Reporter | Luo Yingying
Edit | Shi Yiying
At the beginning of 2020, during the annual goods season, Vlog master Liu Yujia worked hard to sell a pair of pants, issuing a Li Jiaqi-style sigh.
It's a partnership with Lululemon to persuade more Chinese consumers to buy those expensive but comfortable leggings or sweat-wicking T-shirts instead of a pair of jeans or a shirt.
At the same time, a daily people report questioned: Who is Lululemon's consumer base in the Chinese market?
Lululemon, who started out in yoga costumes, the most notable label is women, yoga, high-end, niche.
Not everyone can accept tights with an average price of 900 yuan, but this North American brand has grown by more than 20% in revenue for seven consecutive seasons.
In the Chinese market, Lululemon still has a kind of mystery of "holding the pipa and half covering the face" - who is buying it, the performance of the Chinese market, and, with the store as the core, has really formed a community...
Who's paying the high price?
At the time of the rise of yoga in North America, in 1998, Chip Wilson, who was originally engaged in the surfing equipment industry, established the Lululemon brand in Vancouver, cutting from high-end women's yoga products to the market segment.
Lululemon's consumer base is positioned as a new type of middle-class woman – who is less price sensitive and more concerned about quality, including fabric functionality and fashion design.
Xia Xiaoxi, a yoga teacher who is a core client, calls herself, "a yoga teacher who only wears Lululemon and burns countless dollars for it." ”
Yoga Circle, which has the largest user base of the brand. Comfortable, soft, breathable and revealing, this is a common evaluation of its products in yoga circles.
"Belonging to the kind of seemingly ordinary, you can't make a mistake in wearing it, and even there are surprises," Xia Xiaoxi said, "If there is a score of ten points for yoga clothes, I will give it eight points." ”
As a star product of Lululemon, a pair of sports leggings retails for between 750 and 1,000 yuan in China, which is expensive and rarely discounted.
CEO Calvin McDonald said that even if there are a lot of counterfeit products on the market, the $100 pants will not be discounted, "you can choose to cash out through discounts, but you can also choose to invest in innovation and investment experience." ”
The performance shows that there is indeed a small group that is constantly paying for full-price products.
Lululemon positions itself as a technology company and currently has 9 fabric technologies, resulting in 22 fabrics of different textures, with its patented materials making nude leggings the highest-grossing.
As can be seen from the Tmall store, the Align series of nude skinny sports pants ranked first in sales. On various product recommendation platforms, as long as Lululemon is talked about, this product is almost "blown up".
Xia Xiaoxi said: "The material of the nude series is the most comfortable in the sports series I have worn, untethered, the joints are easy to stretch, the disadvantage is that it is easy to rub the ball, and the visual sense will feel that the legs are thinner." But there will also be a situation where the pants are opened, so they silently take it to the sewing shop to repair it. ”
Unlike Xia Xiaoxi, Maggie, a fitness guru from Shanghai, first bought Lululemon's products to participate in the brand's community activities.
On weekends, lululemon stores are transformed into health clubs, led by brand ambassadors or other fitness instructors, and registered members can sign up for free to participate in the classes.
Maggie has participated in yoga and running activities, "The general activities are spontaneously organized in the store, one is to attract us to the store to consume, and the other is to create stickiness to the brand through participation in the activity." ”
In fact, the startup's rapid growth is due to its bundling strategy with the fitness community.
Due to limited initial funding, Lululemon did not have a dedicated marketing department. Branding relies heavily on working with yoga instructors and sponsoring community yoga classes to reach more potential users.
It is understood that their community activities are mainly yoga, and the rest of the types of exercise are less.
They also invite yoga teachers and fitness instructors from all over the world to become brand ambassadors, providing clothing for the latter as a traffic outlet, through word of mouth from professionals, borrowing a small group of people to reach a wider audience.
For example, the ambassador of the Taikoo Hui store in Guangzhou is Daisy, the founder of Yoga guangzhou studio, and the Shanghai Xintiandi store has The founder coach OfUd CrossFit, Liang Ke.
Former CEO Laurent Potdevin explains the brand strategy this way: "How do we tell the outside world what Lululemon is doing? Not by creating a trendy hit, but by creating an emotional connection. ”
As brand recognition has grown in China, the Daily People report featured a store clerk portrait of a user who came to consume: rich, crazy and athletic, and most of the rest were yoga instructors.
In Maggie's view, the characteristics of its consumers are more extensive, "generally in their 30s, all walks of life, there are no rules, they are people who love sports or have exercise habits, not necessarily very professional, but a little sports foundation." ”
As a pragmatic consumer, Maggie felt that Lululemon was expensive, and only bought two products. In her sports circles, there are indeed a few people who are already addicted, and all styles will be started.
SpaceCycle, a high-end gym chain with 7 stores in Beijing and Shanghai, has a single lesson price of more than 100 yuan. In yoga and ballet classes, less than half of the teachers wear Lululemon, while the members of the class are mainly girls, wearing sportswear and brands.
Revenue is red, and China's performance is a mystery
Two years before Lululemon was founded, another North American sports brand, Under Armour, was launched in Baltimore, USA.
The growth trajectory of the two is very similar, both starting from niche markets and finding differentiated advantages in sportswear fabrics. Lululemon is dominated by female customers, while Under Armour is dominated by male consumers.
Prior to 2016, Under Armour had a revenue growth rate of more than 20% for 26 consecutive quarters. However, after years of rapid growth, the performance has been in the doldrums for the past two years.
In contrast, although he once relied on the "egg protector pants" to get out of the circle, Lululemon started slightly slower.
In fiscal 2018, Lululemon's revenue increased 24% year-over-year to $3.29 billion and its full-year net profit was $484 million, the strongest year in the company's history.
Not long ago, the brand raised its expectations for the fourth quarter of fiscal 2019. In its annual report to be released in February 2020, Lululemon's full-year revenue is expected to exceed $3.9 billion, an increase of 20% over 2018, which will undoubtedly break the performance record again.
Amanda Casgar, Lululemon's then Director of Brand and Communities for Asia Pacific, said, "We are bullish on China's potential, including its contribution to the next 5 and 10 years, and we believe that China will become one of the largest markets in the future." ”
In 2013, Lululemon opened a non-sale display space in Beijing and Shanghai to test the waters of the Chinese market. After three years of exploration, in December 2016, the company officially opened three stores in China.
From the official website, at the beginning of 2020, the number of Chinese stores reached 40, second only to the United States and Canada, and the location is basically located in a prominent position in a bustling business circle or shopping center. Shanghai has the most stores, with 9.
At present, Chinese stores adopt a direct-operated model, with more autonomy in pricing, discounts and marketing, and no third-party retailers to divide profits. At the same time, direct operation means huge labor and rental costs, and the pressure on store profitability increases.
The brand has never announced specific results in China, but the company's executives have occasionally mentioned this market in the earnings conference – in the third and fourth quarters of 2018, China's online sales were as high as 200% and 140% year-on-year, respectively; in the first half of 2019, China's online and offline sales increased by nearly 70%.
Stuart Haselden, Chief Operating Officer and Executive Vice President of International Operations, has said, "50% of china business comes from online. "E-commerce channels such as Tmall, official websites and WeChat malls have become important growth points.
Since Lululemon has officially entered the Chinese market for only three years, the market base of sales volume is low. Therefore, in the past two years, these high-growth data do not have much reference value.
At present, the market share of Chinese volkswagen and even high-end sports is mainly controlled by four big brands: ANTA, Li Ning, Nike and Adidas. According to the level of domestic consumption, lululemon's price point is not the scope that most consumers will consider.
How many consumers can the North American brand impress with nearly 1,000 yuan to buy a pair of sweatpants, and how much market volume it has gained in China, this is still a question mark.
Step out of the yoga circle PK niche bonus
Yoga clothing is no longer limited to fitness places, but also suitable for daily life, consumer demand for leggings remains high.
According to a report by Lyst, a British fashion shopping search platform, sales of yoga peripherals have increased by 42% in the past two years, with the search volume for leggings growing at an average rate of 36% per month.
But in his main yoga market, Lululemon has a strong opponent.
In 2019, Nike announced the launch of a dedicated yoga training apparel line. It wasn't until January of this year that the yoga series called Infiniton was launched.
According to reports, the new product is made of Infiniton cloth, with the characteristics of lightness and high elasticity, priced at 200 yuan to 600 yuan.
In addition, Nike is launching experiential retail at the same time – Nike Training Club will release a series of yoga training programs. Nike is benchmarking Lululemon to seize the latter's market.
Although Nike started more late in the professional yoga field, the former has an unparalleled brand influence in the full-category sports market. At the same time, compared with Lululemon, Nike's price positioning has a greater market scale advantage and is expected to take some shares.
With increased competition in the yoga segment, Lululemon can't get around the expansion stage from "niche" to "mainstream". The experience of giants including Nike, Adidas and ANTA shows that only by dabbling in a wide range of categories can we gain a larger market.
To this end, starting in 2019, Lululemon is busy "out of the circle".
The company has gradually expanded its business from a single women's yoga suit to running, training, leisure and swimming.
In April 2019, Functional Apparel-oriented Lululemon announced that it would enter the sneaker market.
McDonald revealed that the team is working on a line of sneakers, "We did a lot of testing of footwear products, realized a lot of things from it, Lululemon found a blank space in the footwear market." ”
The company said it would not disclose more details about the footwear development progress until the new product was announced. At present, footwear products still do not appear on the shelves.
An industry consensus is that footwear products are the key to dominating the sports footwear market, and more than half of Nike and Adidas' performance comes from footwear sales.
According to the Euromonitor report, in 2018, Nike's share of the U.S. sports shoes and apparel market was 18.3%, Adidas ranked second with 6%, Under Armour and Skechers were followed by 4.1% and 2.6%, respectively, and clothing-based Lululemon accounted for only 1.9%.
In addition, Lululemon ventured into the beauty and personal care industry, offering care products such as moisturizers and balms designed specifically for the athletic population. At the same time, the company launched a high-luxury clothing brand Lab, the price is on average 30% higher than the main brand.
Next, they will also terminate their children's clothing business Ivivva and focus more resources on the adult sports and leisure market, especially the male business.
"Men's awareness of the brand is still very low, and we need to let consumers know that it's not just women, Lululemon is also a male brand, and we need to let more men know about it," McDonald said.
Lululemon is expanding the menswear category, offering sportswear including training, swimming, running and yoga, as well as lifestyle sportswear, to a greater extent to cover men's demand for sportswear.
Its goal is to double men's product sales by 2023, which means more than $1 billion in annual revenue — in fiscal 2018, men's category sales accounted for 21% of the total, reaching $600 million.
For Lululemon, "out of the loop" is inevitable.
Perhaps the worry is that when brands gradually get rid of their labels in the field of single sports and move into a more mainstream track, will the natural love of early loyal consumers for "niche" disappear?