lululemon's high growth has made it a bloody path among the old sports brands. However, its proud strategy may become a hidden danger in the future
text | "Financial" reporter Xin Xiaotong
edited | Yule
in international sports brands In the market value ranking, Nike first and Adidas second have been going on for many years, and the third place battle is very fierce, but it is hard to match. Now, this pattern has been broken by the non-traditional player lululemon (Lululemon) .
In July 2022, lululemon surpassed Adidas with a market value of US$37.4 billion, rising to the second place in the world's sports brand, second only to Nike. 2021 financial report shows that lululemon's revenue is less than one-third of Adidas's, but its net profit is equivalent to 65% of its competitors. As of press time, lululemon's market value has reached US$38.6 billion, while Adidas has US$33.8 billion.
In 2021, international brands are still struggling with external factors such as the epidemic. In comparison, lululemon can be regarded as the biggest winner. The brand's annual revenue is the same as that of Under Armour (UA) , but the growth rate is more than 50% higher than the other party; in the comparison of multiple data, lululemon surpasses Nike, Adidas and Under Armour Its annual report is specially marked competitor.
In the field of sports brands, the emergent lululemon is a brand new species: It was born in 1998, about 50 years and 30 years later than Adidas and Nike, respectively; compared with many "all-round" opponents, its product categories are not Many, almost just a pair of yoga pants "fight the world"; unlike traditional sports brands that are obviously male, lululemon focuses on female consumers, and thus has achieved growth and profit margins far higher than competitors; In terms of marketing, channels, store system, etc., lululemon's strategy is also very different from that of traditional brands.
For traditional players, the emergence of lululemon seems to confirm the saying: what you have never defeated is not a long-standing competitor, but a new human from another world.
But as the brand attracts more and more attention, another voice is also emerging. Some people believe that lululemon relies too much on existing advantages and sets a high threshold for future market expansion, especially to the male market and non-yoga fields; in addition, its products rely entirely on OEM, and the e-commerce system is incomplete. , has laid hidden dangers for brand development in upstream and downstream fields.
has emerged with yoga pants
Fitness expert Yu Xi found that more and more girls are wearing yoga pants in fitness group classes, replacing the previous fitness shorts. With the popularity of Frisbee and Flag Football , yoga pants have also moved from the gym to the outdoor football field. "In the past, I could see girls wearing yoga pants on the streets. Now I feel it's everywhere."
Although the field of yoga pants has gradually become a red ocean that brands continue to pour in, lululemon is still a pioneer and benchmark. Founder Wilson (Chip Wilson) said in his autobiography that when he first practiced yoga in 1998, most girls wore dance clothes or "replaced to men's sportswear "small or pink". It is lululemon that makes the category of yoga pants deeply rooted in people's hearts.
Wilson (Chip Wilson) calls the popular single product strategy of lululemon yoga pants "category killer (Category Killer) ". The reason he chose yoga pants as an entrepreneurial element is because he saw the two blue oceans connected behind it - yoga sports and female consumers.
lululemon has many patents in the field of fabrics. Now it focuses on fabrics called "nulu" and "everlux", which emphasizes nude feeling, breathability and sweat absorption, and has high elasticity. The seamless crotch cut and diamond-lined lining design solve the visual awkwardness of women wearing yoga pants.In addition, lululemon exposes the lines at the stitching to the outside, which can not only avoid friction with the skin during exercise, but also highlights the good figure through the line-like design, making the buttocks more upturned and the legs look better.
Yuxi has done many yoga pants reviews. She said that she is willing to choose lululemon for comprehensive consideration. Comfort is only the most basic advantage: "When exercise, the pants' legs will not slide upward along the calf, and they will not wrinkle after a long time. The pants' shape The tailoring shows off your figure and avoids your weaknesses."
According to data released by Fortune Business Insights in March 2022, the global yoga shoe and clothing market size in 2020 and 2021 was US$19.24 billion and US$22.72 billion, of which the contribution of pants is about three points Second, it is far higher than tops and shoes, which shows that yoga pants sell better, and lululemon also started out in making yoga pants, and the two promote each other and confirm each other. According to its estimates, this figure is expected to increase to about US$40 billion by 2028 at a compound annual growth rate of 8.4%.
And women are the main consumer group of this movement . According to research data from investment company Frost & Sullivan (Frost & Sullivan) , the compound growth rate of China's female consumer economy market size reached 63.1% from 2013 to 2017, and the market size is expected to reach 8.55 trillion yuan in 2022 RMB.
Because female consumers pay more attention to "self-expression" and "sharing" in consumption motivation and product selection, this has greatly promoted the popularity of yoga and its equipment. According to the 2020 iResearch Consulting female exercise and fitness data, more than 60% of domestic female exercise and fitness enthusiasts participated in yoga in 2020. Nowadays, sports brands are emphasizing female consumers and are putting the development of the women's market in a five-year plan.
It is precisely because of this east wind that lululemon's yoga pants "sowed up" and quickly occupied the minds of female sports consumers and drove the rapid expansion of brand awareness.
Now lululemon has extended from a "yoga brand" to more categories, including running, comprehensive training and daily wear (On the Move, OTM) , but yoga is still the cognitive label of lululemon. Although the financial report did not disclose the revenue of various categories, according to the Magic Mirror Market Information, yoga products still account for 760% of the product categories of Lululemon Tmall flagship store html in 2021.
lululemon entered China in 2014, and its growth was relatively stable at first, but it has accelerated in recent years. Although the headquarters has not released revenue data separately in the Chinese market, the revenue of China's "market outside North America" has surpassed the world's second largest market in (2021 financial report data), and the number of stores in the Chinese market has significantly exceeded that of Other countries outside the United States. Therefore, it is generally believed that China is the third largest market in the world after the United States and Canada.
brand CEO Calvin McDonald (Calvin McDonald) expressed his optimism for the Chinese market in public interview. In 2021, lululemon has a net increase of 53 stores worldwide, of which 31 are in China. It is estimated that the number of stores in China will reach 220 in fiscal 2026.
(There is still a big gap compared with the largest market in the United States)
killer weapon is also a double-edged sword
Industry analyst Shi Yu believes that the category killer strategy itself is a double-edged sword. Although it can help brands enter the market quickly, The more successful the positioning is, the harder it is to expand a new market, especially in the Chinese market. "A brand tag has been worn for a long time, and consumers' perception of it has long been fixed, so it is difficult to change it." Take the recent controversial Zhong Xuegao incident as an example. When consumers have a basic idea of ice cream in their hearts, they have a basic idea of ice cream in their hearts. Positioning, high prices are easily rejected.
lululemon's dilemma is that its "strength" yoga market is limited after all, and in categories such as "weakness" running, comprehensive training, etc., it has to "fight" with the traditional advantage areas of Nike, Adidas and Under Armour. This is a necessary step for the company to cross the platform period after reaching a certain scale. However, consumers admit that it is "HTM5 Hermes in the yoga world", but they may not admit that it is at a high price in other categories.
"What I hear most offline is: What is the difference between this piece of clothing and Uniqlo 300 less? Why do you want to sell more than 1,000?" A lululemon clerk told the reporter of " Finance ".
The clerk refers to the product in the store's "daily wear" category, which is a category that lululemon strongly recommends at this stage. Xiao Fan, a former employee of lululemon, said that the brand basically holds integrated marketing activities for "daily wear" every cycle.
However, lululemon's "daily wear" does lack advantages in the country. In order to continue the brand's previous style, the daily series is also basic, with a great discount on its fashion, and its appearance is similar to those brands that occupy the minds of consumers with basic models.
"The high price of lululemon yoga pants is not only the cost, but more of a brand premium." Shi Yu said, "But this perception has not extended to other categories, and some products are not even obvious in logos. Wearing yoga pants can also be said to be It is wearing the 'Hermes of the yoga world'. It is difficult for the daily series to bring people this 'vain sense'."
5 The house is leaking and raining all night. , and the "Daily" series is the first to burst. On May 5, lululemon was fined more than 80,000 yuan by the Xicheng District Market Supervision and Administration Bureau of Beijing for its products "subparents are used as good ones". The punishment was Navigation men's down vest, whose fill volume does not match the national standard.
In fact, lululemon, which is known for its "high quality", has always had hidden dangers in the supply chain. lululemon does not have its own factory, all products come from the OEM factory , , and all fabrics are supplied by the OEM factory. Lululemon has 56 fabric suppliers, of which 5 supply accounts for more than half of the total, and the largest one is close to 30%. If the supply chain is interrupted, it will be difficult for lululemon to find a suitable replacement manufacturer in a short period of time, and the order will be short.
This can also easily cause core technology loss. Although the patent was applied for, fabric production itself is not a high-end technology, the moat is not deep, and the risk of being referenced is also very high. "Nike, Adidas and other brands have their own factories and take some core technologies into their own hands." Shi Yu thought for a while and said, "But the 'reference' technology of domestic factories is also very clever, with their own factories and OEM factories. It is just a matter of whether it is easy or not. "
More importantly, lululemon's high price is bound to quality. Once quality problems break out, the brand will be affected more than its peers. "And lululemon also depends on social media to spread. Once there is negative news, social media will quickly amplify and the reputation will be damaged even more severely."
In addition to the resistance to category expansion, lululemon's impact on the male market also has obstacles. When the competitors vigorously entered the women's market, lululemon, which has high-quality resources, was worried about the reverse entry.
Xiaofan said that in lululemon's internal report, the store's men's clothing sales are an important indicator for assessing the store's KPI.
In April 2022, lululemon announced its new five-year plan, proposing that in terms of men's clothing, lululemon achieved growth in the men's business in fiscal year 2023 two years ahead of schedule. It is expected that by fiscal year 2026, the revenue of men's business will double compared with fiscal year 2021.
According to the financial report data, the revenue revenue of men in the past three years has increased significantly, but the revenue contribution has always been around 23%-24%.
According to Magic Mirror market information, the overall GMV of lululemon men's clothing product line in its Tmall channel in 2021 was 14.3%, an increase of 4-5 percentage points compared with 2019.
Forbes (Fobes) article analyzes that the growth of the lululemon male market is related to the increasing number of men in North America starting to practice yoga. Two problems are pointed out behind this. First, yoga cannot be called "opening" in China's male market; second, lululemon still has too much dependence on yoga categories.
"Chinese men, especially middle-aged men, are mostly smart when purchasing clothing, and even say 'stingy'," said Xiao Fan. Most male users have not experienced the process of planting lululemon. For them, wearing lululemon does not mean anything, and male users may not agree with the concept behind the brand.
"Even tags like lululemon and yoga pants are bound to 'female' in the perception of many men." Shi Yu said that men with exercise habits are usually absorbed by brands such as Nike and will not spend 1,000 yuan. Buy a pair of yoga pants that you can't use normally.
powder-enhancing advantages and e-commerce digitalization
In addition to yoga pants becoming a "category killer", lululemon's second advantage is store-based brand marketing. In the early days of its establishment, lululemon adhered to the direct sales model and operated all stores on their own, which is completely different from other sports brands that rely on dealer channels to achieve rapid growth, and is also essentially different from new brands starting with e-commerce channels and then switching to offline stores.
lululemon's stores are not just trading venues, but also the functions of community event venues. In North America, lululemon's store is built on the community and serves yoga enthusiasts in fixed areas. They will regularly ask coaches to teach members to do yoga together, just like a community gym or yoga studio. Some clothes hangers in the store are equipped with pulleys, so the event space can be reserved if needed.
Although lululemon's store opening strategy has changed from a community to a CBD and a large shopping mall, the community activities based on stores have not changed.
These yoga and fitness coaches have also become the first batch of "brand ambassadors" in Lululemon. The brand ambassadors signed by lululemon rarely have top athletes or traffic stars. Most of them are more famous "opinion leaders" in a certain circle, including yoga coaches, fitness experts, and other circles. The "ambassador"'s promotion of products can accurately hit the target group.
"The products of coaches and store ambassadors who have been certified in lululemon start at 25% off, and the discounts will be greater when different levels are different." A store ambassador told the "Finance" reporter.
Nike also does community marketing , but it is basically a promotion at the public relations level, not at the store level. Nike's social marketing has no fixed venues and fixed programs, and coaches are usually hired externally. Compared with lululemon, Nike's social activities have lower targeting goals and greater expenses. It is more appropriate to promote the brand rather than pursuing conversion rates.
In addition to the brand ambassador, another "brand promotion specialist" is his own employee - in-store shopping guide. Lululemon has positioned its target group as "new middle-class women" at the beginning of its brand. Wilson believes that only clerks are also "new middle-class women" can attract such consumers. Therefore, he offered a salary higher than that of the industry shopping guide and encouraged them to actively participate in the sports. It can be said that every clerk is a promoter of the lululemon brand culture.
"Finance" reporter learned that the clerks in a lululemon store are divided into four levels , including 1 store manager and 1 deputy store manager - 2 people. The third level is "Team Leader (key leader) ", with 3 people in a store, in charge of different tasks such as store operations, community activities, etc.The last layer is "Educator (educator) ", which is similar to shopping guides, but has both brand cultural publicity functions and attracts more consumers to plant grass.
Xiaofan told the "Finance" reporter that offline stores attach great importance to the sales data, which generally requires that the daily customer order volume of the store must be more than 2, that is, each customer buys more than two items on average. "If the number of orders is less than 2, the store manager of the internal meeting will be criticized." Xiao Fan said, "The logic of the senior management is that the number of orders is high, which means that you have a high connection with the guests. The guests regard you as a friend, so they will Buy more. "
Therefore, the marketing of lululemon is different from celebrity endorsements, and it is not like traditional brands to name and sponsor various events. The functions of traditional brands and public relations departments are weakened, and they do not rely on "advertising" but on "reputation of mouth ”Propagate. In this way, lululemon has found a low-cost, high-efficiency and strong sticky user growth channel.
However, lululemon, which started with direct stores, is still not conspicuous enough in the fields of e-commerce and digitalization, and has not successfully integrated digital and physical channels at this stage. For example, whether online shopping products can be returned and exchanged in physical stores depends entirely on the store manager's consideration, and the backend has not been connected. Brands such as Nike and Uniqlo have already achieved this.
"This is not a bad thing for lululemon." Shi Yu said. According to the financial report, during the 2020 epidemic, lululemon e-commerce revenue accounted for more than half of the company's revenue. Although it declined in 2021, it was comparable to the store channels. "lululemon's e-commerce growth is very fast, and it is far from the end. Digitalization gives it a clear room for improvement."
Whether in the international or Chinese market, lululemon wants to break through the ceiling of the yoga market and continue to maintain high growth. , to challenge old players such as Nike and Adidas in all aspects, we also need to make targeted innovations.
