Uniqlo 2007 Report

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UNIQLO Operations

Fashionable and high-quality clothes that anyone can wear anywhere, any time – that’s what UNIQLO is all about. Our global operating systems weave together all processes from product design to final sales, including global R&D, procurement of world-class quality materials, production focused in China, and the operation of 790 stores around the globe. This seamless system allows UNIQLO to consistently offer its customers high-quality products at reasonable prices.

UNIQLO Japan
b UNIQLO CO., LTD.

UNIQLO Operations
UNIQLO International
b UNIQLO(U.K.)LTD. b FAST RETAILING(CHINA)TRADING CO., LTD. b UNIQLO USA, Inc. b FRL Korea Co., Ltd. b UNIQLO HONG KONG, LIMITED b UNIQLO FRANCE S.A.S.

b CABIN CO., LTD.

b G.U. CO., LTD.

Japan Apparel Operations
b ONEZONE CORPORATION

b VIEWCOMPANY CO.,LTD. (Listed on JASDAQ Securities Exchange, equity-method affiliate)

b Créations Nelson S.A.S.

Global Brand Operations

b PETIT VEHICULE S.A.S.

b LINK THEORY HOLDINGS CO.,LTD. (Listed on TSE Mothers, equity-method affiliate)

FAST RETAILING ANNUAL REPORT 2007

11

UNIQLO Japan Operations

To a New Stage: “Clothes that Make News”
Most of our customers already have plenty of clothes. For them to purchase new clothes, there must be some new value added in design and/or function; we could call them “clothes with some news value.” To communicate the true value of our products to customers, we have to change all aspects of the shopping experience, including store design, the sales floor, lineup of products, and our service. Our large-format store strategy is part of this change and a process for taking UNIQLO to a new stage. In our large-format Naoki Otoma Senior Vice President and COO, UNIQLO CO., LTD.

stores, it is important for us to raise the skills of each staff member to provide customer services that enhance the display and raise the level of customer satisfaction. We aim to communicate the features of our products, offer new products each season, and help our customers make their daily lives more comfortable. The growth driver for UNIQLO is to continue to offer that something new that customers are looking for.

Large-Format Store Strategy on Track
In fiscal 2007, consumer spending was sluggish while competition grew more intense. With the warmest winter on record and unseasonable spring and summer weather, UNIQLO Japan experienced a profit decline. To continue to grow in this market environment, there are limitations on the strategy we have implemented thus far of selling basic apparel items through standard-format stores in the suburbs with between 700 square meters and 800 square meters of sales floor space. That is why UNIQLO has positioned large-format stores as its growth driver. Under this large-format strategy, UNIQLO is opening stores in different types of locations, including urban street sides, suburban shopping centers, commercial facilities, and roadsides. At the end of August 2007, we had 28 large-format stores, and, in fiscal 2008, we are picking up the pace of openings of these large-format stores. In fiscal 2007, we opened megastores with about 3,300 square meters of sales floor space in Kobe’s Harborland and in Tokyo’s Setagaya Chitosedai district. Both of these have drawn strong customer interest. Looking ahead, we will be working to increase the efficiency of these stores by optimizing the right lineup of products to take the best advantage of the strengths of these larger stores, while standardizing our customer service and store management.

Growth through Responding to Women’s Needs
Women’s apparel accounts for about 70% of the sales of the fashion apparel industry as a whole, but women’s items account for only about 40% of UNIQLO’s sales. We believe UNIQLO has considerable potential to increase sales of women’s clothing and look to higher growth in sales by responding to women’s apparel needs. In fiscal 2007, we scored with skinny jeans, which became...
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