Fast Retailing has announced a new plan to boost online sales and make better use of IT in its stores. It expects to build new systems that allow sharing of online purchase data with store staff in the hope of providing better in-store services. The initiative will mean a significant increase in IT hires and the new system will roll out to some 3,000 stores globally.
Fast Retailing is moving towards an omnichannel approach, allowing staff at its physical stores to access customer data collected through e-commerce in order to better cater to customer needs and provide improved services. It will also introduce a new option to pickup online orders at its stores. The company currently employs only around 200 IT people, but will hire a further 350 new specialists this year as it develops the new system, a task that will take around 3 years.
In order to expand online sales, Fast Retailing hopes to better leverage the 30 million or so users already registered at its domestic online store. It recently announced a tie-up with Daiwa House Kogyo, which will run logistics and delivery for online orders, including same day delivery in Tokyo by 2016 – with even single brand online stores moving to same day delivery it is only a matter of time before it comes to be expected by consumers.
Uniqlo doesn’t currently have a loyalty or membership card for its stores, but for promotions it has made widespread use of smartphone apps, all of which allow customer tracking of one sort or another. Similar apps will be used to allow shop staff to check purchase records for sizing data and make new product recommendations based on past choices online – and this service will be speeded up by enhanced software.
The company already uses 30,000 iPads at its domestic stores, and its smartphone apps can track customers as they enter a particular location, so, at least in theory, staff would know customer profiles without even logging in.
From 2016, the new services will be supported by 100 new ‘Service Store Managers’ tasked with planning and rollout of the various initiatives. Once working in Uniqlo, Fast Retailing will roll out the same IT solutions to GU, Theory and J Brand, stretching to 3,000 stores globally.
In addition to same day delivery, Uniqlo will also allow pickup of orders in stores in Tokyo next year. This will feed into a further rollout of new, small format stores in stations and station buildings. By shopping online customers have access to the full range, usually only available in the very largest stores, and can shop 24/7 – Fast Retailing claims significant demand from people ordering at work to pick-up at a station Uniqlo on the way home. To make this process even quicker, the company is looking into Apple’s smartphone checkout system, allowing customers to drop in to collect their purchases with almost no waiting.
For August 2015 Fast Retailing is targeting sales of ¥1.6 trillion, a 16% increase on last year, but global leaders H&M and Inditex are more than a third larger still. Fast Retailing is hoping the big boost to online sales will help it close the gap.
Uniqlo to move further upmarket, prices to increase 10%
From July, Uniqlo will increase prices on a fifth of new products by an average 10%. The price increase comes six months after a 5% rise in late 2014. Although publicly blamed on the increased cost of imports, the ongoing rise in prices at Uniqlo is likely a strategic decision to take the brand more upmarket and away from the lower priced GU chain – a strategy that mimics Gap’s positioning in the US vis á vis Old Navy. The latest price increases will begin with new lines of jeans and sweaters due to appear this Autumn. Some lines may even see prices rise 20-30% compared to similar lines from last year.
Sales at Uniqlo have been strong this year, with same store sales up 8.4% overall, ahead of most rivals. Better product planning and merchandising have helped, especially in womenswear where the new, higher prices will allow it to explore and develop its fashion lines further. As a result Uniqlo says it doesn’t expect the next round of price increases to have any negative effect on total sales.
The announcement came at a press conference for Fast Retailing’s latest financial forecasts for end of year results due in August. The company is now predicting a whopping 61% increase in net profit to ¥120 billion, the highest on record and up from a previous forecast of ¥100 billion. The increase is partly due to the price increases last year, but also due to the maturing performance at Uniqlo stores overseas, again helped by the much more varied and sophisticated merchandise ranges in the last two years, overcoming the decade old problems wrought from its dependence on a tiny number of hit products.
Total group sales are expected to increase 19% to ¥1.65 trillion, with operating profit up 53% to ¥200 billion. For the first half, August-February, sales increased 24% to ¥949.6 billion, operating profit was up 40% to ¥150 billion, and net profit jumped 56% to ¥104.7 billion. Overseas operations alone contributed ¥42.8 billion to net profits, up 63% on last year.
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