In July this year, Lululemon became the world's second largest clothing group, surpassing Adidashml4 with a market value of US$37.4 billion, second only to Nike, equivalent to 1.3 Anta and 1.8 Li Ning . What is most talked about in
is that Lululemon's market value exceeded US$40 billion in September. Adidas used 68 years for the
, Nike used 46 years, while Lululemon only used 22 years.
may be because the times have changed, or it may be because Lululemon's opponent is old.
It is undeniable that the " Hermes " in the yoga world has finally become an important pole in the sportswear brand market.
But what is inconsistent with its reputation is the product quality that has repeatedly failed. So, how far can Lululemon, which sells 42 billion yuan a year, go?
Revenue rose by nearly 30% in the second quarter, and the Chinese market contributed the most
One day in 1998, Chip Wilson, who once founded a ski sports brand, signed up for a yoga class due to back disease.
As the students in the class increased from 6 to more than 30, these female students did not have the right yoga suit , which caused the movements to be unstandard - after all, at that time, yoga was a niche sport from the mysterious East, and it was normal to have no professional sportswear.
But Chip Wilson smelled the business opportunity. Compared with skiing, a sport that has long been popular in North America, the yoga sports market is obviously more immature and easier to start.
So, in the same year, Chip Wilson founded Lululemon, the originator of yoga pants.
Chip Wilson
At the beginning of its establishment, Lululemon gave itself a very clear user positioning: women aged 24 to 35, single or engaged, have no children, have received higher education, are good at media and sports, are highly professional, love travel, and have their own apartment.
Lululemon calls its users "Super Girl" in the new era.
In 2013, Lululemon came to the Chinese market and contacted domestic consumers in the form of "Show Room" in Shanghai and Beijing.
In 2016, Lululemon officially opened physical stores to China, opening three stores in Shanghai Pudong Guojin Center, Shanghai Jing'an Kerry Center, and Beijing Sanlitun.
Judging from the financial report data, Li Ning and Anta really cannot envy "Super Girl"'s preference for Lululemon.
financial report data shows that in the second quarter of the 2022 fiscal year (Note: Lululemon's 2022 fiscal year was 2021.11-2022.10), Lululemon's net revenue increased by 29% to US$1.868 billion. Net profit increased to $290 million from $208 million in the same period last fiscal year.
Among them, Lululemon's US market revenue was US$1.28 billion and Canadian market revenue was US$270 million, up 28% and 24% year-on-year compared with in the previous year.
international market contributed US$320 million in revenue, with a growth rate of 35%, and the proportion of total revenue increased to 16%.
It should be noted that the international market here in is the Chinese market.
In the second quarter of fiscal year 2022, Lululemon's net revenue in the mainland Chinese market increased by more than 30% year-on-year, with a three-year compound annual growth rate of nearly 70%.
Out of importance to the Chinese market, in April this year, Lululemon announced the five-year development plan of "Power of Three x2" and mentioned that it is expected that by fiscal year 2026, the number of stores in mainland China will reach 220, becoming Lululemon's second largest market in the world.
As of now, Lululemon operates 40 first-tier cities in mainland China, 25 second-tier cities, and 14 stores in third-tier cities.
In addition, in the first half of this year, Lululemon's revenue reached US$3.481 billion (approximately RMB 24 billion).
For comparison, in the first half of this year, Li Ning's revenue was 12.409 billion yuan, Anta's revenue was 25.965 billion yuan, Nike's revenue was 23.681 billion yuan, and Adidas' revenue was about 12 billion yuan.(Note: Unit RMB)
In other words, among the sportswear brands with high voices, only Anta narrowly beats Lululemon in the first half of the year, and Lululemon started with a pair of yoga pants, and now it has sold for tens of billions of dollars in multiple categories.
Some industry insiders laughed at that customers who buy Lululemon all have an almost religious superstition about their products. Even if they wear yoga pants worth a thousand yuan pair, they are not as comfortable as described by Xiaohongshu bloggers, they still suspect that they have "the way to open it is wrong."
But in fact, the relationship between Lululemon's product quality and its extremely high-profile price has always been debated.
OEM model has been criticized, is the quality sorry for the price?
Lululemon has always emphasized that its products are in line with "human aesthetics", "ergonomics" and " human science ", and are following the ultimate single product hit route.
With a price of about 1,000 yuan, the gross profit margin of Lululemon has always been at a high level, which can be earned more than Nike and Adidas.
Judging from the gross profit margins of the three brands, Lululemon's gross profit margin has always been higher than Nike and Adidas in 11 years. As of the 2021 fiscal year, Lululemon's gross profit margin was 57.7%, 12.9 percentage points and 7 percentage points higher than Nike and Adidas respectively.
However, in fact, since entering the Chinese market, the debate on "quality is sorry for price" has been around Lululemon.
Day Eye Check Data shows that in China, Lululemon has been punished three times for product quality issues, including men's down jackets and women's yoga pants, which are suspected of "subparents are good". Overseas, Lululemon also recalled products twice due to quality issues.
On Black Cat Complaint , consumers' complaints about Lululemon quality issues include pilling after wearing shorts for less than three months; pants ripped after wearing them twice; yoga mats have plastic smell; clothes are hooked, etc.
plus the recent incident of customers buying Lululemon products worth 1,080 yuan online, and the incident of a sign price of 950 yuan arrived, which caused Lululemon's domestic reputation to decline.
This is related to Lululemon's highly dependent on suppliers' foundry production model.
On the one hand, Lululemon is highly dependent on head fabric suppliers. Data shows that as of fiscal year 2021, the concentration of Lululemon's five major fabric suppliers was 56%, the largest supplier provided 27% of fabrics, and the largest product supplier produced 15% of products.
On the other hand, it is interesting that in order to prevent suppliers and manufacturers from "stealing learning" scientific research results, Lululemon's cooperation with the supply chain usually separates fabric suppliers and garment manufacturing.
For example, its largest fabric supplier comes from Ruhong Enterprise Co., Ltd. in Taiwan, China, and its manufacturers are mainly distributed in Southeast Asia based on labor costs.
Therefore, the instability of the supply chain has caused Lululemon's quality risks and the illusion of "hunger marketing" - the new products that consumers want to buy are either out of stock or limited in quantity.
However, even if there is suspicion of "quality is sorry for the price", for most of the "new middle class" who have purchased Lululemon, they are not very sensitive to price, and they care more about quality and the identity symbolic behind the brand.
To put it as a saying, they bought not yoga pants, but a lifestyle and identity tag, which is also the point of Lululemon's marketing success - such as "the backbone of the mid-to-high-end outfits of programmers ", "the exquisite local outfits of Silicon Valley bosses", etc. Wearing Lululemon makes them feel not only decent but also tasteful.
and with "technological functional fabrics" and "design-sensing and plastic body beauty", as well as its fashionable design that is different from traditional sportswear, Lululemon's products do feel more comfortable to wear.
In addition, Lululemon's proud DTC model (direct to consumer) and community marketing model make consumers feel "respected", and has a different consumer experience compared to the product itself. Although there is no signing a celebrity to endorse, the grass-planting marketing of KOLs and social platforms (such as Xiaohongshu) in the fitness field has made Lululemon's user loyalty higher.
Image source: Xiaohongshu
In other words, although Lululemon does not advertise, it does not cost a lot of marketing expenses.
data shows that in the 2021 fiscal year, Lululemon's sales, management and other expenses were US$2.225 billion, a year-on-year increase of 38.3%, setting a 10-year high, 15.1 percentage points higher than the average growth rate in the past 10 years. Since the epidemic, marketing spending has been more than before, accounting for more than 35% of the two consecutive years.
is gradually increasing marketing expenses, and the revenue growth rate is gradually slowing down. If no changes are made, Lululemon's next path will undoubtedly become narrower and narrower.
Can men and shoes support the future of Lululemon?
Obviously, Lululemon himself also realized that the routine of "eat all over the world with one move" is not enough.
On the one hand, in the North American market, since 2014, with the development of Under Armor, New balance and other local American brands began to explore the women's market, Lululemon's advantages have weakened, and the shortcomings of single category have been exposed.
On the other hand, no matter how the yoga market grows, the overall market capacity is relatively limited. And but as far as the Chinese market is concerned, "yoga" is no longer a blue ocean.
day eye check data shows that as of February 27, a total of 56,000 company names or business scopes include "yoga". According to incomplete statistics, from March 2021 to April 11, at least 16 domestic sports brands have received financing, and 10 are emerging sports brands.
So, in order to slow down growth anxiety, Lululemon has been trying to expand categories and develop across borders.
When other brands learn that Lululemon is targeting the women's market, Lululemon is also following the old path of Li Ning and Anta, opening up markets such as men and shoes - market competition is nothing more than taking the other party's path and leaving the other party with no way out.
First of all, it is the male market.
In 2015, a new male product line was added, and men's yoga and sports products were launched; in 2021, autumn and winter jackets and jackets were released, but the development was not smooth.
The reason is that the label of women in the early stage was too strong, and the male audience was small. Many men’s minds were not open to the point of wearing yoga pants like some fashionable trendsetters. So the Lululemon brand may not be as attractive to men.
But judging from the financial report data, it has indeed become Lululemon's second growth curve.
Second quarter financial report data showed that the male business revenue reached US$416 million, accounting for nearly 25% of the total revenue, a year-on-year increase of 27%, exceeding the growth rate of female business.
may be the loyal female fans of Lululemon to recommend the brand for their family and lover . After all, most women who have bought Lululemon think they will recommend their friends around them to buy, and the comfort of the style and design is indeed OK.
Next is the shoe market.
In March this year, Lululemon launched the running shoes Blissfeel - that is, Lululemon is going to face Nike and Adidas. The running shoes of
have created a lot of topics once they were launched. The reason is not that they are designed specifically for women, but that they are priced at 1,180 yuan. Lululemon fans who had high expectations for it also began to complain about the appearance of Blissfeel. It can be seen that although the "new middle class" is willing to pay for the premium of Meihe brand, they do not want to be a pure "big injustice". After all, "more money does not necessarily mean that people are stupid."
However, I believe that with Lululemon's social marketing methods and KOL grass planting promotion strategy, the four sports shoes it launched will not end in failure at least like children's clothing brand iviva.
Overall, the two major directions of men and shoes are important influencing factors for Lululemon to maintain growth in the future. Maintain the basic foundation of women's business and do a good job in the steady expansion of men's business and shoes market. Lululemon's development momentum can continue for a few more years.
It is worth mentioning that if the supply chain problem is not solved well, Lululemon's market competitiveness will lack a core. You should know that its competitor Nike has 329 apparel factories in 38 countries around the world, while Lululemon has very few suppliers and manufacturers.
If you want to become bigger and stronger, you can be worthy of the market value of the world's second largest clothing group. Lululemon's supply chain still has many courses to make up for.
Reference materials:
1, Zhang Xilun @Growth Black Box, "12,000-word Interpretation of lululemon: The Combination Game of "Witcher" and "Hedgehog""
2, "Chinese Story" Save Lululemon?
3, data cable SJX, lululemon opens stores in China, and its revenue depends on the United States?
