Clr 2015 eng integrated minds by Changellenge

Integrated Minds are eager to provide UNIQLO with unique business solutions ahead of trends

Diana Allabirdina Nikolay Ageev Tatiana Kan Oleg Kan

Cup Russia 2015 Changellenge >> English section Tour â&#x201E;&#x2013; 1

Market Opportunities

VFM strategy

HR policy

Uniqloom Promotion

Stock Management

Total Effect

Team Résumé

The harsh economic conditions force UNIQLO to focus on value for money competitiveness not to lose its own clients and to lure away customers from high market companies The current slump in Russia challenges UNIQLO extensive expansion in the stagnant fashion industry in the next year… 5%

Fashion industry, Russia

GDP, Russia

25 800

Warning! Recession in motion

2% 1% 0%

2013

-1%

2014

60 50

25 200 40 24 600

30 Real income 20

24 000 10

2015

23 400

3 As consumers are getting more budget-conscious they are likely to downshift to lower segments unless superior service is provided premium segment medium segment low segment

price

UNIQLO, H&M

customer distribution

2014

Forever 21, Cotton on

2015

Summary

2014

2015

4 UNIQLO should find the optimum value for money to reap the maximum rewards from the market restructuring

ZARA, RAOUL, Massimo Dutti etc.

quality

low price elasticity

Exchange rate

0 2013

-2%

RUR/USD

Year to year growth

2 Plus, the weaker ruble results in the real income plunge entailing lower spending and worse consumer sentiment Real income per capita, RUR

high price elasticity

lower prices

 UNIQLO should retain budget-conscious clients by cutting operating expenses and according discounts

higher value

 UNIQLO may win over competitors’ premium customers by providing higher quality of service

The declining GDP growth as well as the unfavorable currency fluctuations lead to the population impoverishment making it vital for UNIQLO to retain and attract clients by offering them better value for money than competitors

Sources: team analysis, case materials, banki.ru

Changellenge >> Cup Russia 2015 >> Integrated Minds

Market Opportunities

VFM strategy

HR policy

Uniqloom Promotion

Stock Management

Total Effect

Team RĂŠsumĂŠ

UNIQLO should optimize their promotion campaign, HR-policy and stock management to achieve all of the net sales, staff turnover and client satisfaction targets in a year VFM Strategy

Network Promo

HR-Policy

Essence

Customers will be granted discounts if they upload their looks to social networks luring their friends in-store

The Family policy will improve every step of HR-management from recruiting & training to assessment & retirement

The new real-time stock management will make high-demand goods always available & prevent overstocking

Value

Wider choice of client-made looks will help customers to meet identity needs

Lower staff turnover will make all shopassistants able of delivering HQ service

The optimized assortment of goods will better comply with customers needs

Price

Goods can be made more affordable by giving customers various discounts

Recruitment & training expenses will be cut allowing greater margin for discounts

Lower logistics & storage costs will enable UNIQLO to make the clothes less expensive

Risks

Dishonest clients may collect likes from fake accounts. There may be a technical failure in processing all the customer photos taken

Extra HR-policy costs may exceed the economy on recruitment and training. There may be a tension between the current staff & newcomers

The OPEX economy may be less than the software amortization. There is also a risk of ITmalfunctioning resulting in over/under- stocking

Target

Budget-conscious and creative clients

Premium clients requiring HQ service

Mass clients

2 Lower prices and higher value will boost sales Annual Sales YTY increase, 000 JPY

SYNERGY RESULTS

by attracting clients from other segments 403

1344

Number of negative responses out of 35 respondents will diminish almost to NIL Assortment

Staff

Annual staff turnover will fall from 14 to 6 leavers a year ensuring superior service

-8 employees 14

Leavers per year

672 Price

Summary

Staff

268

Promotion HR policy

Stock Optimization

Stocks

Total

Pleasure 2014

Note: Impossible to rule out the human factor

2015

0 2014

2015

Network-based promotion, new recruitment and development process and real-time stock optimization allow increasing sales by 10 %, improving the client sentiment by 400 % and reducing staff turnover by almost 60 %

Sources: team analysis, case materials; UNIQLO complaints register

Changellenge >> Cup Russia 2015 >> Integrated Minds

Market Opportunities

VFM strategy

HR policy

Uniqloom Promotion

Stock Management

Total Effect

Team RĂŠsumĂŠ

The Uniqloom promotion will attract clients via social networks on an unprecedented scale increasing their number by 4% and the total sales by 5 % 1

The Uniqloom will provide clients with discounts based on their popularity in social nets and will increase their time spent at store

A list of discounts for the number of likes received or of people pictured will ultimately enrich the UNIQLO clientele

Basic Discounts Likes Discount

A Client puts on a set of UNIQLO clothes

He uploads a selfie with #Uniqloom to social nets

Step 1

Step 2

There comes a wait for his friends to like the photo

Step 3

The Client goes to the cashier and gets the discount

Step 4

3 The Uniqloom will also encourage customers to invent new UNIQLO looks by offering special prizes to the top four most popular users Month Beg.

Step 3

1. UNIQLO defines a color or a theme for the monthly contest (e.g. Yellow, Easter)

Step 1

2. Clients upload their original looks buying UNIQLO clothes and accessories

100

200

10%

Special Discounts Company Photo

Discount

With a Friend

With a Family

With a Party (at least 4 people)

4 The Uniqloom promotion campaign will boost the number of clients by 4 % and the average purchase per customer by 1 % 105%

+5%

102%

2014 2015

99%

Month End

Summary

Step 2

3. UNIQLO rewards the most popular winners* and displays their sets at store

* Rewards include coupons, limited collection items, fashion event invitations & master classes from professional stylists

96% Number of Customers

Average purchase

Turnover

The Uniqloom promotion will lure away clients from competitors by offering substantial discounts and innovating competitions among customers and will increase turnover by 5 %

Sources: team analysis, case materials, banki.ru

Changellenge >> Cup Russia 2015 >> Integrated Minds

Market Opportunities

VFM strategy

Uniqloom Promotion

HR policy

Stock Management

Total Effect

Team Résumé

Improvement of selection process, employee life-work balance and internal social programs will reduce annual staff turnover from 70% to 30% & will generate 2% more sales 1

Improvement of the selection process and of UNIQLO Manager Candidate Program (UMCP) will help in choosing the right people  Remote selection process

2 Employee needs should be taken into account in order to improve life-work balance and keep their interest in UNIQLO Give employee training and reward on achievements

Include more selection steps for better selection

 Increase qualification of HR  Provide candidates with clear understanding of their responsibilities and career path

 Cultural-fit Test

 Improve UMCP by focusing more on people with experience in retail

 Motivation Test

Reduce overtimes / hire more staff to handle workload

 Situational Strengths Test

3 Social benefits and motivation schemes, as well as training and opportunities will improve performance and satisfaction rates

Satisfied and happy employees

Ask employees for feedback and listen more to their needs

Hold teambuilding events and increase work motivation

Improve relations between salesmen and management

4 The amendments will reduce the annual staff turnover from 70% down to 30% and bring two per cent higher sales

Introduce Customer Satisfaction Button

: 30

Individual bonuses for outstanding customer service on weekly basis

 10% pay rise each year for length of service  Making Career plans for employees  Evaluate and promote hard workers rather than recent graduates who tend to underperform

70% staff turnover

   

Less new-comers training expenses Better performing employees Happier customers Stronger Word of Mouth

30% staff turnover

Higher Sales +2 %

Summary With spending more on extra workforce, bonuses and current employees trainings and investing less in new-comers training and attendance allowance, the staff-related expenses may remain the same while sales will increase by 5% and staff turnover will fall to 30%.

Sources: team analysis, case materials

Changellenge >> Cup Russia 2015 >> Integrated Minds

Market Opportunities

VFM strategy

HQ Promotion

HR policy

Stock Management

Total Effect

Team Résumé

Inventor Soft Solution allows optimizing the stocks resulting in great OPEX economy and offering customers a more balanced portfolio of high-demand goods 1

UNIQLO store has a clear problem with stock management

Inventory turnover = Cost of goods sold Average Inventory = 0,14 Storage period, days = 365 / Inventory turnover = 2561 days Store

Time For Sale, months

Problem

Implementation of Inventor Soft in UNIQLO will rectify the situation and make the stock management run smoothly

Inventory write-offs

Optimize global inventory

Overstock

Maximize Return on Assets (ROA)

Selling

Total

3,57

Overstock

Improve service levels

Kids

2,79

Overstock

Women

2,95

Overstock

Increase revenue and net profit

Men

4,88

Overstock

Women’s Bottoms

6,49

Overstock

Women’s Accessories

8,93

Overstock

Women’s Inner

8,21

Overstock