Uniqlo suffered 44pc fall in sales in South Korea last year due to COVID-19, continued boycott movement
Mar 19, 2021
Seoul [South Korea], March 19 (ANI/Global Economic): Fast-fashion brand FRL Korea Co Ltd, which operates clothing retailer Uniqlo in South Korea, failed once again to get out of sales slump last year. Uniqlo's sales decreased by more than 40% and operating loss increased nearly sevenfold.
The retailer's continued woe is seen as stemming from the impact of the COVID-19 pandemic on top of the prolonged boycott movement of Japanese products.
Uniqlo, which has now recorded poor performance for two consecutive years, has started to plan a new online strategy to rejuvenate its business in South Korea. Its strategy is to minimize fixed costs by downsizing offline stores and retain customers by adapting to contactless trends.
According to Lotte Shopping Co Ltd's business report on Mar. 17, FRL Korea's sales last year fell by 41% from 2019's sales to about $528.64 million (about 574.61 billion won). Last year's operating loss stood at about $11.88 million (about 12.91 billion won), which is approximately a sevenfold increase in loss from 2019's operating loss (about 1.87 billion won).
The economic recession brought on by COVID-19 last year is seen as having had a big effect on the retailer. People went out less due to social distancing measures, and thus there were fewer people visiting physical stores, and work-from-home measures also led to a decrease in purchases of clothing.
"There have been fewer customers visiting stores as daily life and consumption trends changed due to the prolonging of the COVID-19 crisis," said a source of Uniqlo. "This is the result of various complex factors that got involved along with the issues of the Korea-Japan relationship."
FRL Korea first entered South Korea in 2005 with a joint investment from Fast Retailing Group (51%) and Lotte Shopping (49%). Uniqlo introduced the fast-fashion trend to the South Korean market and successfully settled in the country, launching a string of hit products such as its AIRism and HeatTech collections. Uniqlo's sales numbers also proved its success, as it recorded over $850 million (1 trillion won) in sales in 2015.
It was from 2019, however, when dark clouds started to cast over Uniqlo. When the Japanese government began to impose restrictions on exports of semiconductors and display materials to South Korea after taking issue with providing compensation to victims of forced labor, Uniqlo was regarded as a representative Japanese brand and became a major target of the boycott movement of Japanese products in South Korea. (ANI/Global Economic)
