Lululemon bets on wider China reach, faster delivery

Lululemon is expanding into more Chinese cities, upgrading existing stores and accelerating deliveries as the Canadian athletic apparel maker seeks to sustain growth in its second-largest market amid rising competition.

The company is also broadening its product offerings beyond its yoga roots, targeting segments such as running, training and menswear where it sees further growth potential in China, San Yan Ng, regional president of China and Asia-Pacific at Lululemon, said in an interview with China Daily during the ninth China International Import Expo in Shanghai.

Ng expressed confidence in the long-term growth potential of China's activewear market, citing rising consumer interest in exercise, wellness and active lifestyles.

"Consumers' expectations are becoming increasingly sophisticated. They are seeking products that seamlessly combine performance, functionality and style, creating continued opportunities for growth in the performance apparel category," she said, adding that for Lululemon, the focus is on introducing new products and experiences that meet evolving consumer needs while enhancing the overall consumer experience, thus creating further opportunities for growth.

The strategy follows a challenging second quarter on the Chinese mainland.

In the quarter ended Aug 2, Lululemon's revenue on the Chinese mainland rose 4 percent to $407.1 million, while comparable sales fell 2 percent. The company added 15 net stores in the market over the preceding year.

Lululemon currently operates 178 stores across 47 cities in the Chinese mainland. The company plans to continue expanding its retail network while renovating and enlarging selected existing locations.

The company is tailoring its retail strategy to different markets, strengthening its presence in major cities, upgrading selected stores in second-tier cities and testing demand in smaller markets, she said.

Hohhot, capital of the Inner Mongolia autonomous region, offers an example of the potential in emerging markets.

Ng said the company had initially been uncertain about local exercise habits and guest demand before entering the city. However, the response exceeded expectations.

"We were very surprised. Guests might approach movement differently from those in Shanghai, but people really embraced us. Some buy our products for exercise; others buy them for everyday wear."

Alongside retail expansion, Lululemon is strengthening its logistics infrastructure to improve product availability and support its growing store network.

Its new distribution center in Wuhan, Hubei province — which opened on Sept 16 in partnership with Chinese logistics company SF Express — is the company's largest outside North America, according to Ng.

Ng said Wuhan's location provides an advantage for nationwide distribution, while the partnership allows Lululemon to leverage SF Express' extensive delivery network and logistics expertise.

"We are exploring how to make distribution smarter and faster across China, serving both guests who shop online and in our physical stores," she said.

Real-time inventory information enables the company to monitor demand across stores and determine where products need to be replenished or transferred. Stores currently receive daily replenishment, while the company is exploring ways to anticipate potential shortages and improve inventory allocation.

Product innovation is another pillar of the company's strategy as it seeks to reach a broader range of Chinese consumers.

Ng said fabric technology, support and garment development remain key points of differentiation. Running, training and yoga remain Lululemon's largest activity categories in China, while tennis and golf offer additional opportunities for growth.

Citing its third consecutive appearance at the CIIE, Ng said the CIIE provides an important platform for the company to strengthen local partnerships, showcase product innovations and engage with the country's growing community of active participants.

"The CIIE is much more than an exhibition for Lululemon. It is an important platform for us to deepen local collaboration and share new opportunities emerging in China's dynamic market," she said.

wangzhuoqiong@chinadaily.com.cn