Retail in Asia

In Sectors

Taking Stock: Philippine market surprises Uniqlo

When Japanese casual clothing brand Uniqlo opened its first store in the Philippines in June 2012 to further explore the rapidly growing retail market in Southeast Asia, it’s brand recognition among Filipino consumers is practically nil. It forged on and set up shop at the SM Mall of Asia, a waterfront site on Manila Bay that is one of the world’s largest shopping malls with a floor area of 407,000 square meters.

In this vast shopping heartland local shoppers call MOA, Uniqlo opened its flagship store with a floor space of approximately 1,550 square metros, easily becoming one of the mall’s largest tenants.

Katsumi Kubota, Chief Operating Officer, said the vision paid off. In less than five months, the store has opened its second store in the country, this time on the opposite side of the metropolis at the SM City North EDSA in Quezon City.

Like the SM Mall of Asia, the Quezon City mall is the acknowledged business, entertainment and lifestyle hub in the northern part of Metro Manila, which Uniqlo deemed ideal as a venue for its first store expansion in the country.

"The result is beyond our expectation. In terms of numbers and sales, it is remarkable. In our headquarters in Tokyo, everybody starts to talk about the Philippines," Kubota said.

The Japanese executive said in the last six months, the fast-selling items in its local stores are jeans and shirts, attesting to the brands’ leadership in casual wear clothing. Filipinos, he said, love casual wear and tend to pick more vivid colors.

"In Japan, we have severe winter times, so people tend to wear dark colors, but Filipino customers, who enjoy good weather all throughout the year, like colorful outfits," he observed.

Another reason he cited for the brand’s fast success in the country is it offers high-quality merchandize for the middle market. "The type of the product we offer is generally for everybody in the family and we express ourselves as a brand that is "made for all". Since Filipinos tend to have bigger families, I think we hit it off with the crowd easily," he said.

This "made for all" philosophy underlies the company’s objective to provide casual clothing for all people regardless of age, gender, ethnicity, or any other ways that define an individual.

It’s an uphill climb though as the retailer have to introduce the brand to the mass market. Compared to other Asian cities, he said consumers from Shanghai, Taipei, and Hong Kong know more about the brand than Filipinos.

This is understandable because by the time Uniqlo entered the Philippine market; its network of stores already included 851 locations in Japan and 234 in other global markets, of which 214 are throughout the rest of Asia. It opened its first store in Thailand in September 2011, following its successful expansion into Singapore and Malaysia. The Philippines is the 12th branch outside of Japan where UNIQLO has presence.

"Our advantage here is that there is no preconception. We tried to communicate well to local customers who we are, what we do and what we offer," Kubota said, adding that this approach will continue as more Filipinos get to know the brand more.

With both stores doing well, the Japanese executive reveals that the company is planning to build 50 more stores in the country in the next three years. The plan includes building stores in key cities outside Metro Manila such as Cebu and Davao. This is back to back with its plans also to start business in Indonesia and Australia next year.

With the increasing popularity of online retailing and the so-called Omni-channel strategy, does Uniqlo plan to put up an online shopping portal in the country any time soon?

"Online sales in Japan is very strong. It is doing well in China. It started in the US. Here in the Philippines, however, we need to think about the infrastructure first and how we can deliver the products. But yes, definitely it is in the pipeline," Kubota said.

In the meantime, Uniqlo is concentrating more on its customer touch points via traditional channels such as newspapers and magazines and also largely via Facebook, which he said is much more popular in the Philippines than in Japan.

"Our challenge right now is our communication with customers is one-directional – from us to them. We want to listen more to our customers," he said, adding that the Philippine market is unique in the sense that when sales are high it is really high, but there were times that the market is very calm. "The environment is really changing. We want to explore how to interact with customers better."

In 2013, he said the company is optimistic that the sales trend will continue. However, more needs to be done. As a Japanese brand, Uniqlo is already enjoying the advantages of a streamlined supply chain management system that makes its operations more efficient.

"Our supply chain management system links what we sell in the stores and what we have ordered in the factory. We have very clear visibility of the pipe. The type of improvement we are seeing is how we can better react or respond to customer needs. It is not going to be a dramatic change but merely enhancements to what we already have," he said.

Given the success of its first foray in the market, Kubota said Uniqlo expects to see a steady growth of the retail market in the country, which he said will really benefit all retailers.

Overall, Uniqlo’s business is doing very well, according to Kubota. Within three years, Uniqlo sales outside Japan will be equal to Uniqlo sales in Japan.

"That is our projection and the Philippine market is part of that growth," he said.

Taking Stock is Retail in Asia’s fortnightly column dedicated to showcasing opinions from experts in the retail industry.