Canadian Athletic Apparel Retailer lululemon Faces Doubts in China

Canadian athletic apparel retailer lululemon started the year as one of the most popular brands in China due to its superior quality and design. Recently, however, the brand is encountering some doubt as to its quality and prices.

Lululemon, founded in 1998, broke the $40 billion market value in 2020, surpassing Adidas, while in November of last year the company’s market value stood at $60 billion. Its best-known product is yoga pants, selling for between 750 yuan ($104) and 1000 yuan in China. At the beginning of this year, after Canadian athletes dressed in red down coats appeared at the opening ceremony of Beijing 2022 Winter Olympics, the company attracted many new buyers in China.

Lululemon’s financial report for the second quarter of fiscal year 2022 shows that, as of July 31, 2022, the company’s revenue increased by 29% year-on-year to $1.9 billion, and its net profit reached $289 million. In the second quarter, its net revenue in China increased by more than 30% year-on-year. In addition, 8 new stores were opened in China, reaching 70 in total.

Chinese media outlet Xinshang believes that the popularity of lululemon in China is due to the humanized brand design and its advanced operational concept in a niche field. But doubts about the company have crept out.

At the beginning of June, a consumer complained on life-sharing platform Xiaohongshu that he/she spent more than 3,000 yuan to buy two sets of lululemon’s yoga pants, one of which pilled after wearing them for two days. This post led to other complaints from many consumers about the brand’s normal quality and high price.

(Source: lululemon)

As for the reason why the quality of lululemon products is declining, many global consumers think that the brand intends to shorten the service life of its products in order to improve the repurchase rate and subsequent sales volume. The company has twice recalled products from overseas. In China, lululemon’s affiliated company has been punished three times for product quality problems.

On a Chinese complaint platform, some consumers said that the fabrics used in lululemon’s products purchased online were inconsistent with that found in offline stores. There have also been many consumers complaining that the price of lululemon’s online flagship store is higher than that of offline stores.

As a result, Chinese consumers are now choosing procurement services. In Canada, the price of lululemon’s products is only about half of the price in China. Even with procurement service fees, they can still get what they want hundreds of yuan cheaper than in China.

In China, lululemon first attracted the attention of middle-class female consumers who loved yoga. But the strategy of selling a single product is now slowing the company’s market growth.

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Lululemon has been aware of this dilemma, so in recent years, it began to explore new market segments, such as men’s wear, shoes and personal care. In 2018, men’s wear accounted for 28% of the company’s inventory and its revenue in FY2022 accounted for 24.55% of the annual revenue, increasing by 61.13% year-on-year.

In 2022, lululemon’s focus has been on shoes. It launched its first women-only running shoes in March, a multifunctional women’s sneaker in July, followed by women’s training shoes and slippers. Although lululemon currently only has slippers for men at present, it plans to launch more shoes for the consumer group in 2023.