What Does UNIQLO Want To Raise Prices After Another?

What is the reason for UNIQLO's successive rise in price? Why do UNIQLO feel so strong?

As a world-famous "fast fashion" brand, Uniqlo It has always been praised by the people for its price and comfortable sense of clothing. A basic POLO shirt is only 100 yuan up and down. Consumers are happy to choose products in fashion and color, without having to look at the price of products. Because of this, the brand's continuous price increase has become a hot topic in the industry.

Utah International Brand investment management Yang Dayun, President of the limited company, told China Textile Daily reporters that the "fast fashion" brand has two major competitiveness, one is the speed of product promotion, and the other is the price accepted by the majority of consumers. "The price rise of UNIQLO is the result of the dual role of market environment and business pressure, otherwise it will not be such a big price adjustment." Yang Dayun said.

Talking about the reason for the price rise, Okazaki Ken, the chief financial officer of the fast sale group, said, "the enterprise has been trying to digest the pressure of the rising cost, but now we have to make this decision." The main reason cited by Okazaki health is the depreciation of the Japanese yen. He pointed out that enterprises have been using long-term measures such as forward exchange rate to reduce the impact, but the depreciation of the yen has become normalized, and has not been able to make up for it.

The yen has depreciated by about 10% since the BoJ expanded its quantitative easing programme at the end of October 2014. For UNIQLO itself, the depreciation of the Japanese yen has made the prices of raw materials imported by enterprises increase, especially the purchase price of rare and precious materials such as wool and cashmere, which has led to higher production costs. In the fiscal year ending last August 31st, the company's exchange rate forecast was US $102.5 to 102.5 yen instead of the current 120 yen. Okazaki Ken said: "in the economic environment, we have no choice but to raise prices."

In addition to the increase in import costs caused by the depreciation of the yen, the rise in labor production costs of China's other generation factories has also become a major reason for the rise of UNIQLO. It is understood that UNIQLO sells 60% to 70% of its products in Chinese factories. The reporter tried to contact the head of a processing and manufacturing company in UNIQLO, but the person in charge was reluctant to talk about it. He only said that labor cost is a problem that all export enterprises have to face. At present, the monthly salary of China's textile enterprises frontline staff is around 3500 yuan, 3 times that of some Southeast Asian enterprises. At the end of last year, a research report released by UPS, a world-renowned logistics company, pointed out that China's export manufacturing enterprises are under great pressure in terms of supply and demand. Among them, 40% of enterprises said that rising labor costs is the biggest challenge they face.

The depreciation of the Japanese yen and the rise of labor costs have made UNIQLO's price rise rather helpless. But there are also insiders pointed out that the price hike must be the exploration of brand transformation, which is based on the fact that UNIQLO is complaining about the rise in costs, but the profit has not been significantly dragged down. Fast marketing group reported that in September 2014 ~2015 February, the Japanese domestic sales of UNIQLO brand were 454 billion 500 million yen, up 12.1% over the same period last year. Driven by the hot selling of warm underwear, light down garments, and core winter products such as sweater trousers, the discount promotion rate has decreased, which has raised the gross margin by 180 basis points. Over the same period, international sales rose by 48.9% to 345 billion 500 million yen, with sales and profit growth in the Greater China region and South Korea exceeding the group's forecast level.

In the special period when the global consumer market stabilizes and recoveries, such performance is bright enough. Because of its impressive sales performance, UNIQLO also has more capital to explore the possibility of more profits through the superposition of product lines. Not long ago, UNIQLO announced that it would combine the personal brand Lemaire of Christophe Lemaire, the former Hermes art director, to launch a series of cooperation between men and women this autumn. Christophe Lemaire studio director Sarah-Linh Tran said: "UNIQLO's brand concept is also Lemaire's view and philosophy of fashion, so we have been looking forward to working with UNIQLO."

The "hand in hand" with former Hermes art director will undoubtedly add color to the design of the product. Although the designer knows how to locate the price of the product, at least, the market strategy for UNIQLO to expand the product line is traceable. Perhaps, just like Liu well, President and President of fast marketing group, adjusting prices is to create better quality. Brand fans come from the same end

Whether it is the forced behavior caused by cost increase or the intention to pave the way for brand transformation, for a very mature international brand, the successive price rises need to have enough confidence. Because once the price exceeds the scope of consumer acceptance, not only can not attract more attention through the new product line, it is likely to lose some of the loyal brand supporters. In response, Yang Dayun analysis said: "UNIQLO before the price increase must be conducted research work. Can consumers accept the price increase? How much is the scope? In view of the development of the brand, a solid consumer group is its market base. And from its product positioning, even if the price increases 10%, the final price will not be unacceptable.

In the autumn and winter sales of new products in 2014, UNIQLO first launched a comprehensive price increase in the Japanese market, the main price has increased by about 5%, and has also improved the functionality and quality of underwear and other products. From the point of view of passenger volume and sales volume, customers are basically not lost. Insiders pointed out that as consumers purchase UNIQLO consumers are more concerned about quality, so long as the final price of the product and its added value pairs and other relationships, consumers can still digest the price of products. In addition, due to the Japanese government's economic stimulus measures, the wages of Japanese companies have increased, coupled with the fall in oil prices, the easing of consumer pressure has also contributed to the rise in purchasing power.

In the Chinese market, UNIQLO also has a stable group of consumers. In a shop in UNIQLO, Chaoyang, Beijing, a female consumer is choosing basic underwear. In her view, UNIQLO is a practical type. "Fast fashion" brand 。 "Clothing is comfortable and simple, not just following the trend, but also more suitable for parents than other brands. UNIQLO has more advantages, such as fleece coat, shirt, light feather down liner and so on. If the price is reasonable, even if the price is the same as other brands, I will choose UNIQLO because of the trust in quality.

UNIQLO has laid a good brand foundation in the Chinese market, so even raising the price in the Chinese market by 10% will not affect the final product sales. With such an idea, Chinese consumers are not in the minority. Over the years, UNIQLO has been developing steadily in the Chinese market with the positioning of differentiation.