What Inspiration Does Lululemon Bring To Retail Industry For 8 Consecutive Quarters Of Profit Growth?

Can you imagine that a sports brand that never advertises and rarely endorses stars has nearly $20 billion in Nasdaq market value.

Lululemon, the Canadian sports brand, which started in the production of women's Yoga wear, now has 8 consecutive quarters of profit growth. Since 2019, the company's stock price has risen 35%, and its share price has risen by 54% in 2018.

In March 28th, Lululemon released the fourth quarter of fiscal year 2018 and its annual performance report, which is much faster than capital market expectations.

In fiscal year 2018, Lululemon achieved a revenue of $3 billion 300 million, an increase of 25% over the same period.

Net income was $1 billion 800 million, an increase of 29% over the previous year, net profit of 484 million US dollars, gross profit margin reached 55.2%, an increase of 240 basis points over the previous year.

Among them, in the fourth quarter of fiscal year 2018, Lululemon's revenue reached $1 billion 200 million, an increase of 27% compared with the same period last year, and the gross margin reached 57.3%.

Calvin MacDonald, chief executive of Lululemon, said: "this is one of the most powerful performance years in the history of the company, and the overall business strength is improving at the same time", Calvin McDonald said.

On the day of earnings, Lululemon surged over 14%.

What inspiration does Lululemon bring to the physical retail industry after this success?

Health is a way of life.

The essence of fitness craze is the consumer's attention to health and the pformation of lifestyle. Lululemon is an active advocate of this healthy lifestyle. This company always brings unique experience to users with excellent functional and ultra high quality.

People in the industry have commented that "Lululemon shifts its focus from products to brand culture, which is the key to maintaining a high premium."

"Science of Feel" is the core idea of Lululemon design. It aims to integrate body feeling and emotional appeal together.

Lululemon is not only designed for sports equipment, but also takes into account the complex and varied interactions between the body and spirit. It creates a unique product experience, helps users get the desired experience, and ultimately unlocks the overall performance potential.

Happiness, friendship and sportsmanship constitute the core of Lululemon's brand culture. This concept of life is printed as a slogan appearing on all promotional materials such as Lululemon stores, shopping bags and so on.

In order to convey this spirit, Lululemon not only provides yoga teaching regularly, but also promotes cross-border social interaction through activities such as hotels and other venues.

In pursuit of user stickiness and consumer interaction today, Lululemon has established a centralization oriented vertical retail mode.

Every time a city is developed, Lululemon will dig out the 20 most popular fitness trainers and yoga teachers in the region, provide them with free clothing and hang their posters in Lululemon in the store, allowing the brand to slowly radiate in these KOL circles.

Borrowing their influence to build consumer awareness of brand and promote their products and brand culture.

The use of yoga experience to create a community model, for the birth of the Lululemon has brought great benefits, but also become an important part of Lululemon brand culture, and Lululemon conveys the spirit of the spirit of friendship and friendship closely related.

Think Equity Partners data show that consumers of Lululemon will spend $92 to buy a pair of sports pants, while the price of Nike sports pants is about $60, while Under Armour is only 70 dollars.

It wasn't until last year that Lululemon changed its marketing methods for the first time.

In May last year, Lululemon released the first global marketing advertisement "This is Yoga", which is the first large-scale advertising campaign.

But the same thing is, without the use of big name stars, Lululemon has spotlight the spotlight on its brand ambassador, trying to resonate with artists, creators and fitness professionals from all over the world, as well as consumers who love sports and healthy living.

Create a sense of community and brand participation

Yoga instructors, fitness trainers, trainees...

Around this group of sports fitness enthusiasts, Lululemon has established a good community culture.

This community can not only maintain consumer relations, but also become an experimental field before the brand enters the new market.

According to Lululemon, salespersons are "educators", who communicate directly with consumers and get real feedback from them.

On the one hand, the establishment of the community can combine products with free experience lessons, so that consumers can understand Lululemon and lifestyle in long-term yoga training, and buy directly in a relaxed and enjoyable training atmosphere. Through the concretion of brand culture, they can show the brand stickiness of consumers. On the other hand, they can reach potential consumers deeply, understand their consumption habits and habits, and collect consumer feedback to continuously improve their products.

In fact, from the first store in Vancouver in 1998, Lululemon has both the yoga experience and the clothing retail store.

At the beginning of its establishment, Lululemon included a small design room, a retail store and a yoga training hall. The founder, Chip Wilson, developed the product in person. She made a female Yoga suit with light and obedient textile materials. At the same time, he extensively solicited the opinions of customers, yoga coaches and professional athletes, and improved their design according to their different body characteristics.

After the design is completed, the product is placed directly in the retail store for sale. In this way, Lululemon customers can directly experience the product and brand culture while experiencing yoga courses, and purchase directly.

The direct participation of potential consumers in product design has greatly enhanced their brand preference. The first batch of loyal customers of Lululemon was born in the process of participation in design, experience courses and products purchase.

Today, Lululemon's store staff has several functions, including selling products and planning community activities.

Activities can attract more new customers and increase the flow of stores, and continuous interaction can establish relationships with consumers, effectively enhance conversion rate, and timely receive consumers' feedback on product functionality and fashion.

Although this mode consumes huge time and manpower costs in the early stage, the five consecutive quarters of growth in retail outlets has proved the effectiveness of this store operation mode.

Setting up direct stores and communicating directly with consumers is the biggest problem facing retail brands today.

To some extent, Lululemon has sacrificed its early development to solve this problem ahead of time, and its stock price explosion in recent two years is an example of the success of this model.

In fiscal year 2018, Lululemon increased by 18% compared to sales.

By the end of the fiscal year, the average annual sales of self operated stores in its 440 stores were at least $1579 per square foot and 8% in the same store.

However, there are obvious drawbacks in this way of expansion. Too slow and too expensive are the problems that Lululemon must pay attention to.

After all, in many emerging markets, first come first served is still a major rule in the physical field, and Lululemon needs to bring new and continuous experience to consumers who are now loathing new, so as to ensure their loyalty to the brand.

Strategic pformation from women's clothing to all kinds of products

Despite the bright prospects, Lululemon is also facing serious challenges. The product line is too single and related to the future direction of lululemon. The first step to deal with the crisis is to expand the men's wear market.

Lululemon, started from women's fitness apparel, has been making efforts in the men's wear market in recent years to cope with the fierce competition environment.

In early March of this year, Lululemon announced the signing of the fifty-second Super Bowl MVP winner Nick Foles, which became the first male spokesperson of the brand.

As the key business of Lululemon, the male product line aims to achieve sales of US $1 billion in 2020, accounting for 25% of the group's total target revenue of US $4 billion.

At present, this proportion is slightly higher than 20%.

Stuart Hazelden, chief operating officer, said, "the scale of Lululemon's male business will be as great as that of women."

Today, Lululemon has opened a separate male yoga class. In the first quarter of last year, for the first time, it launched a men's wear line called "office, travel and commuter". For example, a series of trousers made of stretch fabric, for example, consumers will feel more comfortable and suitable for daily travel after wearing cycling, thus extending the wearing occasions of sportswear and clothing to a wider life situation.

On the product category, Lululemon's product line is also extending. The Lululemon, which originally sold only women's Yoga wear, now sells sportswear specially designed for running, swimming, ballet and so on. Even recently, it has introduced On the Fly series which can meet commuting and office needs. It is no longer limited to the vertical category of sports fitness, and develops to multi category clothing brands.

Lululemon is also expanding its products in more market segments.

From yoga equipment to outdoor, running and life categories, and even into the field of physical care, to provide antiperspirants and moisturizing cream products.

For example, in the running market, Lululemon has stepped up its offline activities, and even the third sides have launched yoga and meditation online courses designed for running.

For cycling, Lululemon collaborated with the cycling studio SoulCycle in the first capsule series of sportswear.

From women's clothing to all kinds of products, Lululemon has completely solved the dilemma of product line, and Lululemon has gone through the pformation from niche community to lifestyle brand. The most intuitive change is in its performance report.

Lululemon abandoned the description of the "Yoga inspired sportswear brand" in the past, and turned it into a sports brand inspired by a healthy lifestyle. But behind this pformation, what remains unchanged is the strategic landing of Lululemon through products and communities to make consumers happier, healthier and happier.

The Chinese market plays an important role

According to the report of the Academy of Social Sciences, there are 10 thousand and 800 yoga training schools and millions of yoga practitioners in China.

Although the total population is small, there is great potential for sustained growth.

Today, North America is still the most important market in Lululemon, occupying nearly 90% of the business share, but the Chinese market is playing the fastest growing role.

In 2013, Lululemon began to enter the Chinese market. It opened 3 Show room in Shanghai Xintiandi, Shanghai mall and Beijing Sanlitun. In the first 3 years before entering the Chinese market, the 3 showrooms did not have the role of retail stores, but only for curriculum experience. They have yoga classes every week to attract local yoga enthusiasts, and sometimes organize cycling, running, dancing and other sports courses.

In the 3 years of 2013~2016, although there were no entity stores in Lululemon in China, community culture in 3 showrooms made Lululemon famous.

At the end of 2016, Lululemon opened three entities stores in Sanlitun, Beijing, Pudong, Shanghai, Shanghai and Jingan Jiali center.

Before formally opening a physical store, Lululemon has begun to test the water business. In November 18, 2015, the official flagship store of Tmall Lululemon was officially opened. About two weeks every week, new products will be put on the shelves, and will be gradually updated with Canada, so as to provide more choices for Chinese consumers.

In 2018, Lululemon entered WeChat mall to further build social business, with a view to establishing a long-term emotional connection with WeChat customers through WeChat mall.

Lululemon chief operating officer Stuart Hazelden (Stuart Haselden) mentioned in the earnings conference that China's e-commerce business grew by more than 150% last year, and in the next few years, China's online channel sales will account for 50% of the total business.

To be sure, the Chinese market is bound to be the focus of Lululemon overseas expansion.

The success of Lululemon is not accidental. Under the premise of fully grasping the market rules, we have established the connection with target audiences through the continuous ploughing community, and then, with the word-of-mouth of opinion leaders, we can jump off the traditional marketing communication mode, and ultimately achieve economic returns and customer loyalty. The future Lululemon is still worth looking forward to.