Even Uniqlo, the king of substitutes, has trouble selling its products. Sales have been declining for three consecutive years. What should we do?

Uniqlo itself can't sell its products. In this case, what else can we do? In this article, the author gives his own opinion. Let's take a look.

Did you know?

Uniqlo's growth rate in the Chinese market has been declining for three consecutive years; and its revenue and profits rank last in the global overseas market.

Do you know what this means?

Come on, let’s continue chatting.

Uniqlo itself focuses on "value for money". It was born during Japan's economic downturn and can be called the "pioneer of substitutes". Now even its own products are not selling well.

This is simply unimaginable!! How bad is China's consumer market!!

Therefore, UNIQLO had to adjust its market strategy in China , including

1. From opening 50-80 new stores each year, we will reduce or renovate 50 stores each year in the next three years. In short, we will not open new stores.

2. Pay more attention to single-store operations, improve store efficiency and profitability, and do not pursue scale

3. Actively expand sales through new channels such as store live streaming, Douyin and instant retail (hourly delivery)

4. Price reduction in the form of discounts, so a loyal user recently said, "I won’t buy from Uniqlo unless there is a discount."

However, it is still unclear whether these adjustments can ultimately stop the decline.

Of course, this is not the main point I want to talk to you about.

The point is that the situation faced by Uniqlo reflects the current situation. It has to cause every merchant, entrepreneur and enterprise to think deeply about what should we do next?

I remember in April, when I was having dinner with Professor Xu Xiaonian, he reminded us: Think of the difficulties as harder as possible and just stay alive.

In fact, the situation may be far more serious than we expected.

Recently, Fu Peng, chief economist of Northeast Securities, pointed out in a speech at the Phoenix Bay Area Financial Forum that China's consumption downgrade is far from bottoming out and the problem is much more serious than Japan's back then.

On the one hand, the economy is slowing down, on the other hand, the fertility rate is 40% lower than Japan's in 1990, and the population is aging very rapidly.

He emphasized that the demand generated by the increase in the elderly market is far from enough to make up for the reduced consumption demand due to the absence of young people. Simply put, economic growth still depends on children and young people, and it is not enough to rely on the elderly.

However, the population cannot resume growth in the short term, and people’s income is decreasing , which directly reflects the shrinking total market demand.

Many industries simply cannot support the expansion and growth of so many companies. What to do? Involution. Just like Uniqlo's original strategy, continue to expand the number of stores, but if the stores have no business, they will lose money; unless they can snatch customers from other brand stores, the company can continue to grow.

This triggers competition, and companies have to invest more in marketing costs, or even sacrifice profits and incur losses, but even then, they may not be able to grow.

The reality is that no one can monopolize the market 100%, customers are mobile , and business operations fluctuate.

Therefore, we should pursue rational growth rather than blindly .

Faced with this situation, companies like Uniqlo will have more choices. Its stores are spread all over the world. Even if the Chinese market does not grow, other countries will also grow, and the two will complement each other, and ultimately the company will grow.

Therefore, it has more room for adjustment and is more flexible; at worst, it can maintain its market share in China, or even reduce it slightly to maintain profitability.

Chinese companies are not so lucky, especially those that have grown in scale and are listed on the stock market. Only growth can maintain their market value, so they either go overseas or join more intense competition to grab market share.

Going overseas , without a doubt, means that you are starting to develop globally. After all, there are 6.4 billion people overseas, which is five times the population of China. The development of each country is uneven, so there are definitely opportunities.

To compete domestically , we need to accelerate innovation in business models, teams, products, marketing, etc. Just like the competition between Luckin Coffee and Starbucks.

It is easier said than done.

In general, as Li Ling, a consultant at Lianshang.com, said, " For brands, they should be prepared for a decline in the future and make corresponding changes. In general, they will definitely reduce the number of stores they open. Even if they open stores, they will have to reduce the area. They will also have to adjust products and increase services, especially to increase the stickiness of loyal customers. They should also do a good job in member management."

My understanding of this passage is that it essentially consists of two parts. The first part says that we should go with the flow, adapt to changes, and it is not shameful to shrink when necessary; the second part says that we must conduct refined operations for customers, cultivate deep membership, and maintain loyal old customers.

At any time, whoever gains users gains growth; users are the most important asset.

Having said so much, what should we do when it comes to our company? In fact, Uniqlo provides a reference, and I summarize it into the following 5 points for your reference:

1. Close stores with poor performance
2. Renovate and adjust old stores to increase single store operating profit and efficiency first
3. Reduce prices by offering discounts to pass on benefits to consumers. The past high gross margin and high profit positioning is no longer feasible.
4. Channel expansion, try channels that have not been tried before.
5. Cultivate members. Through private domain operations and member operations, maintain old customers and improve repeat purchase loyalty.

In short, all actions revolve around reducing costs, improving efficiency, and increasing revenue; ensuring profitability and doing everything possible to survive.

When running a business, as long as you have the green mountains, you will never be afraid of running out of firewood.

Reference: "Consumers have changed! Can the "King of Fast Moving Consumer Goods" Uniqlo still make money?"