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How long has it been since you bought clothes at Uniqlo?

Recently, Uniqlo's parent company, Fast Retailing Group, released its financial report for the first three quarters of fiscal year 2024. The group as a whole achieved double growth in revenue and profit, but its performance in the Chinese mainland market has declined significantly.

Terms such as "Uniqlo executives say Chinese consumers' mentality has changed" and "Uniqlo has lost its value for money in China" also made it to the hot search list.

01

UNIQLO's revenue in Greater China declines

According to the financial report recently released by Uniqlo's parent company Fast Retailing, in the first three quarters of fiscal year 2024, Fast Retailing's total revenue was 2.37 trillion yen (approximately 110 billion yuan), a year-on-year increase of 10.4%; profits reached 401.8 billion yen (approximately 18.5 billion yuan), a year-on-year increase of 21.5%.

Among them, the revenue in Greater China was 522.469 billion yen (approximately RMB 24 billion), accounting for 22.1% of the total revenue.

However, in the third quarter, revenue in the mainland China and Hong Kong markets declined, operating profit dropped sharply, and same-store sales shrank.

Pan Ning, CEO of UNIQLO Greater China, pointed out in a briefing that both external and internal factors led to this result:

In terms of external factors, first, the performance in the same period last year was strong and the base was high, with revenue increasing by about 50% year-on-year; second, due to poor climate performance, consumers' willingness to consume has declined; finally, as competition among shopping malls has gradually intensified, the ability of different shopping malls to attract customers has begun to differ.

Regarding internal factors, Pan Ning said that the main reason was that the company was unable to compile an adequate product portfolio to meet customer needs and adapt to the different climates in each region; at the same time, the inadequacy of product portfolio and marketing activities also affected sales performance.

In addition, due to the growing disparity between shopping malls, about 150 stores failed to attract customers, thus pulling down the overall monthly average.

02

“Chinese consumers’ mentality has changed”

From a small clothing store to a household name clothing giant, Uniqlo is a classic case of corporate management.

In the 1990s, Japanese people's enthusiasm for consumption declined, and Uniqlo quickly rose by downplaying its brand and emphasizing high cost-effective products.

After implementing its globalization strategy, the overseas market growth rate of Uniqlo's parent company, Fast Retailing Group, has exceeded that of its domestic market in Japan, and the proportion of its revenue has continued to increase.

As for the decline in Uniqlo's revenue in China, Pan Ning analyzed that the mentality of Chinese consumers has changed:

“We are seeing a set of consumer values ​​centered around ‘substitution’ — consumers choosing more affordable products that are barely distinguishable in quality from branded goods.”

“More and more consumers want to improve their quality of life in terms of safety, security and health, and there is a growing interest and demand for products that are reliable, comfortable to wear, easy to care for, and can be worn as daily wear as well as sportswear.”

The reporter noticed that there were many posts related to "Uniqlo substitutes" on social platforms.

In addition, popular UNIQLO items can be purchased on some e-commerce shopping platforms for just a few hundred yuan, including polar fleece zipper jackets, designer collaboration series hooded patchwork jackets, etc.

"The key is that the goods are not good and the price is not cheap" "The styles remain basically unchanged, but the prices are getting higher and higher." On social platforms, some netizens said that Uniqlo's price-performance ratio has declined.

Some consumers also believe that the quality of UNIQLO products has not improved as prices have risen, and that they are easily deformed, etc. E-commerce platforms provide more choices, making UNIQLO no longer the only cost-effective option.

In addition, some consumers are dissatisfied with Uniqlo's price transparency and discount strategy, and said they would only consider buying during special events.

03‍

Train employees to participate in live streaming sales

Facing the challenge, Pan Ning revealed Uniqlo's response strategy:

The company plans to adjust its store opening strategy and will focus more on the quality rather than quantity of stores in the future, ensuring that at least 50 new stores are added each year to better reflect the brand value.

In the next three years, UNIQLO China plans to close and renovate approximately 50 stores each year, improving the efficiency of individual stores by optimizing the layout, with the goal of increasing sales of renovated stores by at least 1.5 times.

In addition, flagship stores in Shanghai, Guangzhou and other places will be renovated and upgraded. At the same time, UNIQLO also plans to open new flagship stores in potential markets such as Chongqing and Chengdu.

In the online field, given that UNIQLO's online membership has surged to nearly 80 million, the company plans to increase its e-commerce investment and use social e-commerce platforms such as WeChat and Douyin to strive to increase the proportion of e-commerce sales to 30%.

It is worth mentioning that given the popularity of live streaming sales by Uniqlo store employees, the company is training about 2,000 employees to participate in live streaming sales to further expand online sales channels.

Despite facing competitive pressure from declining market share and the rise of local brands, Uniqlo remains firmly optimistic about the long-term potential of the Chinese mainland market.

"We offer simple, high-quality, basic clothing for all ages that can be used for both sports and everyday wear. As consumer sentiment changes, Uniqlo's relative competitiveness is actually growing. We believe that Uniqlo has the potential to become the preferred brand for consumers in mainland China," said Pan Ning.

Editor: Chen Lixiang

Proofreading: Ran Yanqing