UNIQLO's Parent Company Started War On The Clothing Industry's Chronic "Inventory" Problem.

The volatility of the earnings performance of Fast Retailing, the Uniqlo of Japan's fast fashion giant, is often closely related to the "weather change" - the main products of UNIQLO, such as HEATTECH thermal underwear, light down clothing, etc., will be sold every time the cold weather breaks down. Conversely, if the winter climate is warm, it will remain unsalable. For example, as of the first quarter of 2019 fiscal year ending November 30, 2018, mainly due to the abnormal warm winter, the profit of xungang group fell 8.1% compared with the same period last year. Okazaki Ken CFO said: "we did well in the local market in the first year, and there was no backlog of winter clothes, so we increased the volume this season, but encountered warm weather." He said bluntly, "compared to the economic environment, the weather has a greater impact on our sales."

By the end of April this year, the total value of sweaters, HEATTECH thermal underwear, down coats and other garments sold by XXX group was about 44 billion 800 million yen (about 2 billion 840 million yuan). (in the first half of fiscal year 2019, sales of XXX group was 1 trillion and 270 billion yen). (February 28, 2019)

Aiming at the problem of "inventory" in clothing industry, Xun group hopes to achieve more automation of logistics and retail functions through a series of technology driven change measures, and better understand and adapt to consumers' preferences in different regions online and offline. To this end, XX accelerates the integration process of online and offline operations, involving thousands of stores and the entire supply chain process in more than 20 countries.

Ryui Masa pointed out: "we have integrated the two elements of production and retail, and the rest is integrating information technology and service industries. Digitalization enables the direct connection between individual consumer preferences and production processes, and we need to turn into an entity that connects all processes. "

This is the goal of Ariake Project. Since the establishment of the project, the digital strategy of XXX group has been developing for two years. During this period, an office center located in the Ming District of Tokyo Binhai District was built to realize flat management to improve the team's flexibility and speed.

Recently, a series of reform measures adopted by XXX group are embodied in the following four aspects: improving supply chain efficiency, strengthening demand forecast, strengthening customer connection and enhancing brand image.

Improving supply chain efficiency

Fast marketing and logistics company Daifuku Co establish a global strategic partnership, with the help of Daifuku, improve the logistics system, improve the delivery speed of products, plan to invest 100 billion yen to achieve the automation of warehousing and distribution system.

According to Xun, under the current logistics system, HEATTECH thermal underwear must enter warehouse storage in advance in May, which brings a lot of additional costs. After updating the system, the delivery of goods will be more timely, the time to enter warehouses can be delayed and the cost savings can be maximally saved. It is predicted that the number of staff in the Ariake warehouse will be reduced by 90% and 24 hours after the completion of automation.

Strengthening demand forecasting

The backlog of inventory is a common problem in the retail industry. In addition to discount sales, fast retailing will also be adjusted at the sales stage - dispatching products that are not salable in a place to a popular area, and more likely to solve it from the source: providing information technology (forecasting demand) to provide products that consumers will really buy.

Joining the newly established Advanced Solutions Lab in Tokyo by Google Cloud, a technology giant Google (Google), further enhances the group's speed of transforming customer needs into products and services, and achieves its goal of becoming an information production retail companies. The contents of the two sides' cooperation include: fast marketing through Advanced Solutions Lab and G Suite, to better understand and understand consumers' thoughts and make corresponding demand forecasts.

It also invested tens of billions of yen to introduce RFID tags to all stores in the world. Electronic tags can save time for payment and inventory management, so as to ensure that the company can rapidly increase the output of hot products, and at the same time shorten the closing time, ensure that goods are in stock and provide other benefits, such as obtaining detailed information for analyzing consumer behavior, when consumers will take goods and put them back on shelves, and when and where the products are sold.

Strengthening customer connection

The collaboration between Google and Google has also extended to customer connection and online consumption experience, and launched AI IQ shopping assistant.

Uniqlo IQ is not the new mobile app launched by UNIQLO, but the Google Dialogflow dialogue interface built into the AI customer service system in brand app. It not only helps consumers search for commodity information, wear relevant information, confirm the inventory of single products, but also answer questions related to shopping on the Internet.

At the same time, fast marketing is constantly strengthening customer data analysis, so as to better conduct targeted marketing in the future. But user data leakage is a major problem that retailers have to solve in the digital age. Between April 23rd and May 10th this year, the Xun marketing group was attacked by hackers, and about 460 thousand customers' names, addresses and contacts were released. XXX acknowledges that some credit card information may "leak", but says there is no possibility of any leakage of credit card security code, and suggests that its e-commerce users should set up passwords with higher difficulty and less likely to be guessed.

In addition, UNIQLO has introduced other measures to strengthen links, including:

Digital stores and online semi customization

Launch automatic vending machine Uniqlo to Go

Enhance brand image

The upgrading of brand image is also one of the aims of XX group. According to Ryui Masa, the group will also invite famous designers to redesign stores, and it will also change the logo design of UNIQLO, highlighting its Japanese characteristics.

In addition, the selection of spokesmen for UNIQLO is worth careful selection, and its successive product spokesmen are well-known athletes to highlight their excellence in the field of technical fabrics. In July 2018, UNIQLO announced that tennis superstar Federer became the brand's new global ambassador. The cooperation between the two sides is far more than Federer playing in UNIQLO sportswear, wearing brand clothing to attend charity and public activities, helping the image ambassador of the brand platform, and Federer will also participate in costume design.

"Black technology" fabric is also one of the reasons for many people to choose UNIQLO. Fast marketing also continues to maintain and strengthen its advantages in this field. In 2018, XXX announced its strategic cooperation with the island refining mechanism to accelerate the two sides' comprehensive development and technological innovation in the field of knitted products. According to Xun, the deal will help the group achieve the goal of "mass production on demand" and enable the group to have more choices in hi-tech fabrics.

In keeping with the advantages of UNIQLO's core brand, XXX group has also bought several brands, but in Liujing's view, the group's basic strategy is to "promote organic growth".

"If we want to borrow money, we can borrow trillions of yen, but what do we need to do? Buying Zara parent company Inditex or Gap? (acquiring the two companies) can really make us the number one in the world, but it's not interesting enough. Ryui Masa said, "only when you really do it, can things be fun."

Sales data of Japanese market released recently by UNIQLO showed that sales increased by 27.3% over the same period last year, thanks to the excellent performance of summer clothing sales and annual promotional activities, the first double-digit growth was achieved in June. At the same time, UNIQLO's Japanese stores and online stores in June were also ideal for passenger traffic, up 25.6% over the same period, and the average customer purchase volume increased by 1.4% over the same period last year, the best data since 2019.

The excellent performance of UNIQLO in June shows that the strategic adjustment of fast retailing group in Japanese market is in effect.

Note: the current 100 yen is about 6.34 yuan.