From the perspective of the development history of global sports brands, it has always been an oligarchy between Nike and Adidas, and the competition in the "pan-sports" sportswear industry has been deadlocked for decades. However, in recent years, with the awakening of some emerging sportswear brands, including the globalization strategy of domestic brands Anta and Li Ning, the global competition pattern of sports brands has undergone considerable changes. In recent years, in addition to the sportswear brands that are still horizontally "fully covered", the vertical "vertical extension" of sportswear has gained good development opportunities. Among them, the more popular is the Canadian sportswear brand lululemon, whose market value in the U.S. stock market in 2022 was once close to $65 billion, and the market value is still above $60 billion by the end of 2023n）。In terms of market capitalization, lululemon exceeded the $40 billion mark in 2020. And to reach this height, it took 68 years for Adidas, 46 years for Nike, and only 22 years for lululemon. In the past two years, due to the impact of weak performance growth and declining sales, Nike is in a "mid-life crisis", which has brought greater opportunities to many rising stars. For example, the "rising star" lululemon will sell for 550 yuan for a light T-shirt in China, and the price of a pair of yoga pants is about 1,000 yuan, and the unit price of customers far exceeds that of Nike, Adidas and other peers, and it is ridiculed as a "middle-class harvester". Although the price is not low, lululemon has never lacked die-hard fans. In fact, lululemon's revenue has maintained a steady double-digit growth over the past decade, with revenue of only 1$4.8 billion, doubling to $3 in two years5.3 billion US dollars, exceeded 1 billion US dollars in 2012, and sold 81 in 2022$1.1 billion. Revenue has been soaring, and lululemon's profitability growth is also quite amazing, with a net profit of 9 for the full year of 2021$7.5 billion. Why did lululemon counterattack?
Step into the times, create concepts and needs.
I thought lululemon was an emerging sportswear brand that was established in recent years, in fact, the company was established as early as 1998, "differentiation" is one of the core strategies of the company to this day, and "pan-fitness" Nike and Adidas are different, lululemon has focused on the women's yoga wear market from the beginning, and has been vertically cultivated in the field of yoga as a subdivision of sports, attracting and stabilizing a group of loyal consumers in the early stage. However, this group of consumers comes from the "time of day", that is, the times have driven the rise of lululemon.
lululemon is indeed grateful for that era, and it is undeniable that the brand has achieved the ultimate in differentiated competition, precise positioning of brands and products. The first is to create a new concept, for the sports style of traditional sports brands, lululemon created and led the "athleisure", women love beauty after all. As a sports product, lululemon first highlights the technological content and functionality of the product, and adds fashion and design elements on the basis of sports functionality, which has achieved lululemon's athleisure style. The brand has always insisted on using elements that are comfortable to wear and fashionable to make sportswear jump out of the original sports scene and gradually integrate into every occasion in life, creating a fashion trend of legging. You know, in 2014, New York's fashion ** put forward the concept of "athleisure sports and leisure".
Then lululemon created a new demand. In North America in the 90s, a social phenomenon caught the attention of the brand's founders. At that time, the percentage of women in North American college graduates had risen from about 20 percent to 60 percent. Women's educational attainment has increased dramatically, raising women's average income, but this has led to a delay in childbearing. As a result, a new demographic consumer portrait has emerged, that is, 24-35 years old, unmarried and childless, with a high education level and annual income, with their own residence, and independent women who love life, sports, and travel, that is, lululemon has been accurately targeting this kind of segment "super girls".
Independent women with high education, high cognition and high income, while focusing on work, also increase the demand for sports, leisure, fashion, and life in their spare time. In front of quality and fashion design, the sensitivity to ** has been lowered. In addition to busy work, invite a few friends to change into comfortable and fashionable yoga clothes to complete a slow-paced yoga exercise together, not only to maintain the figure but also to socialize, etc., and the continuous social needs make sports and fashion continue to improve repurchase and user stickiness.
Lululemon then expanded the definition of "super girls" to include the "new middle class." The expansion of the consumer group, the increase in the repurchase rate, and the high unit price of customers have enabled lululemon's revenue and net profit to continue to increase. That's why some people say that buying lululemon is actually buying a lifestyle.
Fantastic" Power of Three strategy.
Now that you have the demand, you can start building your brand and product.
It is rumored that lululemon does not have a marketing department, but in fact it is not the case, but the company has found another way to turn the overwhelming advertising expenses of traditional sportswear companies into other marketing expenses, taking the 2022 annual report as an example, it can be seen that the company's year-on-year growth in 2022 SG&A is mainly spent on wages, and here my understanding is that lululemon spends a lot of marketing expenses on "brand educators". This is lululemon's unique marketing concept, from which consumers can see that most of the offline stores are girls or boys wearing branded yoga pants.
Compared with celebrity endorsements, lululemon believes that since the brand's positioning is "Super Girls", the ideal type of employee is also Super Girls. While the short term means higher salaries and benefits and more investment in employee development initiatives, the value of the high-quality connections between employees and consumers is greater in the future, which seems to explain why the company's SG&A growth is clearly wages.
And these "super girls" in the store, that is, "brand educators", are the most important piece of the puzzle of lululemon's community marketing strategy. Through these educators, on the one hand, they introduce and promote products to bring new consumers, and on the other hand, they connect with local high-quality yoga teachers and fitness instructors, and these coaches are another piece of the puzzle - "brand ambassadors", and then divided into several levels, a bit like Amway back then. Compared with "distant" celebrity endorsements, brand ambassadors and educators are closer to consumers, which is more likely to bring brand resonance and even "emotional value" to consumers.
However, it is not enough to rely on unique marketing tactics to make the pie bigger.
Judging from lululemon's revenue growth in the past ten years, the company's most recent revenue doubling was from 2019 to 2022, which took three years; Compared with 2015-2019, it is one year shorter, which shows that 2019 is a crucial year for the company. In retrospect, it was also the year that lululemon first released its "Power of Three" strategy, which includes "product strategy, user experience, and market expansion".
On the product side, lululemon's core luon fabric focuses on high elasticity, high breathability, soft and comfortable. On the one hand, it solves the problem of transparency of yoga pants, and on the other hand, it also uses seamless crotch cutting and diamond-shaped lining design in the design, which solves some pain points of traditional yoga pants and broadens the application scenarios of the product. In addition, there are also hidden pockets and other designs. Later, the company also expanded different fabric technologies for different products. However, it is still a bit far-fetched to position themselves as a technology company, after all, several other sports brand giants are also quite good at the material technology of their respective fist products. Focusing on product development and design should be my job, not the core driving force for lululemon's high performance.
On the channel side, lululemon can be regarded as a hitchhiker for e-commerce. In 2008-2009, affected by the global financial crisis, lululemon also suffered from the nightmare of overstocking. At that time, it happened to be the node of the rapid development of the global e-commerce economy. Therefore, it began to lay out the online DTC (direct to customer) + offline omni-channel model, expand the direct stores offline, and build the offline stores into a gathering place for yoga and sports enthusiasts, accurately locate potential customers and maintain the stickiness of old users, and even some stores are opened next to yoga studios and gyms. In the first quarter of 2018, more than 300 of Lululemon's stores began to launch the "online purchase store delivery" service. In the second half of 2018, the "online purchase and pick-up" service was launched one after another. Online and offline stores are connected (only the official website and online stores) to complement each other's shortcomings. According to the 2022 financial statements, DTC growth in net profit for the year reached 33%, more than double the 16% growth of offline stores.
Moreover, the expansion of online channels has also laid the foundation for the expansion of the third market.
However, there is one thing to say, compared with the online channels of other sportswear giants, lululemon's online shopping experience is indeed not a competitive advantage, and Nike's membership program started in 2017 is understood to have 2500 million members, not to mention the past 2023. In the future, lululemon's online revenue will have to rely on the transformation of offline core battlefields.
Market expansion. At present, although the North American market is still the main battlefield of lululemon, with the development, it also tends to be saturated, and expanding into other markets has become the core strategy. The company's "Power of Three" strategic plan for 2019 achieved this strategic goal ahead of schedule in FY2021.
Based on the growth momentum of the past three years, lululemon announced a new "Power of Three x2" growth strategy around April 2022. Broadly speaking, the revenue of the men's business doubled, the revenue of the digital business doubled, and the revenue of the international market quadrupled on the basis of the original business. In fact, the most important thing is the international market, because men's business and online channels still need to attract traffic from offline. From a regional point of view, the growth rate of the international market is still higher than that of the North American market, with the annual net revenue of North America increasing by 40% and the net revenue of the international market increasing by 53%. So who is lululemon's largest international market?
Undoubtedly, it is China. First of all, in terms of the number of stores opened, in fiscal year 2022, the number of lululemon stores in China increased from 55 in 2020 to 117 in 2022, doubling in two years, and plans to continue to double to 220 in 2026. In addition, China's market revenue has increased by 50% in three years, leading the world. It's no wonder that China is the fastest-growing market for offline stores in the table above, second only to the United States.
The core reason for China as an important overseas market is that there are almost similar "times" opportunities in China at this time to the rise of North American brands at that time.
Does the story of "Super Girls" sound familiar?
In recent years, with the rapid development of China's economy, independent women with high education, high awareness and high income have gradually become the strongest consumer force in China. In other words, theoretically, the story and concept of lululemon's "super girls" can be replicated in China.
However, it is not easy to succeed in the domestic market, in addition to the need to continue to improve the brand image, product design and quality, lululemon not only has to face the macro and micro economic cycles such as domestic consumption downgrade, but also continues to enter competitors, such as in October 2023, Anta acquired Maia Active, which is a domestic yoga wear brand and has been used by users as a replacement for lululemon.
We all know that the Chinese market is important, and it depends on the sincerity of each brand.
The author of this article |Liu Chaoran **Talent Magazine.