Since the outbreak of the COVID-19 pandemic, citizens’ improved awareness on wellbeing has been underpinning all aspects of life in China. Even though sportswear and many other categories in fashion were hard hit by retail disruptions, leading players quickly returned to dynamic growth; consumers’ appetite for the sector led to strong recovery in the second half of 2020, which was sustained during 2021. As Euromonitor’s research on the Chinese sportswear market shows, it registered fast-paced double-digit current value growth.
Valued at $7.5 billion in 2021, the country’s booming fitness market has given rise to growth opportunities to sportswear retailers: Lululemon was one of the names that saw exponential growth thanks to consumer demand for sportswear.
As an athleisure titan, Lululemon became the world’s second-largest sportswear company, after Nike, since its market value surpassed Adidas earlier this month. Behind its global expansion, China has played a significant role since the Canadian company made its foray into this market in 2014. In fact, you could say, it’s a disruptor that achieved significant milestones despite the turbulence of the pandemic. Standing out among the global sportswear names with a presence on the mainland, the company recorded a 42 percent net revenue increase in 2021, significantly surpassing its competitors.
Known for its leggings, Lululemon has built a solid following among Chinese fitness lovers through digital penetration on Tmall and offline footprints across top-tier cities. Building on this organic growth over the past 8 years, it officially unveiled a digital flagship store on J Shop — JD’s upgrade of its fashion and lifestyle business — on July 18.
Lululemon is now set to expand categories through the introduction of a footwear collection. In the rivalries with global sportswear titans and local startups, will this new segment offer the Canadian company further local growth and elevate its appeal to the younger generation? Jing Daily finds out.
Targeting footwear with a ‘women-first’ value proposition
According to an official statement from JD.com: “the popularity of Lululemon indicates that the Chinese market not only acknowledges the product quality, but also recognizes the emotional connection it creates between the community and the brand.” Now, China is listed among the first markets where the company debuted its footwear category, with the drop of its ‘blissfeel’ running shoes, in March.
The innovative footwear features a new women’s-specific shoe shape built from scratch – based on scans of more than a million feet — which improves the fit, feel and function of each shoe. This means Lululemon stands for a historically revolutionary, “design for women-first, not women-also” ethos. The launch captured local women shoppers, generating over 2.5 million views of the hashtag #blissfeel on social platform Xiaohongshu.
On July 26, Lululemon debuted its second performance shoe called ‘chargefeel’ — a workout shoe for running, training and on the go. The company said it solved an unmet need in the market: Most people work out in many different ways, in shoes that are made for one activity. The majority of lululemon guests participate in more than one sweat activity per week. So lululemon created one shoe that could support them in every activity.
According to the product description, chargefeel defies typical cross-training construction by leading with the bounce and forward motion required in a running shoe, then rounding out with the stabilizing side-to-side motion of a trainer. All made possible by a dual-density foam layering system.
Riding the trends of national fitness, wellbeing, and the outdoors
In 2019, President Xi Jinping has put health at the center of the country’s entire policy-making machinery, kicking off the Healthy China initiative meaning that even prior to the pandemic, fitness had seen an uptick among the middle-classes. In 2021, China also magnified the promotion of sports and exercise in the 14th Five-Year Plan (2021-2025). According to official data, the country will have 38.5 percent of its population participating regularly in physical activity by 2025.
In fact, before the central and local government push the Healthy China agenda, Lululemon has been dedicated to building local communities and ambassador groups in China. Alongside signature yoga classes, other offerings include pilates, training, cycling, hiking, and frisbee, which are all available for community members. On the WeChat Mini Program, users can easily make reservations to these gatherings, in addition to browsing products. The company also implements scientific research and development across categories, with significant improvements among its signature collections including Run, Train, Yoga and On the Move, as well as exciting opportunities in hobbies new to citizens’ (eg. tennis, golf, and hiking).
Since the debut of its footwear, the brand has initiated a series of in-person and virtual running events, and hosted panel discussions in cities with retail footprints. For those who cannot join in, it rolls out online workout classes with local ambassadors. Thanks to these well-served communities in major cities, the company has consolidated connections with local yogis, runners, and many other sports practitioners; this allows it to leverage WOM marketing both online and off.
An optimistic outlook in China
Given its shown resilience in the post-pandemic China, Lululemon has no reason to stop its expansion progress. The company announced its new Power of Three ×2 growth strategy in April. This includes a plan to double men’s and digital revenue, and to quadruple international revenue by 2026 (compared to 2021). In particular, the company is expecting China Mainland to become its second-largest market worldwide by then.
On a conference call with analysts in June, CEO Calvin McDonald stated: “it will unfold by building up a presence across relatively affluent first-tier cities like Beijing and Shanghai before penetrating second or third-tier cities at the right time.” He also acknowledged macro supply chain headwinds and lockdowns in China, yet the region generated double-digit revenue growth during the first quarter 2022.
In an interview with China Daily, McDonald also expressed optimism about the business in Mainland despite fierce rivalries from established and startup marques, saying the pandemic has been “a catalyst in shifting consumer preference” and “an accelerant to change.” With more diverse product categories and inclusive community building, Lululemon is inching closer to a full-fledged dominant player in the sportswear sector.