In an interview with Nikkei magazine, the founder and CEO of Japanese retailer Uniqlo recognised he has made strategic mistakes, by underestimating the current mood of Japanese customers, leading to results which are regarded as negative.
"The items whose prices we raised have failed to find buyers. The market is extremely tough and our decision to increase prices was not a good one. Consumers find themselves in a situation that goes beyond what I imagined," stated Tadashi Yanai, as quoted in the economics daily's Wednesday morning edition.
In 2015, Uniqlo decided to raise the price of several items by 10%, due to unfavourable fluctuations in currency exchange rates. The group's costs abroad are high and, when the yen is weak (as was the case until recently), they increase sharply.
The strategy was unsuccessful, and last week the Fast Retailing group (owner of the Uniqlo brand) slashed its forecasts for the fiscal year from September 2015 to August 2016, due to the sales slump, notably in Japan.
Uniqlo failed to meet its targets in Japan with the winter collections (including the HeatTech line) due to the cold weather's late arrival, and Uniqlo customers have been visiting the brand's 844 Japanese stores less frequently than usual.
The 13% rise in revenue recorded by Uniqlo stores abroad, 890 of them now (174 more than a year ago), was not sufficient to prevent their associated operating income from plummeting 31% down, to JPY29.4 billion, due to operational losses in the USA and declining profitability in China and South Korea too.
Fast Retailing is now expecting a net annual income of JPY60 billion (€480 million) only, compared to JPY110 billion previously forecasted.
Mr Yanai has indicated that the group will review its commercial policy and its organisation, in order for everyone, at all levels, to show a greater sense of responsibility.
Talking to students and some journalists at a recent conference in Tokyo, Mr Yanai stated that 'the management of a business is anything but settled, it's a string of crises," adding that "it's when you start to feel satisfied with yourself that business grinds to a halt."
Still, for many years Uniqlo had accustomed everyone to good news, showcasing ever-increasing results year after year. Consequently, Mr Yanai's recent warning was defined as "shocking" by the Japanese press.
The following day, the company's share price fell by nearly 13% on the Tokyo Stock Exchange.
FAQs
Uniqlo: CEO admits the start of the year was plagued by strategic mistakes. In an interview with Nikkei magazine, the founder and CEO of Japanese retailer Uniqlo recognised he has made strategic mistakes, by underestimating the current mood of Japanese customers, leading to results which are regarded as negative.
What are the problems faced by Uniqlo? ›
UNIQLO faces several challenges and threats, such as with global supply chain issues, and many specific to UNIQLO such as public labor violations threatening their brand.
What is the message of Uniqlo? ›
Uniqlo's brand message encapsulates a clear vision: “Uniqlo is a modern Japanese company that inspires the world to dress casual”. The corporate strategy that has worked for Uniqlo so far is to “totally ignore fashion” instead of chasing fast-fashion trends like its other competitors.
Why is Uniqlo struggling in the US? ›
Uniqlo opened its first U.S. store in 2005. A decade later, it was struggling. At the time, Fast Retailing said the brand's lack of recognition among U.S. consumers resulted in lower-than-expected sales. It then discounted excess inventory, swelling its financial losses, and closed some U.S. stores.
What are the critical success factors for Uniqlo in Japan? ›
6 Key Strategies Behind the Success of Uniqlo
- Uniqlo has a clear vision of its brand. ...
- Uniqlo brands its innovations. ...
- Its operational strategy gives it both a cost and agility advantage. ...
- The driving force is a charismatic owner-founder. ...
- The emphasis on the in-store experience is over-the-top. ...
- The firm thinks big.
Innovation: UNIQLO invests in research and development, resulting in innovative products, such as Heattech clothing, that meet the changing needs of consumers. Weaknesses: Limited International Presence: Despite Japan's dominance, UNIQLO's global footprint is relatively small, limiting its revenue streams.
What is the unethical behavior of UNIQLO? ›
In 2016, when Uniqlo was cited for such abusive practices as excessive overtime, low pay, dangerous working conditions and oppressive management, the brand's reputation as an ethical producer was seriously damaged.
What is UNIQLO strategy statement? ›
We believe we can turn the power of clothing into a force for good. By designing, making and selling good clothing, we can make the world a better place.
Who is UNIQLO owned by? ›
UNIQLO is owned by Fast Retailing, based in Japan. UNIQLO's clothing is aptly referred to as LifeWear. LifeWear is inspired by the most classic clothing designs to provide apparel that truly lasts from the initial purchase to a life of wear.
Why is UNIQLO so successful? ›
Uniqlo isn't considered a fashion company; instead, it is a company that goes by technology. Unlike the competitors, it produces styles and patterns for practical urban uses. The production people never compromise with the quality of the clothes, which makes them one of the most outstanding clothing brands of all time.
UNIQLO only uses responsibly sourced down and feathers from farms that seek to minimize their impact on wildfowl.
Is UNIQLO good or bad? ›
Uniqlo is already ahead of comparable brands by creating timeless staples that don't go out of fashion nearly as fast. And if your options are Uniqlo or a brand like SHEIN that is making little to no effort for people, the planet, and animals, Uniqlo is a clear winner. Progress over perfection.
Why is UNIQLO not on Amazon? ›
Ltd. does not plan to sell its Uniqlo apparel through Amazon.com Inc., opting to forge its own path in the e-commerce space instead, The Nikkei reported, citing CEO Tadashi Yanai. The brand will develop its own shopping site and a system to deliver products to customers within 10 days of an order, Yanai said.
What is Uniqlo's slogan? ›
' “'Made for all' [Uniqlo's slogan] is our philosophy.
What does Uniqlo stand for? ›
Initially, the brand was going to be registered as a shortened contraction of "unique clothing". However, in 1988, during administration work in Hong Kong for registering the brand, the "C" in the contracted name was misread as "Q".
Who is Uniqlo's target customer? ›
Uniqlo primarily targets urban-dwelling millennials and Generation Z consumers looking for affordable and modern wardrobe essentials. With a global distribution spanning key metropolitan hubs, Uniqlo aims to cater to young professionals leading fast-paced 24/7 lifestyles across continents.
What is the UNIQLO production issue? ›
But in 2021, U.S. officials blocked imports of Uniqlo shirts, citing insufficient evidence that they were free from forced labor. Fast Retailing has said since 2020 that no Uniqlo product is made in Xinjiang and that no Uniqlo production partners subcontract to fabric mills or spinning mills there.
What is the UNIQLO labor problem? ›
Labour conditions
A real disappointment here is that there is still no evidence Uniqlo ensures payment of a living wage, which puts a damper on the fact that the brand disclosed adequate policies to protect suppliers and workers from the impacts of COVID-19.
What are the poor working conditions for UNIQLO? ›
The report accused Uniqlo of buying from two suppliers in China's southern Guangdong province that made employees work long hours for low pay in unsafe conditions. It pointed out that factories have neglected work safety, with sewage on the factory floor, extremely high temperatures and poor ventilation.
What are the UNIQLO allegations? ›
Uniqlo is suing Shein over claims the Chinese fast fashion giant is selling copycats of its viral "Mary Poppins" shoulder bag. The legal case filed in Tokyo alleges that some Shein bags "closely resemble" Uniqlo's own and could dent customer confidence in the brand.
