Lululemon banks on China for growth

Athletic apparel brand Lululemon Athletica Inc is banking on China as its top growth engine abroad, planning an expansion that would make the country its second-largest market globally by 2026.

With 138 stores in 41 cities, the company is rapidly scaling its reach in response to Chinese customers' rising interest in health, wellness, and active lifestyles.

"China is our biggest international market and is set to become our second-largest worldwide," said Andre Maestrini, Lululemon's executive vice-president of international, who was in Shanghai earlier this week for the China International Import Expo.

The company hit $1 billion in revenue in 2023 in China, which the company views as pivotal to its global growth strategy.

Maestrini, who has visited China four times this year, emphasized the importance of local engagement and a long-term vision for the market.

Lululemon's approach in China leans heavily on community-building, setting it apart from competitors that focus on product offerings.

"Our stores (all directly operated) are hubs of community," said San Yan Ng, managing director of Lululemon China.

The retailer has doubled down on what it calls its "hyper-local" strategy, customizing not only its products but also the fit and feel of its apparel for Chinese consumers.

"We have a creation team dedicated to making sure our products suit the body shapes and preferences of local guests," Maestrini said.

The retailer leverages extensive feedback from Chinese social media platforms, as well as interactions in-store, to stay on top of local trends and preferences.

Douyin, a popular video-sharing platform in China, has played a critical role in Lululemon's strategy. Rather than focusing on sales alone, Lululemon views Douyin as an educational tool where it can showcase its products and brand philosophy.

"Douyin has delivered incredible results, enabling us to connect with customers even in cities where we don't have stores," said San Yan Ng.

The brand uses the platform to offer product education and reach new audiences as China's consumer landscape continues to digitalize at high speed.

Lululemon's WeChat presence is just as central to its China plans. Through the WeChat platform, Lululemon has built an ecosystem where customers can shop, sign up for community events and access brand updates in real-time.

While women's activewear has traditionally driven the company's growth, Lululemon also sees rising potential in the men's market.

"Our male customers in China tend to shop across categories," Ng said. "They will buy shorts for running or pants for the office. It is an area we want to develop."

Lululemon has also seen interest in categories like tennis and golf apparel, capitalizing on emerging fitness trends among Chinese consumers.

"China's pace of urbanization and interest in wellness makes it a unique market," said Maestrini.

As Lululemon's presence in China strengthens, the executives see the country as a model for other international markets.

"China is helping us shape our global strategy," Maestrini said, adding that the company is learning from the local team's successes on Douyin and WeChat.