How Big Is The Possibility Of UNIQLO Achieving Its Goal By Organic Growth?

The fast selling of its parent company lowered its sales target in 2020 to 3 trillion yen (about 30 billion US dollars), and the figure was 5 trillion yen when it first set up the 2020 target in 2012.

Whether it is 3 trillion or 5 trillion, the most important part of the whole goal is the US market.

According to the plan set in 2012, the US market should achieve sales target of US $10 billion (about 1 trillion yen) in 2020, accounting for 1/5 of global sales of fast selling companies.

However, the United States

I am afraid that the specific figures are difficult to tell.

In the last fiscal year, the losses in the US market have widened.

In a recent interview with reporters, Ryui Masa, chairman of fast marketing company, said, "we plan to achieve the goal of 3 trillion yen through organic growth."

The so-called "organic growth" refers to not through external acquisitions, but mainly by UNIQLO,

The growth of these two brands.

As early as 2014, Xun had planned to buy J.Crew Group, the parent company of J.Crew, to boost the group's 2020 plan. However, the deal was finally terminated, and the two sides did not disclose the reason.

How big is the possibility of relying on organic growth to achieve the target of 3 trillion yen?

If the sales target of 3 trillion yen is achieved in the 2020/2021 fiscal year, then the average annual sales growth in the next five years will be at least 11%, based on the annual sales of 1.8 trillion yen.

This figure has been 6.2 (2015/2016 fiscal year), 21.6% (2014/2015 fiscal year) and 21% (2013/2014 fiscal year) in the past three years.

The 11% growth rate is not impossible, but if we only rely on UNIQLO single brand to achieve growth, there may be a lot of pressure.

Sales in the Greater China region, the fastest growing market in UNIQLO, are slowing down, which is one reason why UNIQLO is eager to expand in Europe and America and Southeast Asia.

UNIQLO's sister brand GU may have stronger growth potential, though its annual sales are only about 1/9 of UNIQLO.

In the last fiscal year, UNIQLO brand contributed about 81.5% of sales revenue to fast retailing companies. The sales of GU classified as "global brand" were relatively low, but sales in the past year increased to 32.7% and operating profit increased by more than 34%.

GU, founded in 2006, has a younger audience. It is more sensitive to fashion elements and lower in price.

At present, GU operates less than 400 stores in the world, of which about 350 are in Japan.

According to the plan recently announced by GU, the brand is expected to expand in the Japanese market by offering 40 to 50 new stores every year, and to plan a total of about 50 stores in the global market in the next three years, when international sales will account for 10% of the total sales of GU brands.

Prior to that, Xun had said it would open 1000 GU stores in the international market outside Japan in the next 10 years.

Ryui Mana, he hopes to further expand GU's expansion in the Asian market and introduce the brand to the US market in the future.

In an interview with reporters, he hinted that he might merge GU and UNIQLO in the future, but Liu did not elaborate on this.

The biggest worry of UNIQLO is the United States.

Currently, UNIQLO has about 45 stores in the United States, which first entered the US market in 2005 and set up the flagship store in New York in 2006.

We have written and analyzed the predicament faced by UNIQLO in the US market. The key point is the location of stores.

In the past, UNIQLO had chosen the stores that had first entered the US market in the shopping malls of non metropolis, which is not conducive to the shaping of brand awareness. Moreover, consumers in small cities may have less enthusiasm for foreign brands.

UNIQLO should have been aware of this problem.

Ryui Mana's current store strategy is to focus on big cities, where consumers appreciate the quality of clothes and pay attention to fashion trends.

In the past two years, UNIQLO has established stores in Chicago, Seattle and Boston.

UNIQLO in the US

UNIQLO entered the US market in 2005, and opened shop in New Jersey.

UNIQLO's first global flagship store opened in New York SoHo in 2006.

2011 UNIQLO New York Fifth Avenue world flagship store opens

In 2012, the first store on the west coast of the United States opened in San Francisco.

In 2012, it quickly acquired most of the J Brand Holdings of Losangeles clothing company.

In 2015, Liu Jing, chairman of fast forward marketing company, advertised the New York Times print edition and website, and wrote a letter to Hello America.

In 2015, the first American UNIQLO store opened in Chicago.

UNIQLO SoHo global flagship store was renovated and opened in 2016 to introduce more Japanese elements.

However, another problem facing UNIQLO outside the US market is how to stimulate the development of brands in the two largest markets in Japan and greater China, in particular, to curb the downward trend of performance growth.

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Although UNIQLO had achieved an increase of nearly 50% in sales in the Greater China region in the fiscal year 2014/2015, it has always been among the top clothing categories in the past two years, but the brand has shown signs of a slowdown in the 2015/2016 fiscal year, including a 5.5% decline in the Greater China region operating profit.

In Japan, UNIQLO sales increased by 2.5% compared with the same period last year, but this performance was the result of product price reduction. In Japan, UNIQLO's operating profit in the past year fell by 12.6% compared with the same period last year.