---
title: "Young people start to abandon Uniqlo? Factory goods launch a siege war for substitution"
description: "Under the impact of the \"Ping Ti\" brand's price war, UNIQLO is facing operational pressure in the Chinese market. FAST RETAIL-DRS Group announced its performance for the 2024 fiscal year, with annual "
type: "news"
locale: "en"
url: "https://longbridge.com/en/news/216680000.md"
published_at: "2024-10-13T23:35:20.000Z"
---

# Young people start to abandon Uniqlo? Factory goods launch a siege war for substitution

> Under the impact of the "Ping Ti" brand's price war, UNIQLO is facing operational pressure in the Chinese market. FAST RETAIL-DRS Group announced its performance for the 2024 fiscal year, with annual revenue of 3.1038 trillion yen, a year-on-year increase of 12.2%; operating profit of 500.9 billion yen, a year-on-year increase of 31.4%. Although the Greater China market revenue reached 677 billion yen, a year-on-year increase of 9.2%, the operating profit only slightly increased by 0.5%. UNIQLO's market share is being eroded by low-priced white-label products, as young consumers tend to prefer high cost-effective products. UNIQLO has not responded to interview requests regarding future strategies

Under the fierce price war of "fast fashion" brands, Uniqlo is facing increasing operational pressure in the Chinese market.

On October 10th, Uniqlo's parent company Fast Retailing Co., Ltd. (9983.T) announced its performance for the fiscal year 2024 (from September 1, 2023, to August 31, 2024). The annual revenue was 3.1038 trillion Japanese yen (equivalent to RMB 147.1 billion), a year-on-year increase of 12.2%; operating profit was 500.9 billion Japanese yen (equivalent to RMB 23.7 billion), a year-on-year increase of 31.4%.

In the Greater China market, Uniqlo achieved revenue of 677 billion Japanese yen (equivalent to RMB 32.1 billion), a year-on-year increase of 9.2%; operating profit was 104.8 billion Japanese yen (equivalent to RMB 5 billion), a slight increase of 0.5% year-on-year. Despite the year-on-year growth in revenue and profit, the growth rate has significantly slowed down compared to the double-digit growth in the same period last year. Both the mainland China and Hong Kong markets saw revenue growth, but operating profit declined.

As a major driver of performance growth, the Greater China market has always been considered an indispensable part of Uniqlo's global expansion strategy, rapidly rising in China with its high cost-performance products. At its peak, Uniqlo once achieved an annual sales revenue of over 30 billion RMB in the Chinese market.

In recent years, more and more fast fashion brands have entered the market, and Uniqlo's relatively simple product styles have quickly become the target of imitation by these brands. These fast fashion brands, priced lower than Uniqlo, have become Uniqlo's "fast fashion" substitutes, further eroding Uniqlo's market share in the Greater China market. In today's consumer market where young consumers prioritize high cost-performance, Uniqlo is facing the dilemma of being caught up and replaced by these substitutes.

Regarding how Uniqlo will cope with the performance pressure in the Greater China market, the fierce competition from fast fashion substitutes, and the future strategic deployment in the Greater China market, on October 11th, a journalist from Time Weekly sent an interview letter to Uniqlo via email, but as of the time of publication, no response has been received.

**Squeezed by Fast Fashion Substitutes**

The decline in performance in the Greater China market for Uniqlo is mainly attributed to external factors.

Regarding Uniqlo's performance in the Greater China market for the fiscal year 2024, Fast Retailing Co., Ltd. explained in the financial report that although the sales performance in the first half of the fiscal year 2024 was good, the second half performed poorly, with a decrease in revenue and a significant reduction in operating profit. The main reasons were the high comparison base of the previous year (fiscal year 2023), weak consumer willingness in the second half of fiscal year 2024, poor weather conditions, and products not meeting customer needs.

Specifically, in the first three quarters of fiscal year 2024 (from September 1, 2023, to May 31, 2024), Uniqlo's revenue in the Greater China region was 522.469 billion Japanese yen (approximately RMB 24 billion), accounting for 22.1% of the total revenue. In the third quarter (from March 1, 2024, to May 31, 2024), revenue in the mainland China and Hong Kong markets declined, operating profit significantly decreased, and same-store sales shrank However, the downward trend in same-store sales did not just appear in the second half of the year. As early as the second quarter of the 2024 fiscal year (December 1, 2023, to February 29, 2024), Uniqlo's net same-store sales in mainland China saw a slight decline. Today, this trend has not completely stopped.

At the 2024 fiscal year financial report meeting, Fast Retailing Group stated that in September 2024, same-store sales in mainland China were still declining, but showed some improvement after the "Golden Week" holiday, with most same-store sales in recent times higher than the same period last year. In response to the above phenomenon, Pan Ning, CEO of Uniqlo Greater China, pointed out that due to the increasing differences between stores, about 150 stores were unable to attract customers, thereby lowering the overall monthly average.

Despite facing pressure in the Greater China market, Uniqlo still believes that this market has huge growth potential and insists on pursuing a cost-effective route, continuing to expand the strategy of "replacement with affordability."

"Cost-effective consumption is particularly evident among the younger generation. Under the value of 'replacement with affordability,' consumers no longer choose branded products, but opt for more affordable products with little difference in quality." Pan Ning believes that Uniqlo has the potential to become the preferred brand for Chinese consumers.

Today, the Greater China market is still Uniqlo's largest overseas market, but an undeniable fact is that Uniqlo's business there has become somewhat challenging.

Despite sticking to being a cost-effective brand, Uniqlo has been raising the prices of some products in the Japan region since the fall of 2022 due to the impact of rising raw material prices and freight costs; in the Greater China market, the price of Uniqlo's basic clothing has increased from 49.9 yuan to 79.9 yuan or 99.9 yuan. This has led to more and more private label brands born from platforms like 1688 and Pinduoduo seeing opportunities, starting price wars and competing with Uniqlo.

According to observations by a Time Weekly reporter, platforms like Pinduoduo and 1688 are filled with popular products imitating Uniqlo such as dumpling bags, fleece zip jackets, and air cotton clothing, but at prices much lower than Uniqlo flagship stores, with most prices below one hundred yuan.

For example, on Uniqlo's official flagship store on Taobao, a dumpling bag is priced at 99 yuan, but in a certain private label store on Pinduoduo, it is only sold for 12 yuan, and on 1688, it is as low as 4 yuan; a air cotton jacket priced at 499 yuan/piece in the official Taobao flagship store, is sold for as low as 15 yuan/piece on Pinduoduo and 65 yuan/piece on 1688.

On the social platform Xiaohongshu (Little Red Book), many netizens have listed notes on "Uniqlo replacement brands," along with the names of domestic OEM factories and self-owned brand factories, and the comments section is filled with voices praising the concept of "replacement": "It's not that I can't afford Uniqlo, it's that factory goods offer better value for money" "Uniqlo is only possible to reach the replacement price during discounts, isn't it better to buy replacements on a daily basis?"

Clearly, many private label and factory brands have benefited from imitating Uniqlo. Lu Ling, a practitioner in the clothing industry, told a Time Weekly reporter that Uniqlo mostly sells basic style clothing, which has almost no manufacturing threshold, the styles are easily "copied," and with the highly developed domestic clothing manufacturing industry, there is generally not much difference between replacements and authentic products. "Except for products like cotton clothing and down jackets that require certain standards for internal materials, fabrics for T-shirts, shirts, dresses, pants, and bags are similar, but brands have their own supply chains, so the phenomenon of passing off inferior goods as good ones will be less prevalent The quality of fabric will be more guaranteed."

Lu Ling further stated that in terms of workmanship, products with brand supervision are more finely made, while white-label and factory-made products may be relatively rough, "but it does not affect the wearing and usage in general."

**Accelerate store closures, cautious store openings**

With the fierce price war of white-label products, UNIQLO chooses to "join if unable to beat."

In the online channels, apart from opening flagship stores on e-commerce platforms, UNIQLO officially entered the live streaming e-commerce sector in September 2022, and occasionally released a large number of coupons and discounts in Taobao and Douyin live streaming rooms, attempting to turn the tide in the competition with "platform brands."

After two years of layout, UNIQLO's live streaming e-commerce data has shown improvement.

In the past two years, UNIQLO has performed well on the Douyin platform during major promotions. Growth Black Box data shows that compared to the same period in 2022, UNIQLO's official flagship store on Douyin achieved a 171% year-on-year growth in sales in November 2023, and a 111% year-on-year growth in sales in June 2024, with GMV exceeding 50 million RMB at both time points (November 2023 and June 2024).

During the 6.18 promotion period this year, UNIQLO's live streaming channel sales surged by 50%, accounting for 20% of the overall online sales share. Among them, UNIQLO's sales on the Douyin platform during the 6.18 period increased by 30%.

The positive results in live streaming e-commerce have also strengthened UNIQLO's efforts. In the third quarter financial report briefing for the 2024 fiscal year, Pan Ning revealed: "We are currently training approximately 2,000 store staff to conduct live streaming in all stores."

While focusing on online live streaming, UNIQLO has not given up on offline expansion. Compared to the bold moves in online channels, UNIQLO appears more conservative and cautious in store deployment.

UNIQLO has publicly stated that starting from the 2024 fiscal year, within the next 3 years, it will restructure its store network in the Greater China market, optimize urban layout, close or renovate approximately 50 stores each year, and plan to increase the sales of each store by more than 1.5 times.

As of the end of August 2024, UNIQLO had 1,032 stores in the Greater China market, with 926 stores in mainland China. In the 2025 fiscal year, UNIQLO plans to add 60 stores in the Greater China market, a number that has been around 80 to 100 in previous years.

Facing the weakened purchasing willingness of consumers in the Greater China market, UNIQLO is adopting a dual strategy of online and offline operations to explore growth opportunities. How to attract and retain consumer groups, especially young people, has become a top priority in UNIQLO's strategy in China.

Cheng Weixiong, a senior brand management expert and founder of Shanghai Liangqi Brand Management Co., believes that when competing for some lower-tier markets, UNIQLO needs to respond with lower-priced and lower-positioned products, while integrating online traffic and effectively combining it with offline stores. Through a multi-brand strategy, effective competition can be formed for such products.

In the view of Ma Gang, an independent retail commentator, from the background and positioning of UNIQLO's birth, the understanding of mass consumption can be said to exceed that of other similar enterprises to a certain extent, so the company has the ability to quickly adjust its strategy to cope with new environments and challenges Faced with the changing environment and demand, UNIQLO should introduce a lower-priced product mix, increase the proportion of such products, benchmark against brands that have grown rapidly in recent years, and optimize the supply chain

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> **Disclaimer**: This article is for reference only and does not constitute any investment advice.
