Canuck firm goes for gold in mar­ket

China Daily - - HOLIDAY | BIZ LIFE - By WANG ZHUOQIONG wangzhuo­qiong@ chi­

Cana­dian ath­letic ap­parel re­tailer Lu­l­ule­mon Ath­let­ica Inc said it ex­pects to cash in on China fast-grow­ing pas­sion for sports and keep­ing­fit by open­ing more brickand-mor­tar stores in ma­jor cities, as well as ex­pand­ing its reach on­line.

So far the yoga-in­spired brand for men and women, started in Canada in 1998, has es­tab­lished 10 stores in China while glob­ally Lu­l­ule­mon had 425 stores in op­er­a­tion by the end of last year. Ac­cord­ing to the com­pany it has achieved its high­est level of brand aware­ness in Canada, at 80-85 per­cent of the mar­ket, while in the US its brand aware­ness is 45-50 per­cent and in China it is about 12 per­cent.

The com­pany, how­ever, con­sid­ers its brand aware­ness in China ac­tu­ally to be quite high, es­pe­cially in cities like Shang­hai and Bei­jing. It said it will con­tinue to build a sig­nif­i­cant and sus­tain­able busi­ness in the coun­try, start­ing with a pres­ence in lo­cal com­mu­ni­ties, hook­ing up with gyms and sports stu­dios, and un­der­stand­ing where peo­ple get to­gether to work out — rather than mak­ing a ma­jor push with heav­ing mar­ket­ing or in tele­vi­sion com­mer­cials.

Lu­l­ule­mon said its strat­egy is to start with tier-one cities and ini­tially pop­u­late them with six or seven stores, be­fore branch­ing out, and to date it has achieved av­er­age growth in the Chi­nese mar­ket of about 350 per­cent an­nu­ally.

Last year the brand ex­panded its pres­ence to Guangzhou, Shen­zhen and Chengdu as well as ex­pand­ing its dig­i­tal foot­print on WeChat and Tmall. The com­pany said its Tmall busi­ness in 2017 surged by 175 per­cent, fu­eled by a more-than-dou­bling of on­line traf­fic.

Lu­l­ule­mon says yoga fash­ion is a $10 bil­lion mar­ket in China and its stores there achieved prof­itabil­ity of $15,000 per square me­ter in 2017, much higher than its stores in North Amer­ica.

The Cana­dian group says it is in a high-end mar­ket, driven by in­no­va­tion, and has a ver­ti­cal busi­ness struc­ture. This means it has di­rectly-op­er­ated stores — rather than the whole­sale model many sports­wear brands have adopted in China — which has been key to its suc­cess­ful per­for­mance in China.

Re­search and de­vel­op­ment and tech­nol­ogy has also played its part in boost­ing sales. The com­pany launched its “En­light Bra” last May – af­ter two years of re­search in col­lab­o­ra­tion with sev­eral uni­ver­si­ties, as well as work­ing with a num­ber of ath­letes — which was the most ex­pen­sive bra it had ever sold. Although priced at $98, how­ever, two weeks af­ter its launch it had be­come the com­pany’s top-sell­ing bra.

The men’s cat­e­gory is also a key driver in China and will con­tinue to be so, Lu­l­ule­mon said.

Lu­l­ule­mon’s global rev­enue by 2020 is ex­pected to hit $4 bil­lion. The com­pany said of that, $1 bil­lion would come from its in­ter­na­tional op­er­a­tions, $1 bil­lion from dig­i­tal sales and $1 bil­lion from menswear.

Ac­cord­ing to the com­pany women and life part­ners are the largest buy­ers of its menswear prod­ucts.

The com­pany es­ti­mates that in­ter­na­tion­ally, 80 per­cent of its rev­enue comes from women’s prod­ucts. In China, how­ever, the bulk of its sales is in menswear.


Vis­i­tors shop at a Lu­l­ule­mon store in Bei­jing.

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