Running Water, Fast Fashion, Iron Fad

In July 11th, UNIQLO's parent company released the latest quarterly bulletin. In the 9 months ending May 31st, revenue rose 7% to 1 trillion and 820 billion yen, or 115 billion 600 million, and operating profit increased 3.7% to 247 billion 600 million yen, or 15 billion 700 million yuan.

Although UNIQLO's revenues and operating profits in the Japanese market decreased by 0.5% and 19.5% respectively. But UNIQLO's overseas business revenue increased by 14.6%, of which China's sales increased to 402 billion 600 million yen, or 25 billion 600 million yuan.

In recent years, fast fashion has been very difficult in mainland China. Forever21 quit, Zara and H&M closed shop, only UNIQLO singing all the way, adding nearly 100 stores a year, became a special case.

2018 is the watershed for the performance of multinationals. The business of H&M and GAP has declined significantly in China, and the growth of Zara parent Inditex has slowed down. The growth rate of fast selling business has reached more than 30%, which has robbed several other businesses.

Fast retailing has 8 of its revenue from UNIQLO. A clothing brand from Japan is not that easy to win the favor of Chinese people. How did UNIQLO do it?

"Half of the success of UNIQLO is due to the Chinese market".

Since its entry into China in 2002, UNIQLO has not been able to open up the situation for several years. Because it uses the same old ideas as Japan, and provides quality products to customers at the lowest price.

But in Japan, UNIQLO, which belongs to the popular brand, is not the cheapest in China. Many companies in the Chinese market are competing at low prices.

Price war is not effective.

In 2005, UNIQLO China CEO Pan Ning began to take charge of the Chinese market. At that time, UNIQLO had only 9 stores in China, and its performance was not good. Pan Ning's first task is to turn off 2 lost stores.

Pan Ning positioned the Chinese customer group in the middle class, and the price of clothing was 10%-15% higher than that of Japan.

UNIQLO's clothing price is lower than that of ONLY, Europe, JACK&JONES and Selected, and is higher than that of China's local clothing brands Metersbonwe and Semir. It is similar to H&M and Zara, but its quality is better than those of international fast fashion brands.

Pan Ning later said in an interview with people's website that for the international brand such as UNIQLO, the low price is not enough, and the most important thing is to bring customers the unique experience that they could not feel before -- excellent service.

UNIQLO's services in China are similar to those in Japan. Staff often spend more time tidying their clothes, providing the necessary help only when customers need them.

After the clear positioning of prices and services, UNIQLO's development in China was on the fast track. A year later, UNIQLO opened Asia's largest flagship store in Shanghai, China's revenue doubled and began to make profits. Since then, UNIQLO has opened 20 new stores in China.

In 2013, UNIQLO opened a global flagship store in Shanghai, covering an area of more than 8000 square meters, larger than the flagship store in Tokyo and the flagship store in New York. In the same year, another flagship, cheap fashion young brand GU, chose the first overseas shop in Shanghai. China has become the largest market for UNIQLO overseas.

In the 2012 fiscal year, UNIQLO accelerated the pace of opening stores in China, and opened 598 new stores in 7 years.

Store expansion is not slow, but in the weekend, you need to queue up for checkout.

UNIQLO has been successful in China, and it has a lot to do with online sales. In April 2009, UNIQLO entered Tmall. Online sales have made the popularity of UNIQLO rapidly improve, and have helped UNIQLO sell clothes to stores that have not been covered by stores. In 2015, "double 11", UNIQLO sales exceeded 600 million yuan mark, won the clothing sales champion, since then, every year double eleven of clothing sales champion is UNIQLO, no clothing brand can surpass.

In China, online sales of UNIQLO already account for 15% of total revenue. UNIQLO has also tried online ordering and offline pick up services in China, which is specially built for China, but not in Japan.

In contrast, H&M did not open Tmall store until 2018. Zara's Tmall store is also 5 years behind UNIQLO, and it is reasonable to lag behind.

As the founder Ryui Masato said, "half of the success of UNIQLO is due to the Chinese market."

In 2018, China's revenue grew 27%, to 439 billion 800 million yen, and operating profit increased by 47% to 73 billion 700 million yen. By selling clothes alone, UNIQLO can earn 28 billion yuan a year and earn 4 billion 700 million yuan in China.

The annual report of fiscal year 2018 shows that UNIQLO's overseas sales have surpassed that of the Japanese market, but Japan's revenue is more than 50% higher than that of China. Compared with Japan, China's performance still has much room for improvement. The development momentum of UNIQLO in China will continue.

What's the difference between UNIQLO?

Unlike Zara, H&M and other fast fashion brands, UNIQLO's stores are full of basic funds, clothes that look ordinary and not fashionable. In fact, UNIQLO does not consider itself a fast fashion company.

UNIQLO's special feature is not to pursue fashion. Ryui Masa once said, "clothes are more than fashion." He believes that people who do not pursue fashion are not in the minority, and UNIQLO serves them.

Other clothing brands are the main fashion, and UNIQLO is unique in its own style.

Everyone knows the principle of "one price, one share of goods", but UNIQLO has done quality and low price.

Ryui Masa's approach is to design independently, entrust factories to process, and create their own supply chain. In 1988, UNIQLO set up procurement offices in central Hongkong and arranged for production and quality management in factories in China. After completion of the garment production, UNIQLO bought the merchandise and the factory did not need to take any risks. In this way, efficient operation from design to terminal sales saves a certain cost. Moreover, most products of UNIQLO are basic, and the cost of raw materials is better controlled.

UNIQLO's clothing is not only cheap and comfortable, but also can be worn one year to the next year, and it can be matched with other brands of clothes. Fast fashion brands like Zara and H&M pay too much attention to fashion and sacrifice quality. Many clothes can't be worn after washing several times.

In terms of cost performance, UNIQLO wins. UNIQLO has its own unique insistence on clothing display and material.

In 1984, the first store in UNIQLO opened, and Ryui Masa considered the problem in the customer's position. The shop business concept was "let customers buy casual wear like buying magazines." Therefore, starting from the first store, UNIQLO made the storefront a similar warehouse style. Each store has a high ceiling and a wide aisle, and put a large number of clothes neatly, from the floor to the ceiling to facilitate customers to take. This kind of storehouse display is still in use till now.

The technological sense of fabric is another highlight of UNIQLO.

In 1998, the fleece boom made UNIQLO famous. At that time, the wool coat was monopolized by the outdoor brand, and the market price exceeded 10 thousand yen. The heating effect of UNIQLO's fleece is good, and the selling price is surprisingly low. As long as 1900 yen, it is simply a "price killer".

Since then, UNIQLO continues to maintain the advantages of materials. AIRism, Dry EX, Heattech and light down products are all other fabrics that have not been developed by other brands, and have also led the trend.

UNIQLO's advantages are more than that. Walking into a UNIQLO store will have a very intuitive feeling. The goods in the shop are neatly arranged and clean; when they go in, there will be no salesmen to sell behind them; children, young people and middle and old aged people, customers of all ages can get the right clothes at the store, "eat all", and the clothes and sizes are complete. Customers' good impression of UNIQLO naturally deepened.

UNIQLO's clothing is not fashionable, but it is not static. It works with the world's top designers every year to sell joint funds. You know, these designer clothes are so expensive that ordinary people can't afford them. The KAWS joint T-shirt, which was snapped up in China in April, was launched jointly by UNIQLO and New York contemporary art master KAWS. KAWS dolls often cost tens of thousands, and UNIQLO's joint name is only 99 yuan.

Fast selling means quickly capturing the needs of customers, rapidly turning the needs of customers into commercial outlets. To produce good products, we also need an efficient operation system to sell clothes quickly and turn them into profits. UNIQLO has also done so.

Cheap and cheap UNIQLO has been very popular in Japan, where consumption is sluggish. In 2001, UNIQLO began to enter the world and opened its stores to the world, including Britain, China, Korea and Thailand.

Can headquarters become the number one in the world if we move our headquarters to warehouses?

Today's fast retailing is the third largest clothing manufacturer and retailer in the world, after Zara's parent company Inditex and H&M. But its goal is to become "the world's first".

To achieve this goal, UNIQLO moved its headquarters to the 6 storehouse of Ming warehouse in February 2017, and began implementing the "Ming plan" to further improve all processes of design, planning, production, logistics and sales.

In office buildings located in the open area along the Gulf of Tokyo, the design, storage, logistics and so on have been converged, and the efficiency has been improved.

UNIQLO now puts the information in the most important position and rebuilds the supply system based on information. UNIQLO hopes to use the power of information to achieve "no useless things, no useless things, no useless things".

In 2018, UNIQLO also established a partnership with Google, using big data and user profiles to predict popular colors and styles, and predict the number of products that need additional production.

These practices can help UNIQLO grasp user preferences and improve efficiency. But these are not enough. Despite years of hard work, UNIQLO's revenues in North America and Europe are not high enough to open up markets in Asia. To raise revenue, we must count on the Chinese market.

How far is it from the world's first clothing manufacturer and retailer Inditex?

Inditex has many brands such as Zara, Pull&Bear, MassimoDutti, Bershka and so on. Inditex's revenues in the 2018 fiscal year amounted to 26 billion 150 million euros, or 202 billion 300 million yuan. Zara is only a brand, and sales are higher than fast sales.

Only two of UNIQLO and GU brands are available, and UNIQLO accounts for more than 8 of revenue and GU accounts for only 1. In the 2018 fiscal year, the total sales revenue of Fast Retailing was 2 trillion and 130 billion yen, or 135 billion 400 million yuan. There is a gap of 66 billion 900 million yuan with Inditex's revenue.

For Ryui Masa, the greater the goal, the more energetic he may be. This may be why he has not retired at the age of 70.