The epidemic caused many offline stores to encounter “dark moments.” Not only catering and movie theaters, but also offline clothing has suffered a lot.
But at this time, someone took the opportunity to overtake him. His name was Lululemon.
A pair of pants surpassed Adi
On December 10, Lululemon released its third-quarter performance report. Sales for the quarter rose 22% year-on-year to US$1.117 billion, gross profit margin increased to 56%, and net profit rose 12.3% to US$143 million.
Since the epidemic, Lululemon’s stock price has been driven by the two cards of “home exercise” and “e-commerce”. It has doubled from its market value of US$25 billion last year to US$45 billion this year, surpassing Adidas’ market value of US$34.3 billion. Under Armour, the third-place sports brand, has a market value of only $6.8 billion.
Why is Lululemon’s sales outstanding despite the decline in sales of its peers?
Lululemon’s operating income mainly comes from two parts: offline stores and online e-commerce, of which e-commerce channels are indispensable.
The financial report shows that in the third quarter of this year, its offline store comparable sales fell by 17%, while online revenue rose by 94% year-on-year, accounting for 42.8%, compared with 26.9% in the same period last year.
E-commerce’s outstanding performance is firstly due to the impact of the epidemic.
Lululemon first closed all stores in mainland China in February, and then closed all stores in North America, Europe and other countries in the Asia-Pacific region in March. Online channels have become the core of driving revenue growth, and as consumers migrate online, this consumption habit continues.
Being able to migrate online in a short time is inseparable from Lululemon’s previous brand building.
Lululemon is a typical DTC (Direct Connect Consumer) brand. To put it bluntly, just like Tesla, it cut the middleman link and took the brand direct route. Such a model can better maintain brand tonality, increase operational efficiency and retain users.
The core of DTC is the consumer-centered interactive relationship, which allows consumers to become spokespersons for product promotion. The core of Lululemon is to enter the community, yoga studios and other scenes first, so that coaches become the first wave of guests, and promote products and brands by organizing various yoga activities. In this process, it establishes emotional links with consumers and forms a low cost. “KOL Marketing”.
Another point is that Lululemon helps the product and brand spread by finding sports opinion leaders around the world, allowing its own fans to act as brand ambassadors, enhancing user stickiness and attention.
Even in Taobao live broadcast, which is closer to business, the host of Lululemon’s self-broadcasting is also a sportsman, and the tone of yoga and fitness style has always remained the same.
For every sports brand, product sales are limited, but scenes and content can become part of the lifestyle. Just as fans of Lululemon recommend Lululemon to others, “Take it as the output of a high-quality lifestyle. To identify with this brand is to identify with me.”
A pair of pants for a thousand
With a brand, pricing is not difficult.
To the envy of all colleagues, Lululemon cracked the pricing rules of sportswear. One of its most classic series of yoga pants, the domestic price has been stable at 850 yuan, which is several times higher than the price range of 100-500 ordinary yoga pants on the market.
High pricing is of course in order to maintain brand tonality, and at the same time, higher pricing allows Lululemon to obtain higher gross profit when the market is still small, thereby promoting the steady development of the business.
Lululemon is not always discounted, you can also buy 40% off goods in the store, but the price of the top-rated models will never be shaken, and the purpose of the discount is only to clear the goods.
Discounts do great harm to the brand itself. Once the low price has formed consumer perception, it is difficult to pull it back.
After the epidemic, online discounts have become a normal action for sports brands. In particular, Adi has launched discounts and promotions madly. It has launched 3 consecutive online promotions such as 50% discounts, discounts on discounts, and full discounts. Some offline stores also Push the “Buy One Get One Free” campaign to attract consumers.
However, it is clear that, apart from clearing inventory, discount sales are difficult to become the starting point for continued brand growth. Judging from the recent third-quarter revenue announced by Adidas, revenue for the quarter was 7.04 billion U.S. dollars, a year-on-year decrease of 7%.
It can be seen that one of the key to Lululemon’s success is that consumers are willing to pay high prices for it and are extremely sticky to the brand.
Naturally, Nikes will not wait to die. After Nike first released its yoga series in January last year, Nike launched its yoga series Infinalon in January this year. In addition to serving women, new fabrics have also been introduced.
Yoga pants gradually “far away”
Can a small yoga suit carry so many brands? Lululemon also began to transform.
Based on the women’s market, Lululemon launched its first men’s fashion brand last year. At the same time, try to take a higher price, launch a luxury brand, the design is mainly minimalist, including men’s clothing, women’s clothing and a small number of neutral clothing. The tailoring is more relaxed and simple than Lululemon.
On Double 11 this year, the growth rate of men in the Lululemon flagship store on Tmall platform has significantly surpassed that of women. Of course, the small base of male consumers is the reason for the soaring growth rate.
But an important question is that for a “religious” brand like Lululemon, which is deeply tied to women, can it be attractive in the male market?
More importantly, whether more and more male products will destroy the brand tonality, this is probably a question Lululemon has to face.
The brand’s first personal care product series launched earlier are used in daily sports scenes. Some analysts believe that the gross profit margin of the beauty industry is usually higher than that of apparel, and the launch of this series may further increase Lululemon’s overall profit.
According to reports, the brand’s female business has grown strongly this year, and its menswear business has resumed double-digit growth. Jogging apparel has also performed well, showing great potential. In the coming months, Lululemon will also launch the world’s first 3D yoga mat with a textured surface.
Obviously, Lululemon should focus on lifestyle and expand into more categories, and yoga pants are more like a flow portal.
In May of this year, Lululemon also made its first large-scale acquisition since its establishment, spending $500 million to buy home fitness company Mirror.
Mirror is a two-year-old start-up company, but its sports mirror reflective screen is also an online celebrity product in the North American market, and is often recommended by sports bloggers, targeting high-net-worth individuals, especially women. The RMB price of this “magic mirror” is about 10,000 yuan, and the membership course fee is about 275 yuan per month.
On the premise that the target user overlap is high, Mirror makes up for Lululemon’s shortcomings in the home scene. For Lululemon, $500 million is more like a long-term investment.
To put it bluntly, it still values the sports value potential of the family scene.
However, the increasingly rich product line also makes Lululemon face a head-to-head confrontation with its established rivals, but it must also take this step. Consumer brands that are “held” in the palm of the hand need to continue to create surprises for fans.
article links：The market value has doubled--a thousand-yuan yoga pants
Reprint indicated source：Spark Global Limited information