Offline channels have been adjusting their product structures toward “freshness” to fend off online erosion. Meanwhile, clothing and home goods categories have shrunk within traditional supermarket formats, leaving a supply gap in China’s most mainstream markets.

At the same time, non-local lifestyle brands are often very cautious when it comes to lower-tier markets. According to JiHai Data, as of May 2024, 80% of Uniqlo’s China stores are concentrated in first- and second-tier cities; MUJI’s store expansion strategy still focuses on “anchoring mainstream high-tier cities + limited downward expansion.”

But having grown up from second-tier cities, Ludao carries a stronger lower-tier gene, enabling it to keenly observe the pain points of mass Chinese consumption.

In the eyes of Ju Ma, founder of Ludao, shopping is an experience full of joy. Consumers not only want to gain a practical and regret-free experience after purchasing but also yearn to feel surprise and happiness in the very moment of consumption.

Therefore, Ludao aims to provide universally practical products for ordinary households — products that not only solve everyday household problems but also allow consumers to genuinely feel that life has improved because of them.

From large items like 100% Australian pure wool quilts or highly cost-effective down jackets, to small essentials like non-slip ceramic bowls or pure cotton face towels, these are basic necessities for most Chinese families.

But beyond just products, Ludao also wants to solve problems on the perceptual level, building an emotional connection between consumers and the brand.

For example, Ludao stores usually feature a green plant section at the entrance. Its large stores now carry around 200+ SKUs of gardening items, while smaller standard stores focus mainly on fresh-cut flowers. At its Shanghai store, Ludao not only expanded the green plant area but also added a used-clothing upcycling workshop, promoting the idea of a circular lifestyle.

Building on essential needs, Ludao adds many inspirational touches to guide users. Shoppers may not know they need a particular product, but as they browse, they discover it might perfectly fit their desired lifestyle.

For instance, a camping enthusiast might find a portable camping lamp at Ludao, which can also double as a household flashlight. This kind of “treasure-hunt” experience creates lasting consumer attraction and helps build positive brand sentiment.

Compared to the “efficiency-driven consumption” that Uniqlo and similar brands focus on in high-tier cities, Ludao’s original model, blending lifestyle appeal with practical utility, has shown differentiated competitive strength in China’s vast lower-tier markets.

One of Ludao’s best-selling down jackets is priced at only 139 yuan, a price rarely seen among other brands. There’s even a shirt that has sold strongly for eight years, despite facing repeated pressures to raise its price by over 100 yuan. Through excellent management, Ludao has kept it at 99 yuan, never raising the price.

According to Ju Ma, this is entirely thanks to Ludao’s accumulated expertise and management on the supply chain side.

On one hand, Ludao uses an off-season advance ordering strategy to lock in supply early and maximizes fabric efficiency through a multi-product-line model, ensuring stable product availability and lowering product costs.

On the other hand, different clothing types have specific requirements in terms of craftsmanship and materials. Some factories specialize in cotton products, while others are experts in heavy-duty or washed fabrics. This requires long-term deep collaboration with partners in their specialized fields.

Currently, Ludao has partnered with over 100 small and micro manufacturing enterprises in the apparel category and has integrated a group of long-term suppliers. Together, they share inventory and co-develop products. In the fabric supply chain, some suppliers even shoulder more of the financial investment for Ludao, creating a risk-sharing, co-creation, and profit-sharing collaboration model.

Q: Ludao defines itself as a brand for the mass market, focused on essentials while promoting a lifestyle. Do you think this concept fits today’s era? How do you judge that?

First, before the pandemic, many consumers shopped casually, feeling it was okay to spend a bit more and not necessarily chasing extreme cost-effectiveness.

Second, back then, consumers tended to buy whatever they saw, since the overall economic situation allowed for it. But now, consumption has become more planned, people choose more carefully and compare prices thoroughly when shopping.

Against this backdrop, Ludao’s cost-effective product positioning stands out even more, as its advantages become clearer to consumers through repeated comparisons and intentional purchasing behavior.

By 2024, in some slightly lower-tier shopping malls, Ludao has already moved from being an optional brand to a must-have. Basically, as long as a customer tries something on, it almost always leads to a sale.

Q: While Uniqlo is experiencing net store closures, Ludao is seeing same-store sales growth. What changes are happening on the brand supply side of the industry?

In terms of overall consumer coverage, international brands indeed have many strengths that are worth learning from in the long run. But I firmly believe that we (demostic Chinese brands) have a sharper sense of the pain points of Chinese mass-market consumers.

Especially in this product category, there’s already a gap on the brand side. Take Uniqlo: while its international supply chain gives it cost-effectiveness, if you look just at the process from raw cotton to finished garments, serving local Chinese consumers, considering China is a manufacturing powerhouse, I personally think its prices are still too high for users here.

Currently, in lower-tier markets, there are some fragmented profit opportunities. Compared to international brands, we local companies are much more willing to invest the effort to explore and experiment in these spaces.

Q: What fragmented products has Ludao developed, and what kinds of consumer needs do they meet?

There are two business models we are willing to take on — which others are often reluctant to pursue:

① For different types of terminals, like shopping centers, we apply differentiated management strategies. Through specialized calculations, we find ways to achieve a good management return rate.

② We experiment more within a single apparel format. For example, in areas with small populations or poorly performing malls, we open stores of 280–450 square meters. In these regions, we can use a pure commission model, aiming for monthly sales of 300,000–400,000 yuan, with about 6–7 staff per store. In practice, we’ve found that as long as management is done properly, it’s still possible to achieve solid business results.

Our business approach penetrates into markets that others may not currently consider “core.” While they prefer to define things through standardized store formats, we reverse thinking, focus on controlling the cost system to ensure our own survival and profitability, while making sure users can see and buy more of our products.

This definitely requires careful matching on all fronts. For example, a store size of around 400 square meters tends to work best; if it reaches 500–600 square meters, it may become less feasible. Similarly, inventory management needs to be well-matched — ensuring reasonable turnover, unlike some stores aiming for 1–2 million yuan in monthly sales but ending up with massive stockpiles.

Q: In the past, sales were dominated by “explosive” products, merchants hoped for rapid turnover, with every item being a hot seller. But this approach comes entirely from the consumer demand perspective. From the merchant’s side, a lifestyle brand indeed needs to shoulder certain inconveniences for the customer. For example, presenting life-oriented products and waiting for the customer to discover them may mean keeping products in inventory for longer until the customer selects them to complete their lifestyle, even if it comes at the cost of inventory turnover. Would you say this is a responsibility that lifestyle brands must take on?

A: To some extent, yes. When we consider the role of a product within a consumer’s lifestyle, we realize that as long as the product remains practical and useful, its inventory will eventually be reasonably allocated and utilized within the broader lifestyle system.

The real challenge, I think, lies in the vastness of the Chinese market, balancing regional individuality with the commonalities of Chinese lifestyles is not easy. Some products might be suitable in Shanghai but not necessarily in the north. So, relying solely on generalized solutions is insufficient; we must also have the capability to provide regionally tailored services.

Q: Why did you launch a 20-yuan membership program?

A: From the consumer’s perspective, Ludao needs to provide paying members with more exclusive services, higher product value, and more comprehensive, worry-free solutions. Clearly identifying who this customer group is and understanding their behavior patterns is key.

That’s why we set the membership fee at a lightweight 20 yuan. As long as consumers have a continued willingness to buy, they won’t feel this fee is a burden. But even this small threshold helps us filter out the customers who genuinely recognize and value us.

From Ludao’s perspective, the membership card is also a form of store endorsement. Therefore, the growth in member numbers becomes an important reverse indicator of brand and store operations. In recent months, Ludao’s membership count has exceeded 5 million.

After customers pay for a membership card, their repurchase probability jumps significantly to over 70%. In cities where we already have multiple Ludao stores, when opening a new one, we find that about 90% of the daily customers are members.

In other words, we’ve formed a positive cycle. When visiting a mall, members are very likely to stop by the store. While browsing, they see Ludao continuously promoting new products, which keeps them feeling positively about the brand.

Q: Regarding your member e-commerce system and online operations, how is it different from other platforms?

A: In the first half of last year, we launched a mini-program mall, mainly serving members. We expect the online business to reach over 100 million yuan in scale by next year.

Currently, the standard return rate for Ludao’s mini-program is only about 2.8%, far below the industry average. This actually reflects that consumers have very clear expectations for our products. As long as their expectations continue to be stably met, they will keep purchasing from Ludao.

Across the long cycle of internet development, there may be certain phase characteristics in the early stages. But new forms of internet e-commerce still hold many development possibilities. Ludao hopes to find the solution for the “second half” of the internet and use internet thinking to drive the business of a multi-SKU lifestyle brand.

Q: What store types does Ludao currently operate, and why are they structured this way?

A: Ludao currently operates two store types:

Standard stores: 650–1,300 square meters, the standard lifestyle store, and the largest format so far. Out of the current 180+ stores, about 150+ fall into this category.

Large flagship stores: Over 1,300 square meters.

Additionally, last year we made a firm decision to replicate another format — the select store or “express” format. This is primarily apparel-focused, paired with a floral business, showcasing our pursuit of a beautiful life and happiness, and embodying the brand’s values.

These select stores don’t need to be large, but they can present the best-selling and most lifestyle-representative clothing products. This format has strong growth potential. I believe that by the mid-stage of development, even just within the single apparel business line, we can achieve greater success — opening 500 or even 800 stores is highly possible.

Q: Since you’re a lifestyle brand, why does Ludao also handle general merchandise like bowls, plates, and home textiles — items typically found in supermarkets?

A: Our products are designed to be practical for families, address daily essential needs, and maintain a down-to-earth nature. When building this product line, we adhere to a fundamental principle: avoid excessive price markups. These products are neither about novelty, trends, or rarity, nor about coolness or hype.

Previously, essential products in supermarket formats often lacked emotional value. But as a lifestyle brand, while ensuring essential utility, we also replan the product’s quality control, premium level, and packaging.

These products are inherently medium-frequency use items, so we must ensure two key points: practicality and convenience. Take IKEA for example, it’s vast in scale but difficult to set up within city centers. Our stores, however, can be placed in more communities, allowing consumers to access and use them nearby. Therefore, our multichannel layout and plans for thousands of stores can, in the future, significantly enhance convenience for consumers when it comes to practicality and essential needs.

Q: You mentioned Ludao aims to solve 100 different consumer problems in daily-use categories. How would you roughly classify the main product types or major issues you’re designing the category plan to address?

A: We’ve already developed and managed categories like daily necessities, home textiles, kitchenware, and children’s products. Next, we plan to prioritize 3C products (such as small home appliances and non-specialized large appliances) and travel-related items. Gradually, we’ll also experiment with launching pet categories and items like luggage and other common household goods.

Q: Among the daily-use products, which ones sell the best?

A: The best-selling products have two characteristics: first, they offer convenient, impulse-friendly purchasing; second, they have a clear price advantage.

Among these easily bought products, consumers tend to gravitate toward two types: one is products with clear usage frequency and repurchase potential. For example, when they notice they’ve run out at home while browsing the store, they’ll casually pick one up. The other is products they don’t currently have at home, but once they see them and recognize their usefulness, they’ll buy.

Q: What is Ludao’s current markup rate for daily-use categories? And how are store SKUs planned?

A: The current markup rate is about 1.4 to 1.8 times the cost, i.e., cost × 1.4 to 1.8.

In Ludao’s Shanghai store, there are about 1,500 SKUs in the general merchandise category. Across the whole company, we manage about 2,500 SKUs, but that store carries fewer than 2,000. This year, Ludao’s SKU count should stabilize between 3,000 and 5,000.

Q: Developing and managing so many SKUs isn’t easy. Could you share how Ludao internally works to bring a product from concept to store shelves?

A: A few years ago, we didn’t manage this well, but over the past two years, we’ve developed a deeper understanding.

First, any business activity, no matter how much emotional value or storytelling it contains, ultimately proves its commercial effectiveness through supply-demand management.

For example, when managing the kitchenware category, you can’t blindly assume every plate is worth producing. For a three-person household scenario, they might need about 15–20 plates — we base our SKU count on that need and simultaneously dig for differentiation internally.

To illustrate, among those 20 plates, at least 10 must be super bestsellers with common market characteristics, while the remaining plates must have enough differentiation to surprise the customer.

Ludao hopes its products can both build the brand and create differentiated experiences while still selling well. However, products like this are actually rare in the current market, most product management leans one way or the other: either entirely sales-driven, pushing only bestsellers, or obsessed with differentiation, which then doesn’t sell well.

Our ideal of excellent merchandise management ensures both sales and lifestyle definition. This is what we will keep striving for.

Q: On the supply chain side, what kind of suppliers have you discovered, from apparel to general merchandise?

A: In China, many small companies have production capacities on par with large manufacturers, but they’ve historically struggled to find good channels to promote their products or needed sufficient production volume to develop better.

The suppliers we work with range from small OEM factories to publicly listed companies and state-owned enterprises. In general merchandise alone, we have partnerships with around 200–300 companies, while in apparel, we work with over 100 small and micro manufacturers. We want to uncover more potential partners — together, we can discard the old multilayer distribution models and rethink how to optimize the entire process from product launch to sale, ultimately creating more value for consumers.

In fact, in apparel, we’ve already integrated a group of partners who share inventory with us, co-develop products, and even shoulder more capital investment for us at the raw material stage. This is a risk-sharing, co-creation, and co-benefit collaboration model.

For general merchandise, because our products aren’t high-frequency fast-moving goods, the sales cycle isn’t quick, which poses higher risks for factories in terms of inventory and turnover. But thanks to Ludao’s stable sales channels, factories can produce on schedule to some extent, and we’re willing to share risk with them.

Q: Before going online and before you had many offline stores, how did Ludao survive the pandemic? And how do you plan the next three years?

A: We got through the pandemic thanks to our partners, who played a critical role. Everyone felt a sense of mission, acknowledged the shocks brought by the pandemic, and bore the burden together. Through this, we realized that commercial liquidity is far more important than profit — liquidity ensures smooth operations both at the back and front ends.

Looking ahead to the next three years, I believe Ludao should move toward becoming a true national brand. Store scale is crucial in expanding. We hope to achieve annual revenues of around 3–5 billion yuan.

I believe that for a lifestyle-driven consumer brand, reaching a scale of 5 billion yuan positions it as a market leader in the mass sector today. As scale grows, public recognition and brand affinity will naturally deepen. We aim to expand within currently controllable risk levels and reach 500 stores in the next three years.