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TRANSCRIPT
Uniqlo EGADE/MTY CONSULTING
Agenda 1. Problem Statement and Recommenda2on
2. Analysis
3. Alterna2ves
4. Evalua2on
5. Jus2fica2on
6. Implementa2on
7. Risks
8. Financial
9. Q&A
Problem Statement
How can UNIQLO supply chain be adapted in order to profitably expand in the US and Europe markets?
Problem Statement
Begin a supply chain in LatAm and support low cost
model
RecommendaFon
Background • Japanese family owned business, started in 1984
• Pioneer of the SPA model in Japan
• Strong presence in also China and S. Korea • Focused on affordable, basic casual wear
• Main compe2tors are Inditex and H&M
• Consistent growth for several years
Analysis-‐SWOT
Strengths
IT Infrastructure Solid/low cost supply base
in Asia Quality control
Weaknesses
Falling behind compe2tors in some key markets
Fiber supplier produc2on capacity
Fewer SKUs when compared with compe22on
Opportuni2es
Growth of e-‐commerce Untapped market in Europe
and The Americas Op2mizing the Takumi
approach
Threats
Very strong compe22on Wages increasing in China
Risky joint venture par2cipa2on
Analysis-‐The UNIQLO customer • Hip, young, fashion oriented • Middle income
• Savvy shoppers • Values technology
• Strong online presence: social networks, mobile phones
Informed shopper, looking for quality garments at reasonable prices
Current Supply Chain
China based to fulfill regional demand
Joint Venture in Bangladesh, Uniqlo has low par2cipa2on
Migrated from trading partner model to direct manufacturer to minimize costs and 2me
Supply base ra2onalized from 120 to 40 suppliers
3PL Logis2cs for inbound
Takumi Method
-‐ Process and skills Oriented. Gembutsu Gemba
-‐ Use of experience (30 plus years)
-‐ Demanding Quality and inspec2on controls
-‐ Just in 2me philosophy
-‐ Kaizen Philosophy to adapt customer feedback
-‐ The boss is the customer
Japanese heritage applied
Analysis -‐ CompeKtors UNIQLO Inditex (Zara) H&M GAP
• Highest quality focus
• Partnerships • High presence
in Asian • Price
advantage
• Fastest design to retail cycle
• Ver2cal integrated
• Global presence
• Revenues from in season designs
• Global presence
• Outsource manufacture
• Design oriented
• Seasonal trends
• Global presence
• Outsource • Seasonal
trends
UNIQLO
AlternaKves El sombrero
op2on
• Source in La2n American markets for US Market. E-‐commerce.
• Source in Eastern Europe for European Markets
The kimono op2on
• Grow in US and Europe by sourcing in Asian countries and focusing on distribuFon channels on site.
Op2miza2on strategy
• Focus on lean opera2ons
• Asia region since growth rate is 9.5%
EvaluaKon Criteria q Investment
q Opera2on cost
q Implementa2on Time
q Short term benefit
q Long term growth
q Risk
EvaluaKon
The sombrero The kimono OpFmizaFon
Investment
Opera2on cost
Implementa2on 2me
Short term benefit
Long term growth
Risk
EvaluaKon
The sombrero The kimono OpFmizaFon
Investment
Opera2on cost
Implementa2on 2me
Short term benefit
Long term growth
Risk
Risks
• Direct customer feedback strategy
• Focus on product benefits (quality and innova2on)
Fierce compe22on
• Start with a local partner to get to know the market
*New manufacturing
sites *Culture
• Complement strategy with online presence
Brick and mortar decline
USA • Direct customer feedback strategy
• Focus on fashion
Assume consump2on pakerns same
than US
• Monitor constantly for planning purposes Economic Crisis
EUROPE
AssumpKons -‐ Uniqlo growth rate to con2nue posi2ve trend -‐ Number of poten2al stores opening to be achieved
-‐ Produc2on and labor costs in China will con2nue rising -‐ The US market will respond to the product offering
Sombrero RD ◦ Use current IT func2onality to communicate ◦ APP Integra2on to track trends both in models and sizes ◦ Use Store device to project forecast based on sales data
Manufacturing ◦ Use Mexico for Americas Supply Chain Hub ◦ Supplier partnership model over JV op2on ◦ NAFTA Maquila ◦ Loca2on ◦ Cheap Labor -‐ $1US / $17.5Pesos, minimum wage $62 pesos a day ◦ Qualified workforce for clothing industry ◦ Takumi model would take less Fme to implement ◦ Composite material to be sourced from the US vs Japan (no Composites in Mexico) ◦ Ban child labor suppliers
NAFTA Opportunity
Sombrero DistribuFon ◦ Partnership with an online retailer such as Amazon for quick turn around online sales and e-‐presence posi2oning ◦ Established and mature distribu2on network for expedite deliveries ◦ Installed customer base
Marke2ng ◦ Use an “offer a discount” model if customer retweets or posts in facebook with the cloth ◦ Use Current Stores and as flagship stores to reinforce brand posi2oning
Vendor Management Inventory ◦ Contractual Terms with Suppliers so inventory levels can respond to demand on 2me ◦ Cost absorbed by Supplier in lieu of longer contracts to ensure future business
LaFn American Market opportunity ◦ Installed Capacity ◦ Purchasing habits fit Uniqlo product line
Sombrero Timeline
Immediate (0-‐3 m)
• Partnership with Amazon for distribu2on • Product
Short term (6m – 1yr)
• Based on intelligence gathered from IT system, online sales, and app integra2on, adequate product offering
• Begin produc2on in Mexico
Mid Term (1 – 2 yr)
• Based on results, replicate model for European market, basing produc2on in Eastern Europe
• Introduce brand in La2n america
Financials
0.368 0.393
0.414
0.465
0.501
0.550
0.300
0.350
0.400
0.450
0.500
0.550
0.600
2010 2011 2012 2013 2014 2015
Revenue/ store in Billion Yens
*Rev/store increase of 50% *Stores growth rate: 47% *Assuming: same growth rate for next 5 years
Financials Forecast
39 57
84
123
180
265
0
50
100
150
200
250
300
Stores 2015 Proyec2on 2016
Proyec2on 2017
Proyec2on 2018
Proyec2on 2019
Proyec2on 2020
Proyected Stores
65 addiFonal stores than originally projected
Conserva2ve assump2on: 145 billion yens Aggressive assump2on: 218 billion years
Q&A