Since Uniqlo first entered the U.S. market 10 years ago with a New York flagship, it hasn't been shy about emphasizing its plans for world domination — specifically its intention to become the world's number-one apparel manufacturer and retailer. But according to the Japanese retailer's latest full-year earnings report, released Thursday, it has a new goal in mind: to become "the world’s number one Information Powered Retail Business."
"Information-powered" is obviously kind of a vague term, but in Uniqlo's case it seems to refer to a company setting itself up so that it can respond quickly to either demand for certain items, customer feedback and trends while, ideally, reducing excess inventory that hurts profit margins when it doesn't sell. (See: when Uniqlo was hit hard because an unusually warm winter curbed sales of the brand's all-important outerwear.) Basically, it's how all fast-fashion companies, from Zara to H&M, operate, and that's who Uniqlo has struggled to compete with.
For the year ended Aug. 31, 2016, Uniqlo parent company Fast Retailing saw a 54-percent decline in net profit despite a 6.2-percent rise in revenue. The declining profit/slightly rising revenue trend was consistent across Uniqlo's Japanese and international businesses. However, the company noted that international profits started to improve during the second half of the year thanks to improved conditions in Greater China (the area spanning mainland China, Hong Kong and Taiwan), Southeast Asia and Oceania, and Europe. (The U.S., not so much.)
To propel growth, it plans to continue opening flagship stores in big cities outside of Japan and expects operating profit to grow 37.5 percent in fiscal 2017. And in addition to lowering prices to compete with those fast fashion companies, which it's already begun doing, it plans to "revolutionize" its supply chain in the "medium term." That involves "unifying all procedures from raw materials procurement, planning, design, manufacturing and retail into a new supply chain system that can fully satisfy the needs of today’s digital era," and "immediately incorporating feedback from customer into products, and actively conveying the latest information on lifestyles, fashion trends, and exciting but comfortable modern clothing." It's also transforming and expanding its distribution system to support e-commerce orders, and expanding GU, its lower-priced "casual fashion" brand that hasn't yet arrived in the U.S.
We just hope the retailer doesn't get too trend-driven as a result of this new strategy. We've always relied on Uniqlo for functional items (like Heattech) and classics like button-down oxfords and cashmere crew-neck sweaters, and admired its low-key approach to designer collaborations with the likes of Christophe Lemaire, who now designs a permanent collection for the brand that's perfectly elevated while remaining relatively timeless. Let's hope the rest of the world likes it as much as we do.