Little Black Stretchy Pants

by Chip Wilson

  I also trained our Educators to point the customer to Nike or Adidas if their product provided a better solution for the Guests. I felt that everyone should win; even the competition. Lululemon was to be agnostic and egoless.

  Our training worked. I overheard real conversations shared between friends over coffee about the authenticity of our brand. It was exactly the experience we wanted for our customers.

  Super Girls were defining lululemon, and I was learning from them.

  The 6/13 Rule

  Part of our formula also depended on our customer experience—how we educated our Guests once they were in the store. Using our Kitsilano store as a sort of laboratory, I studied how people interacted with our products and thought about the optimum way for us to engage them. We assumed the number one thing the Super Girl wanted us to solve was her compressed time. She was busy and needed a new way to shop.

  We had the best quality, so she would rarely have to return a garment. We supplied free hemming, so she didn’t have to go to another location to get the right length of pant. Our store was set up on function, not colours or outfits, so she could quickly find what she needed. We were fanatical about having the perfect combination of Educators, change rooms and cash desks to make the shopping experience friction-free.

  I came up with several new procedures. One was something I called the “6/13 rule”—if a Guest was looking at a product for six seconds, an Educator had a thirteen-second window to educate them about the item. Barring any follow-up questions, the Educator would then leave them alone until they looked at another item for around six seconds.

  There wasn’t anything scientific about it. I’d come up with those numbers by looking at people and observing their body language to see what they were comfortable with. I wanted our Educators to impress customers with their sheer knowledge of and enthusiasm for the item.

  Our Educators were on the front lines and knew more about the customer and the product than most people at the Store Support Centre (the SSC was lululemon’s answer to the “head offices” of other companies). When we made big decisions, we made sure the decision was heavily weighted toward the person who works in the store.

  Nothing on Hold

  Our success also came from breaking retail rules at the store level. For starters, we put nothing on hold. Some people couldn’t believe we wouldn’t put products on hold, but we were selling our clothing quickly, and I always felt it was our responsibility to prioritize the Guest who was actually in the store.

  If something was on hold behind the shelf and someone who wanted to buy that same garment was out on the floor, it didn’t make sense to hold it for the person who wasn’t physically present.

  This rule wasn’t accidental—I’d noticed that a large percentage of people who’d asked for something to be put on hold never returned. The product would sit there in the back of the cash desk for several hours. A store Educator might remember to put it back out at the end of the day or the next morning.

  So, I decided I would never put our products on hold. Sometimes people got mad because we were the only retailer to do this, but, in 95 percent of the cases, customers would immediately buy the product.

  We broke another retail rule by rarely answering the phones in our store. We would answer the phone if there were no customers on the floor, but our priority was always the Guest who had dedicated their time to come into the store, and who was maybe already at the cash desk. I wanted us to be really, really good at being present with in-person customers.

  The New Year

  The move to the new store had been expensive, but the location was already bringing excellent returns. Local media had started to take an interest in the company since lululemon was in a unique position at the forefront of the yoga movement. The press was approaching us and not the other way around.

  Pre-e-commerce, every retailer knew the holiday season represented 30 percent of a year’s revenues in forty days. Most retailers go on discount and suffer massively during January and February.

  I was feeling great about our sales through December 2000, and January 2001. Lululemon had surged because of New Year’s resolutions to get back to the gym or get into yoga.

  The biggest sales day we’d ever recorded in the old store was $2,000. Our slowest day in the new store was multiples of that figure. It was thrilling, but I knew to prepare for the sales dip sure to come in February and March. I scaled back production to ensure we didn’t get in over our heads with inventory.

  But then, the end of January 2001 came, and our sales volume showed no signs of slowing. Every day I looked at our sales figures for the telltale dip in volume. And every day, I saw our volume increasing instead.

  I knew what was happening was abnormal. Experience told me I was observing concrete evidence that lululemon was over the awkward stage of retail infancy. Our patience was paying off. The spring of 2001 arrived, and sales had not slowed down.

  It was incredible to watch this happen, but it also meant our little company had to change to keep pace with our new-found popularity.

  The Power of Attraction

  The recent change in lululemon’s revenues also coincided with the growth of our small staff.

  As we hired more Educators, I noticed a higher number of them were older Super Girls (generally aged twenty-eight to thirty-four), with stories similar to Fiona’s. They had been working fourteen-hour days in finance, were not dating, and could see no prospects for marriage or children. They dropped out, looking for a better balance in life. Lululemon and yoga represented their myopic ideal of achieving that balance. We hired them as Educators, but their Type A Wall Street personalities swung the pendulum in the opposite direction.

  Utopia for these women was to be zenned out, but this was not lululemon. Lululemon was not in the wellness business—we were in the good to great business. We soon had to rid ourselves of these Balance Girls.

  Balance for lululemon was maximizing every moment in life. It was knowing when the bank line-ups were short and jumping on that opportunity so as not to waste a second more than was necessary. We had great things to do and waiting in line at the bank was not one of them!

  Around that time, I got talking to a woman who lived across the back alley from me. Deanne Schweitzer had been on a swimming scholarship when she became pregnant in her final year. Now a mother of two with no steady job, she was highly stylish and the overall perfect candidate to become an Educator.

  “I remember thinking Chip may be a little bit crazy,” Deanne laughs. “One day, I was running in the rain, and this car pulls up alongside me. The windows are all steamed up. The window opens, and it’s Chip, naked, except for these tiny little shorts. He says: ‘Hi Deanne, wanna lift?’ I was like, ‘No thanks!’ Later he’d told me he’d just come from hot yoga—which I’d never heard of at the time—which explained why he was driving around with little shorts and steamed windows. Sort of.”

  I’d initially asked Deanne to work for me in 1999. I’d wanted her to promote lululemon at the high-end athletic clubs, same as I’d tried to do at the Glencoe. However, Deanne wanted to focus on an accounting course and taking care of her children, so she said no.

  Then, when our sales picked up around Christmas of 2000, I approached Deanne again. This time, she said yes. Deanne first came to work as an Educator, helping with the unprecedented sales volume we were experiencing. Within four weeks, she became our first store manager. Bright and quick, with an ability to hire the right people, Deanne would eventually go on to become lululemon’s Head of Product.

  Deanne’s sister Delaney, who was managing a bar in downtown Vancouver, joined the team in 2001. Delaney was also a single mother and not living a healthy lifestyle. “I loved what the company stood for and the people it attracted,” Delaney says.

  Like her sister, Delaney started as an Educator, but she soon moved into a managerial role. I loved being in Delaney’s presence because she so easily absorbed everything I knew about retail, and in the years to
come, Delaney would move on to run all store operations and e-commerce (in fact, Delaney would someday become my pick for CEO). Both Schweitzer sisters were superstars; they were cornerstones to the growth and culture of lululemon.

  Eric Petersen, like Deanne, was a neighbour of mine. When I got to know him, he was Director of Marketing for EA Sports.

  As Eric recalls, “Chip drove by my house one day—with no shirt on, of course—and he reached out the window and said, ‘Hey Eric. Come over here. I want you to listen to these tapes.’ He hands me some of these cassette tapes by this guy named Brian Tracy. I think he handed me tapes one, two, five, six, nine, and eleven. He said, ‘I want you to listen to these, give them back to me when you’re done.’ I thought ‘Well great, my weird neighbour has handed me a series of cassette tapes with several missing—he’s going to think I pinched them.’”

  After I had invited Eric to a Brian Tracy event, he said: “I had no idea what type of business Chip ran up there,” Eric adds. “I knew it was some sort of apparel company, but I was blown away by the energy in the room, these young women who felt that they could change the world. I went home that night and told my wife that in thirty-years of team sports I’d never seen a group of people who were so passionate about achieving something and said, ‘I’ve got to go work there.’”

  Eric would join us as Director of Marketing and would play a pivotal role in our disruptive plan for the 2010 Olympic Games in Vancouver.

  One of the next people to join us was Darrell Kopke. Darrell was another person I’d known through Westbeach—he’d been doing sales for a zipper manufacturer, with which Westbeach (and then lululemon, in its first stages) did business. Having just finished his MBA at the University of British Columbia, I hired Darrell as general manager in November 2001.

  “Chip told me he didn’t want to get on another airplane,” says Darrell. “He knew what he was good at, but he wanted me to grow the business. We were an unusual group of people that had no business being successful. We didn’t come from pedigree. We didn’t listen to what anyone else was saying. It was fun. It was exciting. It was us against the industry.”

  Darrell was the perfect person at the perfect time to grow lululemon. Like Delaney, Deanne, Shannon, and Eric, Darrell became another lululemon philosophical icon, because he understood why our specific development model connected to the value of the brand.

  To have core Kitsilano people understand my vision and trust that the company would become something great was all I ever wanted. There was no traditional recruiting. In my mind, lululemon was built organically through the Power of Attraction. By sharing my love of athletics, fun, and greatness, I attracted people who were all about the same things. I am completely blunt and transparent, and everyone knew where they stood. We had zero internal politics, and immediate direct feedback was the norm.

  As lululemon grew, our teams were often assembled using the same technique. We went out into the community and practiced yoga, we joined local run clubs, and attended athletic events. We did the things that we loved doing, and in doing so, we met great people that we wanted to spend time with. Relying on the power of attraction instead of recruitment analytics or traditional channels allowed us to quickly attract people that were interested in what we were up to.

  Most of the people I hired from within the community were athletic, educated, and had a healthy West Coast approach to living. They withstood the growing pains as we morphed from entrepreneurial to professional, growing and shining. It was a synergy thing—one plus one equals three. Lululemon would never have achieved what it did without these core players.

  ____________________

  12 Brian Tracy, The Psychology of Achievement (1984)

  13 Brian Tracy, The Psychology of Achievement (1984).

  14 Paco Underhill, Why We Buy: The Science of Shopping (Simon & Schuster, 2009).

  15 Malcolm Gladwell, The Tipping Point, 2000.

  16 Howard Schultz & Dori Jones Yang, Pour Your Heart Into It (Hyperion Books, 1997).

  17 Jack Welch, Jack: Straight from the Gut (Grand Central Publishing, 2003)

  18 Jim Collins and Jerry I. Porras, Built to Last: Successful Habits of Visionary Companies (HarperCollins, 1994)

  Chapter 16:

  Toronto

  Syd

  In the spring of 2001, I was approached with an offer from Syd Beder, a Canadian apparel veteran based in Toronto.

  Syd had at least twenty-five years’ experience in the industry. His business partner, Alexandra Bennett Morgan, had happened upon lululemon in Vancouver and liked what she saw. Syd knew the ins and outs of production, so he immediately recognized the quality of construction and materials we used. The two of them believed in yoga and its growth in popularity.

  Syd wanted to open a lululemon franchise in Toronto.

  The offer was a dilemma for me. A big part of me just wanted to keep my little shop in Kitsilano and preserve lululemon as it was, simple and local. However, sales had taken off so much I was having a hard time thinking small. Back when Westbeach had become successful with snowboard apparel, there was just never enough money to facilitate the growth we’d needed to take us to the next level. I didn’t intend to repeat that with lululemon.

  I wanted us to reach a larger audience—I just didn’t want to start our expansion in Toronto. Saying no would have consequences, however. Syd was experienced, and I got the feeling if I didn’t jump at the franchise offer, he would give the concept a try and create a lululemon knock-off of his own. If he copied us, he had enough background to do it well and corner the whole Eastern Canada sales market before I even got there.

  It seemed I could ink a contract with Syd and make an ally, or I could say no and create an instant competitor. So, I signed the agreement… but did so without legal advice. In those days, even though we were becoming successful, every penny still meant something.

  Once the agreement was signed, Syd Beder paid $25,000 for the right to sell lululemon clothing in Canada’s most populous city.

  A Declaration

  My first business goal was to have a single store and ride my beach cruiser to work every day. I had achieved that goal. My second business goal was to have five stores to enable an increase in quantity and drive down productions costs. My third was to compete against Nike.

  As Syd and Alexandra got to work on opening in Toronto, I thought a little more about my own expansion plans. I knew that making an amazing product at a reasonable price would get a lot easier once we got to five stores and could take advantage of economy-of-scale production. Eventually, I knew, making several times more of something and having enough space in which to sell it would work better for us—especially since I’d committed to never doing wholesale again.

  I could see long-term success. I knew if we didn’t grow, Nike would figure out what we were doing, set up across the street, and put us out of business.

  But the real reason to grow was our people. They were just ageing into the stage where they were thinking of marriage. They wanted a bigger possibility in their career and to take on more significant challenges. We all knew if the company grew, we could afford children and mortgages and schools. I felt I had an obligation to give them every opportunity to fulfill their lives.

  One day in mid-2001, I gathered our staff together and told them, “Nike is our competitor.” Considering we had only $4 million in yearly sales, it was a crazy thing to say. My handful of staff didn’t know whether to laugh or run for the door.

  As Delaney Schweitzer recalls, “There were fifteen of us in a room—the whole company—and Chip declared we would open three hundred stores, that we’d be across North America, and that soon we’d be mentioned in every board meeting at Nike. As crazy as that sounded, every one of us was like: ‘I’m in.’

  “A few years later, we hired a production person from Nike,” Delaney continues. “He told us that the second he gave his notice and said that he was going to lululemon, they immediately had him escorted out of the bui
lding. At that point, Nike had created a small team to dig into the lululemon story and understand our stores. They couldn’t figure out the connection we were making with people. When he said, ‘You’re on the agenda at Nike, they’re talking about you, they’re trying to figure you out,’ it was proof positive that Chip’s declaration had come true.”

  Small as we were, we were united in the opinion we had a better product and business model than Nike. We were reaching the female market in a way Nike couldn’t because they did not have the culture. We were doing so well that I could envision if we didn’t expand, Nike could replicate our business. This was closely related to what I’d considered when taking Syd Beder’s offer. It was sobering to consider the demise of our company while the brand was still in its infancy.

  I knew our staff were more than up to the challenge of growing lululemon. By that point, I’d paid for our core people to attend the Landmark Forum, and I’d seen them come back empowered and communicating in a way they’d never known before. They’d become people who were no longer willing to settle for mediocrity in their lives—or in the company to which they’d devoted themselves.

  In fact, instead of targeting Nike as competition, it even occurred to me to model lululemon after McDonald’s and become a real estate company. Our stores were profitable enough to pay for their own real estate.

  The possibilities were endless.

  Showrooms Defined in Toronto

  Meanwhile, Syd’s plans to open in Toronto were progressing. I liked the way he was building enthusiasm by word-of-mouth. In June of 2001, he invited people to his own loft apartment where he’d set up a few racks of lululemon clothing. Since it was invite-only, Syd’s loft had an exclusive, underground feel to it, much like the feel of our original second-floor store. People had to know someone to get in, so it generated a lot of curiosity. It was pull instead of push marketing.