Laurent Potdevin sets Lululemon in a new direction

Laurent Potdevin, CEO of Lululemon, prefers to speak softly while carrying a big brand

He’s been in the hot seat of B.C.’s best-known global company for over two years, but Laurent Potdevin hasn’t had much to say—until now. Here the CEO of Lululemon speaks about rumours of a takeover, his distaste for the term ‘athleisure’ and competition from company founder Chip Wilson

Laurent Potdevin is the first to admit that he’s a bit of a behind-the-scenes guy. “My passion is in building the best team the brand needs,” says the French-Swiss CEO of Lululemon in accented but fluent English, clad casually in a black cotton shirt, forest green khakis and slip-on black sneakers as we chat in late January in his Kitsilano office. It’s one of his first sit-down interviews since joining the Vancouver-based apparel giant just over two years ago. “I’m not the CEO you’re going to see in the press or everywhere all the time. I’m pretty under the radar.”

While he may fly under the radar with the press and public, the 49-year-old son of Parisian parents (his father was an engineer at CERN in Geneva when Potdevin was born) is a well-known commodity among employees, especially retail associates (who, in Lulu argot are “educators”; customers are “guests”). He visits most of the Vancouver stores on a weekly basis, always pops by locations while travelling for business or pleasure, and even worked the floor of the flagship Robson location last Christmas Eve.“I spent three hours at the cash. It’s the best way to interact with people. They’ve made their decision, and then you can focus on them.”

Does he ever introduce himself to customers, or is he all Undercover Boss? “Well, once,” he recalls, “to this woman who was running in the SeaWheeze”—Lululemon’s annual half-marathon, which attracts some 10,000 runners to Vancouver each August. “She came into the store and was buying a hundred-and-something dollars’ worth of product and she had a gift card. And the gift card was $17 short. And she didn’t have cash, didn’t have anything else with her. And I said, ‘Don’t worry about it. I’ll take care of it.’ And she’s like, ‘You’re going to get in trouble! Don’t do that.’ And I’m like, ‘I’m the CEO of the company—it’s our treat.’ That’s the one time I’ve done it. I put $20 in the cash register and that was it.”

Sure, the story makes the big guy look good, but the anecdote also gives you a sense of where Potdevin is taking Vancouver’s global brand icon—now an almost-$2-billion enterprise with 9,000 employees and 354 retail locations on four continents. Since taking over in January 2014, sales have increased over 25 per cent and more than 100 new stores have been opened. Last Christmas, when most retailers saw dismal results, Lululemon reported a “very successful” Cyber Monday-to-Christmas Day period, with 90 per cent of apparel sold at full retail price. In June 2015, Potdevin was ranked the top CEO in Canada in an anonymous survey of employees conducted by Glassdoor.com. (The question: “Do you approve of the way your CEO is leading the company?” 93 per cent said yes.) And while the line of yogawear products is still critical to Lululemon’s success, in the eyes of its new CEO, selling stuff is subordinate to the relationship the company has developed with its customers and employees.

Potdevin’s move into the corner office came at the tail end of one of the darkest chapters in the 18-year-old company’s history: the 2013 sheer pants controversy, founder Chip Wilson’s “the pants don’t work for some women’s bodies” media fiasco, the running battle between Wilson, then-CEO Christine Day and the board. For Potdevin, job number one was restoring customer confidence. “We had lost a little bit of love and loyalty that guests had for the brand. And I said, ‘You know what? We’re going to be guest-centric first. We are going to make the guest right—and if they’re not happy with the product, we’re going to listen and we’re going to take care of them.’”

As Potdevin explains it, what had happened to Lululemon was typical of fast-growing companies—including the two he’d previously led, Los Angeles-based Toms Shoes (2011-2013) and Burlington, Vermont-based Burton Snowboards (2005-2010). “I’d experienced that at Burton, I had experienced that at Toms: you grow incredibly fast and then you stumble. And then you have another inflection point.”

To reach that next inflection point at Lululemon, Potdevin had to not only ensure that quality was top-notch and customers were treated right but that employees had the confidence to sell the brand. On that latter point, the CEO says he was surprised by what he found. “I was expecting to find people within the company who were demoralized or down after having been beaten down so much. And what I found was an energy inside the building and our stores—a positive approach, a passion, a level of engagement that I didn’t expect to find.” The challenge was that “the brand, after the Chip debacle, had no voice,” he says. “By virtue of being silent, it was the bad press that sort of took over.”

There were stories to be told—good stories, positive stories—but management had to give a “microphone” to customers and sales associates, as Potdevin describes it, “to bring those grassroots stories to life,” through decentralization of Lululemon’s social media channels. “We’re in a position now where it’s no longer ‘one founder, one voice.’”

Back in the summer of 2013, when Lululemon came calling, Potdevin almost didn’t take the job. “I was in the middle of getting separated from Cathy”—the mother of his two children: Luc, 15, and Estelle, 13. “I was happy at Toms. The kids had relocated from Vermont—I was like, ‘I can’t look at it.’” He hung up the phone.

But then he started to think about it and realized his whole career had been building toward this point. A trained engineer, Potdevin had followed his master of engineering in Switzerland with an MBA at Paris’s exclusive École Supérieure des Sciences Économiques et Commerciales (ESSEC), where he specialized in a new program focused on managing luxury brands. Fashion house Louis Vuitton Moët Hennessy sponsored the program—and right out of school, in 1991, offered him a job. “I spent a lot of time in the factories. I sewed a lot of bags and cut a lot of leather hides. The attention to detail—how you’re cutting the leather around the defects—was impeccable.” Eventually he would be sent to Los Angeles to restructure an LVMH factory there before taking over the company’s North American operations, based in New York.
 

In 1995, he was introduced to Jake Burton, whose eponymous snowboard company had become a cult favourite and was taking off around the time of the 1998 Winter Olympics in Nagano, where snowboarding debuted as a medal sport. Potdevin had grown up skiing, but had also—as a young entrepreneur—built 10 snowboards of his own (“We sold eight of them… they were not that great. You couldn’t get on the chairlift”); he liked the idea of moving into a more entrepreneurial environment and back into the milieu of outdoor sports he’d grown up with in Switzerland. Potdevin spent 15 years with Burton, the last five as president and CEO. “We had a blast building a brand, a sport and an industry. We went from being this countercultural teenage boy smoking dope on a chairlift to building an Olympic sport.”

Then, in early 2011, he was lured across the country, back to L.A. as CEO of social impact shoe company Toms. Toms, founded in 2006 by Blake Mycoskie, made famous the “one for one” business model—when Toms sells a pair of shoes, a new pair of shoes is given to an impoverished child—which has since been widely copied. Potdevin was intrigued by the notion of a company that not only sold a product but also certain ideals. “At that time, I thought of philanthropy as you go to a black-tie dinner, there’s a silent auction, you spend some money and you feel good about it. At Toms, I really learned so much more about sustainable giving.”

So when he put it all together on that day in August—working for a vertical-integrated luxury retailer with a high degree of craftsmanship; a manufacturer of functional, performance-driven athletic gear; and another that sold high-quality products with high-minded ideals—Potdevin felt he had no choice. “I was like, this is the dream opportunity. This is everything I’ve done, all in one.” He picked up the phone and called the headhunter from Lululemon back.

As Lululemon has built a category over the past 18 years, it has also attracted a lot of competition, most notably from apparel giants Nike and Under Armour, whose scale and deep pockets allow them to offer what the industry calls “athleisure” at significantly cheaper prices. Rumours have even swirled in recent months that Lululemon might be a takeover target for one of them.

Potdevin isn’t buying it. “I think there are going to be fewer players in this market five years from now. Everybody talks about ‘athleisure’ right now—we actually don’t see ourselves as a part of athleisure. I’m not even sure what athleisure means.” But he says Lululemon will be one of the survivors—and that it will thrive by not competing on price and continuing to innovate. “We are so much more than a product company. We’ve got amazing products in a market that we’ve created, but half of the equation is the experience we’re creating for our guests.”

He talks about getting Lululemon more into the mindfulness field—offering services and experiences to customers that enhance their lives. “I don’t think our people—especially our demographic—want to buy more stuff. They want to attach themselves to brands that have purpose.”

“We started as a yoga brand for women—and now we’re men’s and women’s, and we’re across multiple categories,” he continues. “Ten years from now I could see us getting into so many more categories—but always at the high end of the spectrum, where we can bring a lot of innovation. Keep in mind that what’s really unique for us is our vertical model: every time we transact, every time we sell product, we control that experience. And that’s very unique. That gives us a margin structure that’s very different from a lot of our competitors that have a wholesale business.”

Of course, it’s not that different from the model born just across town two years ago—Kit and Ace. That’s the elephant in the room when we chat: the retailer of technical “athleisure” wear founded with Chip Wilson’s money. As of early February, the chain counted 60-odd vertically integrated stores in Canada, the U.S., Australia, the U.K.—all the markets that Lululemon fervently goes after. Kit and Ace also promises a similar technical, design-forward product and targets an active, affluent audience.

What does Potdevin think of this competition from Lululemon’s iconic founder? He doesn’t. “I think they are building a lot of beautiful stores and we’ll see if the venture is viable or not.”

But isn’t it a similar customer base that they’re both going after? “I’d be lying to you if I knew what their guest base is,” says Potdevin, staring out his office window toward the North Shore mountains. “I know that the way we go to market is very unique—and it’s very successful. We open a showroom four or five days a week. We build a lot of vibrancy in the community—we connect with the right studios, we connect with the right ambassadors, we build momentum, we build authentic relationships. And then we trigger a store rollout. That’s why, across our 350 or so stores, we don’t have one bad location. So it’s been a very nimble, powerful steady approach to store rollout. It’s never been ‘open as many as you can.’ I’m actually very proud of the discipline that we have: we go to market when the community pulls us in. We never push ourselves on a community—and I think that’s probably a very big difference in how we both do things right now.”

As for the cheeky “Not for Yoga” dig that Kit and Ace is using in its ubiquitous ads—on billboards right now across Toronto, Manhattan and London, and in magazines around the world—Potdevin is, at least outwardly, positively zen about it.

“I look at our manifesto bag, and it says, ‘Comparison is the enemy of all happiness.’ I’ll take the high road: we’re very focused and we’re very good at what we do. And we’re obviously very grateful for what Chip created back in 1998, but I don’t spend any time looking at what he’s doing now. What we have is very powerful, very unique—and we’re looking forward.”