By the end of this month, Lululemon will have three stores in Mainland China, two in Shanghai, located in IFC Pudong and Jing’an Kerry Center, and one in Sanlitun, Beijing.
The yoga and athletic brand opened its first Mainland China showroom in 2013, marking its entry to the market. Up until now, Lululemon relied on its three showrooms in the country, which offered a limited selection of the brand’s clothing and aimed to incubate the local community, and sold its products through Alibaba’s Tmall. The company claims to have learned about the market through these showrooms by hosting a variety of events and monitoring consumers’ behavior online. The showrooms, considered precursors to stores, have since closed. Executives declined to give overall sales information for China but a spokeswoman said sales on Tmall have been growing 50 percent quarter-over-quarter.
While it has taken the brand a while to get around to opening freestanding stores, Lululemon chief executive Laurent Potdevin said his company is taking the cautious route.
“We go to market when our communities are ready to go to market. From a retail standpoint, the digital landscape has changed so much [in China]. It is ahead of where the rest of the world is, so it is not the time to rush into opening 100 stores or 200 stores. I don’t think that’s really what motivates us, but it’s how many people can engage with the brand, whether it’s digital, in the stores, or in models that don’t even exist today,” he said.
To coincide with the store openings, Lululemon will launch its Chinese e-commerce web site. This launch had originally been slated for mid-2015. Although the brand’s Tmall store was created, a dedicated web site did not materialize.
“Obviously, we could just open e-commerce for the sake of opening a store, but we wanted to make sure that our assortment was available and our content was available. We wanted to create some sort of synergy between our stores and digital,” said the brand’s senior vice president, Ken Lee.
Lululemon is hoping to tap into China’s embrace of sporty pursuits — particularly in the lead-up to Beijing hosting the 2022 Winter Olympics. In particular, the company is eyeing undersaturated, increasingly wealthy, Internet-savvy shoppers living in second- and third-tier cities.
“We have started exploring tier-two and tier-three cities,” said Lee. “We had one of our biggest events in Chengdu, where we have no presence. In one day, 500 people showed up. We’ve got the opportunity to explore and we have the culture of listening.”
Since entering China, the brand has introduced size 29 in men’s pants, to fit the more petite man; however, it has not drastically altered its offering from North American stores.
“Our design team travels a lot and gets inspired from sports in different parts of the world. We are definitely inspired by Asia in what we do, but I really don’t believe that you become successful by designing a specific product line for a specific market,” said Potdevin, adding that the brand will make some adjustments for fit.
Executives said the brand has lowered its prices in China to come in at levels close to that of the United States to encourage Chinese customers to shop at home rather than wait until they travel. The align pant, the newest and one of the brand’s most popular pants, costs $98 in the States compared to 850 renminbi (or about $123) in China.
“I’ve heard so many times, ‘I wait until I travel to buy product.’ We don’t want people to wait. We want them to engage with the brand when they see something they love,” Potdevin said.
Earlier this month, Lululemon posted third-quarter results that easily beat Wall Street’s consensus estimates. Net income for the three months ended Oct. 30 jumped 28.5 percent to $68.3 million, or 50 cents a diluted share, from $53.2 million, or 38 cents, a year ago. Net revenue rose 13.5 percent to $544.4 million from $479.7 million.