Lululemon, Arc’teryx lead niche apparel brands defying China’s spending downturn
‘Consumers with real spending power still have a strong demand for products that are high-end, experiential and relatively niche,’ analyst says
A bestselling pair of Lululemon yoga pants costs nearly 1,000 yuan (US$141) in China – three to six times more than similar products from local brands. Yet, the Canadian activewear company stands out as a bright spot in China’s sluggish consumer market, posting strong mainland sales in its latest earnings.
Lululemon’s performance is uncommon but not unique. While many international brands struggle in China amid a downturn in consumer spending and stiff local competition, a select few premium brands have bucked the trend with solid gains in the world’s second-largest economy.
“[Chinese] consumers with real spending power still have a strong demand for products that are high-end, experiential and relatively niche,” said Richard Lin, chief consumer analyst at SPDB International, who stressed that all three criteria have to be met.
Lululemon Athletica, which recorded a 34 per cent year-on-year rise in net revenue in China in the second quarter, sells more than just pricey apparel. It also sells a lifestyle of personal development and fitness. For example, it hosts community events like yoga sessions with local instructors and it partners with inspiring ambassadors – the latest being actor Jia Ling, who shed 50 kilograms for her role in hit boxing film Yolo.
The brand “takes a very localised approach” that is “grounded in wellness” in the mainland China market, CEO Calvin McDonald said on an earnings call in August.
The approach has paid off. Lululemon’s growth in China helped offset its flat North American business as the company reported a 7 per cent rise in net revenue in the three months ended June.
