From UNIQLO to top-quality products, “high quality and low price” is the way out for physical stores?

The days of global economic downturn seem to be very long.

The data shows that since 2008, the household income of developed countries has not grown, and the lack of demand from developed countries will directly have a greater impact on the economic growth of countries with a relatively high export share. The fate of the global economy is unprecedentedly clear.

The only way for consumers to cope with the future can only be to tighten monetary policy and become more and more “defective”. Conforming to the information explosion era, various product information is transmitted to consumers through the Internet anytime, anywhere, and they are becoming more and more “picky” at the same time.

As a result, this raises a problem for operators of physical stores: How to cope with consumer trends at the same time? Ye Guofu, a global co-founder of Mingchuang Excellence, which was known for its defying trend in recent years, gave a simple answer: high quality and low price. The more common is: five-star products only sell two-star prices.

In fact, some physical retailers have already applied the strategy of “high quality and low price” and achieved good market effects, such as Uniqlo, IKEA, and Top-quality products. In 2015, IKEA's sales revenue was 31.9 billion euros, an increase of 11.2%; Uniqlo's sales revenue was 167.17 billion yen, an increase of 21.6%; and outstanding sales revenue was 5 billion yuan, an increase of 100%.

From IKEA, Uniqlo to top-quality products, we ignore the differences in its business categories, store types, and sales methods, and abstract the core business logic. That is, “high quality and low price”.

In the brand, consumers are attracted by the image of high compulsion, while in terms of price, the transaction is facilitated by the price of civilians. Take UNIQLO as an example. The price of a white shirt with a modal fabric can be as low as 129 yuan, while the same quality of clothing can reach 350 yuan or more in some counters.

These cases all show that in the future, physical stores must survive the “high quality and low price” path, and they have to tamper with the traditional retail industry.

Retail giants are all appearing as "price saboteurs"

This sentence was written by Professor Chen Liping of Shouqi University of Economics and Business.

As a retail research expert in Japan, Chen Liping discovered that several major retail giants in Japan have initially subverted their predecessors in the image of “price saboteurs” to gain market share. But in fact, we will this theory by extension will find that almost any retailer in the world, initially in the image of "saboteurs price" appear, many of them ZARA, such examples H & M, IKEA.

Take Wal-Mart as an example. At its inception, Wal-Mart made every effort to save money through purchase channels, distribution methods, marketing expenses, and administrative expenses. It put forward the slogan "every day is cheap and consistent," and strived to realize prices more than others. Trader promises cheaper. The appearance of Wal-Mart overturned the high price of traditional department stores in the United States.

The format of hypermarkets was first born in China. It was also the phenomenon of "price saboteurs" that subverted the sales of counters at state-owned department stores at that time, which was expensive and experienced poor experience. However, after more than a decade of development, the traditional hypermarket format has become backward production capacity, which requires new "price disruptors" to subvert them.

The brand name created in 2013 was created in a new round of “price saboteurs”. Those who have been to high-quality products know that the price of goods here is mostly between 10 yuan and 39 yuan, and the same quality of commodity prices may be only 1/4 of other stores.

Share with Dior the supplier of the world's largest fragrance group, Givaudan, but the 35ML perfume sells for only 39 yuan; shares the "Jianliren" with Jiacheng Group as a supplier, but a set of 3 pieces of freeware is only available. Sell ​​15 yuan.

This is evolutionary theory, natural selection, survival of the fittest. If the physical store does not subvert itself, it will wait for others to subvert.

The commercial routines of "spoilers"

The reason why IKEA, Uniqlo, and top-quality products can achieve "high quality and low price" is in fact a routine.

First, establish a brand image from the top level design.

We mentioned the Scandinavian-style home shopping mall. The first one would think of IKEA. When it comes to cheap, good-quality basic men's and women's clothing, the first one would think of Uniqlo. In recent years, the rapid development of the "retail dark horse" with 1,400 stores opened in three years - Mingchuang Excellence has also gone very smart when setting up a brand image on the top floor. Japanese designer Miyake Sayaka was recruited and the company was registered in Tokyo to emphasize its “Japanese quality”.

Second, strong product development capabilities and supply chain control.

IKEA, Uniqlo, and Top-Quality products all have one thing in common. All of the products are developed by us. This on the one hand from the source to protect the product quality, on the other hand formed a natural barrier to e-commerce - the product is mine, I can choose to sell online or not.

The strong supply chain is the strong guarantee for its "high quality and low price". In order to save costs, they can scale procurement, global distribution of the industrial chain, and organize production in the least costly and efficient manner.

Take clothing as an example. It can be designed in Tokyo or New York. The purchase of fabrics is in China. The zipper buttons are purchased from South Korea. Finally, garment processing is done in Southeast Asia where labor is cheaper. Again, for example, IKEA can even contract a whole forest for a certain piece of furniture, and Chuangxin Premium can request a purchase quantity of 1 million pieces from a supplier at a time.

The excellent products vividly demonstrated the "high quality and low price" business model.

How do local retailers achieve "high quality and low price"?

For China's physical retailers, IKEA and UNIQLO can hardly follow suit. Even learning how to create top-notch products is not realistic, but this does not mean that China's physical stores cannot achieve "high quality and low prices."

To sum up, there are the following two approaches:

整合 Integrate supply chain and enhance direct mining

This is the approach that most retailers are currently doing, and it is easier to start. The specific approach is to promote the flat supply chain, the development of the buyer system and joint procurement.

开发 Develop your own brand

In Europe, it is normal for retailers to own 30% of their own branded goods; among the top three retail giants in the world, Costco’s own brand accounts for as much as 50%.

The practice of some local retail companies has shown that private brands can not only become “explosive” products that attract consumers to shop, but also have huge profit margins. For example, Chuangyou Premium has an enduring explosive product – a 10-yuan/browser eyeliner. Since its inception, it has sold more than 100 million cigarettes worldwide, although its price is only 1/10 of the counter, but There is profit.

As the old saying goes, which hilltop sings which song. In the face of changes in the global economy and consumer trends, only by learning from the successful business logic of "price disruptors" and constantly wondering how quality and low prices can be achieved, physical stores may be able to find a way out for the future.

Source | Retailer Zhao Xiangyang

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