Unfair Pricing, UNIQLO Hit A Big Blow To Raise Prices

The main developing markets of fast selling are Japan's local market, Asian market and global market.

Among the 6 billion 800 million people, 4 billion low-income groups living in developing countries are at the bottom of the income Pyramid, and will be the biggest potential market in the future, that is, the BOP tower market.

As report goes,

(Uniqlo) Ryui Masa, who has been hit hard by raising prices and falling from the richest position in Japan, should find that as Asia's largest clothing retailing brand, UNIQLO has no room for improvement in price positioning. On the contrary, downside seems to be an inevitable trend.

In the three quarter of May 31st, in the 2016 fiscal year ending May 31st, GU operated 351 stores, the second largest brand of the XXX group, but only about 10% of the group's revenue.

As of the 2015 fiscal year of August 31, 2015, GU business profit recorded a 1.7 fold increase, helping the FastRetailingCo.Ltd. fast marketing group to turn a profit out of the global brand business except Uniqlo UNIQLO.

The group's global brand business also includes Theory, COMPTOIRDESCOTONNIERS, PRINCESSETAM.TAM and JBrand. The four brands are basically at a loss.

Reporters here learned that UNIQLO was founded in 1984, which is the starting point for the next step of Japan's economic growth. In 1994, 100 direct stores were realized. Even in 2008, the global financial crisis still maintained a compound growth rate of 16%, benefiting from the characteristics of high cost performance, fashionable style and fast updating. The fast fashion brands including UNIQLO in the past 10 years had a compound growth rate of over 10%, and the market share in the global apparel market continued to increase.

Insiders also told reporters that since 2015, some fast fashion brand revenue growth is still positive, but operating profit has begun to decline, such as UNIQLO 2015, the three quarter business profit growth is turning negative.

The main reason for the decline in UNIQLO's profits is that competition intensified and market saturation has intensified. In the past 2012-2014 years, four fast fashion brands have opened 547 new stores in China, and 8829 stores in the world in 2015.

Correspondents learned that in 2013, UNIQLO International's turnover in the Chinese market was close to 7 billion 600 million yuan, accounting for 50% of UNIQLO international, accounting for 11% of total revenue, operating profit of nearly 800 million yuan, accounting for 74% of UNIQLO international, accounting for 10% of total operating profit.

In August 2013, the number of UNIQLO stores in mainland China, Hongkong and Taiwan was 225, 18 and 37 respectively.

According to the fast marketing plan, the Greater China region will maintain an annual average opening rate of 100 new stores, with an annual compound growth rate of nearly 30%.

From the earnings report since 2016, the UNIQLO international performance exceeded the company's expectations, and the Greater China region is the key to the rapid growth of performance.

The Chinese market will continue to be a performance guarantee in the future.

Li Jie, a researcher at Everbright Securities, said that the main developing markets of fast selling are Japan's domestic market, Asian market and global market.

Among the 6 billion 800 million, 4 billion of the low income group (below $3000 a year) living in developing countries are located at the bottom of revenue Pyramid (BaseofPyramid), and will be the largest potential market in the future, that is, the BOP tower market.

The middle market of Asian developing countries, including China, is the protagonist of the world's mass consumption at the present stage.

In terms of the clothing market value predicted by EUROMONITOR from 2012 to 2017, the two fastest growing CAGR markets were China (8.3%) and India (7.6%), much higher than those of North America (0.1%), Japan (-0.4%) and Western Europe (-0.5%) in the same period.

In Li Jie's view, the future of UNIQLO brand is mainly focused on the Asian market with mainland China as its core.

At the same time, through Bangladesh layout supply chain, focusing on resources to cultivate the absolute low price sub card GU and so on, has maintained the attention of India to become the next potential market.

Li Jie believes that with economic growth in recent years down the ladder, China

The dividend is over, and demand is falling, which is similar to the pition from the seller's dominant market to the buyer's dominant market during the burst of the Japanese economic bubble.

The overall supply of domestic brand clothing is in excess of demand.

The price rise of the previous brand is facing a bottleneck, and the clothing price bubble burst.

Therefore, clothing brands, including UNIQLO, need to reduce intermediate links, eliminate redundant channels in traditional value chains, and achieve profits for consumers.

At the same time, through the fast response ability, the terminal consumption demand will be dynamically fed back to the supply chain, which will be faster and better to meet the buyer's needs and enhance the added value of the brand.

It is reported that after the burst of clothing price bubble, consumer demand has turned to the most competitive products.

UNIQLO products have advantages over other competitors in the current Chinese market environment.

According to the distribution of the price of the main products in China, UNIQLO has the most advantage in price, and takes the product quality and functionality as the selling point; H&M is slightly lower than the GAP price, and H&M takes the additional fast fashion as the selling point; the ZARA price is relatively high, but emphasizes the fastest speed, and the rapid flow of goods and the European self capacity increase the cost and the terminal price objectively.

Experts here also said that in recent years, China's garment industry has undergone a round of adjustment.

But UNIQLO has hardly been affected, and has maintained a rapid expansion in the Chinese mainland. It has a unique advantage in the Chinese market, and is gradually emerging.

With the adjustment, local brands have made strategic readjustment: they seek growth from purely relying on channel extension and expansion, and turn to the importance of products and supply chain.

According to EUROMONITOR, China is in the period from 2012 to 2017.

Capacity composite growth rate of up to 8.3%, still higher than the composite growth rate in other parts of the world.

In 2017, China's clothing market will reach 335 billion dollars, surpassing Western Europe and North America, reaching 3.6 times the Japanese market and becoming the world's largest market.

The large volume market provides a broad space for the growth of casual wear enterprises including UNIQLO.