Recently one of my classmates Lauren Telford wrote an interesting article on Lululemon’s recent public relations disaster, millions of dollars of inventory in the form of see-through pants. Lauren touched on a couple of topics that I found particularly interesting, specifically what Lulu will end up doing with the wasted inventory.

* This is where I would typically post a picture of the see-through pants. However, I have deemed them as inappropriate for my blog so please perform your own google search! *

One option would be to simply throw them out, which as Lauren pointed out may not be the best for their marketing strategy. Lululemon has marketed itself as a brand based on quality and sustainability; throwing millions of dollars worth of yoga pants in the trash does not provide much support for either aspect of this marketing claim. The other option would be to offload the pants to a discount retailer like Winners, but I strongly believe this would be an awful proposition. If they were to sell them to Winners to salvage this economic loss, these products would eventually be seen and purchased by consumers. This would prolong the exposure of this blunder while in my opinion it needs to be handled quickly and efficiently.

Throughout the years, Lululemon has invested considerable time and capital into promoting its marketing mix based on high quality and premium prices. The company was able to effectively convey this to consumers, but the market is now more competitive and it is more difficult to sustain a competitive advantage. Lululemon’s stock was down almost 9% this week, and I believe it was with good reason. Not only has the company wasted millions in inventory, but it has also suffered the opportunity cost of not selling these products. In addition, letting these kind of products get to market has trashed its marketing proposition, and it really makes me question Lululemon’s ability to demand premium prices for their products going forward.