented towards comfort in the work-from-home environment and address the growing focus on health and wellness as well. This combination may actually position the brand for even greater heights once COVID’s effect dissipates,” he said.

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