A pair of women’s yoga pants alone cannot conquer the world.
Editor’s note: This article is from the micro-channel public number “zinc Finance” (ID: xincaijing), Author: Ge Yu.
In the past year, lululemon drove into the fast lane.
In lululemon’s fiscal 2020 fourth quarter and full year financial reports, data show that the company’s fourth quarter revenue was $1.73 billion, a year-on-year increase of 24%. Judging from the full-year data, lululemon’s full-year revenue in fiscal year 2020 increased by 11% to US$4.4 billion.
lululemon’s main performance data for the fourth quarter and the full year of 2020
Although it was established nearly forty years later than Nike and Adidas, lululemon once surpassed Adidas in market value in January this year, and briefly became the world’s second most valuable sportswear brand.
This brand, known as the “Hermes of Yoga Pants”, is very popular among elites for its special product design. On the one hand, it is the sense of design. For example, the size information of lululemon is printed between two layers of fabric that are not easy to be washed off. The interlayer in the bag will mark you what can be placed on each layer; on the other hand, lululemon has developed to eliminate sweat Stinky fabric patent.
The high-end lululemon has always been high-profile. Its founder, Chip Wilson, once mocked that consumers who complained about the brand were “fat women”, and also frequently fired at its competitor Under Armour. In addition, the location of the brand’s store next to luxury goods and the price that is nearly twice higher than that of similar products have made ordinary consumers stop.
It’s just that a pair of high-priced women’s yoga pants cannot beat the world. After experiencing the rapid growth last year, many investors began to worry about whether lululemon has enough capacity to withstand the upcoming slowdown in growth.
lululemon has also tried to enter the male sports market, but lululemon, who has been “holding the shelf”, wants to expand its categories, but it is not so easy.
Short track overtaking
Affected by the epidemic, the global apparel retail industry has been hit hard. Compared with many sports shoe apparel retail giants such as Adidas and Nike, they are struggling to cope with the crisis of store closures and inventory.In the face of difficulties, lululemon has the opportunity to overtake on a short track.
According to the financial report data, lululemon’s sales have achieved contrarian growth. For the full year of 2020, the group’s revenue rose 11% to US$4.4 billion, a record high, gross margin was 56%, and net profit fell 8.6% to US$589 million, both exceeding analyst expectations.
This is due to lululemon’s “direct sales + e-commerce” model. Last year, lululemon reduced the proportion of directly-operated stores from 63% to 38%, and revenue decreased by 34%; however, the proportion of e-commerce increased from 29% to 52%, and revenue increased by 101%, directly offsetting the downturn in offline business. .
In fact, since lululemon’s listing, its stock price has risen more than ten times in 13 years. To some extent, this is not only the quiet rise of the women’s sports market, but also due to its own commercial play.
Yoga enthusiasts wearing lululemon
In the beginning, lululemon’s offline stores included small design studios, retail stores, and yoga training halls. Consumers can purchase products directly after experiencing yoga courses. At that time, while the overall clothing market was still dominated by aesthetics, lululemon focused on the functionality of the product. First, it solved the problem of stretchability of yoga pants during exercise. In addition, the fabric was comfortable and easy to clean, so it opened quickly. Women’s market.
After yoga became popular around the world, lululemon, which started gradually, did not choose to join the male sports market, but continued to take root in the segment of women’s yoga wear, focusing on brand tonality, making lululemon the “Hermes of yoga wear”. Loved by the elite circles.
Lululemon is often seen in the fitness street shots of some European and American stars, such as singer Avril Lavigne and “Fifty Shades of Grey” heroine Damei. The great god who does difficult yoga on the beach on Instagram also wears lululemon; in China, in the hit drama “Ode to Joy”, Andy, played by Liu Tao, is also wearing lululemon sportswear in the play.
lululemon in star street photography
The celebrity effect, coupled with the support of many KOLs, allowed lululemon to penetrate the market quickly. In terms of channels, lululemon opened a yoga experience hall in the store, and invited a yoga instructor to come over to give lessons. “Make a friend first, then talk about business”, lululemon uses more than just a way of selling yoga clothes to convince consumers to buy goods.
With the support of brand tonality and social marketing, lululemon has rapidly grown from a small shop next to Vancouver Yoga Studio to the world’s second-most-valued sportswear brand.
The proud lululemon
If lululemon is called the “Hermes of yoga pants”, then its founder, Chip Wilson, is called the “Trump of the fashion industry.” The ground beats the air.
The first time lululemon was pushed to the forefront was the 2013 yoga pants recall. At that time, some users complained that the leggings priced at $98 were too exposed and easy to run out, so the company announced the recall of this product. However, Chip Wilson said in a TV interview in November of the same year, “Our company’s products are not for all women. Some women can’t wear our products at all.”
Faced with the TV saying that consumers are too fat and the product is not for “fat women”, these behaviors are enough to make users furious, and they accuse Chip Wilson of being too self-righteous.
Chip Wilson, founder of lululemon
Perhaps because of the influence of the founder, lululemon’s pricing from pricing to store location,They are firmly separated from ordinary consumers-direct-operated stores are mostly located in high-end locations, and the product prices are expensive. In similar products, Nike is priced at $60, Under Armour is priced at $70, and a pair of yoga pants from lululemon costs $92.
It is certainly a success to be outstanding in the niche circle, but what lululemon loses is the broader market. Excessively high prices have blocked more consumers, which is not a good thing for lululemon who wants to occupy a larger market.
Lululemon, which entered the Chinese market, also retains a consistent tone. Maintaining the “arrogance” of pricing and store location, but here, superior brands often lose their competitive advantage due to fierce price wars.
Among the few directly-operated stores in China, lululemon’s stores are basically selected in the center of high-end shopping plazas. For example, lululemon’s in77 store in Hubin Yintai, Hangzhou, is next to luxury items such as Jimmy Choo and Louis Vitton.
In China, no brand will ignore the purchasing power of consumers in the sinking market. What’s more, lululemon sells a pair of yoga pants that are not yet popular in China. Most consumers may not pay for a pair of high-priced yoga pants.
On Xiaohongshu, there are hundreds of notes on “lululemon Ping Replacement”, and Aeroie Offline is one of the most popular and evaluated alternative products. In a note, a user described “the thickness and elasticity of the fabric is almost the same as that of lululemon”, and the price is only $40, which is almost half the price of lululemon.
Screenshots of “lululemon Ping Replacement” notes on Xiaohongshu
The data is the most intuitive proof. At first, lululemon maintained steady growth in the Chinese market. When announcing the performance report for the third fiscal quarter of 2020, he also proactively disclosed that the revenue growth rate of the Chinese market exceeded 100%. However, its latest financial report rarely did not announce detailed performance data for each region in the financial report, nor did it mention the performance of the Chinese market, and was accused of “not paying attention to the Chinese market.”
Faced with this accusation, the chief of lululemonExecutive Officer Calvin McDonald did not mention the specific reasons, but emphasized that lululemon has always attached great importance to major global markets. Calvin McDonald also revealed that in 2021, lululemon plans to continue to open 40 to 50 stores on the existing basis, of which 15 to 20 will be located in China.
Obviously, lululemon doesn’t want to let go of the big cake in the Chinese market, but its symptoms of inadequacy are becoming more and more obvious.
It is difficult to continue the myth of high growth
lululemon’s difficulties in the Chinese market are actually the bottleneck of its development-it has pleased the elite, but it has not been able to further increase the penetration rate. After all, its main product is still just a pair of women’s yoga pants.
This pair of yoga pants is now also shackling lululemon’s popularization. Lululemon also publicly stated that the strongest business last year was still women’s clothing.
In contrast, Nike, Adidas and Under Armour competing on the same stage all have an extremely complete product matrix. In addition to the core sneakers, there are also basketball, football, running, fitness and other professional clothing. Lululemon’s main source of income It is women’s yoga clothes.
Aware of the problem, lululemon launched the first men’s fashion brand lululemon x Robert Geller and Lab, a luxury brand with a higher unit price, in 2019. But data shows that lululemon’s menswear sales are only one-tenth of Nike’s menswear business.
In addition, lululemon has also launched a series of personal care products, but the scale is very limited. It is not easy to be seen by consumers in an increasingly crowded track.
Since the establishment of lululemon, it has continued the “make friends and talk about business” style. It now appears that the “emotional connection” route can open up another way for lululemon to become the world’s second-most-valued sports brand, but it also prevents it from gaining a larger market share.
People practicing yoga
After perceiving the potential of the female sports market, global sports brand giants have joined the vertical competitionRoad, trying to get a piece of the pie.
Nike and Adidas decisively aimed at the field of yoga clothing, and also launched interactive programs such as teaching courses online after the outbreak. On the other hand, Puma not only launched the Puma Studio series, but also opened hip-hop yoga classes at Keep, with every step directed to the hinterland of lululemon.
In addition, lululemon’s success has also attracted a group of “imitators”. Allbirds and lululemon have a similar growth trajectory. It took four years to become a unicorn company and is also regarded as the “next lululemon”.
Actually, not just Allbirds, every player who participates in the women’s sports market, and even the more subdivided women’s yoga pants category, is likely to be the “next lululemon”, standing on lululemon in the process of rapid rise opposite.
Despite the release of a report that exceeded expectations, lululemon’s P/E ratio is as high as 74 times. Investors are worried about whether lululemon has enough heritage and foundation to support such high expectations in the current market.
Obviously, a pair of women’s yoga pants cannot support the continued growth of lululemon, and it is difficult for the lululemon to resist the arrival of the “next lululemon”.