Chip Wilson on how retail is going to change post-COVID

Lululemon founder joins Yahoo Finance Live to discuss the state of the consumer, Lululemon’s acquisition of Mirror and his outlook for retail.

Video Transcript

BRIAN SOZZI: Retailers are gearing up for a holiday season the likes of which most have never seen before in their lifetimes. Who better to chat some retail with Lululemon founder Chip Wilson. Chip, good to see you. It's been a while. Good to see you. Thanks for taking the time this morning. Who's really impressing you right now retail ahead of the holiday season?

CHIP WILSON: Well, I think it was anybody that was digitally savvy before going into this season. I think the-- you know, obviously Amazon is doing phenomenal, and Walmart is too. I don't know if that's really what you're asking me about. I'm more of a small-box retailer but a small-box retailer where e-commerce now is 40%.

So I think that, you know, obviously I think moving into this time, Lululemon was a company that was really set up to do well that way. And I think that, you know, the outdoor companies are really set up to do well. I mean, obviously Lululemon through yoga but Nike and Adidas through running shoes have moved into general technical streetwear. And now I think it's the, you know, companies like Arc'teryx and Peak and Salomon and maybe even Anta out of China. But you're probably more Americancentric, so I'll leave Anta out of it.

BRIAN SOZZI: Chip, we haven't talked since-- in quite a while but since Lululemon purchased Mirror for $500 million. It was a lot of money. It got a good reception on Wall Street. Did you like that acquisition, and do you think that fusion is the next big thing in retail where you have these athletic brands and now they may look to partner with hardware-oriented tech companies to drive their business forward?

CHIP WILSON: Well, you have to look at a company like Lululemon that was never built on kind of a Nike or Adidas model of sponsoring big-name athletes. So it was all about the community. So my theory has always been the heroes of the community are more powerful than the big-name sports athletes.

So by replicating then what used to happen in the yoga studio or maybe on the mountain or maybe on the running track, this moving-- having Mirror or something like this-- I think even Alo has a great system-- is to put those people in your apparel in front of people digitally in classes is probably the new way of going.

JULIE HYMAN: And, Chip, it's Julie here. Speaking of the new way of going, I mean, you were one of the pioneers of athleisure. And so I'm curious, sort of moving beyond athleisure or beyond sportswear as we're talking about, do you see another emerging trend that you think is going to be the next big thing of the next decade or so, or do you think it's-- I mean, especially with people home and wanting to be comfortable, do you think it's just the expansion and domination of athleisure?

CHIP WILSON: Well, I think if you look over 40-year trend, you have apparel moved from the East Coast to the West Coast. I think it moved from couture fashion to casual. I think it moved from street to what I'd call an athletic look and probably wholesale to D2C. So I think all these things are kind of working in tandem to-- you know, the way people are thinking has changed. We're no longer living in England in terrible weather and cold where you have to have your neck covered up with suits and ties and scarves all the time. It doesn't make any sense for the real world. So I think it's been a 40-year trend that's just continuing, and I think the COVID thing, like digital, has just exponentially moved things forward 10 years.

BRIAN SOZZI: Chip, what is next in terms of how retailers reinvent their stores? Prepandemic, I would argue Lululemon had a very interesting concept. It was, I think, 16,000 square feet. It had a cafe in there. You could take, I believe, yoga classes. Certainly you could shop for apparel. But what will retailers have to do now? because I can't imagine they want these crowds back in these stores. So what looked like a promising model isn't so promising.

CHIP WILSON: You may say that. I think for right now you're entirely right. I think we're going through a decimation of small retailers. I mean, even in Canada where it seems crazy that they would allow, I mean, quote, unquote, the American retailers of Costco and Walmart stay open and yet you've got, you know, hundreds of thousands of small retailers that are closed. It makes absolutely no sense.

And now I've got away from your question, Brian. You'll have to ask me again.

BRIAN SOZZI: Well, how do you think retail reinvents itself? So many of these retailers tried to bring experiences into the stores, but is that still the model postpandemic?

CHIP WILSON: No. I think it's-- I think what's going to happen is rents are going to drop in half, and I think a new model is going to come up. And I think it's going to be-- I think retail is going to be-- street retail is going to be as strong as ever.

But because rents are half, the stores will be an omnichannel in themselves of Shopify, a brand store to kind of bring what the customers want-- tactile fit, e-commerce returns. I think it's going to be-- and then, I think, going back to that Lululemon model which was actually developed by a woman named Delaney Schweitzer who's at Amer now, you know, setting up that studio, coffee shop, retail store all in one is-- it makes a lot of sense to me. I think people still really want to be together, and I think people really want to be close. And I think that we're talking maybe a year from now. I think we're going to forget all about this.

I mean, people in their 20s and 30s have to find each other, get married, and date. You know, they had to smell each other. So there's chemistry involved. I think we're missing something, the most beautiful part of life, and I don't think digital will take over from that.

BRIAN SOZZI: Amen to that. We'll leave it there. Lululemon founder Chip Wilson, always good to speak with you. Stay safe, and have a good holiday season.

CHIP WILSON: Thanks, Brian. Bye-bye.