Rolls-Royce In Yoga Costume: Why Can It Be So Expensive?

In just a few years, the position of the global sportswear market has changed. Canada's "dark horse" lululemon has replaced Under Armour as the third most popular sports brand and continues to grow.

Yoga dress Rolls-Royce

Lululemon, inspired by the healthy lifestyle, was founded in Vancouver, Canada in 1998. It is known as "Canada's first professional sports brand" because of its close fitting, comfortable and exhaust characteristics. Lululemon has over 400 stores in Canada, the United States, Australia, New Zealand, Europe, the Middle East and Asia.

According to fashion headline monitoring, the company's stock price has risen by 42% over the past year, far outperforming the industry. Some analysts pointed out that one of the indicators to measure the status of the brand industry is to see whether they hold the pricing power.

Calvin McDonald, chief executive of lululemon, recently said that although there are many counterfeit products on the market, its $100 yoga pants will not be discounted. He believes that this is not necessary because the brand is at an early stage of growth. He said, "as a brand, you can choose to cash in through discount, but you can also choose to invest in innovation and investment experience."

For many middle tier cities, lululemon yoga pants and Dyson hair dryer are signs of status and lifestyle. As a star product of lululemon, the retail price of a lululemon yoga pants in China is between 750 and 1000 yuan, while Nike's tight pants are about 300 to 700 yuan.

Lululemon Yoga Pants insist on selling expensive and without discount, on the one hand, because of the market's strong demand for yoga pants and tights. With the normalization of the Athleisure trend in recent years, yoga pants and tights have become part of their daily dress for young people nowadays.

Tight pants were popular in the early 1980s with the rise of fitness and aerobics. In 2005, they were used as mini skirts. In recent years, they were paired directly with t-shirts for younger generations.

Compared with other fitness exercises, yoga has only become popular around the world in the past 20 years. Lululemon is also taking advantage of this, so that it will grow rapidly. Lululemon was founded by founder Chip Wilson in 1998 in Vancouver, BC. He captured the niche of yoga, and then developed into a whole brand by Athleisure.

Lululemon chief executive said that despite many counterfeit products on the market, the $100 yoga pants will not be discounted.

For a time, whether Instagram has hundreds of millions of fans such as Kim Kardashian, Kendall Jenner and other star supermodels, or young people in Europe and the United States are wearing different colors or all kinds of tight pants with various patterns as "street clothes", and the boundaries of dressing scenes are further broken. According to Edited, a retail research firm, there are more than 11000 kinds of tight pants available to consumers.

New York Times's fashion director, Vanessa Friedman, wrote in a related article that the controversy about tights is that it has different meanings for people of different ages. For Y generation, tights are symbols of life style, representing health and vitality rather than daily work clothes. But in the younger generation of Z, tight pants are a basic single product like jeans.

It is noteworthy that the growth of lululemon depends largely on the binding of Yoga Culture and yoga community, and consumer loyalty is the basis of brand premium. Chip Wilson is an ambitious business entrepreneur and marketing genius. He has chosen to work with yoga instructors or fitness coaches around the world to invite them to be brand ambassadors by providing free clothing for one year. With this innovation promotion mode and sponsorship of community yoga courses, lululemon quickly accumulated huge fans and cultivated brand culture communities, while Yoga Pants became a totem and symbol of brand culture.

The growth of lululemon depends to a large extent on the binding of Yoga Culture and yoga community.

Unlike traditional sports brands, most of the fitness apparel is based on men. Lululemon chooses yoga as the entry point, aiming at female consumers from the very beginning. Therefore, when more sports brands overweight women's sports market, lululemon has taken the lead and gained the advantage of difference.

According to a new report by FT Confidential Research, a high-end research service, women spend about 1141 yuan on sports equipment every year, which is more than 1081 yuan for male consumers. Gartner L2 predicts that the growth rate of men's clothing market will exceed the next two years.

NPD group said sales of sportswear market increased 10% to $55 billion last year, while the US retail apparel market grew 1.3% to 220 billion dollars over the same period. Market research firm said lululemon ranked second in women's sportswear categories.

In the good trend, Nike began targeting women's tights in 2017, and set up a sports pants' monopoly area "pant studios" in 5000 stores. Nike management said at the time that with the increasing popularity of sports equipment, tights would become new jeans.

In addition, Nike and Under Armour are also developing more sportswear for women. Victoria's Secret has also added sports bra products, including yoga pants. Gap expanded its female sports brand Athleta, and launched a new menswear sports leisure brand named Hill City.

Although more and more competitors are entering the field, competition in subdivision areas is becoming more and more intense, but they do not have the pricing power like lululemon, especially in their star products Yoga Pants category. According to the statistics in 2018, the DSO index of lululemon products was 2.8 days, far below the 32.85 days of Under Armour and 38.1 days of Nike. According to people in the industry, lululemon has shifted its focus from products to brand culture, which is the key to maintaining a high premium.

IDG capital analysis believes that the core reason why lululemon can continue to grasp pricing power is product innovation. Lululemon has always defined itself as a technology company rather than a clothing company. As early as Chip Wilson set up a brand, he made changes to the functional defects of yoghurt on the market, and then improved it to market quickly. The brand has obtained the fabric patent "Luon", which gives the yoga pants a soft feeling. In order to show different designs, lululemon will also set up yoga pants wall in online stores.

Lululemon announced that it will continue to accelerate the global layout and plan to add 40 to 50 stores.

Around the product, lululemon set ambitious ambitions for expanding product categories. Since the slogan was changed to "sports brand inspired by healthy lifestyle", the brand no longer called itself Yoga brand, but extended its tentacles to more fields. Calvin McDonald stressed the need to enhance consumer awareness of brands and expand market share through the introduction of new products.

Since last year, lululemon, a consistently targeted female consumer, saw men's products as a new growth point. "Men's clothing is our most unknown secret". Lululemon executives predict that men's clothing will achieve annual sales of $1 billion in 3 years. According to COO Stuart Haselden, the proportion of male product line to lululemon is slightly higher than 20%. And it is estimated that by 2020, the men's clothing category will increase to $1 billion.

Not long ago, lululemon announced that it will launch the first series of protection products, including deodorant, lipstick, moisturizing cream and shampoo 4 products. These products will start selling online and about 50 stores in June.

Lululemon's research and development team says these "functional" products are mainly used in everyday sports scenarios. Some analysts believe that the launch of the series is likely to further increase the gross profit margin of lululemon, after all, the gross margin of the beauty industry is usually higher than that of clothing.

Forbes analyst Andria Cheng pointed out earlier that sports brands need to be vigilant. As lululemon's strategy extends beyond the scope of Yoga wear, it will directly participate in the competition between Nike, Adidas and Under Armour in the future.

If you want to become bigger and stronger in a wider market, it is very urgent for lululemon to enhance brand awareness and consumer awareness. According to Bernstein's data, lululemon's brand popularity is still lower than its main competitors. About half of the respondents in the 1000 person survey conducted by the company had not heard of lululemon. For those whose families earn more than 75000 dollars, the result is about 1/4.

In terms of channels, unlike brands such as Nike and Adidas, which sell products on department stores and Amazon websites, lululemon is currently only distributed through the brand official website and 440 stores. At present, lululemon has expanded its territory to Europe and Asia.

In March of this year, brand China's official website was reopened after shutting down and refurbished, and the content of WeChat brand mall and official flagship store was fully synchronized. To expand the Chinese market, lululemon also launched a special Asian series with Chinese actress Xin Zhilei to celebrate the Chinese New Year.

The Chinese market was overweight, and lululemon launched the Asia special series with actor Xin Zhilei at the beginning of this year.

Calvin McDonald told the Wall Street journal that the company now sells men's wear and women's wear, and will not just be a clothing retailer. "We are not just playing Athleisure sports and leisure, but we will go to bigger territory."

In the fourth quarter of February 3rd, lululemon sales surged 26% to 1 billion 160 million US dollars, and net profit surged 82% to 218 million US dollars. Calvin Mcdonald said in its statement that 2018 is the most powerful year for lululemon. It will continue to accelerate the global layout and plan to add 40 to 50 stores in the future. The target men's clothing will achieve an annual revenue of 1 billion US dollars in 2020.

Lululemon has been growing rapidly in the sports industry because of its differentiation strategy and word of mouth marketing. Now the brand's development prospects have been continuously valued by the capital sector, and its closely related ambition to enter the whole category of sports equipment, the continuous expansion of consumer groups and the potential of emerging markets are not yet fully developed.

However, some analysts have questioned the expansion strategy of lululemon, and the high-end and enterprise scale can not be shared. Lululemon will not be able to maintain this growth rate if it does not make the brand "more accessible" and more popular with people. Nomura Instinet analyst Simeon Siegel said that if the brand wants to keep pace with growth, it must compromise on price, expand distribution or increase marketing expenses. He believes that high priced enterprises are not as large as those of popular enterprises. Compared with Nike, lululemon's route is more like high-end jewelry brand Tiffany.

If lululemon continues to be high-end positioning, the distinction between brands and Nike, Adidas and other targeted market players will become more and more obvious. People have reason to predict that when lululemon is committed to becoming CHANEL in sportswear field, the price of star products yoga pants will not rise or fall. In recent years, CHANEL has normalized the price of its classic products to maintain brand rarity, which is also the manifestation of CHANEL's pricing power.

Another trend that can be referenced is the luxury of living goods in recent years. For example, Dyson broke the consumer's imagination of the prices of articles such as hair driers and vacuum cleaners. Despite the high price, they still won the favor of a group of consumers. This also proves to a certain extent that the boundary between practical products and luxury goods is constantly being broken. At the moment, sports products in addition to functionality, the importance of fashion and brand culture also provides brand premium space for sports products.

Of course, some pragmatic consumers are not buying lululemon's high price. They prefer to buy Yoga Pants from mass retailers such as Primark or Amazon. "I don't want to dress beautifully, but you sweat anyway."

Whether consumers are willing to pay more for practical products will continue to be a hot topic in the near future in the society of consumer escalation and middle class inflation. However, it is clear that lululemon has become the first "heterogeneous" category in sports apparel.