A lingerie named Everlux by Lululemon has caused a sensation in the market, claiming that its design can bring miracles to married life. This lingerie is known for its front opening and hollow-out design, adding a touch of stunning visual effect.
On some social media platforms, there are enthusiastic reviews from consumers, praising that wearing this lingerie can change people’s lives and help solve marital problems. However, there have been voices questioning its practical value, especially the issues that may arise when used as sportswear.
Lululemon initially targeted the market of high-income and highly educated women, but the success of this hit lingerie seems to show that the brand is beginning to cater to a broader consumer base and may gradually deviate from its original market positioning.
Recently, Lululemon‘s market strategy has obviously changed, starting to shift its focus to second and third-tier cities, and opening offline stores in many smaller towns. In addition, the brand is also actively laying out on video social platforms, aiming to further expand the Chinese market.
The company executives have revealed in public that the performance of stores in China has continuously exceeded expectations, and the brand will continue to look for market opportunities in first to third-tier cities. As part of the company’s future growth blueprint, Lululemon plans to significantly increase the number of stores in the coming years, focusing on penetrating the down-market and targeting the middle-class in China’s third and fourth-tier cities.
From focusing on a specific group of people to expanding market coverage, Lululemon is indeed undergoing changes. From brand strategy, product design to market tactics, how to transform these changes into sustained growth momentum will be an important task for the brand.
For the general public with a monthly income of just over 3,000 yuan, sportswear priced around a thousand yuan has been criticized. Nevertheless, as the economic situation remains unclear, the economies of county-level cities have shown amazing resilience, continuously attracting more brand attention. Away from the hustle and bustle of the cities and the high cost of living, the middle class in these areas has demonstrated strong risk resistance.
Economist Guan Qingyou mentioned in an interview that the middle class in county towns has a stronger economic endurance than that of first-tier cities. Independent analyst Cheng Weixiong agrees with Lululemon’s channel strategy for the down-market, believing that most of China’s markets with great consumer potential are located in second and third-tier cities. Cheng Weixiong noted that compared to the expenses women incur on daily beauty, Lululemon’s pricing does not seem abrupt.
In expanding channels in county-level markets and below, Lululemon chose Douyin as a pilot platform for experimentation. Douyin has a strong social attribute, and since Lululemon’s official Douyin flagship store’s first broadcast last October, although it started small, with the official opening of the flagship store this year, they have actively increased the duration and frequency of live broadcasts to strengthen interaction with consumers. Statistics show that they have increased their live broadcast duration from an average of two and a half hours to an average of five hours now and have managed to hold a live broadcast every day after the Lunar New Year. Their dedication is indeed commendable.
Meanwhile, Lululemon’s product release pace on Douyin has surpassed that of its Tmall flagship store. For instance, in February this year, Lululemon uploaded up to 88 new products on Douyin, covering items ranging from inner wear, vests, shorts to long-sleeved garments, as well as hats, headbands, and wrist pouches. In comparison, the Tmall flagship store had far fewer new products.
Besides establishing a presence on Tmall, Xiaohongshu, and JD.com, Douyin has become the brand’s latest channel expansion measure. Lululemon’s approach clearly aims at one target—to seek new growth opportunities in county-level and below markets. According to the “2023 Douyin E-commerce Semiannual Report,” 68% of Douyin e-commerce’s interested users are distributed in second-tier cities and below, with nearly half in third-tier cities and below. Against this backdrop, Lululemon demonstrates its strategy to reach and attract consumers in the sinking market.
In China’s complex urban system, it’s difficult for brands to spread like cells into every corner. However, China’s efficient and mature e-commerce platforms provide brands the potential to cover all regions. According to Euromonitor data, from 2016 to 2021, the annual growth rate of offline retail was much lower than 5%, whereas the annual growth rate of online retail was steady at 15%-35%, which also verifies Lululemon’s foresight in online market planning.
E-commerce has gradually become a key factor in Lululemon’s sustained revenue. Over time, the proportion of revenue Lululemon obtains from e-commerce has continued to climb. Based on data analysis by Growth Black Box, the brand’s e-commerce revenue share surged from 17% in 2011 to 50% in 2022, meaning that half of Lululemon’s annual new profits now come from e-commerce.
Looking back at Lululemon’s early market strategy, its target consumer was very clearly defined: single, highly educated “power girls” aged 32 with annual incomes between $100,000 and $150,000.
The company’s founder, Wilson, once pointed out that with the growth of North American females with undergraduate and higher education, and the improvement of women’s income, a new consumer profile has emerged. Subsequently, in the yoga craze that swept through Europe and America in the early 21st century, the “power girls” became the driving force behind the popularity of Lululemon’s yoga pants, making Wilson a billionaire with a fortune of $7 billion.
A similar scenario is reenacted in China 17 years later. In 2015, with the rapid growth of the “super girl” demographic in China, Lululemon entered the Chinese market, where career women in first-tier cities with undergraduate or master’s degrees and substantial incomes became the main force of its market in China.
For these customers, Lululemon is not merely a fashion symbol but also a part of social interaction. What they pursue is not just a piece of yoga attire but the embodiment of a lifestyle that integrates a pursuit of quality and health.
However, behind the high prices, the quality issues associated with lululemon products are frequently complained about by users on social platforms. Consumers have complained about pilling after wearing their clothing just once, or fading after washing, and some garments quickly experience issues like loose threads or snagging.
As the once “die-hard fan” Linda said, even before lululemon entered the Chinese market, she began acquiring lululemon products through overseas purchases. She abandoned the brand due to rising prices and declining quality, mentioning pilling after a few washes in recent years, and unstable product quality control.
Indeed, lululemon has encountered quality issues. The brand was fined over 81,000 yuan by the Xicheng District Market Supervision Administration of Beijing for violating the People’s Republic of China’s product quality laws, involving quality issues such as adulteration with fake goods, shoddy goods, and passing off substandard goods as qualified ones.
When consumers purchase a men’s down vest labeled at 1380 yuan, they may not realize that the fill power does not meet national standards. The issue of high price and poor quality not only disappoints consumers but also causes former brand loyalists to turn away. Looking further into the profit margin of this down vest, we find each sale could bring nearly 500 yuan in profit to lululemon, with a profit margin close to 35%.
lululemon, which is accelerating the renewal of its products, is facing the issue of product homogenization. Hanna, a young woman pursuing her doctorate in Hong Kong, once had a special fondness for lululemon’s clothing series. In the past, she would happily purchase the same model of wicking shirts in different colors. However, she gradually realized that the brand’s functional garments, such as yoga pants and wicking shirts, are not fashion items that require frequent replacement, and the difference between new and old models is minimal, leading to a closet filled with similar styles.
As the economic situation changes and consumption downgrades, some consumers like Hanna prefer to be more frugal, allocating funds for other purposes. Meanwhile, lululemon’s market share is also eroded by competitors, with not only longstanding sports brands like Nike and Adidas entering the field but also emerging brands such as MAIA ACTIVE, which was acquired by Anta, competing for the market that once belonged to lululemon.
In response to market changes, lululemon turned its attention to the men’s market and set up China’s first men-focused pop-up store in Shanghai in November 2023, followed by the first men’s standalone store in the Asia-Pacific region in Beijing in January 2024. The range of products displayed in the brand’s Tmall flagship store is also increasingly rich, from clothing to men’s bags, headwear, water bottles, sportswear, and other accessories. The brand even debuted its men’s shoe line for the first time earlier this year, showing its strong ambition in the men’s wear field.
But for the Chinese market, which pursues personalized consumption, niche and vertical brands are more likely to become the darlings of the market, while full-category clothing brands struggle to highlight personalization and differentiation. lululemon, once started with women’s yoga pants and now diverging from its original intention to venture into the mass market, remains an open question whether it can still attract those consumers who seek excellent quality and become a significant brand in the Chinese market.
