China fuels the rise of Lululemon and other high-end sportswear labels

In China, premium sportswear brands are experiencing robust growth as they directly engage with their primary clientele, posing another challenge to mega-brands like Nike and Adidas amidst their competition with local rivals in the US $ 55 billion sportswear market.

Sportswear stands out as a beacon of growth in China’s sluggish consumer market, as health and wellness have taken center stage for aspirational middle-class consumers post-pandemic. Many individuals are venturing into activities such as yoga, hiking, and running for the first time.

The market, ranking as the world’s largest after the United States, is anticipated to grow by 7 per cent this year to US $ 59 billion, surpassing the forecasted growth rate of 0.8 per cent in non-sportswear apparel and footwear, according to Euromonitor data.

While this development bodes well for market leaders like Nike, Adidas, Anta, and Li Ning, it presents even greater opportunities for higher-priced brands such as Lululemon and niche sneaker manufacturers like On and Hoka. These brands have favoured leveraging social media influencers and community-targeted marketing over the celebrity-driven campaigns traditionally relied upon by larger brands.

Nike recorded a 4.5 per cent increase in sales in the Greater China market in its most recent quarter, albeit from a significantly higher base compared to its smaller rivals. It reported sales of around US $ 7 billion in footwear and apparel in Greater China during its 2023 fiscal year. Adidas, on the other hand, saw an 8 per cent growth in its China business in the first quarter.

Lululemon, in comparison to other premium brands, boasts a decade-long presence in China. It adopted a gradual expansion approach, reaching its 100th store milestone last year to coincide with its 10th anniversary. However, it has since accelerated its strategy, aiming to establish 220 stores by 2026.

The Canadian yoga wear manufacturer, relying heavily on targeted marketing, reported a remarkable 45 per cent growth in China during the first quarter, its second-largest market globally. This growth contrasts with a sluggish demand in the United States, where sales only grew by 2 per cent. Its net sales in China nearly reached US $ 1 billion last year.