1) Lululemon is trying to strengthen its international business but American athleisure doesn’t always translate abroad.

WHAT HAPPENED: Lululemon launched new ecommerce sites in China, Japan, South Korea, Germany and France as a way to localize the brand experience. Lululemon first expanded internationally in 2013 and now operates 95 stores throughout Europe and Asia.

WHY IT MATTERS:

  • While athleisure remains a craze in the U.S., the same can’t be said abroad. Health and wellness products continue to be top of mind in the U.S. and beyond. But the normalization of athleisure in American culture—especially among American women who are key to Lululemon’s success—does not exist on the same scale internationally. Although the U.S. influences fashion trends on a global scale, Lululemon would have taken off internationally already if demand for the trend was there. Curated product assortments and localized size runs won’t change this reality.
  • Compared to Nike or Adidas, who have seen success abroad, Lululemon doesn’t thrive on sports and competition. Even as Lululemon becomes more of a lifestyle brand, the athleticwear market remains hyper-competitive. While yoga is becoming more widely practiced, it still appeals to a niche audience that has many options to choose from.
  • Product assortment combined with a strategic marketing campaign is key to recruit local clients. Lululemon has used events like the Sweatlife Festival in London, Paris and Berlin to communicate the Lululemon ethos in international markets. While this is a good start, it will take more than a multi-day event to convince international shoppers that they need Lululemon in their lives. To do that, the brand should rely more on local ambassadors and cultural pillars to lead the charge.

2) Moda Operandi invests heavily in technology to take market share from iconic department stores such as Barneys and Saks Fifth Avenue.

WHAT HAPPENED: Moda Operandi introduced a revamped ecommerce site complete with a new logo and updated homepage based on feedback from over 3,000 customers. The company has rapidly hired technology employees, complete with a dedicated office in Chicago.

WHY IT MATTERS

  • Moda Operandi is shifting its differentiator from pre-ordered runway looks to a technology-enabled shopping experience. Moda Operandi built its following as a destination for pre-ordered runway designs, but the uncertainty around the traditional fashion model isn’t enough to rely on for further growth. With LVMH’s increased focus on its ecommerce platform 24S (formerly known as 24 Sèvres) and the growing popularity of luxury resellers like TheRealReal and Vestiaire Collective, it’s crucial for Moda Operandi to strengthen its value proposition as competition from third-party retailers increases. Barneys’ recent bankruptcy is proof that product curation and brand discovery are no longer enough to drive the business.
  • Discovery is now one among many selling points for luxury shoppers, with service and convenience mattering just as much. With more intentional technology, Moda Operandi will have better inventory control and more accurate trend forecasting, allowing its team to make more informed decisions. Luxury department stores’ demise is partially the result of inaccurate forecasts that cause extreme discounting, tarnished reputations and margin erosion. Technology can help Moda Operandi avoid this fate.

3) Nordstrom launched Nordstrom Local stores in New York City, proof that the small store format is key to the department store’s turn-around.

WHAT HAPPENED: Nordstrom opened an inventory-free, 1,800-square-foot store on the Upper East Side with plans to open in the West Village at the end of the month. Nordstrom already has three Local stores in Los Angeles and the format allows shoppers to discover products online and try them on in-store. Nordstrom reports that a Local customer spends two-and-a-half times more than an average Nordstrom customer.

WHY IT MATTERS:

  • Nordstrom’s limited physical presence in New York City enables this small store format to thrive without cannibalizing its flagship stores. This new format offers shoppers more convenience and enables Nordstrom to use its inventory more effectively, compared to buying more inventory just to fill space. Local stores could heighten the probability customers will actually keep what they buy, thus reducing the costs of returns.
  • Local offers customers convenience but fails to address the online product overload. The success of Stitch Fix is proof that many shoppers still require curation. Twenty to thirty product pages on Nordstrom.com can be daunting for some, leaving many shoppers disillusioned and more likely to buy from their favorite direct-to-consumer brand, which has a tighter product assortment. In order to make Local more impactful, Nordstrom.com will need to be just as convenient and navigable as Local stores.

4) Target’s new rewards program drives sales in-store and online, while integrating philanthropy as differentiator.

WHAT HAPPENED: Target will introduce Target Circle nationwide in October, a free loyalty program offering customers personalized coupons, birthday rewards, one percent back on all purchases and the opportunity to choose a local organization for Target to donate to. Target piloted the program in five markets over the course of eighteen months and saw an increase in sales from participants.

WHY IT MATTERS

  • Target’s new program enables itself to be a resource for local communities, something Amazon hasn’t been able to do. The reward program allows Target to better compete with Amazon by collecting more data from its customers while being involved in the community.
  • As many direct-to-consumer brands donated to a cause on day one, Target might be the first big-box retailer to do so. As shoppers become more informed and interested in the philosophy behind the brands and retailers they patronize, Target’s decision to give back to the community should work well. Target Circle’s ample discounts could influence shoppers to buy their essentials at Target versus a Walmart or Amazon.