$100 (about 150,000 won) high-priced leggings that helped grow the global athleisure (a fashion trend combining sportswear and everyday wear) market have put Lululemon on a new proving ground in China. While its China business had propped up results amid slowing growth in North America and intensifying competition, concerns are rising that the existing high-growth strategy could hit a ceiling as even this segment has recently slowed.
According to the Financial Times (FT) on the 5th (local time), Lululemon's recent challenge is a slowdown in sales growth in China, its core market. Until now, the company's China operation had offset weakness caused by softer growth and fiercer competition in the United States, but analysts said it has turned into a burden as weaker consumer sentiment and stronger competitiveness from local brands in China have coincided.
Lululemon is a sportswear brand that started in Vancouver, Canada. It began with yoga wear and grew into a global brand by spreading the athleisure culture of wearing workout clothes as everyday attire. In particular, after the COVID-19 pandemic, rising interest in health management and exercise fueled rapid growth among younger consumers, and it secured a loyal customer base for leggings priced over $100 by emphasizing quality and brand experience.
China is considered Lululemon's key growth market. Growth weakened in North America due to slower consumption and intensifying competition, but in China, rising demand for health management and the spread of fitness culture, along with an expanding middle class, have driven a boom in the premium sportswear market. For Lululemon, China effectively served as a core growth axis that could make up for weakness in the U.S. market.
In this context, Lululemon's concern is deepening because even its China business, the core growth axis, is slowing. As China's economic recovery proceeds more slowly than expected, Chinese consumers' purchasing criteria are also changing. Consumers who once favored overseas premium brands have become more price sensitive than before, shifting their standards toward value for money and practicality.
Competition from local brands is also a burden. Chinese sportswear companies such as Anta and Li-Ning are expanding their influence by improving quality and leveraging price competitiveness. Unlike in the past, when high prices were accepted simply because a product was a global brand, Chinese consumers now have more choices, changing the competitive landscape of the premium sportswear market.
Lululemon maintains that the long-term growth potential of the Chinese market remains strong. However, the FT noted that if growth in China, which has helped offset weakness in North America, also slows, Lululemon may need to adjust its existing high-growth strategy. The industry expects that, amid changes in China's consumer environment and intensifying competition with local players, whether Lululemon can sustain its premium brand strategy will be the watershed for its future growth.