Uniqlo Wants To Expand At A High Speed In China, So It Can Find Another Way To Stick In Front Of Hailan'S Home And Play Price Performance With Big Stores

Uniqlo, a Japanese fast fashion giant that is stepping up its overseas expansion, plans to increase its number to 1000 by 2020, and the Chinese market is becoming an increasingly important growth engine for Japanese fast fashion Uniqlo. In the first nine months up to May 31, Uniqlo's operating revenue in overseas markets reached 820.5 billion yen, and the Chinese market is still the main driving force for its overseas business growth.

Industry analysts believe that the rapid growth of Uniqlo's performance in the Chinese market can not be separated from the brand's aggressive expansion strategy. In addition to opening nearly 100 stores every year, e-commerce and digital businesses combined with offline stores are also progressing smoothly. Liu Jing, the group's chairman and CEO, recently revealed that in order to revitalize Japan's business, We are strengthening our business model in China.

At the same time, Uniqlo's parent company, Telemarketing Group, will launch a new personnel system in the spring of 2020:

Increase the starting salary of new employees, including new graduates, by about 20%;

Provide more promotions and salaries for young employees who have been employed for 3-5 years:

To provide employees with global job opportunities, the annual income in Japan will exceed 10 million yen (about 640000 yuan), and the annual income of employees in the United States and Europe will reach about 30 million yen (about 1.92 million yuan).

According to the public information, Uniqlo was founded in 1984 and is the core brand of Japan Fast Retailing Group. The chairman and general manager of Fast Retailing Group, Liu Jing, has introduced a hypermarket style clothing sales mode for the first time in Japan. Through the unique commodity planning, development and sales system, Uniqlo has realized the low cost of store operation and led Uniqlo into the top 500 most valuable brands in the world. Starting from a small clothing store selling suits, the company has grown into one of the internationally renowned clothing brands.

The reporter learned from the financial report that as of the third quarter of 2019 on May 31, the operating revenue of the parent company of Uniqlo Fast Retailing Group increased by 7% year-on-year to 1.82 trillion yen, equivalent to 115.6 billion yuan. The revenue of its Uniqlo brand in the first three quarters was 96.6 billion yuan, an increase of 14.4% year-on-year. Among them, driven by a 20% increase in the net profit of the mainland market, the net profit of Greater China achieved double-digit growth, with the operating profit increasing by 3.7% year-on-year to 247.6 billion yen, equivalent to 15.7 billion yuan. Although Uniqlo's revenue and operating profit in the Japanese market decreased by 0.5% and 19.5% respectively, Uniqlo's overseas business revenue increased by 14.6%, of which the sales volume in the Chinese market increased to 402.6 billion yen, or 25.6 billion yuan. Greater China and Southeast Asia have become an important engine for Uniqlo's business growth.

By the end of August 2019, the number of UNIQLO stores in Japan will reach 820 (including employee franchise stores), the number of overseas UNIQLO stores will reach 1392, the number of GU (excellent) stores will reach 420, the number of global brand business divisions is expected to reach 982, and the total number of brands under the Group is expected to reach 3614.

Shi Hongmei, an analyst of Orient Securities, said that after years of hard work in the local market, Uniqlo's share in the Japanese market continued to increase. However, since 2012, the expansion of the company's local stores in Japan has basically stalled, and more business strategies have been adopted to upgrade small stores to large ones. The growth of the same store has become the main driving force for Uniqlo's sales growth in Japan at this stage. Considering the limited space of Japan's local market and the near stagnation of Japan's economy, compared with the huge potential of overseas emerging markets, Uniqlo's internationalization strategy began to accelerate. By 2015, the operating revenue of Fast Retailing Group had reached 1.68 trillion yen, with a year-on-year growth rate of 21.64%, and the net profit was 110 billion yen, with a year-on-year growth rate of 47.60%. In that year, the company opened 165 to 798 new overseas stores, of which the total number of stores in Greater China was 467, and the proportion of overseas revenue of Uniqlo brand rose to 43.63%. By fiscal year 2018, the company's overseas revenue had exceeded that of the mainland.

In fiscal year 2018, thanks to the strong growth of the Chinese market, the operating revenue and net profit of Fast Retailing Group increased by 14.37% and 29.79% respectively. Compared with the single digit growth of revenue in 2017, the company's performance in 2018 began to recover significantly. In contrast, Shi Hongmei believes that the revenue growth of its competitors such as ZARA and H&M has slowed to single digits, and the revenue growth of GAP has been negative for many consecutive years. At the same time, Uniqlo's overseas expansion has not stopped. It has seized on the similar body shape and culture of consumers in Asia, expanded rapidly in the Asia Pacific region led by China, broke through the bottleneck of local growth, and constantly shared the cake of the global market. In fiscal year 2018, the company's Uniqlo brand had a net increase of 170 overseas stores and 78 stores in China, while the number of stores in ZARA China had a net decrease of 4 in the same period, and the number of net increase stores of all brands of H&M Group in China was 24.

From the secondary market, UNIQLO's share price has risen from 30000 yen in September 2017 to nearly 70000 yen at present, with a rise of 130%. In terms of valuation, UNIQLO's share price has also risen from 25 times PE low in 17 years to about 38 times at present.

Uniqlo's singing along the way is particularly eye-catching when the giants in the fast fashion industry are showing signs of fatigue. Shi Hongmei believes that this is closely related to the current stage of development of China's consumer market. At present, China's urban per capita disposable income is about 5500 dollars, and the macro-economy as a whole is in a slowdown stage, close to Japan in the mid and late 1980s. At the same time, the current stage of development of consumer culture in China is similar to that of Uniqlo, which is the social basis for the establishment and rapid development of Uniqlo in Japan at that time.

From observation, with the gradual slowdown of the domestic economy and residents' income growth, consumers began to get rid of the blind worship of high-end brands and high unit prices. While the overall consumption ability of high-income groups increased, they paid more attention to the improvement of their own quality of life by high-end goods. The era of conspicuous consumption ended, and consumers returned to rational consumption, Consumer companies that successfully comply with consumers' pursuit of cost-effective products are easy to stand out. The rapid development of Fast Retailing Group in Japan at that time benefited from this. Through its Uniqlo and GU brands, Fast Retailing Group provided consumers with affordable high-quality casual clothes. On the one hand, it guaranteed product quality with low SKUs, large orders and super quality suppliers, and on the other hand, it reduced costs with efficient production chain management to achieve ultra-low markup.

In Shi Hongmei's view, Uniqlo's singing all the way is crucial to the impact of domestic brands, which also shows that adhering to the cost performance ratio is the foundation of positioning the leisure apparel industry for the public, especially in the current social environment, the cost performance ratio demand is constantly improving. From the perspective of industry development, in the fast fashion boom period before 2015, ZARA have captured consumers with the mode of frequent updating and rapid change, and the whole fast fashion industry has been weak since 2016. Although Fast Retailing Group has experienced a short downturn in this period, and even once was teased because of the lack of style innovation, no matter how the industry environment changes, the company always adheres to the high cost performance ratio as the basis, This is the business strategy in line with the public positioning of leisure clothing.

Shi Hongmei stressed that for most consumers, although they sometimes pursue high-end and personalized products to highlight their unique labels, most of them still focus on basic models for daily wear, and pay more attention to the comfort and cost performance of products. Especially in the context of the overall slowdown of China's macro-economy and the increasingly rational consumption of the people, high cost performance will be the core of the public leisure clothing brand.