Every now and then, if a foreign brand can perform well in China, we must give our standing ovation. Just imagine, it is the most difficult market for international brands to crack or stay, often with a long list of predecessors’ death toll as the bugbear. This time the applause goes to a high-end sportswear brand established in Canada in 1998, Lululemon. In the first quarter of 2019, the company reported a 70% sales surge in China.
For 20 years, without much hard and aggressive advertising, the brand has been winning worldwide popularity. Experts boiled down its winning formula into three factors:
- Direct-store mechanism
Today its 455 stores globally are strictly owned and operated by Lululemon, no franchise in the middle, which considered by many as a wise strategy for a niche positioning, preventing the dilution of its brand experience.
- Building a customer-centric community
The direct control of its offline stores paves the way for its creativeness in building community experience, especially through engagement activities in the stores such as the yoga class, fitness training, etc.
- Nurturing grass-root influencer network
It is mainly leveraging the power of fitness instructors, sports activists or influential customers to spread the reputation of Lululemon for the targeted audience and constantly collecting their feedback to improve its product. It tends to shy away from showering millions on high-flying sports celebrity for brand endorsement, a practice often done by Nike or Adidas.
In 2013, Lululemon entered the playfield of China with a cautious plan in mind and brought the exact formula to cook things up, while sprinkling the unique zest of China digital on top.
- Between 2013-2016, it only opened 3 showrooms, not for sales, but just for educating brand awareness via implementing all kinds of training classes, fitness workshops, sports events, dance parties in order to expand the community size.
- During these 3 years, it had been actively seeking KOLs partnerships in big cities of China, usually offering them free products in exchange for brand publicity in the gym, yoga studio or relevant location.
- It was not until at the end of 2016 that Lululemon finally launched its 3 retail offline stores in Beijing and Shanghai. Between 2017-2018, it added an additional 10 stores in five major cities in China.
- It puts the digital channel as the brand top priority in China. It dabbled into the water of e-commerce in 2015, setting up Tmall store, even way before the official debut of its brick&mortar stores.
- In 2018, it dived deeper into social e-commerce. Now a full-fledged Wechat store and Wechat centric community which seamlessly integrate the online and offline experience, have been under healthy execution. Its KOL marketing campaign on leading social media platforms are gaining momentum daily.
In sum, Lululemon has been treading every step carefully in China. Its patience seems to pay off.
Today the competitive landscape of Lululemon might look like below. Under Armour is probably its archrival, followed by competitors such as Nike, Adidas, Puma. Meanwhile, brands like Uniqlo, GAP, H&M would like to design similar products and touch their fingers on Lululemon’s delicious market pie as well.
Lululemon’s rise in China also has inspired many native upstarts to emulate its success. For example, a company called Keep.
It started out modestly in 2015 as a social sharing fitness app which combines multiple features like weight-loss tracking, training coach, healthy lifestyle classes, and community curation. It has already garnered over 100 million registered users so far with Series D funding USD 127 million from leading investors Bertelsmann Asia Investments, GGV, Tencent, etc.
Capitalizing on its massive user base, now the startup has been vigorously pushing its product line, covering from fitness equipment, diet food, down to sportswear at much affordable price compared with Lululemon.
Even though Lululemon might enjoy a smooth ride in China at this stage, those native upstarts by copying its secret formula can demolish its current status at any time.
By: Cecilia Wu