Why Did Lululemon Make Nike Nike Panic?

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Brand Lululemon announced its third quarter results as of October 30th.

The results showed that Lululemon net income increased 13% to 544 million 400 thousand US dollars compared with the same period last year. Net profit increased 28.5% to 68 million 300 thousand US dollars from 53 million 200 thousand US dollars in the same period last year, and this result far exceeded the market expectation. At the same time, its gross profit margin and earnings per share of Q3 also showed a good performance.

Its group CEOLaurentPotdevin said that the good performance of the quarter benefited from the effective implementation of the group's business strategy in all regions.

After its announcement of the third quarter results and the expected increase, the group's share price rose 12.6% to $67.4 per share, and its current market value is about $8 billion 200 million.

Just last year, a serious problem such as changes in management and poor inventory management, once plagued Lululemon, made it difficult for passenger traffic to decrease and gross profit margins to suffer in the first two years.

But with the implementation of its five year plan, the embarrassing situation has been reversed.

As of October 31st, its group's net profit increased 12.5% to $167 million 200 thousand over the same period last year, and net income increased 14.6% to $1 billion 550 million over the same period last year.

Lululemon's five year plan includes product innovation and global expansion plan, with a clear sales target of US $4 billion in 2020, as well as the development group's digital ecosystem.

"China will continue to be a center of development," its Asia Pacific region.

And community director AmandaCasgar told electric business online reporters.

China, as a step in its expansion strategy, has been given high expectations.

Lululemon has decided to enter China in this month, and open 3 shops in the mainland of China, including the IFC gold center store in Shanghai, the Kerry Center store in Jingan and the Sanlitun store in Beijing, which said earlier that the Chinese market would reach 2 times the size of the United States.

"China's Yoga craze is on the rise. You can see that some yoga courses are hot, and people start wearing yoga clothes and Legging (bottompants) to go out for an early Chinese meal or meet with friends."

And such a trend has also made Lululemon sports brands have the opportunity to penetrate into the casual wear market.

Amanda said that the brand is highly innovative in terms of wearability and functionality, and is also highly sought after in fashion.

According to the world clothing shoes and hats net, China Yoga

The speed of development is three times that of the United States, which means the rise of the surrounding products including sports underwear, yoga clothing and so on.

Adidas, Nike, UnderAmour, Decathlon, and the traditional brands such as the Antarctic and the Gulf have launched related products to occupy the market, while some small and beautiful brands are also trying to squeeze into the separatist regime.

By contrast, Lululemon's consumer groups are positioned in the "new middle class", who are less sensitive to price and more concerned about quality.

The brand cuts the market from the high-end products of women yoga, promotes its brand advocacy lifestyle to operate the user community.

This is also the myth reason why it has no market department, never advertised and never invited celebrity endorsements.

"Lululemon not only emphasizes functionality, we are also shaping a way of life," and this lifestyle is a positive, sunny lifestyle advocated by the brand, and this lifestyle is branded as "sweatlife" (sweating lifestyle).

The specific way of landing brand idea is to build a community through providing free courses including yoga and running, which has become the carrier of brand promotion concept of life.

From the high-end products of women yoga, we should cut into the market segments and promote the lifestyle of brand advocacy to operate the user community.

Initially, its brand founder ChipWilson relies on cooperating with coaches and sponsoring community yoga courses, creating a community and group atmosphere, accumulating a large number of fans in a short time, and coming out of many sports brands.

After developing into every city, the brand will send a team to participate in the local Yoga related activities, discover and excavate the "opinion leaders" in the Yoga field, let them experience the products, and persuade them to be "community contacts".

Brands call these people "Ambassadors" (ambassadors), composed of yoga teachers or students who have studied Yoga for many years, and use spare time to teach yoga in brand Showroom (exhibition hall).

Therefore, the establishment of community has become the first step for Lululemon to enter China.

"In the form of showroom, we first build communities, let people perceive brands, build customer relationships and integrate into the local market. We do this in Shanghai and Beijing," Amanda told reporters.

Lululemon takes the urban population density as a priority in site selection, followed by rents and area. The interior display and design are supported by the headquarters team.

The specific way of landing brand idea is to build a community through providing free courses including yoga and running, which has become the carrier of brand promotion concept of life.

"Choosing to enter Tmall is also following this logic," Amanda said.

As early as three years ago, Lululemon entered China in the form of Showroom, but it did not invite the star to do marketing for the store like another threat to Nike and Adidas. Instead, it chose to enter Tmall in November last year as another beginning.

Lululemon opened their first showroom in Beijing in Sanlitun.

"Tmall can enable more consumers to experience Lululemon and display brand culture at home," she said. The time for brands to enter China is just the same, because digitalization and mobility have been rapidly popularized in the past 5 years. Compared with some brands that have entered the domestic market earlier, they are able to rapidly push forward online and offline marketing plans, so as to implement the group strategy.

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In addition to the more popular women's market, another major step in the Lululemon five year plan is to expand the male market and hope to increase the men's income to 40%, which is expected to reach US $1 billion.

In 2013, it announced the opening of men's clothing stores. It is understood that as of September, men's clothing styles were close to 20%, while in Tmall flagship stores, there were nearly 200 products under men's clothing category and nearly 500 products under women's clothing category.

Earlier analysts have commented that the growth of men's wear line can help them compete with Nike and UnderAmour for palm competition, while UnderAmour, the main male fitness market, is also expanding the women's wear line and expanding its share.

In addition to the more popular women's market, another major step in the Lululemon five year strategy is to expand the male market and hope that the men's clothing income will eventually rise to 40%, which is expected to reach $1 billion.

Some analysts have studied Lululemon, indicating that they need to focus on product design, production efficiency and supply chain.

Amanda said, "building a strong supply chain requires continuous investment. We have been doing this in the past few years."

Group CEOLaurentPotdevin has said that this year, new high tech fabrics have been loved by many consumers. The income of sports underwear has increased by 20% this quarter. Next year, the group will continue to make innovations in its products.

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