Profits plummeted, UNIQLO relied on China to redeem? This article is from the WeChat official account: reveal (ID: lingshouke) , OF: ten, from the head of FIG: visual China
“I feel like I can’t wear Uniqlo anymore.”
Li Dapeng(pseudonym) called out to his colleagues as soon as he entered the office: “I used to feel free to buy clothes in Uniqlo, but now I feel very Expensive.” He asked his colleagues around him, “Does it also feel like that, Uniqlo seems to be expensive?”
The reason why he said this is because he visited Uniqlo at noon today. He originally wanted to buy two clothes and “picking up a bargain”, but found that Uniqlo seemed to “raise prices”: 999 yuan, 799 yuan, and 599 yuan. Clothes of RMB 399, RMB 299 and RMB 299 accounted for the vast majority. Previously, clothes of RMB 149, RMB 199, and RMB 249 accounted for less and less.
The “shy” Li Dapeng turned around and left empty-handed. “It’s not that I can’t afford it, but that it’s worthless.” He said.
On this point, Wang Fei (pseudonym) feels very much the same. He is nearly 40 years old, and he has been Uniq in recent years.Ku’s regular customer, in his own words, is a loyal fan of Uniqlo-you wear your LV, Gucci, and I wear Uniqlo for 100 yuan. Doesn’t it fragrant?
Li Dapeng and Wang Fei represent the views and attitudes of some consumers. They were both iron fans of Uniqlo and were more sensitive to the price changes of Uniqlo products.
This change may be related to labor, market conditions, and raw material procurement costs under the influence of the epidemic.
1. Uniqlo “price increase”
Affected by the epidemic, manufacturing costs are rising steadily, and Uniqlo is no exception.
On April 22 this year, Fast Retailing Group issued an announcement stating that the company will fulfill its commitment to suppliers and pay for orders that have already been completed and that have already started production. “It will not be blocked by the new crown epidemic. Changes have been made to the established payment schedule.”
At the same time, Fast Retailing Group also confirmed that the supplier partners have purchased surface accessories for order production, but if these surface accessories become obsolete, they will receive Fast Retailing Group compensation.
On this basis, Fast Retailing Group will take a series of measures, such as adjusting the production schedule, and if feasible, reallocating orders among partners to ensure that the distribution of orders will not make partners unaffordable Financial risk or pressure.
Although Uniqlo did not announce the specific amount of this compensation, this compensation has made Uniqlo virtually increase a lot of manufacturing costs.
Understandably, due to the impact of the epidemic, all kinds of costs have risen, and Uniqlo’s fast fashion positioning, with its thousands of stores around the world, is due to the large consumer demand, which can be very good at the supply chain Control costs.
But now sales have plummeted, becomingThe increase in cost and the decrease in gross profit margin are transmitted to the natural price increase on the consumer side. It’s just that, in the Chinese market, apparel brands collectively present the status quo of “cleaning up inventory, promoting sales, and returning funds”. Uniqlo, which focuses on high cost performance, can still capture consumers if the price increases?
Actually, in 2016, Uniqlo made a significant price increase, but the financial report that year taught Uniqlo a heavy lesson in price increases.
From 2014 to 2015, due to the impact of exchange rates, the depreciation of the yen led to an increase in raw material costs and labor production costs in OEM factories, and Fast Retailing Group raised prices to varying degrees twice.
In July 2014, the average price increase of Uniqlo products in autumn and winter was 5%, and the average price increase of Uniqlo products in 2015 reached 10%.
Although Uniqlo’s price hikes made up for the loss of the yen’s depreciation and the increase in raw material costs, the passenger flow has decreased significantly. According to reports, Uniqlo’s price hikes have led to a decline in passenger traffic, which has forced Uniqlo’s parent company Fast Retailing to re-adjust prices. The price reduction measures will cover the world, with a maximum reduction of 30%.
However, according to the 2016 fiscal year report released by Uniqlo’s parent company Fast Retailing, the group’s annual operating income from September 1 last year to August 31 this year was 1.7846 trillion yen, a year-on-year increase of 6.2%. Comprehensive operating profit fell 22.6% from last year to 127.2 billion yen.
In this regard, the CEO of Fast Retailing Group Yanai Zheng admitted that the price increase strategy was wrong.
Uniqlo, which has experienced hardships, has not only dared not explicitly raise prices in recent years, but has even “hinted” promotional information to consumers. The online “Uniqlo discount strategy” is very detailed. Nowadays, even if it is Price”, Uniqlo doesn’t dare to fantasize.
According to the foundry information published by Fast Retailing Group, among the 242 foundries in 11 countries including China, Indonesia, and Myanmar, there are 128 foundries in China, accounting for 50% of the total.
Analysis of industry insiders said that although the price of labor in China continues to rise, considering the stability of labor and productivity, Chinese foundries still account for a large proportion.
In addition, in order to improve its performance, Uniqlo also started the mask business during the epidemic. The price was 65 yuan, which caused a rush by Japanese consumers.
In fact, the biggest dilemma that Uniqlo is facing is that the brand has fallen into “stagnation” and previous aesthetic fatigue in some markets around the world. Although Uniqlo has adhered to its brand positioning, its global position has also declined significantly.
Analysts said that as more and more consumers spend their time at home, Uniqlo (Uniqlo) will focus on practical For everyday clothes, not more fashionable styles