Over the past few years, the ranking of the global sportswear market has changed, and the “dark horse” Lululemon from Canada has replaced Under Armour as the third most popular sportswear brand and continues to grow. According to the monitoring of fashion headlines, the company’s stock price has risen by 42% in the past year. Some analysis points out that one of the indicators to measure the status of brand industry is whether it holds the pricing power. Lululemon chief executive Calvin McDonald recently said his $100 yoga pants won’t be discounted even though there are many knockoffs. He doesn’t think it is necessary because the brand is in the early stages of growth. “As a brand, you can cash in on discounts, but you can also invest in innovation and experience,” he says.

Over the past few years, the ranking of the global sportswear market has changed, and the “dark horse” Lululemon from Canada has replaced Under Armour as the third most popular sportswear brand and continues to grow. According to the monitoring of fashion headlines, the company’s stock price has risen by 42% in the past year. Some analysis points out that one of the indicators to measure the status of brand industry is whether it holds the pricing power. Lululemon chief executive Calvin McDonald recently said his $100 yoga pants won’t be discounted even though there are many knockoffs. He doesn’t think it is necessary because the brand is in the early stages of growth. “As a brand, you can cash in on discounts, but you can also invest in innovation and experience,” he says.

In recent years, yoga pants have become part of their daily wear for young people nowadays. The competition between legging manufacturing company gets fiercer and fierce. Yoga pants became popular in the early 1980s with the rise of fitness and aerobics. They began to be used as the inner lap of miniskirts in 2005, and in recent years they have been directly matched with T-shirts by younger consumers. Compared to other fitness activities, yoga has become popular around the world in the past 20 years. As a excellent legging company, Lululemon grows quickly with popular Yoga. Lululemon was founded by Chip Wilson in Vancouver, British Columbia, in 1998. He grasped the market of yoga and developed into a brand of all kinds with the help of athleisure. According to Edited, a retail research company, there are more than 11,000 kinds of leggings available for consumers all over the world. Vanessa Friedman, fashion director of the New York Times, wrote in an article about the incident that the controversy over leggings is that they have different meanings for people of different ages. For Generation Y, leggings are a symbol of lifestyle, representing health and vitality, not work clothes, but for younger Generation Z, leggings are a basic item like jeans. The growth of Lululemon depends on the bondage with the Yoga Culture and the yoga community. Consumer’s loyalty is the basis of brand premium. Chip Wilson, an ambitious entrepreneur and marketing genius. He chose to work with yoga or fitness coaches around the world and invite them to become brand ambassadors by offering free clothing for one year. With this innovative promotion model and sponsoring community yoga courses, Lululemon quickly accumulated huge fans and fostered a brand culture community. Lululemon’s yoga Pants became a symbol of brand’s culture.

Fitness clothing mostly starts from men but Lululemon chooses yoga pants as the entry point which aims at female consumers from the beginning. Lululemon has taken the lead and gained differential advantages in this area. NPD Group said sales of sportswear grew by 10% to $55 billion last year, while the overall U.S. retail apparel market grew by 1.3% to $220 billion over the same period. According to market research companies, Lululemon ranks second in the category of women’s sportswear. In the positive trend, Nike also started targeting women’s leggings in 2017. Nike manager said at the time that as sports equipment became more and more popular, Leggings would become new jeans. In addition, Nike and Under Armour are developing more active wear for women, and Victoria’s Secret has added sportswear products, including yoga pants.

Although there are more and more competitors entering the market and more fierce competition in sub-divisions, they do not have the same pricing power as Lululemon, especially in the category of yoga pants. According to 2018 statistics, Lululemon’s product liquidation DSO index was 2.8 days, much lower than Under Armour’s 32.85 days and Nike’s 38.1 days. Industry has commented that Lululemon has shifted its focus from product to brand culture, which is the key to maintaining high premiums. IDG Capital Analysis believes that the core reason why Lululemon can continuously grasp pricing power is product innovation. Lululemon has always defined itself as a technology company, not a clothing company. The brand has won the fabric patent “Luon”, which gives yoga pants a soft feel. To show different designs, Lululemon will also set up a “yoga pants wall” in its physical stores. Around the product, Lululemon will be ambitious to expand the product category. Beginning with the slogan “Sports brand inspired by healthy lifestyle”, the brand no longer calls itself a yoga brand, but extends its antennae to more fields. Calvin McDonald said that he hoped to enhance consumers’ awareness of the brand and share by introducing new products in the further expand market.

According to COO Stuart Haselden, male product lines account for slightly more than 20% of Lululemon’s revenue. And it is expected to increase the menswear category to $1 billion by 2020. Lululemon announced that it will launch the first series of protection products, including deodorant, lipstick, moisturizing cream and shampoo 4 products, formally launched the field of beauty makeup recently. These products will be available online and in about 50 stores starting in June. Lululemon’s R&D team says these products are mainly used in regular exercise. Some analysts believe that the launch of the series may further increase the overall gross margin of Lululemon, after all, the gross margin of the cosmetics industry is usually higher than that of clothing. Forbes analyst Andria Cheng wrote earlier that sports brands need to be vigilant, and as Lululemon’s strategy extends beyond yoga clothes, it will be able to compete directly with Nike, Adidas and Under Armour in the future. If we want to “grow bigger and stronger” in the broader market, it is really urgent for Lululemon to enhance brand awareness and consumer awareness. According to Bernstein’s data, Lululemon’s brand awareness is still lower than that of its major competitors. About half of the 1,000 people surveyed by the company had never heard of Lululemon. For those with household incomes of more than $75,000, the results were about a quarter. About half of the 1,000 people surveyed by the company had never heard of Lululemon. Calvin McDonald told the Wall Street Journal that the company now sells men’s and women’s clothes and will not be just a clothing retailer. “We’re not just playing with athleisure& leisure sports and. We’re going to move to a bigger space.” Calvin McDonald said in a statement that 2018 is a stronger year for Lululemon, and that it will continue to accelerate the global distribution in the future. It plans to add 40 to 50 stores, aiming to achieve the goal of annual revenue of $1 billion by 2020 for men’s wear. Lululemon has grown up rapidly in the sports industry because of its differentiation strategy and word-of-mouth marketing. Now the development prospect of Lululemon brand has been well received by the capital circles, which is closely related to its ambition to enter the whole category of sports equipment, the continuous expansion of consumer groups and the incomplete development of emerging market potential. However, some analysts have questioned Lululemon’s expansion strategy, suggesting that both high-end and enterprise size cannot be achieved. Lululemon will not be able to maintain this growth rate unless the brand becomes cheaper. Simeon Siegel as an analyst at Nomura Instinet said that if the brand wants to maintain growth, it must compromise on price, expand distribution or increase marketing spending. He argues that high-priced companies are not as big as popular ones. Compared with Nike, Lululemon’s route is more like Tiffany, a high-end jewelry brand. If lululemon continues its high-end positioning, the distinction between brands and Nike, Adidas and other sports companies will become more and more obvious. There is reason to predict that when Lululemon is committed to becoming “CHANEL” in the sportswear field, the price of the star product yoga pants will rise or not. In recent years, CHANEL has increased the price of its classic products to maintain the rarity of the brand, which is also the performance of CHANEL’s pricing power. Another trend that can be referred to is the luxury of daily necessities. For example, Dyson has broken the imagination of consumers about the price of hair dryers, vacuum cleaners and other household goods. Despite the high price, it has won the favor of a group of consumers. This also proves to some extent that the boundaries between practical products and luxury goods are constantly being broken. At present, besides functionality, attention to fashion and brand culture also provides space for brand premium for sports products. Of course, some pragmatist consumers don’t buy Lulemon’s high price. They prefer to buy Yoga Pants from retailers like Primark or Amazon. “I don’t want to dress beautifully. 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 a society of consumer upgrading and middle class inflation. No matter what it is clear that Lululemon has become the first “alien” in the field of sportswear.

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