Uniqlo Has Promoted Digital Transformation, And The Core Is To Strengthen Corporate DNA

After more than 30 years of development, Uniqlo has become the world's leading apparel retailer, and has formed a strong growth momentum in the Greater China region, Southeast Asia, Oceania, Europe and other markets. Uniqlo's predecessor was a suit shop located in Yamaguchi, Japan. In 1984, founder Liu Jing introduced and improved the SPA (private brand professional retailer) model. Through the vertically integrated business model integrating planning, manufacturing and retail, it reduced the intermediate links, effectively controlled the cost of stores, and made Uniqlo stand out from many clothing brands.

Uniqlo is aimed at consumers of all ages. With the brand concept of "LifeWear suits life", Uniqlo provides clothing products that integrate functionality, comfort and design, triggering a wave of hot sales. Since 2004, Uniqlo's revenue has basically maintained an annual double-digit growth rate. The secret of Uniqlo's success is to adhere to the concept of customer first and continuously meet the needs of consumers. In recent years, with the change of the general environment towards a more technology driven direction, digitalization has been integrated into all aspects of people's lives. In order to meet the needs of consumers in the digital era, Uniqlo has promoted the digital transformation. Starting with strategy, marketing, organizational structure, talent management and other aspects, it has effectively allocated all kinds of resources and integrated online and offline, thus improving the consumer experience and achieving remarkable results.

On demand digital strategy

In 2017, Liu Jing, chairman of Fast Retailing Group (the parent company of Uniqlo), put forward a "smart plan" at the shareholders' meeting, announcing the transformation of Uniqlo into a "digital consumer retail company", that is, through cooperation with technology companies, the way of design, production, manufacturing, sales and all staff work is introduced into digitalization.

For this reason, Fast Retailing Group has announced to cooperate with Accenture, a consulting company, Google, a technology giant, and Daifuku Co, a logistics company, to predict customers' purchase behavior, improve the speed of customer demand into products and services, and realize warehouse automation in the way of big data, artificial intelligence and technology. The company has opened an open office space of about 1500 square meters in the headquarters building in Tokyo, breaking the barriers between departments, allowing designers, planning, sales and other departments to communicate closely, stimulating employees' creativity and improving decision-making speed.

Behind this plan, Yanai is trying to solve the three pain points of Uniqlo. First, change the existing industrial model. Uniqlo's industrial model in the past was relatively simple, focusing on postpartum sales, which was a process of pushing goods to consumers. After the transformation, Uniqlo, through the digitalization of the supply chain process, based on the acquisition of consumer data and external market information, can better predict the trend of goods and specific market demand, integrate more consumer feedback into product design and function improvement, improve the probability of "hot money", and pull consumers into Uniqlo stores. In short, Uniqlo's move aims to overturn the previous model of "pushing" sales in the manufacturing industry and switch to the model of "pulling" consumption demand.

Second, optimize inventory and speed up the supply chain. As we all know, inventory is the biggest problem in the retail industry, including clothing. Taking UNIQLO HEATTECH warm underwear series products as an example, under the past system, warm underwear must be stored in the warehouse in May every year, which increased a lot of additional costs. After the digital transformation, Uniqlo accelerates the delivery of goods through logistics automation, reduces the inventory time of goods, improves the relative benefits, and saves costs to the greatest extent.

In the traditional retail industry, the supply chain process of clothing usually takes three to six months, and goes through multiple links such as pattern making, production, transportation, etc. Through the digitalization of the supply chain, Uniqlo can obtain real-time feedback on product sales in stores. Take the U-series wide leg jeans at the beginning of 2019 as an example. After the first wave of hot sales of goods was out of stock, stores immediately collected information to increase orders, so as to make replenishment more timely, so as to extend the popularity of "hot models" and promote further sales. Digital technology and big data have helped improve the efficiency of the supply chain, enabling Uniqlo to make plans while selling.

Third, online and offline integration. In order to build a digital driven consumer retail company, Uniqlo has integrated offline stores and online sales business. In 2018, Uniqlo announced that it would cooperate with the logistics company Daifuku Co to invest 100 billion yen to establish a new distribution system and gradually realize the automation of warehousing and distribution systems. Take the Ariake warehouse in Tokyo as an example. After full automation, the number of warehouse personnel will be reduced by 90% and 24-hour operation will be realized. The new distribution system can better support the growth of online sales, and provide online consumers with the convenience of delivery on the same day or the next day, or the opportunity to pick up or return products purchased online at the nearest store or local convenience store. Through digital means, Uniqlo has shortened the distance between the Front end (store customers) and the End end (back office customer service). These measures help Uniqlo establish closer ties with consumers.

In fiscal year 2018, Uniqlo's sales in Japan were 864.7 billion yen, of which the online channel sales accounted for 7.3% of the total sales. As the main driving force of Uniqlo's overseas market, the online sales accounted for 15% of the total sales. Uniqlo hopes to expand the proportion of online sales to 30% by introducing services that enable consumers to buy goods anytime and anywhere.

The core is to strengthen corporate DNA

The world has entered the digital era, and any enterprise needs to keep up with this change. As a clothing manufacturing retailer, Uniqlo hopes to create a new and dynamic industry in the digital era and get rid of the shackles of traditional barriers between business fields.

However, no matter how the times change, the mission and purpose of the enterprise is to meet the needs of customers. The core of Uniqlo's digital transformation is to build a customer-centric experience and strengthen the corporate DNA of "LifeWear fits life". Under the concept of "LifeWear suits life", Uniqlo's mission is to create comfortable and high-quality daily clothes and enrich people's lives. This brand DNA distinguishes Uniqlo from other clothing brands. What Uniqlo pursues is to provide consumers with high-quality, fashionable daily necessities at a price that everyone can afford, so as to make life better.

Under the brand positioning of serving life, Uniqlo sells necessities and life plans. This means that in cold and hot weather, work sports, clothes for the elderly and children can be found in Uniqlo. From this perspective, Uniqlo's customer demand is huge, and it is Uniqlo's continuous pursuit to move with the life of consumers. In this process, the use of digital means becomes very important, because digital can help Uniqlo more accurately and quickly understand the personalized and situational needs of all kinds of people, and truly implement the brand DNA of "LifeWear fits life" into the details of product and service experience.

Through the digital method, Uniqlo can optimize the supply chain system, use digital technology to capture customers' real needs, and directly communicate with individual customers. Combining this information with the opinions collected by Uniqlo stores and store managers can help Uniqlo better understand and serve consumers. Having digital capabilities can help Uniqlo accelerate its business cycle, shorten its production cycle, and enable Uniqlo to provide consumers with the exact products they need.

Three step construction of digital mechanism

As the largest overseas market of Uniqlo, Greater China is an area where digital transformation is practiced earlier and deeper. Uniqlo's digital transformation has made more attempts at localization. As early as 2009, Uniqlo settled in e-commerce platforms such as Tmall. In 2014, the management of Greater China noticed the trend of rapid development of China's mobile Internet. Both in media delivery, digital content innovation, and the establishment of brand and consumer communication platforms, mobile Internet has led to trend and revolutionary changes.

With mobile Internet, brands can communicate with consumers more quickly and directly with more diversified content. Uniqlo, which has retail attributes, needs to maintain a fast turnaround speed through more intensive and in-depth communication with consumers. Therefore, Uniqlo has made a bold attempt in China and decided to establish a digital platform integrating consumption, content and experience on the Internet. The digital platform can break the time and space constraints of traditional retail and serve consumers "without dead ends".

Build an We Media platform and a digital team. In order to get rid of the traditional advertising agency model, Uniqlo has invested a lot of team resources to build the We Media platform by project or quarterly communication with consumers. In 2014, Uniqlo began to set up a digital marketing team. At present, the team has 10 people, and is a young team aged 25-30. Uniqlo believes that we should first understand what customers want, as well as our own products, brands and tonality. Therefore, about 80% of the content and creativity of Uniqlo in Weibo and WeChat are created by digital marketing teams, and agents are only responsible for platform integration. In addition, the digital marketing team is also responsible for brand value creation, platform operation, and digital experience and technology development.

How to communicate with consumers through we media platform? Uniqlo believes that the definition of We Media platform should be clear. First, we need to create content based on internal cognition, then ensure the subsequent content operation, gradually form two-way and direct communication with fans and consumers, and finally introduce the communication online and offline, so that consumers have the desire to experience and purchase.

Uniqlo has successively carried out We Media operations on WeChat, Weibo, nice and other platforms. Taking the WeChat public account as an example, the content of Uniqlo is mostly based on practical service information, which is mainly divided into three categories: sharing commodity knowledge or creativity unknown to readers, inviting readers to try new designs, and other content that makes readers enjoy, feel happy and relaxed. Don't deliberately use WeChat to promote products, reduce the pressure of consumers being persuaded to buy, and communicate with consumers in the form of brand stories, design concepts, interactive games, etc., so that WeChat public account fans can achieve explosive growth.

Uniqlo's operations on Weibo and nice platforms are no longer satisfied with one-way communication, but more interactive experiences with users, including UGC (User generated Content) PGC (Professional generated Content) experience, and obtain consumers' very specific feedback on goods, such as the reasons for satisfaction or dissatisfaction with clothing style, size, store service, etc., and then further obtain consumers' big data.

After nearly five years of operation, the number of UNIQLO fans on the digital platform has exceeded 100 million, with an average of nearly 100 million readers per month. And the weekly cumulative page views can exceed 100 million. If you convert natural traffic into advertising, you need to invest a lot of money. It can be said that the successful operation of the digital platform has also helped Uniqlo save a lot of money in marketing.

Access digital payment. In order to further improve the digital experience of consumers in stores, in October 2015, a year after the launch of WeChat payment, Uniqlo announced its cooperation with WeChat payment and accessed WeChat payment in more than 300 stores nationwide. Alipay is also a strategic partner of Uniqlo in the process of promoting digital payment in stores. It not only simplifies the payment process of consumers, but also improves the collection and service efficiency of stores. It is worth mentioning that through digital payment, Uniqlo can introduce store consumers to its own digital platform, brand APP and brand public account, obtain consumer information, achieve precise positioning, retain offline consumers, maintain communication with consumers, and constantly educate consumers in communication. In recent years, Uniqlo has continued to optimize its platform operation, and has also participated in many large-scale marketing activities on the payment side, combining many properties, different industries and IP to form cross-border cooperation.

Connect online and offline. Digital means enable Uniqlo consumers to have a better retail service experience, while the handheld flagship store launched in 2018 (official website, official APP, WeChat applet, and offline code scanning) helps Uniqlo achieve online and offline connectivity in commodity information, inventory, services, and purchase. Before the launch of the handheld flagship store, consumers who want to buy a certain garment published on the Uniqlo public account must go through at least four steps: save the picture, query the nearby Uniqlo store, compare the picture to find clothes, and pay. If there is no suitable size in the store, ask the staff to transfer goods to other stores. In 2018, the handheld flagship store was launched, and consumers directly entered the online shopping mall through WeChat, Weibo, stores and other online and offline channels through the "one click shopping" function. They chose to receive goods at home or take them from stores, greatly shortening the middle link.

After online and offline access, the value of stores is mainly reflected in solving the pain points of online shopping. Long waiting time, poor flexibility and difficulty in returning goods are common problems in online purchase. Take the O2O function of the handheld flagship store as an example. For goods purchased by consumers, store direct delivery can deliver goods within one hour after placing an order. The service of picking up goods from other places provides convenience for consumers when they return home or go on business trips during the Spring Festival. The store's personalized value-added service allows consumers to change the size and color of the product on the spot, and also modify the length of pants for free when it is not appropriate to pick up goods and try them on.

On line, Uniqlo continues to optimize the content, and the "casual" function provides consumers with clothing recommendations on different occasions to solve the problem of consumers not knowing how to match. With the function of "free delivery", you can choose to send clothes to friends around you, making the handheld flagship store have the attribute of social+e-commerce.

Initial transformation effect

Work efficiently. Yanai said, "One of the foundations of a clear plan is to let all our employees have access to information." Before adding digital tools, it is time-consuming and laborious to convey information to employees. You should print and paste the relevant emails in the store, or learn a PPT that is dozens of pages long. Now, Uniqlo has launched an internal communication and learning video for employees on the enterprise digital platform, which makes things clear in one minute, and employees can also take out their mobile phones to learn at any time. In terms of problem feedback, I can also do it very quickly. In the store manager group, you can receive a reply within a few minutes after asking questions, and it is a direct solution.

The digital work mode makes the information flat, and the communication and feedback are rapid. A weekly work report is no longer required to reach the employees layer by layer, and it is sent to the work group regardless of supervisors and non supervisors. All employees can see it in time, and then everyone can discuss the division of labor. This is why UNIQLO can make 20000 employees and 700 stores move quickly in Greater China, which is rare in China.

Better carry forward the corporate culture. Uniqlo has always emphasized a customer-oriented corporate culture, and its employees have a strong sense of service. After using digital tools, Uniqlo employees gradually found that this efficient way can improve their own time management, and customer satisfaction can also be further improved. So the attitude of employees began to change, and gradually embraced the new way of work of creating value with digital tools.

Enterprises can better reflect the importance of "real-time" by using digital tools. Not only can employees receive timely responses to their problems, but also the headquarters can timely understand customer feedback on the site, such as product code breaking, difficult posters, invalid code scanning and other problems. In the short term, digitalization has increased the feedback frequency of employees and customers, and better satisfied their demands to be "heard". In the long run, enterprises will better understand what practices are effective and where problems may arise in implementation, so as to better provide solutions, identify which projects are truly effective for customers and stores, and ultimately optimize various business plans and implementation plans. The widely collected data can help enterprises understand themselves better and find and solve problems faster.

Brand value promotion. From the perspective of Uniqlo's development in recent years, the whole Europe, Southeast Asia and Greater China are growing well. While actively expanding its stores, its operating efficiency has improved significantly. In Japan, the overall revenue and profitability in 2018 also improved. Uniqlo Greater China has maintained revenue growth for four consecutive years, and both revenue and net profit achieved double-digit growth in 2018.

Although it is difficult to give the accurate data brought to Uniqlo by the digital transformation, it is obvious that Uniqlo keeps its overall operation and brand in a good momentum through digitalization. With the help of digitalization, Uniqlo has reduced the cost and risk of marketing, improved the operational efficiency, more deeply captured consumer demand, more easily optimized products and provided value-added services, effectively enhanced customer loyalty, and ultimately improved brand value.

In the future, Uniqlo hopes to let consumers in countries and regions that have not yet opened stores know more about Uniqlo's brands and products through online and offline integration. Through customer feedback, store data, e-commerce data and other big data, we can provide better consumer insight, further strengthen the ability of product design and store innovation, and integrate into issues of public concern such as sustainable development, so as to continue to improve the value of goods.