Shopper Experience
31 March
Lululemon sees membership promise, pivots Mirror to app model
Engagement and incremental spend are focal points of Lululemon's membership program.

Photo by Marco Tjokro on Unsplash
Engagement and incremental spend are focal points of Lululemon's membership program.
Lululemon continued to stretch its success in the holiday quarter.
Fourth quarter earnings showed the apparel brand increased net revenue by 30% to $2.8 billion, bringing a strong close to a year which also had a 30% increase in revenue.
The growth indicates that the brand is facing down headwinds that left many retailers talking about a consumer pullback during the holidays. Adding a further lift is the fact that Lululemon wasn’t among those participating in the highly promotional environment that many retailers cited during the holidays. The brand maintains premium positioning for its yoga pants and other athleisure wear, so it doesn’t run heavy sales as a principle. It stuck with that, even at a time when many brands were discounting to work through a glut of inventory, and incentivize consumers who were facing higher gas and grocery prices to buy.
“We do not drive our client growth through discounts or promotions, and we have no intentions to do so,” CEO Calvin McDonald told analysts on the company’s earnings call. “We run a full-price business with markdown strategically used to clear seasonal and other select product, and this will remain our approach in the future.”
The results are part of the reason why Lululemon is a much-studied brand, both in the direct-to-consumer space and in retail overall.
Like many brands, Lululemon is putting an emphasis on loyalty at a time when profitability is replacing growth as a key focus among retailers, and consumers are exercising more caution about discretionary purchases. A key emerging piece of the brand’s strategy centers around membership. In October, the brand launched a two-tier membership program that includes a free tier called Essentials, and Studio, which is $39 a month.
The membership programs include a number of benefits, including access to workout content, early access to product drops and fast-tracked returns.
McDonald told analysts that the essentials program has “significantly exceeded our expectations.” More than nine million members enrolled in the first five months, demonstrating “significant potential,” McDonald said.
“The rapid rate of sign-up speaks to the incredible loyalty of our guests, and the early results show our membership program increases the frequency of guests engaging with us,” McDonald said. “For example, more than 30% of members have already participated in at least one of the benefits of the program, and we expect this engagement to drive retention and incremental purchasing behavior going forward.”
The Studio program, which includes discounts and access to more workouts both online and in-person, is undergoing changes as it gets underway. The company is repositioning its connected fitness device Mirror as an app that will be part of the Studio program. The program will continue to provide in-home hardware and content.
After the revamp, the app-based model is set to launch this summer at a lower subscription rate.
“The recent launch of lululemon Studio has provided a new way to scale a paid membership program,” McDonald said. “Our best-in-class content helps build on our community of engaged guests, deepens our connection with them and drive incremental purchases of Lululemon product. In fact, after studying the behavior of members, our initial analysis suggests that their spend on Lululemon product increases approximately 9%, and this 9% is incremental. However, as you know, since our acquisition, the at-home fitness space has been challenging. While members love our content, hardware sales did not match our expectations. And even though our CAC has continued to improve, it has not improved enough to maintain the current level of investment.”
It comes three years after Lululemon acquired Mirror for $500 million at the height of the pandemic-era home fitness boom. Now, the company is taking a $443 million impairment charge as it shifts strategy.
“We view Lululemon Studio in the same way we view any innovation. We test, we learn and we evolve as necessary,” McDonald said. “Although the acquisition has not fully materialized as originally intended, we're in a much better position in our understanding of the community and our new membership program as a result.”
Despite the Mirror pivot, the brand’s results and early uptake of the Essentials tier present promise make the membership program a driver of growth. Moving forward, the goals are threefold, said CFO Meghan Frank.
“We continue to see opportunity to build our community, increase engagement and drive incremental spend,” Frank said.
Dealboard has funding and M&A updates from ecommerce aggregators and forecasting software.
Hunter is joining ABG's portfolio. (Courtesy photo)
This week, the aggregator space is active with M&A, IKEA is ready to roll out newly-purchased warehouse management software and Authentic Brands Group acquired a boot icon. Plus, there’s new investment to report for YouTube influencer Emma Chamberlain’s coffee brand and retail forecasting.
Here’s a look at the latest deals:
Chamberlain Coffee, the consumer brand founded by YouTube influencer Emma Chamberlain, raised $7 million in new funding.
The financing included backing from existing investors including Blazar Capital, Chamberlain and United Talent Agency. New investors include Volition Capital, Electric Feel Ventures, L.A. Libations and Noah Bremen, founder of PLTFRM.
The new funding follows the launch of a Ready-to-Drink (RTD) product and coffee pods. Previously, the brand raised a Series A in August 2022.
"Creating a uniquely inviting coffee brand has been my dream for so long now, and having key investors back us allows us to build Chamberlain Coffee in ways that feel fresh and exciting,” said Chamberlain, in a statement. “There are so many products I am eager to develop and projects I'm excited to get working on. With such an incredible team and group of investors I am more excited than ever to see what the future holds for Chamberlain Coffee."
Impact Analytics, a software company for retail supply chain and merchandise planning, raised new funding from Vistara Growth.
The new investment, the amount of which was not disclosed, comes after Impact raised funding in February 2021 and October 2022 from Argentum.
The funding will help Impact Analytics further develop its Impact Analytics SmartSuite product portfolio, which is designed to help optimize forecasting, merchandising and end-to-end lifecycle pricing. Rather than the traditional forecasting approach of basing decisions on the preceding year, Impact Analytics applies a model that includes 150 variables from internal and external sources, while combining recency and history. Clients include BJ's Wholesale Club, Dick's Sporting Goods, Puma and Tapestry.
Selva Ventures, a venture capital firm focused on consumer brands that promote healthier living, closed its second fund at $34 million, TechCrunch reported.
With the new funding, Selva will invest in brands across categories including health, wellness, beauty and personal care. The fund expects to write checks of $1-2 million in seed and Series A startups, while assisting in areas like finance, operations and retail partnerships.
Backers of the second fund include Unilever Ventures, PagsGroup and Obelysk.
Nautica and Forever 21 owner Authentic Brands Group acquired the intellectual property of Hunter, a 160-year-old British outdoor lifestyle brand known for its Wellington boots.
With the deal, ABG appointed longtime partners Batra Group and Marc Fisher to execute retail and ecommerce operations, as well as continue to expand the brand in the UK and U.S., respectively.
“At the intersection of fashion and outdoor, Hunter introduces another elevated global brand to Authentic’s diverse Lifestyle portfolio,” said Authentic CEO Jamie Salter, in a statement.
Terms of the deal were not disclosed.
The investment arm of IKEA parent Ingka Group acquired the warehouse management software platform Made4Net.
As a result of the deal, Made4Net’s software will be deployed across IKEA’s 482 stores and fulfillment centers. Made4Net will continue to operate as an independent subsidiary of Ingka, with a headquarters in New Jersey. CEO Duff Davidson will remain at the helm of the company.
“Our business currently requires a better fulfillment operations system with more accurate data that better supports handling for our customers,” said Tolga Öncu, head of retail at Ingka Group, in a statement. “Our goal is to become leaders of life at home, serving more people in an omnichannel reality, whenever and however customers choose to meet us.”
European ecommerce aggregator SellerX acquired Elevate Brands, a U.S.-based aggregator.
The combined companies will be known as SellerX Group. It will comprise a portfolio that includes 80 Amazon-native private label consumer brands in categories including sports and outdoors, home, mobile accessories, pets and consumables. The portfolio will span over 40,000 products.
With the deal, SellerX Co-CEOs Philipp Triebel and Malte Horeyseck will lead SellerX Group, while Elevate Brands cofounders Ryan Gnesin, Jeremy Bell and Robert Bell will remain in key leadership positions.
“This acquisition combines our know-how and diversified portfolios of strong brands with a market-leading technology platform and strong operational infrastructure,” said Triebel, in a statement. “By leveraging our combined strengths, I am convinced we are well-positioned to drive further consolidation in the industry.”
Ecommerce aggregator Society Brands acquired Wolf Tactical, a tactical gear company.
Founded in 2017 by Tim Wu, Wolf Tactical makes products including DC belts, range belts to weighted vest and tactical backpacks.
"I started Wolf Tactical by myself as a side hustle with very limited knowledge of business and entrepreneurship. A combination of hard work and relentless learning allowed me to build it into a multi-million-dollar business," said Wu who will remain as brand president, in a statement. "With the help of Society Brands, I have access to untapped potential that I would not be able to achieve by myself.”