fashion consultants uniqlo … · fashion consultants eric postma | tom epp jesse perry | amanda...
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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 Alternatives Recommendation Financials Risks
ANALYSIS OF OPPORTUNITY
Analysis Alternatives Recommendation Financials Risks
Value Proposition
Functional Clothing
Low lead times Partnerships Low Pricing
ANALYSIS OF OPPORTUNITY: POSITIONING
Analysis Alternatives Recommendation Financials Risks
Function
Fashion
Quality Low Price
H&M
GAP
Zara
Uniqlo
ANALYSIS OF OPPORTUNITY
Analysis Alternatives Recommendation Financials Risks
29%
13%
1% 1% 10%
46%
UNIQLO STORE NUMBERS BY LOCATION Japan China USA Europe Other Global Brands
ANALYSIS OF OPPORTUNITY
Analysis Alternatives Recommendation Financials Risks
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
Analysis Alternatives Recommendation Financials Risks
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
Analysis Alternatives Recommendation Financials Risks
ALTERNATIVE 1: SAME SUPPLIER, GLOBAL SHIPPING
Analysis Alternatives Recommendation Financials Risks
Advantages Disadvantages
Lead Times
Shipping Cost
High Inventory
Quality
Startup time
ALTERNATIVE 2: VERTICALLY INTEGRATE
Analysis Alternatives Recommendation Financials Risks
Advantages Disadvantages
Capital Intensive
Slow Startup
Risky
Quality Control
Profit margin
ALTERNATIVE 3: JOINT VENTURE
Analysis Alternatives Recommendation Financials Risks
Advantages Disadvantages
Lead Times
Less Risk
Capital
Quick Startup
Dependence
Less Control
CRITERIA
Analysis Alternatives Recommendation Financials Risks
Rapid Growth
Partnerships
Low Pricing Lead Times
Quality Control
EVALUATION OF CRITERIA
Analysis Alternatives Recommendation Financials Risks
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
Analysis Alternatives Recommendation Financials Risks
RECOMMENDATION
Analysis Alternatives Recommendation Financials Risks
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
Analysis Alternatives Recommendation Financials Risks
• 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
Analysis Alternatives Recommendation Financials Risks
Local Manufacturing Joint Venture • Latvia/Slovakia
European Distribution Partnership • DHL
Retail Mix • Flag ship / Outlet / Online
IMPLEMENTATION TIMELINE
Analysis Alternatives Recommendation Financials Risks
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
Analysis Alternatives Recommendation Financials Risks
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
Analysis Alternatives Recommendation Financials Risks
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
Analysis Alternatives Recommendation Financials Risks
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
Analysis Alternatives Recommendation Financials Risks
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
Analysis Alternatives Recommendation Financials Risks
CONCLUSION
Top Global Fashion Brand
Localized Adaptations
Japanese Market Saturation
Analysis Alternatives Recommendation Financials Risks
APPENDIX
Analysis Alternatives Recommendation Financials Risks
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
Analysis Alternatives Recommendation Financials Risks
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
Analysis Alternatives Recommendation Financials Risks
By 2020 Worst Case Normal Case Best CaseTotal Stores 3340 3574 3732Total Sales (Billion Yen) 1,870$ 2,271$ 2,534$