Lulus Keeps Trying to Convince Shoppers It’s Not Fast Fashion

Lulus is not fast fashion. But that’s not what most shoppers think.

Since its inception, the retailer has been clear about its focus on providing luxurious items at affordable prices. Co-founder and then-CEO Colleen Winter reiterated this message during an interview with Glossy in 2019, stating that the company considers itself an affordable luxury brand, rather than a fast-fashion brand, as fast fashion and disposable fashion are widely considered “one and the same.”

That’s the same sentiment Lulus’ chief executive officer and director, Crystal Landsem emphasized during the company’s Q4 earnings call Tuesday (March 14). “We are not a fast-fashion retailer,” Landsem said. “We are a lifestyle brand whose loyal customers appreciate the durability, uniqueness and quality of our assortment relative to the price.”

Despite this, the confusion around Lulus’ business model still exists due to its frequent restocking of popular items and its competitive pricing — and after first impressions, changing perceptions can be extremely difficult. However, when compared to fast-fashion brands like Shein, the differences become clearer.

Shein leverages the fast-fashion playbook to generate revenue, offering incredibly low prices and quick product turnarounds on trendy seasonal pieces that lack staying power. But it’s a strategy that works when targeting deal chasers, as nearly half of retail shoppers say they would leave their favorite brand for a less expensive competitor, according to PYMNTS’ Consumer Inflation Sentiment study, “The False Appeal of Deal-Chasing Consumers.”

Lulus, on the other hand, is seemingly after a slightly different cohort, as according to the study, 63% of persuadable retail shoppers and 68% of loyal retail shoppers are motivated by factors other than price. That said, Lulus has created a business around its commitment to creating quality and designed-to-last, sustainable pieces, and restocking inventory based on demand.

According to its latest earnings call, the company reported generating $91 million in revenue for the quarter, and its 2022 net revenue of $440 million was up $64 million or 17% year-over-year from $376 million in 2021. This growth was attributed to several factors, including the fact that Lulus continues to keep 90% of the items sold on its site private label, and roughly half of its inventory can be carried over from season to season.

Lulus also revealed that about 83% of its units sold were sold without markdowns, which was right in line with pre-pandemic years and largely credits its innovative and data-driven product development process, which helps to mitigate fashion risks and allows for efficient inventory management in response to changing consumer preferences. The company also reported that units sold at discounted price points were “sold on average at a higher, more profitable net merchandise margin than in pre-pandemic periods.”

And while Lulus has seemingly prided itself on its inventory turnover rate, which has allowed it to weather a tough macroeconomic environment, the company said it did observe fluctuations in consumer behavior due to external macroeconomic pressures. However, Lulus seems confident that it can effectively navigate these challenges through a strategic marketing approach that the company said would include a diverse set of targeted product discounts.

“Even in the most challenging macroeconomic environments, we’re able to stay nimble and take a brand-friendly, surgical approach to our inventory management,” Landsem said.

Looking ahead, Lulus has expressed plans to expand the brand beyond its digital platform, broadening its distribution channels across both digital and physical platforms, increase its international penetration and will explore additional wholesale opportunities, like it has with Nordstrom, to better reach and engage with its customers.