The king of Canadian athleticwear has already had a tough year, and just made another unforced error.
What happened: Lululemon issued an apology this week after a marketing stunt in China went wrong. In May, the brand hosted a yoga festival on the Great Wall, using what appeared to be a Japanese taiko drum during the event, angering scores of Chinese social media users. The brand said it “should have been more cautious and thorough.” You think!
The drum mix-up made people mad not just because of the lazy flattening of distinct Asian cultures, but because China and Japan are at odds with each other right now.
Zoom in: If this incident impacts Lulu’s Chinese sales, it would be a disaster. Mainland China has been a lifeline as it loses ground to new competitors in its core North American market. Net revenues rose 29% there last year, and have more than quadrupled since 2021.
For comparison, net revenues dropped 3% or 4% in the Americas last quarter, forcing the company to cut its sales forecast, sending shares to a seven-year low.
Why it matters: As China becomes a more important market for Western consumer brands, the opportunities to accidentally incense the country’s growing number of social media users with ill-conceived promos have multiplied. Lululemon is not the only recent cautionary tale.
Last year, Canadian brand Arc’teryx — part-owned by Chinese sports giant Anta — faced boycott calls after an environmentally questionable fireworks display in Tibet.
Elsewhere, luxury brand Fendi saw a torrent of complaints due to an Instagram post featuring a design resembling the Chinese Knot, implying it had Korean heritage.
Bottom line: Chinese consumer spending and investment fell to their lowest levels since the pandemic last month. With less consumer dollars to go around right now, brands simply cannot afford these screw-ups.—QH
