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Here are a few excerpts from a recent Wall Street Journal article on Lululemon and its seemingly anachronistic methods of product design, customer insight and brand management.

  • Unlike most retailers, Lululemon doesn’t use software to gather customer data, doesn’t build lots of new stores, doesn’t offer generous discounts and purposely stocks less inventory than it can keep on its shelves.
  • When it comes to making decisions, Lulu has gone back to basics. It doesn’t use focus groups, website visits or the industry staple—customer-relationship management software, which tracks purchases.
  • Instead, Ms. Day spends hours each week in Lulu stores observing how customers shop, listening to their complaints, and then using the feedback to tweak product and stores. “Big data gives you a false sense of security,” says Ms. Day, who spent 20 years at Starbucks Corp., overseeing retail operations in North America and around the world.
  • Lulu also trains its workers to eavesdrop, placing the clothes-folding tables on the sales floor near the fitting rooms rather than in a back room so that workers can overhear complaints. Nearby, a large chalkboard lets customers write suggestions or complaints that are sent back to headquarters.
  • While a large part of Lulu’s strategy is getting the product right, an equally important part is keeping it scarce. The goal is to sell gear at full price and to condition customers to buy when they see an item rather than wait. “Our guest knows that there’s a limited supply, and it creates these fanatical shoppers,” says Ms. Day.
  • Lulu also sells 95% of its gear at full price, says Chief Financial Officer John Currie.
  • The company never puts its core items on sale, and it has a very strict return policy: no products accepted after 14 days, and all must be unwashed and unworn, with original tags.