THE BACKGROUND

Japanese-based fast-fashion designer, manufacturer and retailer owned by Fast Retailing Co., Uniqlo has been providing “made for all” wardrobe staples to global citizens since September 1974.

Unique Clothing evolved into ‘Uniqlo’

Feeding on the thriving minimalist culture in Japan and need for closet essentials around the world, the fashion brand’s net sales came to $15.7 billion, up 6 percent from the previous year. Uniqlo has long associated itself with affordable clothing that speaks volumes to the Japanese values of simplicity, quality and longevity.

As GQ commented, “even when the Japanese retailer goes for hype, it doesn’t ever get weird,” following a collaboration the company did with French designer Christophe Lemaire that bore gray hoodies and white sneakers.

The rainbow array of t-shirts, big name collaborations and ever fresh S/S, W/F collections seem to be a hit as Uniqlo has 834 active stores around the world (data from June 2017). Most are in Japan, but other popular locations include the US, France, Singapore, Malaysia, the Philippines, China and Taiwan.

THE CHALLENGE

The company made headlines last year after reports revealed that the brand was struggling in the States – a forecast of roughly $36.31 million impairment loss on its US operations in the six months through August.

Bloomberg also reported that Fast Retailing Co. Chairman Tadashi Yanai cut Uniqlo revenue target by 40 percent to 3 trillion yen by fiscal 2020. Analysts attribute the more realistic predictions to the weakened yen, certain cultural barriers and most importantly, the rise of online players.  

eIQ Brand Series

Drop of Fast Retailing Co (parent company of Uniqlo) earnings. Source: Bloomberg

Other fast fashion brands such as H&M and Zara have also given Uniqlo a run for its money with aggressive market expansion, high product turnover and strong online presence. It means Uniqlo needs to keep up and the company knows it.

THE INNOVATION

“We need to be fast,” said Chairman Yanai. “We need to deliver products customers want quickly.”

Despite both being fast-fashion companies and having a similar production strategy, Uniqlo and Zara are still vastly different.

“Zara sells fashion rather than catering to customers’ needs,” he said. “We will sell products that are rooted in people’s day-to-day lives, and we do so based on what we hear from customers.”

Not only has Uniqlo vowed to increase clothing production, it has also focused rigorous interest on emerging countries.

Rumours arose a few weeks ago regarding Uniqlo holding recruitment days in Ho Chi Minh City – a market already occupied by fast fashion labels such as Zara and H&M, the latter announcing a store opening later this year.

Uniqlo was also the first in Japan to implement a ‘SPA’ model – short for “specialty-store retailer of private label apparel” meaning it encompasses every aspect of the business, from design, production to the final sale.

This gives the company the ability to test new in-store technology such as attaching radio-frequency identification (RFID) tags to all products so the store system can identify which items need restocking and free up time for sales clerks to tend to customers.

Bold marketing initiatives and branding included its partnership with Muslim fashion designer Hana Tajima, to naming world professional wheelchair tennis star Gordon Reid as a global brand ambassador.

Uniqlo winter collection ‘17 by Hana Tajima.

The company also allocates marketing budget to offline pop ups in premium malls. An example is a mini-fashion in Bangkok on July 12 promoting the brand’s new styles of denim.

Uniqlo fashion show at EmQuartier shopping mall in Bangkok to promote its new denim styles.

Uniqlo fashion show at EmQuartier shopping mall in Bangkok to promote its new denim styles.

Uniqlo is declaring to audiences around the world that it’s not afraid to stand up for a cause.

THE STRATEGY

As reported by Nikkei Asian Review, Masanobu Kusaka, previous manager of Uniqlo’s Fifth Avenue store in New York in 2015, realized that Uniqlo’s true rivals were somewhere else. He also witnessed the sudden closure of some of those shops. The culprit? Online retailers.

Kusaka began by improving the company’s existing digital assets starting with the app first. His team added functions that displayed the user’s purchase history and recommended matched clothing sets.

The company’s online sites have also expanded their product sizes – a huge limitation for brick and mortar stores – and offered XXXL to accommodate Americans.

Uniqlo also focuses on upholding a strong omnichannel strategy across its retail footprint. The company plans to open over 200 stores in China and Southeast Asia alone as the company reported same-store sales in Indonesia, Thailand, the Philippines and Malaysia posted double-digit growth in the first half.

Chairman Yanai hopes that customers will find convenience from the company’s new service where shoppers can visit any Uniqlo store, get fitted for a particular item of clothing, order it online and have it delivered to their homes straight from a warehouse.

“The ability to provide anybody, anywhere, anytime with the ultimate, high-quality day-to-day clothing will set us apart,” he said. “We want to deliver products that customers want quickly. That’s why it’s Fast Retailing.”

THE FUTURE

Chairman Yanai, Japan’s richest man, said in April 2016 he wants to expand Fast Retailing’s ecommerce worldwide, with an initial target for online sales to make up 30 percent of total revenue, up from 5 percent currently.

Given the rising popularity of online retail and the brand’s quick strides to innovate, it doesn’t seem too farfetched.  

Fast Retailing Co. Chairman Tadashi Yanai

THE HISTORY

It may not be apparent to most Thai people, but Sahapat Group’s products are probably entwined with their everyday lives. Mama noodles, Mont Fleur bottled water and Pao laundry detergent are all examples of the 70 year old Thai conglomerate’s most popular products.

These brands, including many famous others, all fall under the umbrella of Saha Group, making it Thailand’s leading FMCG company. In 2016, the company made approximately $965 million, bypassing expectations and recording 13% growth in sales from the previous year.

As Thailand’s FMCG market slows offline but presents opportunities online, international brands such as Unilever and P&G are pushing Sahapat to innovate.

THE INNOVATION

In Thailand, it is well known that Sahapat’s core customers are practical, price conscious shoppers. Their necessity products are sold at every supermarket, hypermarket and convenience stores across Thailand.

Sahapat relies heavily on offline marketing, and most notably, special promotions such as giving customers the chance to win gold by buying water at 7-11.

But times are changing and Sahapat is using data to understand behavior patterns across consumer groups and areas across Thailand.

Prior to Sahapat’s newly inked MOU with Lazada Thailand in June, the company was selling in bulk online through Sahapatdelivery.com. It generated over $1 million in revenue, a small fraction of the company’s total earnings.

Sahapat’s ecommerce site

The website succeeds in showcasing an understanding of its key demographic; discount driven, working-middle class consumers who prioritize practicality and value when shopping for household items such as fabric softeners, through its bundle deals exclusively online.

THE STRATEGY

The manufacturing and trading conglomerate believes that through its MOU with Lazada Thailand, sales contribution from ecommerce will enter double digits within three years from less than its current 1 percent.

The company is also planning to invest $29.5 million to build a new inventory warehouse dedicated to ecommerce.

The Nation reports that Saha Group concedes “it had been mishandling its online shopping business for almost 10 years.”

“If we do this online shopping further on our own, it will be quite difficult for me to provide good service to our online customers,” Boonsithi told newspaper.

By working with Lazada, Saha could export its products beyond Thailand to other markets in Southeast Asia as well as China, he said.

In 2016, the company made an aggressive push in logistics by implementing a more technologically advanced system through upgrade IT software systems and a team of logistics specialists to overhaul its operations. This was a layer on top of the 71 smaller distribution centers and 240 vehicles across the country.

The purpose? To know right away what stock needs replenishment, and what products are under performing in which provinces.

THE FUTURE

Sahapat has long been a leading player in FMCG, but with intensified competition from global players, they cannot enjoy staying idle or relying on the same offline strategy to remain top of mind.

With shifting consumer preferences, Sahapat is slowly but surely acknowledging the importance of a wider distribution network, localized marketing campaigns and partnering with one of the region’s biggest ecommerce marketplaces to accelerate growth.

But as Sahapat makes its way to becoming a company of the future, they must also be mindful of maintaining its main bulk of revenue.

“Thai shoppers still prefer to buy goods offline, especially elderly consumers who are not familiar with ecommerce. They need to look at|and try out products physically before buying.”

THE HISTORY

The company synonymous with denim goes back far in time. Levi Strauss & Co essentially crafted the first pair of blue jeans in 1873 and marked Levi’s as a heritage brand, and its creator, Levi Strauss as the inventor of the quintessential American garment.

The first pair was made from denim, the traditional fabric for men’s workwear and they became a fast success, originally known as ‘overalls’ until the 1960s until baby boomers coined the garment, ‘jeans’ instead.

Fast forward over a hundred years with the rise of various designer denim brands like Seven For All Mankind and True Religion and fast fashion, the company needs to re-introduce itself to the next wave of shoppers.

Now, in 2017, the household name employs a salesforce of 22,000, 50 plants and offices across 35 countries. Levi’s is making a comeback by leveraging the rise athleisure, the return of the classic, worn-out denim jacket and today’s digital tools.

The first Levi’s location in 19th century

THE INNOVATION

Levi’s first innovation was the creation of the 501 denim jeans itself, back in the 1870s, for working men.

In 2002, Robert Hanson, former Levi’s President, began focusing on women after Levi’s overall sales has plummeted 40%, from $7.1 billion in 1996 to $4 billion at the end of 2002.

He also reached out to 14,000 individuals and got them to try on Levi’s in order to design the perfect fit for different body types, including ‘sexier’ styles for men. Hanson also deployed two brands, Red Line and Pure Blue, with a price range of $35-95.

“We’ve been accused of trying to be everything to everybody in the past,” admits Hanson. “This time, we have to be one thing to everybody.”

The company’s makeover also included the layout of its offline stores. Walk into any Levi’s and notice its jeans are stored the way you would display fine wines or valuable relics. But was this enough against the newer, flashier denim brands?

“Levi’s is going to have to prove to people that the product is competitive from a style and quality standpoint, and that has to be based on something more than the heritage of Levi’s, which seems to be their endless fallback position,” said Hamilton South, partner at luxury consulting firm HL Group.

THE STRATEGY

The digital age has allowed the company to experiment.

Earlier this year, Levi’s partnered with Google to launch Project Jacquard, a tech ‘wearable’ collab between the two. Wearers can control certain actions on their smartphone by tapping and swiping a nearly invisible fabric touch interface woven into the left wrist of the classic Levi’s denim jacket.

Project Jacquard from Levi’s x Google

The Jacquard jacket will sell for $350 this fall.

“Expect digital assistants, cellular connectivity, and connections to larger systems, both at home and at work. At the same time, expect to see a proliferation in the diversity of devices brought to market, and a decline in prices that will make these more affordable to a larger crowd,” says IDC Wearable’s team research manager Ramon T. Llamas.

More recently, Levi’s has become a part of Amazon Prime Wardrobe, the new initiative for Prime customers to order items to their home to try on without buying.

President and CEO Chip Bergh said in a statement. “Our direct-to-consumer business continues to drive our results with both brick and mortar and ecommerce growing double digits.”

In Q3 2016, Levi’s reported that net income rose 69%, partly due to cost cutting efforts and rising revenues. Revenue growth was mainly due to direct to consumer sales, which grew 14% for both offline store sales and ecommerce.

IN SOUTHEAST ASIA

Levi’s has recently emphasized ecommerce in the region, through a shop-in-shop on Lazada Thailand, and a brand.com earlier this year with ecommerce enabler, aCommerce.

Levi’s pop-shop, implemented by aCommerce

aCommerce shares that the brand tested the market with a popshop first – a simple branded landing page where customers can choose to buy from a few items. The positive feedback reinforced the brand’s decision to commit to ecommerce as another distribution channel alongside its 77 offline stores in Thailand.

Levi’s also has shop-in-shops on Lazada’s platforms in Indonesia and Malaysia.

In Malaysia, Levi’s partnered with music streaming service, Deezer, to introduce its 2015 fall women’s denim collection. A custom built Levi’s in-app page was created via the Deezer platform, including a nationwide contest to encourage consumers to submit empowering songs to a collective playlist called #LadiesinLevisMY, which went viral on social media.

Levi’s x Deezer campaign, Malaysia 2015

THE FUTURE

Levi’s is conditioning its relevancy in the fashion world through a digital strategy to boost its classic products i.e. the 501 jeans and remain relevant. At the same time, while rightfully refusing to discard its heritage.

It might want to rethink the Google jacket though.

The second installment of the eIQ BRAND Series covers the quintessential sports brand, Nike. The trademark ‘swoosh’ is seen on famous basketball players, track stars and probably on your own feet. Founded by Phil Knight and his University of Oregon track coach in 1964, how did they build such a brand phenomenon?

THE HISTORY

Nike can attribute its cult-like following and 48% market share in America’s athletic footwear sector (2015) to high profile athlete sponsors across the world like basketball legends Michael Jordan and Lebron James, a stubborn founder (thank you Shoe Dog) and a well-thought out sales strategy.

Nike’s infamous “Just Do It” slogan.

Websites like StockX have banked on Nike’s popularity in the street fashion circuit by trading sneakers to make money, similarly to how shares are traded on the stock market. Michael Jordan’s line of sneakers, Air Jordans, is considered a collectors’ item and have in fact been sold for $104,000.

Source: StockX ‘s most valuable Jordan releases, 2015-2016

The company has built a global, extensive offline presence scattered across the globe from its home grounds in the US to Finland, China and Hong Kong and over the years, Nike has launched sub-brands that include Nike golf, Nike+, Air Force, Air Max, Nike Skateboarding and Nike Pro.

Nike’s latest figures stand at approximately $3.74 billion in revenue, compared to Adidas’ $877.6 million (2016).

Nike is not only famous for creating running shoes that improve performance during track & field, but also for its continuous innovation. The company’s master storytelling is still influencing shoe designs today.

“We’re connecting what we’re doing today back to Nike’s heritage,” says Dennis Reeder, Ekins training manager, under Nike.

THE INNOVATION

Nike is everywhere.

The company has a mobile app, Nike+, that works like a concierge service. Not only can users use the app to manage purchases, collect rewards points, and book spots at running events, they can also scroll through new collections on their feed.

The app also offers free standard shipping on every order, option to speak with product experts or chat live. Users of Nike+ can also reserve newly released items, and head to the local branch to make a payment.

Nike+ is soon to be available globally and handled by a team of tech entrepreneurs working out of Nike’s digital studio in New York City.

Source: Nike+

Never one to shy away from testing, the ‘Just Do It” advocates also created its own Youtube series to complement its marketing campaigns that garnered over 80 million views.

But it’s the company’s running shoes, continuously tweaked, ripped apart and rebuilt to be more impressive than the last is the prize that keeps fans coming back.

Last year, it teamed up with BBH Asia Pacific to launch an Unlimited Stadium campaign that brought light to a shoe shaped running track in Manila.

The stadium features a 200-metre running track lined with LED screens, where 30 runners at a time are invited to engage in a virtual race against avatars of themselves.

The much anticipated release of Nike VaporMax and relaunch of Nike AirMax through a Kiss My Airs offline and online campaign all drops more money into Nike’s brand equity bank.

THE STRATEGY

Nike has been doubling down on its digital efforts to fully commit to a multi-channel strategy. The company announced only a few days ago that it would slash 1,400 jobs to expand its direct to consumer sales online.

This was following March 2017, when the sportswear giant reported an 18% jump in digital sales. 2016 brought in an estimated $1.51 billion in digital sales and recorded a 49% jump in digital sales in Q1 2017.

“The future of sport will be decided by the company that obsesses the needs of the evolving consumer,” says Mark Parker, Nike Inc’s chairman, president, and CEO. “Through the Consumer Direct Offense, we’re getting even more aggressive in the digital marketplace, targeting key markets and delivering product faster than ever.”

Making web inventory available in stores became a priority for Nike after the retailer conducted a survey that asked shoppers who walked out without a purchase why they didn’t buy anything.

“The No. 1 reason they walked was that they couldn’t find what they were looking for,” said Christiana Shi, President of direct-to-consumer at Nike.

The solution? Give store associates mobile devices to complete transactions and help shoppers find out-of-stock items.

“We are telling them, ‘Hey, buy three sizes. Buy three colors. Ship us back what you don’t want.’ We know that if they get what they want, and they’re happy, they come back,” said Shi.

Nike is also reportedly close to selling directly on Amazon in the US. This would raise competition for brick-and-mortar sporting goods retailers, and also put pressure on rival athletic brands. Currently, Nike’s presence on Amazon is limited to third party sellers and unlicensed dealers. Through the partnership, Nike could weed out excess, discounted inventory available at the marketplace through third-party retailers and sell more full-price products through the online channel

IN SOUTHEAST ASIA

Nike’s presence in Southeast Asia is extensive, both offline in department stores, shopping malls and at flagship stores and through ecommerce across the region, solely selling through its own platform.

Nike Thailand ecommerce website

 

Last year, it teamed up with BBH Asia Pacific to launch an Unlimited Stadium campaign that brought light to a shoe shaped running track in Manila.

The stadium features a 200-metre running track lined with LED screens, where 30 runners at a time are invited to engage in a virtual race against avatars of themselves.

Nike’s shoe shaped running track

The company practices what it preaches; high performance, endurance and pushing its limits.

Nike Philippines Inc held 24% of value share within the sportswear in the Philippines in 2016.

THE FUTURE

True omni-channel retailing and digital investment are all part of Nike’s ambitious roadmap, in which the company vows to grow its ecommerce business to $7 billion by 2020.

The company has already gotten a head start on the online retail trend by pushing a ‘digitized’ shopping experience through its Nike+ app and mobile in-store touchpoints.

But for Nike to reach its ambitious goals of making ecommerce a significant part of total sales, the company must look at building awareness around itself with Gen Z, while maintaining its core character of catering to the performance of athletes and sneakerheads across the globe.

The BRAND Series from eIQ aims to provide a snapshot of how the world’s largest companies are changing their marketing strategies to incorporate digital to reach the newest generations of consumers around the globe.

The first of this weekly series kicks off with FORD, the American multinational automaker that recorded $151.8 billion in revenue last year.

Millennials aren’t investing in cars as the younger generation is already familiar with the on-demand transportation services like Uber and Didi. This has caused auto car sales to experience sluggish growth worldwide but Euromonitor predicts that 2017 will be positive for developed markets such as the US, while developing markets such as India and China have seen positive auto sales.

Where does Ford fit into this picture?

THE HISTORY

Known for its quintessential American middle class, suburban family minivan and pickup truck, Ford Motor Company has been operating for over a 100 years. Ranked as the second largest automaker in the United States, preceded by General Motors, Ford counted 11,971 Ford and Lincoln dealerships worldwide, with 3,238 locations across the United States.

The company has resonated with families as a practical and highly sensible car but missing the mark in appealing to young people, falling behind both Toyota and Honda in Google’s “cool factor”.

Google’s ‘It’s Lit’ report

“Millennials don’t remember the bad stuff,” said Chris Travell, VP of Maritz Research. “They’re coming in as mostly clean slates. Ford is not considered the ‘old Ford’ to this generation.”

THE STRATEGY

To reach a new audience, Ford’s 9-year old Youtube account boasts the most subscribers (830,000) among all auto brands according to L2 and its monthly visits to the US site sees 12 million visits per month.

The company has also joined the ‘driverless car’ trend after it was reported earlier this year that CEO Mark Fields is being replaced by Jim Hackett, Ford’s Head of Autonomous Driving. This, combined with the construction of its data center and investment in Pivotal, a San Francisco based enterprise software company focused on cloud technology, shows that Ford has its eyes on becoming much more than a suburban staple.

Over in the east, Ford Motors has also pushed an extensive online strategy in China, which essentially means a Tmall strategy as Alibaba’s marketplace remains a critical channel for brands to reach Chinese customers.

Ford’s recent moves are taking after global luxury auto brands like Jaguar and Alfa Romeo, the latter selling 350 cars in 33 seconds on Tmall.

Through the Ford Tmall official shop-in-shop, customers can purchase an online voucher to claim a special price offline at a Ford dealership. Because of the e-voucher, customers will have the chance to pay ¥136,800 instead of ¥153,300.

Ford shop-in-shop on Tmall

“Chinese auto buyers are using digital technology at all steps in the purchase process. A majority of Chinese buyers already know what model they want before visiting a dealership, and online research is a key influence factor,” said a report published by L2.

THE INNOVATION

This year, Ford has turned to technology to make buying cars a less painful process through a tech platform called AutoFi where Ford  has made a small, undisclosed investment in.

Once the platform launches, customers will be able to buy one of Ford’s vehicles through a mobile phone or on desktop. The customer simply needs to go into the dealership to finalize paperwork and collect the car.

The idea behind this, according to Ford, is to give customers the best of both worlds; reduced time in dealerships and a chance to see the car before signing the final paperwork.

As previously mentioned, through Ford Smart Mobility LLC, the company is focused on the autonomous cars. It also launched FordGoBikes in San Francisco and acquired Chariot, a crowd sourced shuttle service to target the overcrowded, underserved communities in the Bay area to target students and workers.

Ford Motor has also launched FordPass, an all in one app designed to help drivers find parking spaces ahead of time, compare fuel prices and access FordPay, the company’s digital payments platform that allows drivers to pay for parking and make payments for vehicle related finances such as maintenance costs at dealerships.

The company intends the platform to become the “iTunes of motors”.

FordPass app allows you to compare fuel prices and scan for parking spaces

THE FUTURE

Ford Motor is either building or acquiring pieces of what seems to be shaping up to an integrated digital ecosystem. It’s presence on Tmall also shows that the company is serious about its ecommerce strategy in the east, and through an online marketplace, it will be able to reach auto buyers beyond the capital cities.

Although Ford is emphasizing its digital strategy in the US and China, its Southeast Asian presence is mainly limited to offline advertising, commercials, and dealerships in countries such as Thailand and Indonesia.

Through the company’s various tech investments and efforts in ecosystem building, Ford Motor has a strong chance in strengthening its appeal to the growing digital audience.

Stay tuned for next week’s installment in eIQ BRANDSeries.


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