Uniqlo price-rise tactic fails
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A tactic to move to high prices over the past year has failed for Japanese casualwear chain Uniqlo, admits the chairman of its parent company, Fast Retailing.
Japan’s richest person, billionaire Tadashi Yanai says the company is considering how to sell value-added products for the lowest possible price.
“The world is flooded with clothes without added value,” he said at a fashion event in Tokyo’s Shibuya shopping district featuring Uniqlo’s latest seasonal styles.
Japanese consumers are being cautious as the country’s financial situation tightens, and Fast Retailing has seen its overseas earnings hit by a stronger yen, compounded by China’s slowdown and losses in the US. Uniqlo lost some of its budget-minded customers in Japan after raising prices last year.
Fast Retailing has cut back its operating profit forecast last month to 120 billion yen ($1.1 billion) for the year ending August, down 33 per cent from its estimate in January.
In April, Uniqlo reported that its first-half year profits had plunged.
Questions & Answers
Q.What is the core issue that Fast Retailing's chairman, Tadashi Yanai, has identified regarding Uniqlo's recent strategy?
What is the core issue that Fast Retailing's chairman, Tadashi Yanai, has identified regarding Uniqlo's recent strategy?
He admits that Uniqlo's tactic to move to higher prices over the past year has failed. The company is now considering how to sell value-added products while maintaining the lowest possible price point for consumers.
Q.Which specific consumer groups have Uniqlo lost following its price increases?
Which specific consumer groups have Uniqlo lost following its price increases?
Uniqlo lost some of its budget-minded customers in Japan after raising prices last year. This change occurred as Japanese consumers are becoming more cautious due to the country's tightening financial situation.
Q.What factors have contributed to Fast Retailing's overseas earnings being affected?
What factors have contributed to Fast Retailing's overseas earnings being affected?
Overseas earnings have been hit by a stronger yen, which was compounded by an economic slowdown in China. Losses in the US market have also contributed to the impact on the company's financial performance.
Q.How significantly has Fast Retailing's operating profit forecast changed for the current financial year?
How significantly has Fast Retailing's operating profit forecast changed for the current financial year?
Fast Retailing cut its operating profit forecast last month to 120 billion yen ($1.1 billion) for the year ending August. This figure represents a 33 per cent reduction from its estimate made in January.
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