In the summer of 2023, nearly 30 UNIQLO stores will be launched in mainland China, mainly covering Dabei District and key cities in central China, including Hohhot, Qinhuangdao, Changchun, Zhengzhou, Xi’an, Dalian, Qingdao, Wuhan, Hefei, Chengdu, Changsha and other places.
Currently, UNIQLO has more than 900 directly-operated stores in China, covering more than 200 cities.
Wu Pinhui, chief marketing officer of Uniqlo Greater China, said in a recent interview with China News Service that in 2023, Uniqlo will continue to open new stores in China at a rate of 80 to 100 per year – this is the store opening speed that Uniqlo has maintained since 2005, even during the epidemic. Nothing has changed during this period.
What can be seen as a reference to the above-mentioned store opening plan is that Uniqlo has performed poorly in the Chinese market for more than a year.
According to the 2022 fiscal year report of Fast Retailing Group, the parent company of Uniqlo, during the period, affected by the epidemic, the performance of Greater China declined, with revenue increasing by only 1.2% year-on-year, and operating profit falling by 16.8% year-on-year. Except for Greater China, revenue and operating profit in other overseas markets both increased significantly.
Fast Retailing’s 2023 first half fiscal year report shows that as of February 2023, both revenue and profit in the first quarter of Greater China declined. However, as the impact of the epidemic gradually disappeared, second-quarter performance rebounded, with revenue declining slightly but profit Substantial growth.
However, the performance fluctuations in Greater China did not drag down the group’s overall performance. In the first half of fiscal year 2023, Fast Retailing Group’s comprehensive revenue increased by 20.4% year-on-year to 1.47 trillion yen (approximately 75.9 billion yuan), and comprehensive operating profit increased by 16.4% year-on-year to 22.02 trillion yen (approximately 11.4 billion yuan). , refreshing the highest performance record in the history of the group.
This data provides confidence in Fast Retailing’s future expectations. Fast Retailing predicts that the group will achieve comprehensive income of 2.68 trillion yen (approximately 137.5 billion yuan) in fiscal year 2023. At the same time, Tadashi Yanai, founder of UNIQLO and chairman of Fast Retailing Group, also put forward higher goals for the group’s future revenue expectations: 3 trillion yen in 2024, 5 trillion yen in five years, and 5 trillion yen in the next ten years. exceeded 10 trillion yen.
With the goal of doubling revenue, Fast Retailing Group urgently needs to expand the market.
In the aforementioned two financial reports, Fast Retailing mentioned that it would “accelerate the opening of stores around the world.” However, in the first half of fiscal year 2023 report, the number of overseas Uniqlo stores originally planned to be reached by the end of August 2023 was adjusted from the previous 1,740 to 1,690.
Although from the financial report, the proportion of Greater China’s revenue in total revenue fell from 25.0% in fiscal year 2021 to 23.4% in fiscal year 2022, it is still Uniqlo’s second largest market outside Japan. In addition, considering China’s population and market size, there is still room for growth for Uniqlo. Yanai Masaru said in 2020 that based on China’s population, Uniqlo is expected to open 3,000 stores in China.
Since entering the Chinese market for the first time in 2002, UNIQLO has accumulated a lot of experience in China, and the advantages of continuing to explore the Chinese market are obvious. For example, UNIQLO has long been focusing on both online and offline channels, and has a high brand awareness in the Chinese market. It focuses on cost-effective basic models with distinctive design styles, and currently has no strong competitors in the same price range.
In addition, according to research data from Amy Consulting, the number one preference type of Chinese clothing consumers in 2022 will be casual style, accounting for 59.5%. Uniqlo’s product style and its “LifeWear clothing suitable for life” concept that has been vigorously promoted in recent years are consistent with It matches.
On the other hand, the general background of the market and economy has also alleviated resistance for Uniqlo to a certain extent. Compared with Uniqlo’s steady store expansion, H&M, Zara, which are also fast fashion brands, and other brands under their parent company Inditex have all reduced their development in the Chinese market to varying degrees in recent years. Changes in Chinese consumer attitudes may also make cost-effective mass brands like Uniqlo more popular.
However, Uniqlo may still encounter difficulties in its expansion in China. In addition to common problems such as increased operating costs, difficulty in inventory management, and store saturation brought about by opening new stores, Uniqlo will also face the uncertainty of whether the business strategy that has been used in first- and second-tier cities for a long time can be further reduced. It also works in sinking markets.
Back in 2005, Uniqlo, which had been out of the Chinese market for three years, regained its competitiveness by adjusting its brand positioning. At that time, Uniqlo targeted middle-class consumers in first- and second-tier cities and raised product prices by 10%-15% to get rid of the vague positioning of “low price” and instead pursue “high cost performance.” Now, as Uniqlo enters the price-sensitive sinking market, it may once again face the problem of how to balance brand and price. Uniqlo needs the Chinese market, but whether the Chinese market needs so many Uniqlo remains to be tested by time.