A:

I've heard there's a casual wear retail chain, UNI-QLO, that has been on a winning streak, rapidly boosting their sales despite the on-going recession.

B:

True. The name "UNI-QLO" is in fact a brand name. The company, based in Yamaguchi City, describes itself as Fast Retailing. In the year ending August 1999, their sales totaled 228.9 billion yen (+106% compared with the previous year), with a pre-tax profit of 60.4 billion yen (+326% compared with the previous year) and net profit of 34.5 billion yen (+400% compared with the previous year). This is a remarkable achievement.

A:

What's the key to their rapid growth?

B:

First of all, they use hooks to boost sales, where others simply try to predict the next big seller and go purchase it. The competition cannot compare with UNI-QLO in terms of how they use their money to do promotions. Secondly, they spend by far the largest amount of money on sales promotions, appealing to customers through some 20 million fliers (half the number of households in Japan) distributed every week. To cancel the image of merely being a discounter, they create trends, making it "in" to wear UNI-QLO by running editorial articles with fashion magazines and airing TV commercials. In this way, they are focusing on the greater diffusion of their brand.

A:

I couldn't help noticing there aren't so many different items on display.

B:

That's right. They've narrowed the number down to some 200, but offer a great variety of sizes and colors to meet customer demands. Moreover, they've cut the number of contract factories in China from over 140 down to some 60 who can offer good quality, and order from these in bulk. They buy up the total production and sell quality goods at a reasonable price so they won't have to carry inventory. This is how they've won customer satisfaction.

A:

Another thing I noticed was they had fewer people working than at other stores.

B:

Let me give you an example. A store with annual sales of between 400 and 500 million yen carries an average of 1.5 regular employees and 6 to 7 part-timers. As I mentioned earlier, they spend a lot of money to increase customer traffic so they can boost turnover. In other words, their competitors don't spend so much to attract customers but do spend a lot of money on regular employees, who deal with a small number of customers.

A:	How many UNI-QLO outlets are there in the country?
B:	I don't have an exact figure, since there are new openings every month, but I would hazard 420. They say they plan to add another 100 before the end of the year 2001.

A:

Are they planning to expand overseas?

B:

Yes, they plan to open a store in London. Because they are based in Yamaguchi, their operations have concentrated in western Japan, but they plan to open more outlets in the Metropolitan area and Tohoku region. They also plan to open in Shinjuku and two other stations in a tie-up with Kiosk. They started a mail order service in September 1999, and have been marketing selected lines via E-commerce since the summer of 2000. E-commerce sales are expected to reach 3 billion yen by this coming August, and you can pay for your order at any of their in-station outlets.

A:

How do they decide on their products?

B:

It's quite simple - manufacturing regular items that are basic and look good on anyone. It's called "universal design," which has become a buzzword these days. The company has regularly practiced "scrap and build" since its founding. When things go wrong, they return to the original point, correct what was wrong, and make a fresh start. For example, in the next three years they plan to review the operations of all of their existing outlets, close 110 non-performing stores and open 350 new ones. When things are going well, it's hard to go back to starting point, but they have done this faithfully and have grown rapidly. President Yanai maintains that the status quo leads to the sign of bankruptcy.

A:

What about delegation?

B:

That's something they are good at. They give full authority to their store managers. Shop staffs are obliged to wear UNI-QLO-brand clothing, and the manager tells his or her staff which merchandise to wear. In a sense, they are like manikins. If what they are wearing doesn't sell well, the manager orders them to change to another set of clothes. They also eliminate lost sales opportunities by projecting demand three times a day - morning, noon and night.

A:	What's the ultimate goal of UNI-QLO?
B:	To make the UNI-QLO brand the standard in casual wear. To put it in a different way, they want to develop a national casual style.

A:

I guess the primary reason for their success was that they were quick to anticipate that consumer needs were shifting to a low-price zone, wasn't it?

B:

Correct. One of the biggest reasons for their success has been that they don't spare any effort in manufacturing quality products at reasonable prices. They are making concerted efforts to constantly improve quality, including at their overseas contract factories. Factory engineering is constantly improved as well. They reduce costs through mass-production, but do not sacrifice quality: their motto is, "Inexpensive, but high quality," rather than "Cheap and low quality." If you produce in a large quantity, you can save costs and stabilize quality, and that's what they aim for. The UNI-QLO brand has already taken root in Japanese soil.

A:	Sales per item are staggering.
B:	Yes. They've sold 29.2 million T-shirts, 6 million shorts, 5.2 million denim items, and 6 million stretch pants - all exceeding their projections. They plan to sell 12 million fleece jackets, available in 50 different colors, during fiscal 2000. Last year, they sold 8.5 million in 16 colors.

A:	It's only a short while since they listed, but their stock price is quite high, isn't it?
B:	Their stocks are now trading between 25,000 and 26,000 yen. When they went public, they made three promises: to keep the stores clean and tidy; not to run out of advertised items; and to accept returns for replacement or refund within 3 months of purchase under no question asked.

A:	Do they have many returns and replacements?
B:	No. Only 1% of their products are returned.

A:	Do you think they'll continue to be successful?
B:	I believe so. As long as they pay attention to what customers want and strive to develop inexpensive but quality products, for now they're unstoppable.