Lululemon Critical Incident

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Journal of Critical Incidents, Volume 8

102

THE SOCIETY FOR CASE RESEARCH

Lululemon Athletica and a Series of Bad Marketing

Decisions

Jane Boyd Thomas, Winthrop University

Cara Peters, Winthrop University

This critical incident was prepared by the authors and is intended to be used as a basis for class discussion. The views

represented here are those of the authors and do not necessarily reflect the views of the Society for Case Research. The

part of this work may be reproduced or used in any form or by any means without the written permission of the Society

for Case Research.

Introduction

Chip Wilson was so inspired by his yoga classes that he decided to experiment with different

fabrics to come up with the ultimate yoga wear. When taking yoga classes, he noticed that cotton

clothing that was typically worn did not perform well, given the sweating and stretching required

for the exercise. Having previously owned a snowboarding apparel company for 20 years,

Wilson was used to running a successful athletic apparel business. Thus, in 1998, Chip Wilson

founded Lululemon Athletica, a popular yoga apparel company. However, Chip’s previous

experience in snowboarding did not prevent him from making a series of bad marketing decisions

that resulted in a firestorm of negative publicity for Lululemon Athletica. In 2013, Chip Wilson

was forced to resign as chairman of the board. The board of directors hired Laurent Potdevin to

take the company in a new direction. However, Potdevin was left with a badly damaged brand

image that he needed to clean up rather quickly.

Company Background

Chip Wilson opened the first Lululemon Athletica store in Vancouver, Canada. This store

included a design studio, retail space to display the apparel, and shared space with a yoga studio.

The first multi–purpose Lululemon Athletica storefront was popular, and business steadily

increased for the company. Over time, the company added more retail outlets, and by 2013 there

were more than 200 Lululemon Athletica stores in over 40 different countries around the world.

As the company expanded, Lululemon Athletica became known for its fashionable, high–quality

yoga pants—one pair of yoga pants sold for as much as $98. Celebrities such as Reese

Witherspoon, Gisele Bundchen, Kelly Ripa, and First Lady Michelle Obama became fans of the

brand, and the stylish, upscale merchandise quickly became a fashion trend. Lululemon Athletica

became more than just yoga apparel; it became lifestyle apparel for everyday wear (Weinger,

2013).

Journal of Critical Incidents, Volume 8

A Series of Public Relations Nightmares

In 2006, Lululemon Athletica sold bags that were part of its Vita–Sea line of products. The

company claimed that the bag released amino acids and vitamins and was made of seaweed,

which reduced stress for consumers who carried it. The New York Times conducted a study that

found the claims made about reducing stress were false and that the bag was actually made of

pure cotton (Story, 2007).

In 2008, the company sold a bag with inspirational quotes printed on the outside. Shoppers

discovered that when the bag was washed, less than positive messages were revealed underneath

the top layer of text. For example, according to CTV News Toronto (2008), quotes found on the

inside of the bag referred to being most creative when drunk, stoned, or just after an orgasm (CTV

News Toronto, 2008). Lululemon Athletica responded by stitching a covering over the offensive

language on the bag but that did not quell consumer complaints, so the remaining bags were

pulled from the stores.

In 2011, the company received even more negative press when the media began to cover the trial

and guilty verdict of one Lululemon Athletica employee who murdered her co-worker in a

Washington D.C. suburban outlet store (Lawrence, 2011). The murder and related conviction

brought the company and its business practices under even greater scrutiny from the press and

wider public.

In 2013, Chip Wilson moved the manufacturing of Lululemon Athletica’s products from