‘Fast Retailing moving in right direction but at wrong pace’
DATELINE: The owner of Uniqlo, Theory and J Brand clothing ranges became the world’s thirdlargest apparel maker by delving into fast fashion before it was even in style.
It used a large bricks-and-mortar store network in Japan to trot out new looks ahead of competitors, and then exported that model around the world.
But as Fast Retailing’s home market sputters and profits overseas slow, it’s become clear the company has spent too much time and money on physical retail instead of responding to the way consumers are shopping today.
Investors are taking notice: Shares in Fast Retailing are down 13.4 per cent this year, compared with a 5.2 per cent increase in the Nikkei 225.
Third-quarter earnings out Thursday came in 20 per cent lower than analysts tracked by Bloomberg were expecting, even as overall revenue got a bump from a recovery in Asia and additional store openings.
But while new locations are helping the top line, Fast Retailing is generating fewer sales from each extra store.
There are signs the Japanese firm is aware of what’s at stake.
In the most recent quarter ended May, online sales rose 17 per cent from the year prior.
Earlier this week, executives told the Nikkei Asian Review that a planning phase started in 2015 to overhaul the company’s ecommerce operations is finished, and the focus has now shifted to idea implementation.
In two years, billionaire chairman Tadashi Yanai said he would “show the world a new Uniqlo”.
The problem is five-year plans might work a treat for governments but they tend to fall apart quickly at retailers tasked with responding to rapidly shifting consumer tastes.
By the time Uniqlo gets its ecommerce operations up and running, Amazon.com Inc and Alibaba Group Holding Ltd might be delivering by drones, or putting personal robots in dressing rooms.
Just look at Wal-Mart Stores Inc, which kept paying lip service to online sales while Amazon pretty much slurped up all the ecommerce dollars in America.
It wasn’t until the American multinational retailing corporation’s annual sales shrank for the first time ever last year that it got serious about competing
Amazon is already moving in on Japan, where Fast Retailing generates 48 per cent of its revenue.
Rakuten Inc and Yahoo Japan Shopping rule the rest of the country’s US$80 billion in online sales, and Alibaba’s Taobao isn’t far behind.
For now, Fast Retailing is moving in the right direction. It’s just not scooting along quickly enough.