The challenge of transitioning from niche to mainstream.
Author | Editor He Zhexin | Qiao Qian, backed by the popular Canadian yoga pants brand Lululemon, which has become popular in first tier cities, is accelerating its decline in China.
On June 29th, the first store of Lululemon in Shijiazhuang officially opened, which is another store opened by Lululemon in a second tier city.
In the past year, lululemon has opened its first stores in cities such as Zhuhai, Foshan, and Xiamen.
At present, Lululemon has more than 110 stores in Chinese Mainland, more than half of which are located in second tier or even third tier cities.
Lululemon has opened more than one store in cities with relatively high per capita disposable income, such as Chongqing and Xi’an, or in “new first tier” cities with developed tourism industries, demonstrating its determination to “escape the north, move to the deep”.
In the latest financial report, Lululemon stated that the development of new stores will be one of the development focuses, with around 50 new stores opening within the year, most of which are located in China.
High inventory and slowing growth.
Earlier last month, Calvin McDonald, CEO of Lululemon, highlighted the impressive performance of the Chinese market in the first quarter during a earnings conference call: “Revenue increased by 79% year-on-year, exceeding expectations…
demonstrating huge growth potential in the Chinese market.” Some believe that Lululemon’s strong performance in China in the first quarter is largely due to significant discounts.
In the past 618, multiple products under Lululemon have discounts, promotions, discounts, and other promotional activities; During this year’s Spring Festival, Lululemon also offered a discount of 7.7%.
Prior to this, Lululemon had very little discount frequency in China, and consumers mainly purchased discounted products through its official outlet stores.
But the backlog of inventory due to the pandemic has forced Lululemon to vigorously promote – globally.
According to a Jeffrey analyst report, the average discount for Lululemon increased by about 470 basis points year-on-year in November 2022.
In January of this year, the proportion of discounted products has increased to 19.7%, from 18.7% in the same period last year to 15.8% in December.
For a brand that relies on terms such as “niche” and “cutting-edge” to become popular and position itself as a luxury, the damage of discount marketing to the brand image is self-evident
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