- BRW Lists
Published 18 June 2013 11:37, Updated 09 July 2013 00:13
Lorna Jane Clarkson ...because most Americans have never heard of us, stores are the best way for them to touch and feel it our activewear.
Just as Lorna Jane Clarkson’s career progression from dental therapist to activewear queen has been unorthodox, so is the approach she has taken to conquering the United States.
Unorthodox in the sense that it looks bravely traditional. At a time when bricks-and-mortar retailing is meant to be in the doldrums, Lorna Jane is opening stores in California at the rate of one every three weeks. There are 17 already, and the plan is for 25 by the end of 2013, as well as stores in Seattle, Texas and Canada.
The first Lorna Jane retail store opened in Brisbane’s CBD in 1990, after the exercise gear that Clarkson designed and sewed herself had proven a hit with friends. Since then, there have been 130 more in Australia. With the same two executives at the helm of the retailer for its 23-year existence (chief creative officer Clarkson and her husband Bill as CEO) the strategy has remained remarkably consistent – store opening after store opening, first in Australia and now the US.
My staff are balls of energy – they’re trying to live their most beautiful life and they want to share their knowledge and experiences with other women.
The company rarely spends on above-the-line advertising (and not a cent in the US) and carries no debt. In the early days, it relied on high-quality product – then sewn at a factory in Brisbane – for word-of-mouth momentum. Once in the stores, the potential “Lorna Jane girl” was converted by customer service, by staff hand-picked for their alignment with Clarkson’s “active living” philosophy.
“My staff are balls of energy; they’re trying to live their most beautiful life and they want to share their knowledge and experiences with other women,” Clarkson says.
More recently, technology has complemented the strategy. Lorna Jane has been a pioneer in the use of QR codes and the installation of “tweet mirrors” in its stores, according to Selma Mehmedovic at the Australian Centre For Retail Studies.
The chain has been helped along by the arrival of the fitness craze around five years ago, which researcher IBISWorld says increased sales for items like compression wear, yoga apparel and athletic footwear.
“Mass retailers like Target have become trapped in the price game but Lorna Jane is catering to a hard-core minority of enthusiasts, albeit a growing minority,” says Steve Ogden-Barnes, a retail consultant at Deakin University.
“They’re in the sweet spot of the cycle where they’re still playing the technology game rather than the price game: ‘how will this product enhance my performance?’ So they’re less prone to margin erosion although the technological advantage of an existing range eventually gets commoditised. When Aldi starts selling activewear, you’ll know that day has come.”
Lorna Jane has been making hay while the sun shines. Despite never straying beyond its women’s activewear niche, the chain has built up a 9.4 per cent share of the entire fitness and athletic clothing market in Australia, according to IBISWorld, competing with the likes of the Super Retail Group (which includes Rebel Sport) and Foot Locker. After producing consolidated revenue of $77.8 million in 2010-11, Lorna Jane will exceed $110 million in 2012-13, IBISWorld estimates, topping off an annualised growth rate that’s been running above 40 per cent for the past five years.
Although Clarkson insists that CHAMP Ventures, which bought a stake in Lorna Jane in 2010 (never disclosed but reported at the time to be between 40 and 49 per cent) doesn’t influence strategy, the clock is ticking on a typical private equiteers’ five-year holding period. And the only way to maintain that growth pace into any exit is to expand offshore.
Clarkson says she sleeps perfectly well at night despite the rapid US expansion. Her new-found love of strength training would help in this regard, but Clarkson is also convinced that a critical mass of stores is the best way to break into a new country.
Stores are not the only tools in the kit bag, with attempts to build word-of-mouth before the first US store opened at Malibu in 2012 including “trunk shows” (where Clarkson previewed her wares directly to customers) and “celebrity seeding”, with samples being provided to the likes of actress Charlize Theron.
Lorna Jane also has a full-blown digital and social media marketing strategy, complete with Clarkson’s voice on a pedometer app and a Facebook page that’s been liked more than 724,000 times.
“But people still need somewhere to buy the product. And because most Americans have still never heard of us, stores are the best way for them to touch and feel it, too,” Clarkson says.
Lorna Jane was a known quantity to Westfield, and Clarkson says it was “very supportive” in the early days when other landlords, scarred by the GFC, were wary of any new tenants.
A year in, however, and Clarkson says opening a new store in the US has actually become easier than opening a new one in Australia, given rent and staff costs are comparably much lower than here.
The Clarksons resisted advice to tweak their product offering before launching it stateside. “Bill and I have been doing this long enough that we can run on gut a lot of the time. California felt like it was the state most in tune with our active living concept and I decided if I needed to change something I would let the American customer tell me what it was,” she says.
“We’ve changed a few small things – like we have to call our singlets ‘tanks’ and our short tights are ‘crops’ – but that’s all part of globalising the brand anyway.”
Lorna Jane’s singlet tops will be known as “tanks” in the US market, one of the small tweaks required to internationalise the product for new markets.
Clarkson doesn’t mention it, but the travails of her biggest North American rival – Canadian activewear brand Lululemon – can’t have hurt. Lululemon was forced into a mass recall of its big-selling black yoga pants in March after they were found to become too sheer when their wearers were doing yoga moves. Its CEO resigned in mid-June.
Clarkson agrees with fellow Aussie fashionista-made-good Bruno Schiavi that the only way to really understand and conquer the American market is to move there.
“We’re not sure when, but Bill and I do know we’ll have to spend a couple of years over there,” she says.
“But we won’t jeopardise what we’ve built in Australia. [The move] would just reverse the current situation where we’re here, and then over there every eight weeks or so.”
A self-confessed control freak, Clarkson also makes sure she or one of her senior staff regularly visits Lingbao City in central China, where there are three factories producing exclusively for Lorna Jane.
“I’d still manufacture in Brisbane if I could but we just didn’t have that option any more,” Clarkson says.
“The mills started closing down and we couldn’t find people to sew the product. It’s not an industry the government is encouraging, and young people are being pushed into these new technology industries. Nobody aspires to be a seamstress any more,” says the former seamstress with just a trace of sadness. But she says she’s happy with the product she gets from the Chinese factories, which are operated in partnership with the blenders of the DuPont yarn used in Lorna Jane activewear.
“It’s important to me that we treat our Chinese workers well; we’ve become an employer of choice in the area,” Clarkson says.
“There’s lots of trees, a recreation area, good food. They call it Lorna Land. The workers all go back to their villages for Chinese New Year and some factories have hundreds that never come back – we lose an average of about three a year,” she claims.
This unusual hands-on approach is another sign of Clarkson’s determination to do things her own way, and for that reason she’s having second thoughts about the New York Stock Exchange listing she has previously spoken of as inevitable.
“It’s a big step up in scrutiny; there would be pressure to do things faster,” Clarkson says.
“I mean, Zara can do a three-month turnaround. We can do six months – but for a high-quality technical garment that’s the time you need for it to be fitted properly, and I won’t compromise on that.”
The obvious financial upside of a public listing is not one that will tempt Clarkson to change her approach.
“To be honest, Bill and I have enough money to be happy. We don’t have children together to worry about. I just get off on what I do,” she says.
That ethos informs the Active Living Room, a new concept store that Lorna Jane plans to open in Brisbane in September. The store will be inside FKP’s Gasworks development at Teneriffe, just north-east of Brisbane’s Fortitude Valley, which is now nearing completion. It will sell her activewear ranges as well her own healthy recipes at an in-house cafe and other health products that align with the active living philosophy.
Clarkson also plans to offer fitness and meditation classes at the site for a gold-coin donation that will go to selected charities, and open the space for meetings of community groups.Her design team will also meet there and mingle with customers.
“I want the store to break even – as a businesswoman, I don’t want it to be stealing from another part of the business – but my main motive for doing it is to give something back, to share what I’ve learnt and promote the active living concept I’m so passionate about,” Clarkson says.
“You’ll be able to come in, have a green smoothie and take the recipe home with you – what other restaurant does that?” she asks. (For the record, Clarkson’s green smoothie contains three cups of spinach, a knob of ginger, an orange, a small banana, half a pear and two cups of water.)
If that sounds good to you, there is good news – Clarkson would eventually like to have an Active Living Room in every Australian capital city.