Fashion Consultants UNIQLO … · Fashion Consultants Eric Postma | Tom Epp Jesse Perry | Amanda...

UNIQLO Fashion Consultants Eric Postma | Tom Epp Jesse Perry | Amanda Macdonald Asper School of Business

AGENDA

Analysis of Opportunity

Evaluation of Alternatives

Recommendation and Implementation

Financial Analysis

Risks & Risk Mitigation

KEY ISSUE

Analysis Alternatives Recommendation Financials Risks

 Uniqlo has saturated the Japanese market. What do you do next?

KEY ISSUE International Expansion Strategy

Uniqlo ¥100 billion

Top Global Fashion Brand


ANALYSIS OF OPPORTUNITY


Value Proposition

Functional Clothing

Low lead times Partnerships Low Pricing

ANALYSIS OF OPPORTUNITY: POSITIONING


Function

Fashion

Quality Low Price

H&M

GAP

Zara

Uniqlo



29%

13%

1% 1% 10%

46%

UNIQLO STORE NUMBERS BY LOCATION Japan China USA Europe Other Global Brands



Supply Chain Partners

Planning

- Research & Development Toray

- Merchandising

- Production Planning

Production

- Partner Factories Chefeng, Crystal, Pacific Textile, Ananata, Bros

- Takumi (technical guidance)

Sales

- Distribution and Warehousing 3PLs, Daiwa

- Uniqulo Stores Casio, Microsoft

- Online Sales JD.com

ANALYSIS OF OPPORTUNITY Strengths •  Partnerships •  Low cost, high

quality product •  Proven business

Concerns •  Japan-centric

business •  Lead times

Threats •  Big competition •  Reliance on latest

trends •  Trend-driven

industry

Opportunities •  Untapped markets • Online sales


EVALUATING THE ALTERNATIVES

•  Utilize existing partnerships and manufacturing •  Ship products overseas

Same Suppliers, global shipping

•  Build manufacturing plants in geographically advantaged areas •  Ship products to direct to distributors in US/Europe

Vertically integrate

•  Partnerships with geographically advantaged plants •  60% manufactured in house, 40% partner Joint Venture


ALTERNATIVE 1: SAME SUPPLIER, GLOBAL SHIPPING


Advantages Disadvantages

Lead Times

Shipping Cost

High Inventory

Quality

Startup time

ALTERNATIVE 2: VERTICALLY INTEGRATE



Capital Intensive

Slow Startup

Risky

Quality Control

Profit margin

ALTERNATIVE 3: JOINT VENTURE



Lead Times

Less Risk

Capital

Quick Startup

Dependence

Less Control

CRITERIA


Rapid Growth

Partnerships

Low Pricing Lead Times

Quality Control

EVALUATION OF CRITERIA


Rapid Growth Partnerships

Low Pricing Lead Times

Quality Control

Same Suppliers, Global Shipping X Y X X Y Vertically integrate X X Y Y Y Joint Venture - Partnerships Y Y Y Y Y

RECOMMENDATION

Localized Adaptation • Utilize existing partnerships • Create new joint ventures and partnerships


RECOMMENDATION


Leverage Existing Partnerships • Material suppliers – innovative textiles • Production and quality control

New Joint Ventures/Partnerships •  Latin American manufacturing joint venture • US distribution partnerships

US IMPLEMENTATION


•  Continue material production in India/Vietnam •  New sizes and labels •  Ship to North America

Material Production

•  Manufacturing joint venture – Honduras/Nicaragua •  North American Takumi Team – Kaizen and Quality Control •  US distribution partnership – DHL logistics and warehousing

Garment Manufacturing

•  Flag ship stores – Research and Design/POS Systems •  Outlet malls across US •  Online partnership - Amazon

Retail Sales

EUROPEAN IMPLEMENTATION


Local Manufacturing Joint Venture •  Latvia/Slovakia

European Distribution Partnership •  DHL

Retail Mix •  Flag ship / Outlet / Online

IMPLEMENTATION TIMELINE


2015 2016 2017 2018 2019 2020

Partnerships

NA Opera/ons

Manufacturers

Distribu/on

Online

Store Openings

US 20 22 30 40 50

Europe

20 25 35

Marke/ng

US

Europe

FINANCIAL ANALYSIS


Implementation Plan Incremental Costs (Million Yen)2015 2016 2017 2018 2019 2020

Supplier Partnerships 0.3$ -‐$ -‐$ -‐$ -‐$ -‐$ 0$ Supplier Investment 20.0$ 20.0$ 20.0$ 6.0$ 4.0$ -‐$ 70$ Distribution Partnerships 0.3$ -‐$ -‐$ -‐$ -‐$ -‐$ 0$ Takumi Team 0.6$ -‐$ -‐$ -‐$ -‐$ -‐$ 1$ Distribution Centre Opening 1.0$ 1.0$ -‐$ -‐$ -‐$ -‐$ 2$ Store Openings -‐$ 50.6$ 51.5$ 61.6$ 68.2$ 77.0$ 309$ Marketing Costs 40.0$ 40.0$ 40.0$ 40.0$ 40.0$ -‐$ 200$ Technology Costs 4.0$ 4.0$ 4.0$ 4.0$ 4.0$ 4.0$ 24$

66$ 116$ 115$ 112$ 116$ 81$ 606$

FINANCIAL ANALYSIS


0.0

500.0

1000.0

1500.0

2000.0

2500.0

3000.0

3500.0

4000.0

1 2 3 4 5 6

UNIQLO Growth

Total Stores Total Sales (Billion Yen)

FINANCIAL ANALYSIS


0

500

1000

1500

2000

2500

3000

3500

4000

Worst Case Normal Case Best Case

Scenario Analysis

Total Stores Total Sales (Billion Yen)

CONTROLS & MEASURES


2016 2017 2018 2019 2020Sales China Sales >15% >15% >15% >15% >15%

USA Sales >30% >30% >30% >30% >30%Europe Sales >5% >5% >20% >20% >20%

Supply/ProductionQuality level 95% 95% 95% 95% 95%Lead Time (Design to Production) 6 weeks 6 weeks 6 weeks 6 weeks 6 weeks

Controls & Measures

RISKS & RISK MITIGATION •  Takumi Team implemented •  Transparency from the start •  High Impact (P < 0.10)

Quality Control with partners

•  Expertise in supply chain management •  Reputation and leverage existing partners •  Medium impact (P < 0.60)

Time Required to develop partnerships

•  Designers from U.S. and Europe •  Low lead times, responsive manufacturing •  Low impact (P < 0.55)

Uniqlo products not well received


CONCLUSION

Top Global Fashion Brand

Localized Adaptations

Japanese Market Saturation


APPENDIX


2015 2016 2017 2018 2019 2020UNIQLO Japan

Stores 842 842 842 842 842 842Sales per store (Billion Yen) 0.8$ 0.8$ 0.8$ 0.8$ 0.8$ 0.8$ Total Sales 674$ 674$ 674$ 674$ 674$ 674$

UNIQLO InternationalChina (including Hong Kong)

Stores 364 444 524 604 684 764Sales per store (Billion Yen) 1.0$ 1.0$ 1.0$ 1.0$ 1.0$ 1.0$ Total Sales 364$ 444$ 524$ 604$ 684$ 764$

USAStores 39 59 81 111 151 201Sales per store (Billion Yen) 0.8$ 0.8$ 0.8$ 0.8$ 0.8$ 0.8$ Total Sales 31$ 47$ 65$ 89$ 121$ 161$

EuropeStores 24 29 34 54 79 114Sales per store (Billion Yen) 0.8$ 0.8$ 0.8$ 1.0$ 1.0$ 1.0$ Total Sales 19$ 23$ 27$ 54$ 79$ 114$

OtherStores 289 294 299 304 309 314Sales per store (Billion Yen) 0.5$ 0.5$ 0.5$ 0.5$ 0.5$ 0.5$ Total Sales 145$ 147$ 150$ 152$ 155$ 157$

FranchiseStores 1314 1319 1324 1329 1334 1339Sales per store (Billion Yen) 0.30$ 0.30$ 0.30$ 0.30$ 0.30$ 0.30$ Total Sales 394$ 396$ 397$ 399$ 400$ 402$

Total Stores 2872 2987 3104 3244 3399 3574Total Sales (Billion Yen) 1,627$ 1,731$ 1,836$ 1,971$ 2,112$ 2,271$

Store Sales Growth Projections

APPENDIX


Supplier Location Supplier target by 2020 Markets Served

China/Vietnam/Taiwan 60 China, Japan, Other Asian markets

Latin America 30 USA

Eastern Europe 5 Europe

APPENDIX


By 2020 Worst Case Normal Case Best CaseTotal Stores 3340 3574 3732Total Sales (Billion Yen) 1,870$ 2,271$ 2,534$

Fashion Consultants UNIQLO … · Fashion Consultants Eric Postma | Tom Epp Jesse Perry | Amanda...

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