What Makes UNIQLO a Popular Casual Wear in Hong Kong?
Executive Summary
This report is about UNIQLO, a leading casual apparel retailer in the world. UNIQLO’s success was remarkable. UNIQLO is a combination of the words unique and clothing. Perhaps reason why UNIQLO is popular in Japan, China, the United Kingdom, Korea, Hong Kong and now in the United States is because of its uniqueness. UNIQLO offers high quality, fashionable clothes at a very affordable price. This report will discuss the reasons behind UNIQLO’s success and popularity. This report will discuss UNIQLO’s history, its business structure and the characteristics of the Japanese and Hong Kong retail industry. In addition, this report will also analyze the company’s Strengths, Weaknesses as well as the Opportunities and Threats that it deals with. Lastly, this report will discuss UNIQLO’s growth strategies and its plans to achieve its goal of becoming a global brand that transcends cultural boundaries.
Table of Contents
Page Number
Executive Summary 1
Introduction 4
Industry Analysis
Japanese Retail Industry 5
Hong Kong Apparel Industry 6
Competitor Analysis
Local Competitors: Bossini 6
Giordano 8
Muji 11
International Competitor: Gap 13
United Colors of Benetton 14
The UNIQLO Difference 14
UNIQLO Products 17
UNIQLO Production 17
UNIQLO Stores 18
UNIQLO People 18
UNIQLO Business Model 18
UNIQLO in Hong Kong 20
SWOT Analysis
Strengths 21
Weaknesses 22
Opportunities 22
Threats 23
Improvement Plan 24
Implementation Plan 26
Management Review 33
Conclusion 34
References 36
Introduction
Uniqlo is a brand name of the Fast Retailing Corporation Limited, a Nikkei listed Japanese fashion retailer. The name is itself an example of internationalized Japanese inventiveness, combining the English words ‘unique’ and ‘clothing’. Uniqlo’s emergence on the Japanese (and now International) clothes retail markets has been spectacular and sudden. Sales quadrupled in fiscal 2001 – a remarkable performance given the state of the Japanese retail trade. Uniqlo’s segmentation encompasses lower to mid-price sensitive middle class, which can mean just about everyone in Japan except the extremely rich or the extremely poor. The 2002 advertising slogan ‘Our clothes are not branded on the outside, because we want to promote your sense of style, not our brand name’, illustrates Uniqlo’s inclusive customer focus. The company has made basic staple fashion items acceptable to a highly brand-conscious consumer group and has been credited with, among other things, ‘turning fleece into fashion’ (Jackson & Tomioka, 2003).
INDUSTRY ANALYSIS
Japanese Retail Industry
The history of modern through-store retailing in Japan begins with the Mistsukoshi department store, founded in 1904. Rapid post-war urbanization created a demand for fast and commuter friendly shopping that was met by large shopping malls in railway stations and self-service supermarkets. Brands such as Kinokuniya and Daiei rose to challenge Mitsukoshi and other general merchandise stores. The first significant international influence in shaping the Japanese retail industry came from the now ubiquitous ‘convenience stores’ such as Lawson or Seven Eleven Japan. Their names reveal their US American Inspiration. Competition in this sector is fierce. Differentiation may come in terms of use of space on the premises, opening hours, and technology. Sophisticated point-of-sale inventory and distribution management systems have been standard in Japan since the 1980s. The 1970s oil-price shocks benefited specialist retailers. Ito-Yokado Company became the most strategically focused profitable among these. Their example set a trend fro establishing smaller-scale outlets in large shopping centers. Fast Retailing’s UNIQLO label falls into this tradition. Distinctive features of Japanese retailing include:
- Focus on high quality, notably in terms of design and other aesthetic features, and a ‘no-haggle’ policy if customers return damaged or even unwanted goods
- Obsessive attention to wrapping and packaging, particularly during several ‘gift-giving’ seasons
- Imported goods being more expensive than domestically produced goods, but simultaneously offering attributes and benefits that Japanese-made goods cannot
- Discounting without reliable or trustworthy endorsements in normal economic times suggests goods are faulty or otherwise of low quality
Hong Kong Apparel Industry
Hong Kong Apparel Industry is one of the major manufacturing sectors in Hong Kong and has gained worldwide reputation for delivering high quality apparel in a short lead-time. Some apparel manufacturers are incorporating higher value-added activities such as design and brand development some have expanded into the retailing business locally or internationally (www.mshk.com).
Competitor Analysis
Local Competitors
Bossini International Holdings Limited
Bossini International Holdings Limited and its subsidiaries is a leading apparel brand owner, retailer and franchiser in the region. Headquartered in Hong Kong, Bossini launched its first retail outlet in 1987. Over the past decades, it rapidly established an extensive international operating platform and distribution network that extended to a total of 1,068 outlets worldwide. Among these, the Group operated 521 directly managed outlets in its markets, namely Hong Kong, Mainland China, Taiwan, Singapore and Malaysia. The group also further strengthened its brand presence in Mainland China through the establishment of 284 franchised outlets. As for the overseas markets, the group cooperated with its business partners to establish 263 export-franchised outlets in 18 countries, spanning from Southeast Asia, the Middle East, and Europe to as far as Central America (Bossini Annual Report, 2006).
The Bossini Brand
Bossini is renowned for its casual wear that is comfortable, easy to mix-and-match, colorful and energetic. Bossini caters to different consumer needs through its full range of value for money casual apparel that include ladies’, men’s and kids’ wear. Bossini builds a ‘Family-Fit’ brand. Bossini offers a range of products that fit and suit the needs of every family member. Bossini offers a wide range of products, designs, and colors that are sure to make mixing and matching easy and enjoyable for the whole family (www.bossini.com).
Growth Initiatives
Adopting a prudent and well thought-out strategy in the face of the competition, the group placed strong emphasis on quality, efficiency and profitability to strengthen its competitiveness. Product designs were enhanced to offer a wider array of colorful, easy to mix-and match apparel to fit customer needs. Innovative cross-regional marketing activities were launched to leverage on its extensive network to boost the ‘Bossini’ brand awareness (Bossini Annual Report, 2006).
Efficiency Measures
Bossini plans to take active steps to streamline internal management and increase productivity. Bossini plans to enhance its supply chain management to shorten the product cycle from design to store. Bossini will also continue to build strong ties with its suppliers in order to respond to consumer needs and market changes in a proactive manner. Bossini plans to upgrade its IT system to set a solid foundation to boost its future growth. The ‘Bossini’ brand has a history of almost two decades, in order to enhance the competitive of the ‘Bossini’ brand, the Group will conduct a brand building program to introduce a revolutionary store concept and new logo mark to revitalize and bring out the core values of the Group and its brand, bringing a colorful and energetic world to customers (Bossini Annual Report, 2006).
Giordano International Limited
Giordano is a popular and established casual apparel retailer in Asia Pacific. Giordano started out in 1970s as a local manufacturer of casual clothing in Hong Kong. Today Giordano already has over 1,300 retail outlets spanning three continents in addition to extensive manufacturing facilities in mainland China. The early success in Hong Kong paved the way for Giordano’s overseas ventures, initially in Taiwan and then Singapore. In 1986, the company repositioned itself and its brand as a value-for-money retailer. This fuelled the company’s international expansion (www.superbrandsinternational.com).
Giordano is one of Hong Kong’s most successful homegrown retail stories and the company has won numerous honors for its groundbreaking achievements in the fields of marketing, branding, retailing and service. Unique among local retail operators, Giordano has built a pan-regional and international footprint. It operates successful retail networks in 13 Asian countries as well as 75 shops in the Middle East. From its early days, Giordano helped write a new code of practice for the Hong Kong retailing scene and introduced innovations to the retail industry. Giordano was the first mass retailer to offer unconditional returns and refunds. It was the first to individually greet customers when they enter the store and say goodbye when they leave (www.superbrandsinternational.com).
The Giordano Brand
Giordano’s ‘For the People’ philosophy has served the company well since 1981 as it has grown from local manufacturer of casual clothes into an international retailer of men’s, women’s and children’s apparel. By providing comfortable and casual everyday fashion in a fun and lovely environment, it has built a brand name synonymous with customer service and value in clothing.
The Giordano name today reflects the contemporary lifestyle choices – simplicity in design and quality in substance – of its core 20 to 35-year old target market. the energetic and vibrant Giordano shopping experience reinforces the brand, and has allowed the company to expand both geographically and horizontally, establishing successful retail operations in 26 markets and developing the sub-brands Giordano Ladies and Giordano Junior, each with its own individual market positioning and retail identity (www.superbrandsinternational.com).
Giordano Products
Giordano clothes and accessories reflect the contemporary and easy living lifestyles of its customers. Its steadfast commitment to providing simplicity in design, quality workmanship, attentive customer service and value-for-money has allowed the company to build a loyal following in each of the markets where it operates. The core Giordano lines include fashion accessories including belts, wallets, tote bags, purses and umbrellas. Through Giordano Ladies, a more upscale range of classic and simple business wear is targeted at the female office professional market. Younger customers are served by Giordano Junior and its vibrant and colorful range of children’s wear (www.superbrandsinternational.com).
Giordano Values
Giordano stands at the forefront of Hong Kong’s clothing retailing industry as one of the most recognizable and trustworthy brand names. Devoted attention to providing people with excellent service, good products at affordable prices, and a detailed commitment to positively shaping the overall retail experience, has changed the retail industry in Hong Kong. Because of its continued efforts to upgrade its quality perception, retail design and service experience, Giordano managed to remain fresh and contemporary in a fast-paced world (www.superbrandsinternational.com).
Ryohin Keikaku Co., Ltd. – Muji
Since becoming independent from The Seiyu, LTd., in 1989, Ryohin Keikaku Co., Ltd., has promoted the reputation of the Muji brand by developing a range of apparel, household goods, and food featuring the functionality, simplicity, and quality that have become synonymous with the Muji name. The company’s products have received overwhelming support from consumers in Japan and overseas because they meet the needs asscoaited with today’s increasingly individual and diversified lifestyles (Ryohin Keikaku, Annual Report, 1999).
Processes
Ryohin Keikaku inspects all product processes comprehensively. Inspections are planned to optimize time and labor effectiveness, with processes that have no bearing on a products quality. Items found to have no defects are sent out immediately for delivery, while those that do not meet size and appearance standards are recycled. The Company’s emphasis on efficiency prevents material wastage and improves essential product quality (Ryohin Keikaku, Annual Report 1999).
Materials
For Ryohin Keikaku, the materials it uses to make its products are of the utmost importance; consequently, considerable attention is given to their selection. The company searches worldwide for the most suitable raw materials. Ryohin Keikaku uses many industrial materials as well as materials discarded by other because of their appearance – items can be acquired in bulk at low cost. The overriding selection criteria is always quality. These activities underpin the Company’s ability to create low-priced, high-quality products (Ryohin Keikaku, Annual Report 1999).
Packaging
When packaging products, Ryohin Keikaku seeks not to adorn them but rather to highlight their natural colors and shapes. For this reason, the company uses bulk packaging and place products in plain, uniform containers. The company upholds its commitment to simplicity. This approach is also in keeping with Ryohin Keikaku’s policy of conserving resources and reducing waste. All Muji products appear on store shelves in simple packaging bearing only product-related information and a price tag (Ryohin Keikaku, Annual Report 1999).
The Muji Brand
The name Muji, meaning “no brand” in Japanese, summarizes the philosophy of simplicity that is the characteristic of its product designs. Easily recognizable, the brand name has caught the attention of consumers since its introduction in 1980. The original concept of high-quality, reasonably priced products focused on paring down the extravagant decoration, fancy packaging, and other excesses that accompanied many products and offering consumers value for their money. While responding to the trends of the times, the company has maintained a commitment to creating sound products, appealing because of their simplicity and functionality. This innovative development approach is manifest in a product lineup that encompasses such diverse items as apparel, household goods, and food. To provide top quality at reasonable price, the company turned to overseas markets to capitalize on excellent procurement opportunities (Ryohin Keikaku, Annual Report, 1999).
International Competitor
Gap, Inc.
Gap, Inc. was incorporated in the State of California in July 1969 and was reincorporated under the laws of State of Delaware in May 1988. Gap, Inc. is a global specialty retailer operating retail and outlet stores selling casual apparel, accessories, and personal care products for men, women and children under the Gap, Old Navy, Banana Republic, Piperlime and Forth and Towne brands (Gap Annual Report, 2006).
Gap, Inc. design virtually all of its products, which are manufactured by independent sources, and sell them under Gap, Inc. brands:
Gap – founded in 1969, Gap stores offer extensive selections of classically styled, high quality, casual apparel at moderate price points. Products range from wardrobe basics such as denim, khakis and T-shirts to fashion apparel, accessories, personal care products for men and women, ages teen through adult, and maternity apparel. Gap entered the children’s apparel market with the introduction of GapKids in 1986 and babyGap in 1989. These stores offer apparel and accessories in the tradition of Gap style and quality for children, ages newborn through pre-teen. GapBody was launched in 1998 offering women’s underwear, loungewear, yoga gear, and personal care products. Gap also operates Gap Outlet stores, which carry similar line of products (Gap Annual Report, 2006).
Store Operations
Gap Stores offer a shopper-friendly environment with an assortment of casual apparel and accessories that emphasize style, quality and good value. The range of merchandise displayed in each store varies depending on the selling season and the size and location of the store (Gap Annual Report, 2006).
Brand Building
One of the keys to Gap’s success is its ability to develop and evolve its existing brands. Gap’s distinct brands are among its important assets. Gap, Inc. controls all aspects of brand develop from product design and distribution, to marketing, merchandising and shopping environments. Gap continues to invest in its brands and enhance customer experience through the expansion and remodeling of existing stores, the closure of under-performing stores, and a focus on customer service (Gap Annual Report, 2006).
United Colors of Benetton
The Benetton group is among the popular fashion retailers in the world. It is present in 120 countries. Benetton’s core business is clothing. Benetton exudes style, quality and passion through its brands. United Colors of Benetton is a global brand that has international style with a combination of colors, energy and practicality. Its wide selection of products – women’s wear, men’s wear, children’s wear and underwear, offer an everyday look, for all kinds of activities.
In terms of production, the group pays close attention to superior product quality – one of Benetton’s fundamental characteristics. The organization commits itself to innovation in every stage of its production process.
The UNIQLO Difference
Uniqlo is considered as ‘unusual’ in the context of the Japanese wholesale/retail industry.
- Strategy – Systematically deriving their marketing effort (as opposed, for example, to product development) from foreign rivals; notably GAP and to a lesser extent Benetton (Jackson & Tomioka, 2003).
- Segmentation – Addressing and setting trends simultaneously for the freeter (Japanese expression for people between the age of 15 and 34) generation and for consumers of all ages currently motivated by the ‘quality of life’ trend in Japan. For example, Uniqlo’s ‘Precision Basics’ are designed to appeal to a wide range of consumer age groups in Japan by being well made, affordable, fashionables, and international and assume growing opportunities for leisure time and demand for ‘smart casual’ wear (Oumi, 2000 cited in Jackson & Tomioka 2003).
- Price – Consciously differentiating their products with a lower retail price against foreign rivals’ benchmark price while simultaneously recognizing that there is virtually no tradition of wearing ‘cheap’ or throwaway casual clothes in Japanese public life (Jackson & Tomioka, 2003).
- Product – focusing on limited product range to achieve economies of scale. Uniqlo clothes are made under licence in mainland China and South East Asia under strict design and quality controls. In doing this, they confront a common consumer prejudice that clothes ‘Made in China’ must be cheap and therefore of low quality (Jackson & Tomioka, 2003).
- Packaging – Conforms to high Japanese standards: is understated and effective and carries English language translations of important product specifications and marketing concepts: appears confident and future-oriented (Jackson & Tomioka, 2003).
- Distribution – Individual store managers appear to have considerable opportunities for responding to local customer demand: The point-of-scale inventory system is directly linked to production, storage and transport operations in mainland China. Delivery usually takes less than a month. Shop displays are changed on average very two months (Okamoto, 2000 cited in Jackson & Tomioka, 2003).
- Customer Service – Customers are allowed to shop freely, without the immediate and individual attention of shop assistants, as is normally expected in the Japanese retail sector. Online shopping is also available, thus further freeing up time and space for individual customer choice (Jackson & Tomioka, 2003).
- Brand/Overall Image – Uniqlo appears young and dynamic without appearing brash and aggressive. It presents itself as international but also as Japanese (Jackson & Tomioka, 2003).
UNIQLO Products
At UNIQLO, the basic merchandising concept is to offer clothes that can be worn by anyone, anywhere, anytime. UNIQLO’s goal is to offer fashionable, high-quality basic casual wear at reasonable prices so that everyone can enjoy the quality, color and style of UNIQLO clothing (Fast Retailing Annual Report, 2004).
UNIQLO Production
The company maintains close control over every aspect of the business, from product planning, development and procurement of fabrics and clothing design, all the way through to manufacturing, distribution and sales. Based on customer feedback from the stores, the UNIQLO Design Studio develops products that are manufactured by partner factories in China with which the company has forged strong relationships. The Takumi Team of technical experts, veterans in the textile industry in Japan with more than 30 years of experience, ensures consistently world-class quality by providing technical guidance to overseas partner factories. The Strategic Fabrics Team is strengthening relationships with the leading fabric manufacturers around the world and developing new materials (Fast Retailing Annual Report, 2004).
UNIQLO Stores
UNIQLO stores are the most direct link to its customers. UNIQLO creates distinctive merchandise and sales floors that faithfully project the heart and soul of the company. UNIQLO operates both stand-alone roadside stores in suburban areas and stores in shopping centers. A familiar sight in neighborhoods all across Japan and UNIQLO stores have become a popular shopping destination for the entire family (Fast Retailing Annual Report, 2005).
UNIQLO People
Fast Retailing is a merit-based company. It evaluates each employee’s ability and performance regardless of age, gender or nationality. It is UNIQLO’s people who provide customers with a compelling shopping experience and deliver the ultimate in merchandise and service. In the development and training of employees, UNIQLO aims to maintain an organization in which each store manager, supervisor, merchandiser and head-office employee functions as a accomplished professional, demonstrating the commitment of an independent entrepreneur (Fast Retailing Annual Report, 2004).
UNIQLO Business Model
The mission and visions of UNIQLO is to continuously offer fashionable, high quality, basic casual clothing that everyone can wear at reasonable prices. The mechanisms of unifying and connecting production bases in China and other countries and UNIQLO stores in more than 700 distant locations around the world is the cornerstone of the UNIQLO business model devised to accomplish this mission (Fast Retailing Annual Report, 2005).
The UNIQLO Business Model
UNIQLO Business Model as of November 2006
Source: Fast Retailing Annual Report, 2006
UNIQLO in Hong Kong
Japan’s biggest casual apparel retailer designs, manufactures, markets and sells casual wear that can be worn by anyone, any day. Instead of dictating a look, Uniqlo gives its customers with the piece they need to make their own style. The Uniqlo logo is almost invisible, tucked away inside the garment. Uniqlo is now a household name in Japan has established more than 760 stores in various countries such as China, USA, UK, South Korea and Hong Kong. All Uniqlo products are made in accordance to high Japanese standards for quality; they come in different vibrant colors and styles. Uniqlo commits itself to providing customers with true excellence and innovative in casual wear, from design and functionality to the fit and color choices. Uniqlo controls every stage of product creation from the fabrics to be used to the rigorous production control program and to the store display (www.uniqlo.com).
UNIQLO Hong Kong, Limited
UNIQLO Hong Kong is a wholly-owned subsidiary of Fast Retailing, Japan. Fast Retailing is the owner and operator of more than 680 UNIQLO casual apparel stores in Japan. It also has numerous stores in London, Korea, Shanghai and Beijing. UNIQLO Hong Kong’s philosophy is to offer an outstanding balance of price and quality in a straightforward manner to all customers. UNIQLO Hong Kong offers casual clothing for everyone regardless of age, gender, occupation, or nationality. UNIQLO caters to its customers’ needs by providing them with high quality clothing at remarkably good prices (www.uniqlo.com.hk).
SWOT Analysis
STRENGTHS
- Highly Efficient store operation
- Expertise in inventory control
- Expertise in distribution and store development
- Global materials procurement
- High quality products
- Devotion to low-cost management and the direct coupling of production and sales at the fastest possible speed and lowest possible cost (Fast Retailing Annual Report, 2005).
- Directly engages in all product planning, production, quality control, distribution, sales and sales promotion activities (Fast Retailing Annual Report, 2005).
- UNIQLO products are inspired and shaped by a great variety of information such as customer opinions and market trends around the world (Fast Retailing Annual Report, 2005).
- UNIQLO stores offer comprehensive selection of men’s wear, women’s wear and clothing for children and infants, making them the ideal spot for families of all ages to shop (Fast Retailing Annual Report, 2005).
Weaknesses
- UNIQLO entered the American market in 2005. Analysts argue that the most difficult adjustment for the Japanese Apparel Retailer is the very thing that made it a huge success in Japan – its focus on basic rather than cutting edge clothes. American consumers differ from their counterparts in Japan. American consumers demand more than the basics. Analysts believe that one of UNIQLO’s weaknesses is its limited fashion elements (Roberts, 2005).
- Corporate Acquisition – Fast Retailing engages in Merger and Acquisition (M&A) activities as one of its management strategies for the expansion of its operations. Through these activities, the Group seeks to pursue synergies with companies and operations that are the objects of its M&A activities and optimize its business portfolio, thereby aiming to maximize the Group’s business value. However, in cases where the Group is unable to realize the expected profit and benefits of M&A activities, this could have an adverse impact on the business results.
Opportunities
- Emerging trends in the fashion and apparel markets; companies operating in the global arena are expanding their business activities
- Free trade zone has grown and the fashion and apparel markets have become increasingly borderless
- Globalization has spurred greater simultaneity in fashion trends around the world; trends spread like wildfire around the globe
- Innovations in information technology have increased the speed with which information travels throughout the world
- Low-price apparel market remains underdeveloped in Japan, presenting a huge business opportunity
Threats
- Intense Competition – In each of its businesses, the customers of the Group are consumers who are always highly discriminating about merchandise, services and price, and the Group engages in tough competition with other companies in its industry in Japan and overseas (Fast Retailing Annual Report, 2006).
- Production Regions – The largest percentage of merchandise sold in UNIQLO business operations, which are the core activity of the Group, is manufactured in China and other countries in Asia and then imported into Japan. For this reason, in the event that major changes occur in the political, economic and/or legal environment and natural disasters are experienced in China and other producing countries, this could have an adverse impact on business results (Fast Retailing Annual Report, 2006).
- International Operations – UNIQLO operates in the UK, China, Hong Kong, the United States and South Korea. If the Group is unable to deal with the uncertainties of changes in market needs and product trends in its overseas markets or if economic fluctuations occur, political and economic conditions become turbulent, or changes occur in legal regulations and/or other conditions, these could have an adverse impact on business results (Fast Retailing Annual Report, 2006).
- Foreign Currency – The majority of product imports of the UNIQLO business, which is the Group’s core business, are dominated in U.S. dollars. If there is a major trend toward a weaker yen and a stronger U.S. dollar and this trend persists for a prolonged period, this could have an adverse impact on business results (Fast Retailing Annual Report, 2006).
- Changes in economic conditions and consumption trends
IMPROVEMENT PLAN
UNIQLO plans to transform into a global retail brand. UNIQLO wants to become more than a company with stores around the world, but rather a company that surpasses cultural boundaries. The company wants to attract consumers around the world. This new stage in UNIQLO’s improvement plan incorporates different strategies. These strategies, according to UNIQLO’s 2006 Annual Report, are:
1. Research and Development (R&D) Centers – Through its R&D centers, UNIQLO aims to gather the latest information and finest materials from around the world and continue to create new value and markets through innovation.
2. SPA Business Model – Uniqlo opened its first store in 1984, Thereafter, it has established its SPA business model, which integrates product design, production, distribution, and sales.
3. Location and Store Format Development – UNIQLO traditionally, expanded its store network by deploying standard format of suburban freestanding roadside stores with a sales area of 700 square meters. This standard store format is considered as a contributing factor to the leveling off of UNIQLO in Japan. The company decided to create a new store format strategy. UNIQLO started developing new store formats such as large stores with sales floor space ranging from about 1600 to 3000 square meters and specialized small-format stores with sales floor space of 30 to 160 square meters. UNIQLO is also developing new store locations, opening stores at large shopping centers and department stores (Fast Retailing Annual Report, 2005).
4. Global Flagship Stores
5. Merger and Acquisition (M&A) Strategies – The company believes that an M&A strategy is necessary for acquiring excellent businesses and talented business managers.
6. Transition to a Holding Company – In November 2005, FAST RETAILING started its transition to become a holding company. This is a major step toward the transformation of the company’s business structure.
IMPLEMENTATION PLAN
1. Large Format Stores
UNIQLO has achieved high rates of growth by rapidly opening stores with standardized product lineups and floor space amounting to roughly 700 square meters in a typical location in the suburbs. However, these standardized stores are only able to cater to limited consumer needs. UNIQLO wants to attract its customers to purchase a wider variety of products by rolling out large-format stores with floor space of around 1,600 square meters. UNIQLO plans to open 20 new large-format stores in fiscal 2007, after which the company plans to speed up the pace and open 40 large-format stores each year (Fast Retailing Annual Report, 2006).
On November 10, 2006, UNIQLO opened a global flagship store in Soho district of New York, with sales floor area of 3,300 square meters. Since opening, the Soho store has performed as expected. The store has been covered extensively in the media, raising the awareness of UNIQLO in the United States. The Soho store is located right on Broadway, New York’s best known fashionable district, and is therefore not only well positioned to showcase the best products, shop floor, and service that UNIQLO can create but also transmit the latest in Japanese culture centered around the concept “From Tokyo to New York.” As a next step for the flagship store strategy overseas, UNIQLO opened a large format store with about 2,300 square meters of floor space, on December 7, 2006, in a shopping mall in Shanghai’s Pudong District. The Shanghai store aims to give customers in Shanghai a clear impression of UNIQLO’s good quality and reasonable prices” (Fast Retailing Annual Report, 2006).
UNIQLO plans to open flagship stores in London, Paris, and other major cities in Europe and position UNIQLO as a global brand.
2. M&A (Mergers and Acquisitions)
Among of Fast Retailing’s top priorities are mergers and acquisitions and new business activities. The objective of M&A activities is to leverage UNIQLO’s strengths as a Specialty Store Retailer of Private Label Apparel (SPA), enhance the Group’s global portfolio, and build a business platform for FAST RETAILING and UNIQLO in major markets around the world. FAST RETAILING plans to actively engage in M&A activities, investing between ¥300 billion and ¥400 billion in companies with global potential able to deliver sales of ¥100 billion or higher ratio of ordinary income net sales of 15% or higher and working together with outstanding business managers to achieve high growth. Fast Retailing opened its first store featuring new “g.u.” brand in October 2006. g.u. was created to develop the market in Japan for absolutely low prices. In contrast to the company’s quest with UNIQLO to enhance added value with high-quality, fashionable merchandise, Fast Retailing are going after rock-bottom process with g.u. Fast Retailing plans to open up to 50 g.u. stores each year in a variety of locations. The company aims to realize highly efficient operations by leveraging the SPA know-how that Fast Retailing have gained through its UNIQLO operations in g.u.’s product planning, production management, and store operation (Fast Retailing Annual Report, 2006). Some of the company’s mergers and acquisitions are:
g. u.
Fast Retailing newest brand, ‘g.u.’ aims at offering casual wear for the entire family at affordable prices. The concept of g.u. is expressed as casual wear for the family that offers highly fashionable products with an impressive range of variations, unparalleled low prices, and dependable quality. G.U. CO., LTD was established in March 2006 as a wholly-owned subsidiary of FAST RETAILING and opened its first g.u. brand store inside Daiei Minami Gyotoku store. The company plans to develop the g.u. business model by opening stores in a range of locations and venues, including stores within shopping centers and roadside stores.
ZAZIE
The concept behind the ZAZIE brand is “elegant clothing for adults everyday.” Each item in the ZAZIE brand line is basic, but customers can choose individual items freely from a rich variety of colors, combine them into their liking and keep up with the style trends of the season.
enracine
The enracine brand concept is “daily casual wear for mothers raising children.” This brand line emphasizes being cute, refreshing, and natural, and aims to offer casual, comfortable apparel that people can enjoy in their daily lives.
Comptoir Des Cotonniers
Since its first boutique opening in 1995, the chic Parisian ready-to-wear, Comptoir des Cottoniers has been synonymous with Mothers and Daughters. This original concept plays on the core values of authenticity and proximity, to build up a real emotional relationship between the brand and its customers. Targeting urban, fashionable and active women, the collection offers a sophisticated, natural, and feminine wardrobe (Fast Retailing Annual Report, 2006). Comptoir des Cotonniers is acreative brand, which admires personal relationships and a sense of heart to heart. It encapsulates and nurtures the close bond between mother and daughter (Fast Retailing Annual Report, 2005). In June 2006, FAST RETAILING fully acquired NELSON FINANCES S.A.S. and develops the COMPTOIR DES COTONNIERS brand. The company had 244 boutiques, mainly located in France, Spain, Belgium, Germany, United Kingdom, Luxembourg, Italy, Portugal, and Japan (Fast Retailing Annual Report, 2006). Each season, a fashion show at which clothes are modeled by mother and daughter pairs selected from among more than 10,000 customers from across France attracts great attraction (Fast Retailing Annual Report, 2005).
Princess Tam.Tam
Princess tam.tam is a lingerie brand established by the Hiridjee sisters of France. The brand concept is “creating foundation garments for women that enable them to be themselves.” The brand offers women lingerie that is at once highly fashionable, creative, and romantic, by using original prints, subtle colors, and a wide choice of cuts and fabrics. The brand proposes a range of products to women that reflect close attention to detail.
Foot Park
The FOOT PARK concept is to propose fashionable footwear suited to a free and comfortable family life. The brand encompasses a range of footwear geared to today’s lifestyles at reasonable process. Store interiors are brimming with activity and an at-home atmosphere, providing a comfortable place where families can enjoy leisurely shopping (Fast Retailing Annual Report, 2005).
Link Theory Holdings
Theory caters to the needs of contemporary women who are looking for everyday clothing that is comfortable, modern and sexy. Theory began as a merchandising brand in New York in 1997. Theory’s NEW BASIC silhouette incorporates comfortable, simple and unpretentious trends and is much loved by sophisticated women living and working in the city. Perfect fitting pants and sexy shirts from top quality stretch fabric have become a trademark of Theory (Fast Retailing Annual Report, 2005).
3. Holding Company Structure
In November 2005, FAST RETAILING moved to a holding company structure to ensure its ongoing growth in the future. The new framework is aimed at facilitating speedy decision-making, flexible management of operating companies, Group-level management and globalization, and strengthening of Group companies’ corporate governance. M&A activity development, individual business support, and recruitment of personnel to manage Group companies are among the holding company’s fundamental responsibilities. In addition, FAST RETAILING realigned and expanded audit, legal, finance, and other administrative departments in 2006 to bolster the Group’s corporate governance, making headway in the construction of a management foundation for the Group (Fast Retailing Annual Report, 2006).
4. Global R&D
R&D according to Persaud et al, (2002) is regarded as the most valuable, strategic activity of corporations since it is a source of new competitive advantage. R&D is about the effective and efficient creation and deployment of new technology, products, and processes that may result in substantial financial return and competitive advantage to its producers and which may improve the quality of life of its consumers or society in general (Fast Retailing Annual Report, 2006).
To develop as a global brand, UNIQLO reviewed its product development system and, in autumn 2005, brought on line a global R&D (Research and Development) capacity with operating bases in Tokyo, New York, Paris, and Milan. Through this new global R&D, UNIQLO is able to draw on the talents of top-quality personnel worldwide and develop merchandise that meets top global standards. The first products developed by these R&D centers were placed on UNIQLO store shelves in autumn 2006. This has strengthened the lineup of fashionable UNIQLO merchandise and enabled its stores to offer customers a new level of style. UNIQLO has developed its lineup of basic goods and introduced them around the midpoint of the fashion cycle. The glodal R&D has focused its attention on bringing a higher degree of refinement to basic merchandise, which is UNIQLO’s traditional strength. Products developed by this global R&D will be keys to the success of the large-format store strategy that UNIQLO is implementing. Along with the growing size of stores, an important element will be the capacity to develop even more attractive products (Fast Retailing Annual Report, 2006). Four R&D centers in Tokyo, New York, Paris, and Milan take the initiative in:
- Gathering the latest information from fashion cities, Group store networks, business partners, and other sources of global trends, customer needs, lifestyles, and fabrics.
- Decision-making regarding the concepts of the coming season based on the information gathered from fashion cities, Group store networks etc.
- Designing – designs are prepared in each base, and, from the overwhelming number of designs presented, product lineups are coordinated to suit the markets of various countries.
5. UNIQLO’s Web Marketing
In August 2006, INIQLO’s new website, UNIQLO MIX went online. The site offers more than 200 of the latest merchandise items in the style of the season at all time. The search function allows customers to check on items both according to style and by type. Sales through UNIQLO’s online site are on a growth trend, UNIQLO websites also provide the latest information on UNIQLO stores and other related topics as well as offer medium promotional campaigns at inviting customers to UNIQLO stores (Fast Retailing Annual Report, 2006).
- The top screen directs viewers to a wide range of styles
- By choosing a style they like, customers can access additional information on various styles and introduction to products
- Customers purchase any item on the spot
MANAGEMENT REVIEW
In November 2005, the FAST RETAILING Group adopted a holding company structure to reinforce its corporate governance. At the same time, the Group introduced an operating officer system that clearly separates managerial oversight, which is handled by the Board of Directors, from business execution, which is the role of the operating officers. The Group appointed external directors and auditors to support oversight and the checks and balances governing management and business execution. Regarding management deliberation and decision-making committees, the Board of Directors meets at least once a month to consider issues and make decisions on important managerial matters. In addition, the Executive Committee meets on a weekly basis, enabling top management to review and execute strategies and business plans promptly. Furthermore, to oversee and govern Group companies, members of management meet on a monthly basis to examine operating results and other matters to detect any problems at an early stage and solve them rapidly (Fast Retailing Annual Report, 2006).
Conclusion
UNIQLO is among the top casual wear retailer in the world. UNIQLO is a brand name owned by Fast Retailing Corporation. UNIQLO is famous for its clothes that can be worn by anyone, anywhere, anytime. It offers fashionable, high-quality basic casual apparel as reasonable prices. It maintains close control of the entire business processes from planning to store display. It designs, manufactures, markets and sells its own products. UNIQLO offers a wide range of products that come in different vibrant colors and styles for the whole family. UNIQLO commits itself with true excellence and innovation in casual wear.
Based on the findings and the information gathered in this research I can say that UNIQLO is popular in Hong Kong and other parts of the world where there are UNIQLO stores because of the following reasons:
- High quality and reasonably priced products
- Devotion to low-cost management
- Products and designs driven by different sources of information such as customer opinions and market trends
- Wide selection of products
- Innovative, vibrant and functional designs
- Highly efficient store operation
- Highly efficient inventory control
- Excellent distribution and store development
- Global materials procurement
- Aggressive marketing and advertisement; word of mouth
These strengths make UNIQLO a successful fashion retailer. UNIQLO aims to boost its growth and become a global brand. These goals can be achieved through UNIQLO’s Improvement plans such as
- Establishment of Research and Development Centers
- Adopting SPA Business Model
- Developing Location and Store Format
- Establishing Global Flagship Stores
- Merger and Acquisition Strategies
- Transition to a Holding Company
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