In the global market of 2022

The business of yoga apparel was booming, and this momentum is expected to continue into 2023, especially in the Chinese market.

Lululemon’s Financial Report

This trend can be observed from the latest financial report released by Lululemon — the report shows that in 2022, Lululemon achieved a revenue of $1.857 billion, a year-on-year increase of 28%, with a net profit of $255 million.

Although North America is still Lululemon’s largest market, its performance in the Chinese market is particularly impressive, with China likely to become its second-largest market outside North America. Lululemon’s CEO, Calvin McDonald, pointed out: “The compound annual growth rate of revenue in mainland China is nearly 70%.”

In 2023, Lululemon plans to open 40 new stores worldwide, most of which will be located in mainland China, showing how much it values the mainland market.

2013-2021 Yoga Apparel Market Size (100 million RMB)

Industry Data and Competition

Industry data also prove the popularity of yoga apparel. According to data from the State Administration of Work Safety, the size of China’s yoga fitness apparel market reached ¥14.1 billion in 2021, with a compound annual growth rate of 16.38%. It is estimated that in 2022, the market size of the yoga apparel industry will reach ¥15.6 billion.

A market of this scale naturally attracts many competitors. However, apart from leading brand Lululemon, the Chinese yoga apparel market is currently in a state of intense competition, with the effect of the second-tier brands not yet significant:

Traditional sportswear brands such as Adidas, Nike, Under Armour, Decathlon, and Chinese brands like Li Ning and Anta have all launched their own yoga apparel, but consumer response has been lukewarm. Emerging brands like MAIA ACTIVE, Particle Fever, and VFU are working hard to carve out a niche in the market. In addition, these brands’ OEM factories are not idle either, selling their OEM products at factory prices on platforms like Aprilluck and Kuaigou, and receiving positive reviews on Xiaohongshu.

Yoga pants, ranging from a few thousand yuan to fifty or sixty yuan a piece, always find their owners.

Such a bustling scene seems to be sounding the alarm — the scale of the yoga apparel market will reach its peak, some brands may overtake on a bend, some brands may have fallen behind, the melee will end sometime, but will that day come in 2023?

Emerging Brands and Market Differentiation

Excluding the yoga apparel launched by traditional sports brands such as Nike, if we just look at the emerging brands that have emerged in recent years, we will find that their development paths and product types are very similar.

For example, MAIA ACTIVE, which was established in 2016 and focuses on “designer sports apparel specially made for Asian women”, and Particle Fever, which was established in 2015 and was more like a sports trend brand in the past, both started to focus on yoga apparel in the past two years, and their products look somewhat similar.

A fitness apparel promoter on Xiaohongshu, when introducing yoga pants from different brands, keeps repeating phrases like “soft to the touch”, “double-sided brushing”, “body-hugging cut”, “designed specifically for Asian women”, “does not roll up during exercise”… If she doesn’t mention the brand, one wouldn’t know which product she’s talking about.

These brands have all received the favor of capital in recent years. So far, MAIA ACTIVE has completed four rounds of financing, attracting investors such as Sequoia Capital and Huaren Culture; Particle Fever completed a C round of financing in 2020 from Gaorong Capital; MOLY VIVI, which was established in 2019 and focuses on “multi-scenario diversified technology sports apparel”, received an exclusive A round of financing from Matrix Partners China in 2021…

After obtaining large amounts of financing, these brands have all laid out offline stores, opening similarly styled stores in the downtown shopping districts of Beijing, Shanghai, Guangzhou, and Shenzhen.

Hierarchy in Different Markets

In first and second-tier cities, a hierarchy of yoga apparel in gyms has already formed: Lululemon is naturally the top choice for the new middle class, while brands like MAIA ACTIVE and Particle Fever rank second due to their unique sense of being niche brands; Under Armour, Nike, and Decathlon are just ordinary. In this hierarchy, wearing yoga pants from a certain brand represents your social class.

In the lower-tier markets, yoga apparel presents a different style. For instance, the yoga pants that can fit anything, which went viral on TikTok, leave people confused about their function and use, appearing more like a form of performance art. There are also yoga pants appearing under various names — shark pants, Barbie pants, floating pants… It’s all very confusing.

Low price is always king. On e-commerce platforms like aprilluck and Kuaigou, which focus on low prices, Lululemon’s original marked products with a price tag of fifty or sixty yuan have received hundreds or even thousands of orders.

One consumer detailed the differences between these so-called original marked yoga pants and the real Lululemon on Xiaohongshu: “Lulu’s price is 10 times higher, but the experience is not 10 times better… (original marked yoga pants) even though they lose their shape after a few washes, I still feel they’re worth it.” It seems that product quality becomes unimportant in the face of a price difference of dozens of times.

In addition, the lack of clear differentiation may be the biggest problem in the domestic yoga apparel market at present.

Consumer Perspectives and Challenges

“I feel all yoga pants look the same, I can’t tell the difference,” says Azzi, a consumer still at the “beginner stage” of yoga pants consumption and without a fitness habit, “What’s the difference between them and leggings or tights?”

Azzi may represent a portion of ordinary consumers — most of them just want to buy a pair of “yoga pants” in the broad sense to follow the outdoor and sports trend. For most yoga pants, the only difference in appearance is the color, and details like seam technology and functionality are not important to ordinary consumers.

Eighteen, a fitness enthusiast who owns several pairs of yoga pants, says: “The material of shark pants and Barbie pants is usually harder, without enough wrapping, and they don’t provide enough support for muscles during exercise, so they can only be worn casually.”

She explains that the large category of yoga pants is also divided into different types suitable for light exercise, medium and high intensity strength, and aerobic training, etc. For example, Lululemon’s popular Align series is suitable for light exercise and daily wear, while the Wonder Train series is suitable for strength training.

Fitness enthusiasts like Eighteen will pay for fabric and cut in pursuit of a better fitness experience and have their own set of evaluation criteria: “Not rolling up and not sagging during exercise is the most basic — otherwise you have to pull up your pants after each jump; the design of the embarrassing area is also very important, because wearing tight pants for exercise easily reveals lines… In short, you can’t do standard fitness moves because of bad pants design.”

In addition, she will also consider factors such as whether the pants have pockets and whether they can withstand high-intensity washing in the washing machine.

In Eighteen’s eyes, the difference between Lululemon, MAIA ACTIVE, Particle Fever, and other domestic and foreign yoga apparel brands is not that big: “If you have money, buy expensive ones, if not, buy cheap ones. If it’s just for pure exercise wear, they’re all good.” Eighteen knows friends who buy yoga pants from aprilluck, “The material feels quite comfortable.”

The “Noble” Raw Materials No More

The “bad” news is that in 2023, yoga pants might become even more similar — a major breakthrough at the upstream raw material end makes the main raw material of Lululemon yoga pants no longer “noble”.

80% of the composition of Lululemon yoga pants uses a new type of nylon fabric “Nylon 66” (the remaining 20% is spandex fiber blended with it), and its outstanding skin-friendly feel and wear resistance have made Lululemon’s products highly praised.

The preparation process of this fabric is complex in the slicing, spinning, and dyeing stages, and its raw material “adiponitrile” was monopolized overseas in the past, leading to unstable supply and high prices.

At present, manufacturers with high-quality production technology are mostly in Taiwan — a report on the nylon industry by Guotai Securities shows that 48% of Lululemon’s fabric supply comes from Taiwan, with mainland Chinese suppliers accounting for only 19%.

A pair of yoga pants made of “Nylon 66” and a pair of yoga pants made of ordinary component “Nylon 6” have factory prices of 97 yuan and 54 yuan respectively, and the difference in retail price will be magnified to hundreds of yuan on the basis of brand premium.

The situation of high-priced raw materials has now seen a turn for the better. Driven by strong demand at the domestic and foreign consumer ends, the upstream industry chain has made a breakthrough. In July of this year, adiponitrile was successfully nationalized.

The “Nylon Industry Special Report” predicts that within the next three years, the demand for apparel made from domestic “Nylon 66” will increase by 3.6 times, and its retail sales will also jump from the current ¥23.7 billion to ¥81.2 billion.

A nearly 3.5 times increase in retail sales is certainly not something that Lululemon alone can support. The reduction in raw material prices leads to a reduction in fabric prices, which leads to a reduction in costs, and many domestic brands will inevitably increase the use of “Nylon 66”.

When the time comes, a new storm will certainly sweep the yoga apparel market: fabrics are becoming more and more similar, prices are becoming more and more similar, so what can brands rely on to win in a highly competitive market?

The Alarm Bells Are Ringing

The trend of yoga apparel becoming a type of everyday wear is irreversible, but even Lululemon is facing many crises, the most prominent of which is the risk of high inventory leading to a decrease in gross profit margin. Financial reports show that Lululemon’s inventory reached 1.7 billion pieces in the third quarter of 2022, an almost 80% year-on-year increase.

Secondly, how to seek new breakthroughs.

In recent years, Lululemon has entered the “red ocean” markets of women’s running shoes, men’s clothing, personal care, etc., trying to expand its product boundaries, but it is not favored by the market.

Is multi-scene clothing a false proposition? Where is the balance point between technology and design? Where is the boundary between niche and mass… Obviously, Lululemon has not found the answer to these questions, and domestic emerging brands are even more clueless.

Meanwhile, under the hot market conditions of yoga apparel, some brands have already fallen behind.

An insider revealed that when Lululemon first became popular, some OEM factories were attracted by its high profits and created their own brands: “They thought at the time, since a pair of yoga pants with a cost of only a hundred or two hundred yuan can sell for eight or nine hundred yuan because of brand premium, then they would definitely find buyers if they sold products of similar quality for three to four hundred yuan.”

It sounds reasonable. However, in this era of traffic where even good wine is afraid of deep alleyways, they, who are not willing to do marketing promotion and whose prices do not have much “advantage”, eventually saw their hopes dashed. “After struggling with live streaming for a while last year, they gave up.”

This might also be the fate of many brands…