Uniqlo Experiences Slow Sales in Mainland China in the First Half of the Year
Uniqlo, a popular clothing brand in China, faced lower than expected sales in some of its stores in mainland China during the first half of the year. The number of store closures exceeded the number of new store openings, indicating a challenging market environment.
In response to the slowdown in the Chinese market, Uniqlo is focusing on expanding its presence in overseas markets. Currently, Uniqlo has seen significant revenue and profit growth in North America and Europe, with improving performance in Southeast Asia, India, Australia, and South Korea. The brand’s performance in its home market of Japan has also been strong.
According to financial data from Uniqlo’s parent company, Fast Retailing, the average sales revenue per store in the Greater China region in the financial year 2023 was 600 million yen, which is only about half of the revenue generated per store in Japan.
Uniqlo’s CEO in Greater China, Pan Ning, shared that Chinese youth are increasingly leaning towards locally manufactured unbranded clothing, posing a challenge for international brands like Uniqlo in the region.
Europe Emerges as a Key Market for Uniqlo’s Expansion Efforts
Uniqlo is strategically focusing on expanding its presence in Europe, with key flagship store openings in cities like Rome, Edinburgh, London, Milan, and Nice. Currently, out of Uniqlo’s global network of 2,469 stores, Europe accounts for 76 stores.
Uniqlo’s business model in Europe differs from its approach in Asia, with flagship stores in major cities contributing significantly to total sales revenue. The company believes that establishing flagship stores in Europe is crucial for showcasing its full range of products and conveying its brand philosophy effectively.
In the financial year 2023, each Uniqlo store in Europe recorded an average revenue of 2.9 billion yen, with 800 stores in Japan generating 1.1 billion yen per store. In Greater China, including mainland China, Hong Kong, and Taiwan, Uniqlo operates 1,031 stores with an average revenue of 601 million yen per store.
Impressive Sales Growth in Europe and Expansion to Eastern Europe
Uniqlo reported excellent sales growth in Europe during the first half of the current financial year, with sales from its European subsidiaries increasing by 38.4% year-on-year to 142.1 billion yen. Operating income surged by 50% to 25 billion yen during the same period.
The brand is also expanding its footprint in Eastern Europe, with plans to open its first store in Poland, located in a shopping center in Warsaw, with a sales area of approximately 1,300 square meters.
Challenges in Gaining Acceptance in the European Fashion Industry
Europe is a competitive battleground in the fashion industry, and while Uniqlo’s practical and high-quality clothing designs are appreciated by European consumers, the brand is still working on establishing itself as a major player in the region.
For instance, Uniqlo’s ultra-light down jackets have gained popularity in France, with young professional Sawa Suzuki recalling how she observed people incorporating the jacket into their stylish winter ensembles during her time in France.
Despite the positive reception of Uniqlo’s products, some European consumers are still not fully familiar with the brand. A German man who has been wearing Uniqlo shirts for several years praised the quality but mentioned that the brand remains relatively unknown in his circles.
Overall, while facing challenges in the Chinese market, Uniqlo expects solid annual revenue performance for the current financial year. Fast Retailing has raised its global consolidated revenue target for the year, from the initial estimate of 3.03 trillion yen to 3.07 trillion yen.