15 Oct 2020
Posted in Retail
Reliance on Asian markets and casual product ranges aids Fast Retailing throughout COVID-19
Following today’s release of Fast Retailing FY figures for 2019/20,
Pippa Stephens, Retail Analyst at GlobalData, a leading data and analytics company, comments:
‘‘Though Fast Retailing has experienced a significant sales decline globally as a result of the pandemic, with revenue falling by ¥281.7bn to ¥2,008bn in FY2019/20, it has managed to outperform many of its fashion counterparts. It has been aided by its strong presence in Japan and China, countries which have both managed to suppress the virus more successfully than has been the case globally, with consumers there more willing to return to non-essential stores during the second half of the financial year. While it suffered notable revenue losses across Europe and North America, its relatively low sales mix across these areas will prove to be beneficial into FY2020/21, with these regions currently experiencing second waves of the pandemic and further lockdowns. Though the retailer plans to open an additional 40 stores globally in the new financial year, it must carefully monitor the progress of the pandemic in each of its regions throughout this process, to ensure that this will not be detrimental to its profitability.
The group’s core brand Uniqlo will have particularly benefitted from its high mix of casualwear; a segment that shoppers have favoured during the crisis as they spend more time at home. Its LifeWear range is likely to have been especially appealing to shoppers during this time, where these products are promised to be both comfortable and of high quality, while its sustainability focus will cater towards the growing number of eco-conscious shoppers, and help it to better compete with rivals like H&M and Levi’s. However, Fast Retailing’s smaller global brands, such as Theory and J Brand, experienced particularly poor performances during FY2019/20, with revenue down 26.9% to ¥109.6bn, likely hindered by their more formal products which will have suffered from a loss of demand this year. These brands also have more premium price points, which will have become less desirable as unemployment rates continue to rise globally.
As consumers continue to shift towards making clothing & footwear purchases online, Fast Retailing’s previous digital investments will have proved invaluable as it was forced to shutter stores across many of its markets during the year. This aided it in growing its Uniqlo e-commerce sales in Japan by 29.3%, and by c.20% in international markets, despite a widespread drop in demand for new fashion products. As online penetration is expected to be strengthened in the long-term as a result of COVID-19, the retailer must continue to transform its digital operations to build even greater top of mind appeal, for example by offering regional delivery saver schemes to encourage greater customer loyalty and more frequent purchases.”