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Rise of fast fashion

Wing Tsun Kwok

on 31 March 2016

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Transcript of UNIQLO

Emphasize functionality rather than fashion
Fashion itself has nothing special, it is special after people wear them
to Capture customer desire
to Commodify
that desire
to Sell it out
Help yourself
No market segmentation
- If it can sell to everyone, why need?
- Allow massive consumption = rise sales ability
-Concept of warehouse
customer pick, try, pay, go
-no upsell and sales pitches
In shop,
showcase the reason
of 'best-selling' & most wanted shop in a mall
Hire best designer and design COLLABORATIVELY based on customer's POV
Light & Flexible
Core asset:
Machine, labor, manufacturing knowledge
Core asset:
Knowledge on market
Supply & demand of goods

What they do:
Matching 2 other parties
Core asset:
Sales network

What they want:
Sell goods to as many people as possible
to have scale i.e. bargain
The norm of Supply chain
Trend in
foreign countries
Minimalist Design
1. Limited product type ~200 rather than ~400 compared to H&M or ZARA

2. No inventory left until next season/year
(inventory is made from $, unsold inventory = dead $)

= Buy larger of quantity of a particular kind of fabric
= Economiesof scale
Work with few supplier/ manufacturer
Opportunities to get their expertise realized
Design idea
No. Sales network / sales ability
=> Order larger quantity
=> bargaining power on...
-how to produce
-price negotiation
=> Scale
=> cheap but good quality
Sales goods on commission
(start accumulating exp.)
Buy out existing goods
(start making profit)
Risk & Reward
Design and buy out
(start building brand)
Buy out a whole factory
(to be a mkt leader)
Qn: Why not vertical integration?
poor labor condition
=> Have the flexibility to switch factory
=> has less responsibility in taking care of cheap labor in factory (CSR issue)
"Made for all"
Go global
~100 store
offer 1900 yen/piece in 2000
vs. 4900 yen/piece from world leading fleece manufacturer

Import raw material from japan firm TORAY
Silk processing in Indonesia
Spinning, weaving and dying in China
+ Order in Millions
=> Economic of Scale
Tipping point: Fleece jacket
Realize the market potential of fleece material
(from unpopular to popular)
Dare to re-invent fleece jacket
Re-engineer production process thru consistent trial-and-error
51 Colors to replace dark and dull color

Good functionality in keeping humid and warmth

Limited to Hiking professionals
Made expensive, highly functional clothing available to all
1998 Harajuku store opening
Flyer Tagline:
"Uniqlo's fleece jacket - 1,900 yen"
Advertisement strategy
Advertising PR company
Commercial Message (CM) creator
Only creative CM ideas
from Public POV translate company's idea
Media arrangement
e.g. Timeslot selection
Actor perference
Responsible to tell CM creator
1. company's value proposition and
2. the value product intended to bring to public

Give Full freedom & support to CM Creator

1. Respect customer's feeling, no hard sale
2. Notice - Plant seed - induce customer to take action
3. Comfortable and smooth
Attractive pricing: 1/3x
Sales figure
=> IPO good to go
Fast fashion:
Cheap + good quality
by product & service
Sales data from POS system
+ store staff / manager report observed customer's wants
Large order that utilize full production capacity
Cheap labor and Full control of production process
Factories in developing countries
Manufacturing expertise knowledge to upgrade factories production quality
Japanese experienced tailor and technician
Rise product's standard
marketing team
Production Volume guidance
Production planning and management team
**Stationed with experience Japanese technicians, tailors
Factories in China, Indonesia, Vietnam
The UNIQLO Supply Chain
Minimalist in Inventory
Minimalist in
= Buying same no. of goods from single manufacturer rather than many
= Economies of scale
Rise bargain power with manufacturer to
1. reduce price
2. take control of production process i.e. production quality
=> Economies of Scale
Business cycle
Early lose, Small lose, Many lose
Lose as an asset
Customer Relationship
Value Proposition
Key Activities
Key Partners
Key Resources
Revenue Stream
Cost Structure
Business Model Canvas
Information System
<--------Efficiency / Logic--------->
<---------Value / Emotion---------->
Word of month thru social media: New, simple ideas wins
"UNIQLO Lucky Line"
to queue up online
Absolute Eye catcher
Need a focal point, simple and impressive
Business owner
Business owner
Secured loan from business
Secured loan from business owner
Shop Location
Good location is one that match the business
Expensive, premium location
Cheap, unsatisfying location
Difference between:
Entrepreneur vs Businessmen
Have or have no clear goal, thoughtful plan & sharp execution
(Sell what people wants)
(Sell what business want to sell)
Way of showcase,
Stock Quantity,
"How to sell Better"
Mechandize Design,
Account and Finance,
Information management,
Human Resources
Shop opening
POS system
Sales, Pricing, stock
Cost driven:
High variable cost,
Economies of scale
Asset sale (Clothing retail)

Quality of strong enterprise
Aim high, set seemingly impossible goal
Consider more than $, create value to society, relationship to stakeholders
Use accounting thinking
Know how to maintain +ve in cash flow and P/L structure
Know whether is doable business: profitability, continuity, growth
Business mindset
PDCA Plan-Do-Check-Action
Understand what the work is for
right timing
no time wasting
promise is promise
Fast to handle information
Objectivity in viewing own action
Know the way Numbers and financial report is produced
Cash inflow by sales of clothing
Abundant Cash to open new store
Cash outflow by repayment to factories / Supplier
Time difference in Cash inflow and outflow
Focused sales, well planned marketing
+ Simplistic design
+ larger sales network
-> Order with larger quantity on particular raw material
+ no return to supplier
+ Warehouse design , help yourself
-> Reduced price
-> Create value to customers
Reinvent underwear
Design idea
Design idea
Order Sample
Company seldom put their business model on their annual report... it is what UNIQLO doing every year
Sharp and clear business boost perceived value of investor to firm
Investor's relations: As transparent as possible
Large Number of outlet
-> Scalable Business
-> Bargaining Power to manufacturer
-> Cut production Cost
Other Learnings
Full transcript