Publish Time: 2021-05-24 Origin: Yinshan Sportswear
The yoga wear market has supported lululemon's $27 billion market value. This piece of cake is so attractive that other brands will definitely step in. Nike started to target women's tights in 2017, setting up a sports women's pants area in thousands of specialty stores. Under Armour started from men, but also began to develop sportswear for women, and even Victoria's Secret (Victoria's Secret) also added sports bras and yoga pants.
Lululemon holds the chain of intimacy with consumers. It is difficult for new entrants to win immediately, but the competition is getting more and more fierce. Lululemon also launched an active offensive-full category, cutting into sports casual men's clothing and sports peripheral products.
At the Q2 earnings call, lululemon no longer positioned itself as a “yoga inspired athletic apparel brand”, and transformed into a “healthy lifestyle inspired sports brand” (healthy lifestyle inspired). athletic apparel), serving all fitness people who love Sweatlife, which shows that lululemon will expand its product categories in the long term. At the beginning of the expansion of male clothing, lululemon launched the explosive Anti-Ball Crushing pants, which are sports pants that prevent the crotch from being too tight and protect the private parts of men. They can be worn in sports or daily life.
In addition, lululemon also opened a separate male yoga class, and launched a new menswear series (office, commuting and travel) in Q1 this year. The series is made of a stretchable fabric and has a wider range of wearing scenes.
Men's clothing now accounts for 21% of lululemon's total revenue. Management expects that the business's 5-year average compound growth rate will reach 20%, which means it will double within 5 years.
In addition to men's clothing, lululemon is also trying to enter new markets, including personal care products and footwear. In October 2018, lululemon tried to sell water-free shampoo, deodorant, toner, lip balm, etc. in some stores. Orient Securities predicts that personal care products are expected to increase lululemon's gross profit margin because the beauty industry itself has higher gross profit margins. Mainstream brands such as L'Occitane, Estee Lauder, and L'Oreal have an average gross profit margin of 73.7% in 2018, which is significantly higher than that of lululemon. 55.2% gross profit margin level.
Another main line of growth comes from overseas markets. Lululemon’s current international sales penetration rate accounts for 11% of sales, while sales of other global brands (such as Nike) account for 50% or higher. Lululemon, which is gradually moving towards the full category, is still in this regard. There is great potential.
Beginning in 2014, lululemon began its layout in the Asia-Pacific market from Singapore, followed by Hong Kong, South Korea, China, and Taiwan. Among them, China is playing an increasingly important role. For example, in terms of men's and women's clothing, if divided by geographic location, revenue in North America has increased by 21%, Europe has increased by 35%, and the Asia-Pacific region has increased by 33%, but China has increased by 68% and Chinese e-commerce has increased by 70%.
Learning from the early blind expansion of many traditional retailers, lululemon is more cautious about the Chinese market. It first explored the local market from its e-commerce flagship store. In 2015, it opened a flagship store on Tmall and started to open offline stores a year later.
To many consumers in first-tier cities, a pair of lululemon yoga pants, like a Dyson hair dryer, is a sign of lifestyle. The retail price of Lululemon yoga pants in China is as high as RMB800-1000, which is much higher than Nike and Under Armour.
How did this consumer perception gradually form in China? Lululemon's entry into China almost copied its classic routine in the United States. Before the official store opened, it opened an experience display store, which was mainly used to carry out activities and set up yoga courses, and set up a "sports ambassador" system to obtain seed customers and initial brand penetration rate.
For example, before lululemon opened its first official store in China, it had opened three showrooms in Shanghai and Beijing. When the local demand was strong enough, it began to invest in official stores and build a sports ambassador system and communities at all levels. Lululemon organized many large-scale outdoor yoga activities in the Forbidden City in Beijing, the Big Wild Goose Pagoda in Xi'an, and the Oriental Pearl Tower in Shanghai.
At present, the sales performance of a single store in China can reach 15,000 US dollars per square meter, which is close to the 16727 US dollars in the North American market. In order to meet the needs of the Chinese market, the management plans to add more than 40% of the store area each year in the next five years.
The secret of Lululemon's acquisition of ultra-high pricing power is worth learning from all emerging brands. When the consumption level of a country/region rises, this kind of brand with enthusiasm and vitality will have a good upward potential. In the past 3 years, lululemon is one of the rapid growth stories in the retail industry because it created the "athletica" trend (sports and leisure).
High vitality community marketing has enabled lululemon to not lose much market share during product problems and management turmoil. After 2016, it improved its performance through supply chain reforms, regained its foothold, and broke out in 2018. After the high base in the North American market, lululemon began to move towards multiple categories, developing menswear and personal care, and seeking growth overseas.
But the biggest challenge facing lululemon is that the men's sports market is already crowded with players, from Nike, Adidas to Under Armour, and outdoor brands such as Archaeopteryx, Columbia, and North Face. Lululemon's brand positioning is still feminine. As can be seen from the name Lululemon, this is very different from a muscle-related brand such as UA, and the price of lululemon is significantly higher than that of its competitors, which may limit the upside.
Yinshan sportswear, one of the leading custom sportswear manufacturer and exporter in China. we are expertised on sportswear and activewear, especially in fitness, active gym clothing, yoga clothing, workout gear products. Lululemon is one of our clients for design and manufacture, and we express our respect to the strong developing brands in sportswear industry.
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