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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 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.

As retail preferences continue to shift in favor of online shopping, retailers are facing pressure to keep up with the latest technology to stay relevant to their customers’ expectations.

However, expanding business online is proving to be difficult and retailers are often faced with many challenges, be it from external or internal factors, that hinder efforts to provide a satisfying omnichannel experience.

What is the challenge these retailers are facing? And what can they do to improve their omnichannel experience? PwC has shared its latest insights based on a survey conducted globally to help the retailers make the digital leap.

What channels are retailers using to generate sales?

In addition to the offline store (79%), a website is the next popular platform for 73% of retailers to sell products.

Meanwhile, unsurprisingly mobile apps (24%) have become the next channel to reach a wider audience.

21% of retailers around the world are still using catalogs to promote their products and as much as 18% of retailers are still dependent on a call center.

improving omnichannel experience

What are the challenges to creating an omnichannel experience?

30% of the retailers surveyed stated ‘budget constraints’ as their biggest challenge.

Many of them don’t come from a global household name and find it challenging to devote their limited resources to manage another channel.

They also have to face challenges branching from the existing system. 13% of the leadership team doesn’t consider omnichannel as a priority and many are resistant to the idea of changing their legacy system (21%). Even when they are willing to, they find it difficult to integrate (20%).

The lack of talent and expertise in the field (16%) continue to be another bottleneck in online retail.

improving omnichannel experience

What can retailers do to improve?

With limited resources, retailers need to have smarter strategies to optimize budgets and reach the right audience. Omnichannel is not about favoring one over the other, it’s about the synergy of different channels to create a more satisfying customer experience.

A smarter strategy comes down to two things:

  • Mobile website, not app

Although in-store is still the most common channel for people to shop, mobile is an increasingly popular way to browse and shop and will continue to gain popularity in the future.

improving omnichannel experience

Keep in mind, a mobile strategy doesn’t necessarily mean investing in an expensive app, retailers can focus on improving their current website to be mobile-friendly.

The mobile app is becoming an unpopular method of reaching people as more individuals feel reluctant to download another application that they will not use regularly.

By making sure the mobile version of a website is easy to use and intuitive for both browsing and shopping – making sure the checkout and payment process is smooth-, customers will have a better experience with your brand.

  • Optimize in-store experience

The offline store is not going away anytime soon, people still want the physical experience of seeing the product before buying it.

This may be an advantage that traditional retailers have that pure-play online player doesn’t but the survey showed that there are many customers who feel unsatisfied with their in-store experience.

improving omnichannel experience

Training the sales associates to have a deep knowledge of the product range is a worthwhile investment as 78% of shoppers feel it’s an important experience to have in-store.

The ability to check inventory real-time is integral – i.e. knowing when an item will be back in stock – as customers coming to the store suggest an immediate need for the product. Shoppers are also craving a personalized experience when they’re visiting an offline store – this has been found to be especially true for luxury brands.

By using technology such as an integrated data platform for offline and online channels, customers can easily access inventory information and pick up their online purchases in the nearest store. Collecting this data also allows retailers to create a more personalized in-store experience with each customer visit.

PwC’s report can be found here.

Here’s what you need to know before starting the weekend.

1. Confirmed: Amazon is coming to Australia

The US online retail giant is going down under in a big way.

Amazon is actively looking for a warehouse to become a fulfillment center, the first of many in Australia, with floor space of up to 93,000 square meters. Amazon will also start hiring to add hundreds more to the 1000 employees already in Australia

The brief statement said:

“Amazon Web Services launched an Australian region in 2012, we launched a Kindle store on amazon.com.au in 2013 and we now have almost 1000 employees in the country. We are optimistic that by focusing on the things we believe customers value most — low prices, vast selection, and fast delivery — over time we’ll earn the business of Australian customers.”

“The next step is to bring a retail offering to Australia, and we are making those plans now.”

In Australia, Amazon is already selling entertainment, including ebooks and Amazon Prime streaming of television series and movies.

The next stage is local ordering and local delivery of goods from and within Australia.

Read the rest of the story here.

 

2. iFlix will produce original content in Southeast Asia

iFlix announced today it’s going to produce its own original content in the vein of its US-headquartered competitor. Its first original TV show is called Magic Hour, a spin off from an Indonesian film.

iFlix is also planning a comedy series and has inked a deal with Malaysian studio Skop Productions to stream its movies less than a month after they’ve left cinemas.

Read the rest of the story here

 

3. Chinese ecommerce giant JD plans shift into offline retail

JD.com plans to open more than 1 million JD convenience stores across the country in the next five years, with half of them located in rural areas.

Owners of the stores could order goods, including consumer electronics, home appliances, clothing and home furnishings through JD’s application software. JD will be responsible for logistics and distribution to the stores, according to the company.

 Jason Yu, general manger of consumer research firm Kantar Worldpanel, said: “The network of stores will help JD to enhance its O2O presence in the fast-moving consumer goods sector. To address the last-mile delivery challenge, the move can help consumers to order products at nearby stores.”

Read the rest of the story here.

 

4. Recommended Reading: The book of V-Commerce

Andy Dunn, founder of online retailer Bonobos writes about digitally native vertical brands.

The v-commerce brand requires the commercialization of an e-commerce channel, but that channel is an enablement layer — it’s not the core asset. VC’s sometimes think these should be valued like technology companies.

Some of the valuations still reflect this misguided notion. These are retailers, not tech companies.

Read the rest of the story here.

 

Retail has gone through a revolution. A glance at recent headlines indicate that many global brands in Q1 alone such as BCBG and Urban Outfitters have shown signs of trouble. The former filed for bankruptcy, citing changing consumer habits and increased competition from online players as key factors and Urban Outfitters stated that the ‘retail bubble has burst’. 

According to Bloomberg, shoppers’ visits to retail stores in the US are declining every year, leading industry veterans to wonder, “is anyone not seeing large foot traffic declines?”

Online retail, on the other hand, is thriving in the US. Retail sales through digital channels, including mobile sales, increased by a massive 23% in 2015.

One player enjoying this shift is Amazon. The company now accounts for 43% of all online retail sales in the States and has ventured aggressively into different verticals; from private label fashion brands to groceries. It also made entries into new markets, to the Middle East through the acquisition of Souq, a possible entry into Australia and a rumored entry into Southeast Asia.

A key aspect to its growing success is its omnichannel strategy – allowing shoppers to buy whenever, wherever. The company has been using offline to compliment its online platform, for example, with the launch of its offline bookstores in the US and its trial launch of Amazon Go, an offline grocery store that allows shoppers to scan items and pay through the Amazon Go app. 

Traditional retailers try their hand at omnichannel

The omnichannel strategy focuses on the idea that providing a ‘perfect’ shopping experience requires an integration of online and offline experiences. This is to encourage cross-channel shopping so that customers who shop only in stores will begin also buying online, and vice versa.

Although brick ad mortar players have an advantage here, pure-play brands and retailers are testing offline strategies to offer enhance their entire brand experience. Online brands such as NET-A-PORTER used this strategy back in 2012 by launching offline pop-up stores and eye wear brand Warby Parker launched its first offline store in 2013.

In Southeast Asia, more players are following suit. Thai online fast fashion label Pomelo has launched pop-shops in Bangkok and Central Group bolstered its online presence with acquisition of Zalora.

Retailers are counting on an omnichannel strategy to be their “killer app”. But is this true?

Harvard Business Review teamed up with an anonymous US retailer that operates hundreds of offline stores across the country to find out.

Out of the 46,000 study participants who made a purchase during the 14-month period from June 2015 to August 2016, only 7% were online-only shoppers and 20% were store-only shoppers. The remaining majority used multiple channels during their shopping journey – these are the omnichannel customers.

Omnichannel customer behavior

Findings showed that omnichannel customers loved using the retailer’s touchpoints in all sorts of combinations and places, such as purchasing offline and having the product delivered at home, or targeting in-store customers with personalized messages to their phones.

Shoppers were found to be avid users of in-store digital tools such as an interactive catalog, a price-checker, or a tablet. They were also leveraging their smartphones to compare prices between stores and to download discount coupons but it’s important to note that,

Among customers who lived close to a store, no type of coupon made a significant difference to shopping or profits – HBR

The more channels customers use, the more valuable they are

Omnichannel shoppers spent an average of 4% more on every shopping occasion in the store and 10% more online than single-channel customers. With every additional channel they used, the shoppers spent more money in the store.

Customers who used more than four channels, spent 9% more in the store compared to those who only used one channel.

Omnichannel shoppers were also more loyal. Within six months after an omnichannel shopping experience, these customers logged 23% more repeat shopping trips to the retailer’s stores.

Findings suggest that deliberate searching beforehand led customers to 13% greater in-store purchases. This disputes arguments about the popularity of impulse buying and showrooming, which refers to how traditional shoppers conduct their research in the store and then buy online.

This particular retailer sees the rise of webrooming, consumers that go online to browse products before going offline to buy the products in-store.

Whether the richer, multi-touch point shopping experiences of omnichannel led shoppers to spend, return, and advocate more remains an open question – no causation can be determined – but the case for omnichannel retail is positive.

In a developing market like Southeast Asia, department store culture is huge but ecommerce is only beginning to emerge – less than 4% of total sales. Whichever player is able to reach omnichannel success first looks to capture a large share of the region’s $150 billion retail opportunity.

Traditional retailers with physical stores will do better not only by leveraging the power of the online world, but by synchronizing the physical and the digital worlds to provide shoppers with a multi-channel experience that online pure plays simply cannot match. – HBR

Findings in this article were taken from “A study of 46,000 shoppers shows that omnichannel retailing works”, published on Harvard Business Review.

Kick start your Monday morning with these headlines you should know.

1. Xiaomi begins manufacturing in Indonesia

Amid a global decline in sales, Xiaomi has seen recent success in India and it is determined to remain a key player in Indonesia’s smartphone market, which remains one of the largest in the world.

Since January, foreign smartphone makers must prove that 4G LTE phones sold in Indonesia are made up of least 30% “local content.” Assembly, packaging, design, and even software and R&D investments factor into that number.

Read the rest of the story here.

 

2. Thailand’s T2P wants to improve mobile payments in Burma

Earlier this week, T2P signed a joint venture deal with City Mart Holdings Co.,Ltd, a leading Myanmar retail chain with over 200 outlets across the nation, which includes fast food restaurants, bookstores and supermarkets. The joint venture will see T2P integrate its suite of fintech offerings including its payment platform, loyalty and e-gift platforms, as well as e-wallets.

Fact of the day: mobile penetration in Myanmar has reached 90%. 80% of users own smartphones.

Read the rest of the story here.

 

3. More pure-play retailers go offline: Hong Kong’s SmartBuyGlasses launches store

The brand has been purely online for 10 years prior to the launch in Kennedy Town.

Co-founder David Menning said, “the decision to branch out into brick-and-mortar stores reflects the wider industry omnichannel trend, which involves brands and businesses linking their online and offline strategies in order to provide a truly comprehensive customer experience across all touch points.”

Read the rest of the story here.

 

For more on the omnichannel retail strategy, check out Pomelo co-founder’s David Jou’s insights here.