LONDON, United Kingdom — Activewear retailer Lululemon has trialled a customer loyalty scheme in Edmonton, Canada, to boost sales to its brick and mortar stores and fight back against the failing high street.
The program involves customers paying an annual $128 fee, which covers a pair of leggings or shorts, free expedited shipping and access to special curated workout classes and events.
According to reports by CNBC, the retailer told analysts on its third-quarter earnings call that its pilot program was so successful, it plans to expand it to other test markets, as a strategy to keep customers coming back and compete with retail giants such as Walmart and Amazon.
In the UK, activewear retailer The Sports Edit, which began online, has enjoyed similar boosts to sales since setting up its original store in Chelsea. This October the brand used funds from an earlier £1 million investment round to launch its flagship store in new development, Coal Drops Yard, in London’s King’s Cross — a 100,000 square ft shopping destination featuring shops, cafés, bars and restaurants.
It’s a move founder Nick Paulson-Ellis is confident will pay dividends for the business, which launched in August 2015, but admits there are always risks with physical retail under threat.
Speaking exclusively to Welltodo, Paulson-Ellis said: “There is relentless negativity in the media about the death of physical retail, so any new store opening requires a contrarian mindset. We thought long and hard about it, but we felt that it was important on three fronts: building a stronger community, differentiating us in a crowded sports retail market and using selective physical locations to drive online sales.”
Paulson-Ellis says the brand’s original store in London’s West End boosted online order penetration in Kensington and Chelsea 24 times higher than London overall, indicating that bricks and mortar retail stores have a significant impact on online sales too.
“Regarding community and engagement, we chose Coal Drops Yard as it enables us to use the wider King’s Cross estate to host a series of amazing events, and not be limited to our store,” he added, highlighting the importance of experiential retail opportunities to engage and retain a customer base.
“Every month we will host an event with brand partners or one of our ambassadors,” said Paulson-Ellis. “These could include a Midnight Runners x Reebok event, yoga workshops with [wellness blogger and influencer]Cat Meffan, Pilates by the canal with Grace Hurry, meditation with Michael James Wong in the stunning circular Gasholders Park and launch events with our brand partners such as Adidas.”
This is partly to drive customers to the store but also just to create wider awareness of us and build a proper community centred in the activities that our customers care about, he continued.
“We’re in the business of exercise and sport and we want to host great events for our customers not just sell them leggings online.
For Lululemon meanwhile, it is hoped that by offering Amazon-style memberships it will also enable the brand to gather more information about their customers. Thanks to the new initiative the brand will be able to see which classes customers take and what they are buying.
The company will continue piloting the program in Edmonton during the first half of next year before it expands to new markets.
“We have a few additional markets that we’re going to be launching in, and we’re very excited as we look forward to the ability to have a membership-based program where it’s driving loyalty, but guests are seeing value in this curation of services and content beyond just our product,” commented CEO Calvin McDonald on an earnings conference call.