LAS VEGAS—As we continue our series of conversations between James Cook, national director of analytics for GlobeSt.com Thought Leader Xceligent, and high-level US retail professionals, he chats with Booth Babcock, store development strategy director at lululemon athletica, one of the premier names in sports apparel. Growth—both on a local and an international level—is very much on Babcock's mind, and he shares his thoughts on how the firm tests the waters in new markets.

James Cook: What's the single most important metric that you look at when you think about the next lululemon location?

Booth Babcock: We actually do our new-market entry or infill using a little different strategy than other retailers do. We'll open a market with a temporary pop-up store, a showroom, for only a couple of days a week, with a limited clothing line and probably in an out-of-the-way location. We use it as a community hub so we can have our educators go out into the community, meet people and get a feel for whether that community wants to pull us in. We also look at the traditional demographic and socio-economic factors most people use. But the most important factor to indicate if we would go to a location is that community reaction.

Cook: So you use pop-ups to test the demographics.

Babcock: That's a big part of it, but we use it for a lot of things. We've discovered that the relationship between traditional demographics and the success of a store isn't a direct one. There are places where the local population is on brand or not on brand in ways it's hard to attach numbers to. So we use the pop-ups to supplement our demographic work and to embed our product and our people into the market to seed the market for future growth.

Cook: Your customers are a very targeted group. Has new technology helped you to profile and target those customers?

Babcock: Because the people who founded and ran the company were essentially running a company for people like themselves—a company that they wanted to shop at, we always had a pretty detailed idea of who are guests were. In the early days, it was easy to pursue opportunities on that basis. But as we expand into secondary and smaller markets we don't have that institutional knowledge anymore. Technology has helped us map that guest profile to demographic data and identify the different neighborhoods that match who we think are our key guests. This allows us to quantify people in Grand Rapids, MI, or Des Moines, IA, and profile guests who match our best customers in places like Los Angeles or New York.

Cook: It seems like those who are most successful at developing and targeting that truly engaged following, like lululemon or Urban Outfitters, are much more successful as opposed to those who rely on other options, such as competing on prices.

Babcock: If we try to compete on price we know we're going to get killed. We don't have the reach of a Nike or Target to put product in front of everyone everywhere. So we have to compete not only on the quality and design of the clothing itself, but also on the unique community we've built.

Cook: We're just back from RECon, where there was a large international contingent. It seems it's very difficult in places like Latin America and Asia to acquire reliable data. What has that been like for you? Is it getting better?

Babcock: It continues to be a huge challenge for us as it is for everybody. We get a little spoiled working in North America, where the data is comprehensive and accurate and updated regularly. I can go on the US Census website and download anything, at no cost. You go to another country, and all of these things become untrue. You may be able to find data but it's expensive or you might find free data but it's not updated regularly or it's inaccurate. So it continues to be a struggle for us as we expand internationally.

But there's good news in that in a way, because it's a business opportunity and people are moving into it. When I started to do international work 10 years ago when I was with Starbucks, there was essentially one company selling data for China. Now there are lots of them. But while we're seeing the beginning of better pricing and availability, we're finding the accuracy still isn't quite there. Most of these companies are still reliant on either government sources, which are highly suspect in many countries, or else they're having to do highly manual data collection to supplement the government data, which may or may not be accurate and is highly inconsistent from country to country. So it's hard to use one methodology to do analytical work across multiple countries. The market isn't quite there yet to justify making significant investment in international data, but that day is coming.

Cook: So do you use qualitative data to supplement that?

Babcock: The accuracy goes from usually pretty good at the country level to pretty terrible at the local level. We do a fair amount of analytical modeling at the country level and even at the regional level, and we feel comfortable we have a good model. But when we get down to the city level and compare opportunities in a city like Seoul versus Incheon, the data's not quite as good, and at the neighborhood level analytics are difficult to find and not very useful if you do find them. That's when we take the qualitative data from the field work of people who know their way around. We use that to supplement the high-level data.

Cook: Have research tools changed over the years? And if so, how?

Babcock: There are two different tracks. In the North American area, there's an increasing movement away from traditional desktop GIS cloud-based solutions. There are systems that replicate what GIS used to be—out-of-the-box solutions where you sign up and log in and all the tools and queries are built in. For a small company like ours, it's a great solution. It's easy to learn and cheap and easy to implement. It's a right movement for companies like ours. Again, internationally we haven't seen that, especially in Asia, where the world seems to be working in giant Excel sheet and data bases.

Instant Insights /

Researching Pop-Up and International Retail With lululemon

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