In Business, Being Transparent Doesn't Always Help: Lululemon


In this analytics study, Lululemon was not a client.

Lululemon Athletica is a major producer of yoga active wear, with annual revenue of over a $1 billion and over 200 stores across North America and Oceania. On March 17, 2013, they announced a recall of their yoga pants made with luon fabric because there were reports that the fabric was revealingly transparent. This major quality complaint for a vanguard product posed a significant threat to how the company and its products were viewed by consumers.

For most companies in retail, conversations about their products are happening all the time. Previous water cooler conversations now occur online. Information is no longer limited to just traditional news or social media, but flows through both simultaneously. This makes responding to crises more complicated and the need for real-time research more important. Online discussions are often public and can provide companies with real-time information about how consumers view their products. When misfortune strikes, it is beneficial to have a social media monitoring system already in place to be able to respond immediately.

At Greenberg Quinlan Rosner, we monitor both traditional news media and social networking platforms like Twitter to gather business and political intelligence. How will Lululemon weather the storm of bad publicity? Time will tell, but we are able to examine various forms of social media data in order to come up with some preliminary answers.

REPUTATION IN A CRISIS

In the absence of a scandal, the conversation about Lululemon is generally positive. Graph 1 tracks the number of mentions of Lululemon on Twitter since January 2013. The color of the daily bars indicate how positive or negative the words used to describe Lululemon are. As the graph shows, after the initial story about the recall is broken by the Wall Street Journal on March 18, Twitter users react very negatively.

In contrast, the news coverage of Lululemon, while heavy, is initially positive, and only becomes negative as a rumor spreads (and was subsequently reported in the New York Post) that women who return the defective luon pants are being forced to demonstrate personally the pants are transparent.

In the next chart, we can unpack the coded sentiment ratings by looking at how different the positive and negative words about Lululemon were.

Before the recall, mentions are relatively light, and focus on either business coverage of the company or happy customers “checking in” at their local Lululemon outlet. After the recall, there is much more focus on quality problems, the losses that the company is facing, and the controversy about how the recall is being managed.

The recall shows that even an initially positive reaction through official news outlets can turn into a public relations crisis in the face of overwhelming negative responses from online news consumers reacting on Twitter.

WHEN TWITTER JOKES ARE MORE THAN STICKS AND STONES

How can a company’s image change in an instant on Twitter? In this case, humor is key. Lululemon’s total online profile is clearly impacted by the way its image is presented in jokes. Anyone who has ever spent any time on Twitter knows that it can be a hilarious and rambunctious place. Through repetition and sharing, jokes between users can descend into endless rabbit holes of references, rewarding deeper familiarity with Twitter humor’s tropes. Further, the funnier the joke, the more likely users are to share it with others by retweeting, and subsequently spreading the message to more users. We show that in the next chart.

Drawing from a sample of millions of randomly-selected English language tweets, we collect four word combinations of text that mention Lululemon. This is a simple summary of the content of the Twitter conversation about Lululemon after the recall, where the size of the bubbles indicates larger volume of similar references.

A tweet that got the largest amount of attention came from @canada_stats, a parody avatar that mimics official government statistical releases with satirical morsels of scientistic spoofs.

This reaction to the news of the recall is predictable. The image of athletic women wearing sheer pants, stretching and bending in yoga studios all across North America inspired a lot of smirks on Twitter. The joke associated Lululemon’s transparent pants with leering at women in gym classes, inviting an uncomfortable gaze, and making a woman think twice before pulling a pair of pants off the shelf.

In a fortunate coincidence, Lululemon featured in a Twitter joke that went viral the previous month, but with a very different context.

The @SeinfeldToday account is another parody account, lampooning the popular show from the 1990s and the way we live now. In this case, the subtext of the joke is positive for Lululemon’s image, associating the store with authentic yoga practice and hip urban lifestyles. While both tweets were seen by similar amounts of Twitter users, before the recall, Lululemon was mostly associated with yoga costumes for serious yoga practitioners, while, afterwards, the image of see-through pants was more dominant.

Because Twitter traffic is a reflection of what consumers are saying and thinking in real time, it can be a window for companies into how their brands are seen. Even a couple snarky jokes, when spread across hundreds or thousands of users, can reveal how images shift in times of business crisis.

This post was written by GQR Analyst David Margolis.