Nikita Arora's Blog

Lululemon is a self-described yoga-inspired athletic apparel company, producing a clothing line and runs international clothing stores by creating components for people to live longer, healthier and happier lives. Founded in Vancouver, BC in 1998, the first lululemon shared its retail space with a yoga studio. They have been growing ever since, and their technical yoga clothes and apparel are now at over 100 stores across Canada, the U.S, Australia and Hong Kong.

However, with the growth comes challenges. And, as Lululemon grew with more and more branches opening across North America, it faced the problem of non-correlation among the rising demand of the consumers and the short supply of its apparel. It was a typical example of a ‘Class A’ problem, where supply couldn’t keep up with demand, and it’s stores kept running out of products. There was a problem in forecasting, and since its stores weren’t equipped with the systems to keep track of how much business they were losing by not adequately stocking them, Lululemon was indeed required for some structural changes.

And, then after a few quarters of thin profits, Lululemon took the quintessential step of reforming its Supply Chain management by partnering with Vitech Business Group Inc. In January 2010, both the companies joined hands to implement the Vocollect Voice in both lululemon’s U.S. and Canadian distribution centers to leverage Vocollect voice technology for picking, put to store, and cross docking. And as Vitech’s V.P. of Sales and Marketing, Andrew Wright put it, “Partnering with Vitech to use our supply chain knowledge and experience to implement Vocollect’s Voice techonology will give Lululemon the edge they need to be a leader in the athletic apparel market.”(http://www.your-story.org/lululemon-athletica-partners-with-vitech-to-implement-vocollect-voice-92769/  )

This alliance with the Vitech certainly proved to be the booster for the Yoga apparel as it turned into its best quarter ever in June 2010. Due to an improved strategy and better forecasting which tracks the shrinking size of its average customer and tailors shelf space accordingly, Lululemon has been able to solve many of its crucial problems, said the CEO, Christine Day.     (http://www.thestar.com/business/article/821775–yoga-retailer-lululemon-turns-in-best-ever-quarter)

Lululemon ended the quarter with $173.6 million in cash and cash equivalents compared with $59.3 million at the end of the first quarter of fiscal 2009. This is evident of the fact that  how better supply chain management and forecasting can lead to a 3x increase in profits !