Anne Chen
UNIQLO Competitive Analysis International Advertising & Promotion Mid-Term Paper 10/10/2012
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The UNIQLO Brand Positioning & Mission: “We don’t intend to stop until we become the world’s No. 1 casual apparel company.”1 This ambitious and aggressive pronouncement from UNIQLO’s parent company, Fast Retailing Co., Ltd., was what Parija Bhatnager of CNNMoney back in 2005 dubbed as “a direct challenge” aimed at long-established retail power player, Gap.2 But this supposed “challenge” also accurately summarizes UNIQLO’s brand positioning and overall company mission. The UNIQLO brand has taken the everyday wardrobes of men, women, and children – Tshirts, jeans, jackets, socks, etc. – and injected them with several other unique ingredients: innovation, creativity, self-expression, technology, and high fashion. These elements, combined with the company’s commitment to providing its customers with high-quality items at affordable prices, has carved out a quite a successful brand position for UNIQLO, both in its Japanese home market and the international competitive landscape. According to a 2009 article from The Japan Times, what began UNIQLO’s rise in the world of apparel retailing was the company’s success in popularizing fleece-wear back in 1998; “2000 saw it sell 26 million [units] as the chain’s popularity soared.”3 Currently operating in the casual apparel retail category, the company maintains control over all business activities by acting as designer, manufacturer, and retail. It offers apparel, underwear, and accessories to women, men, kids, and children. The UNIQLO customer is fashion-savvy but price-sensitive; he or she desires quality at a reasonable price, as well as basic designs that also promise high performance. This individual is extremely familiar with today’s variety of media platforms – a Facebook user, a Twitter account holder, a Smartphone owner – and is thus easily influenced by celebrities, musicians, and other prominent public figures. As “a modern Japanese company that inspires the world to dress casual”4, UNIQLO has a clear reason why its company exists. But UNIQLO also has its own distinct business model, which differs from those of fast-fashion retailers such as Zara and H&M. As Fast Retailing Co., Ltd.’s founder, Tadashi Yanai, notes, “We don’t want to chase after ‘fast-fashion’ trends.”5 While Zara and H&M pursue models which seek to capture the latest catwalk styles and provide them as quickly as possible to their customers – thus requiring the rapid churning out of several new lines every year – UNIQLO has opted for a less frequent and speedy strategy. Its “SPA” approach, which allows UNIQLO to control “all stages of the business – from design and production to final sale”6 – also requires the company to annually produce comparatively fewer 2
items than its competitors, thus keeping its products on its store shelves for a longer period of time. And to mitigate the benefits lost from not always having the latest trends available, UNIQLO’s focus on casual, basic apparel has still resulted in higher-than-average inventory turnover rates. It also compensates for its less extensive lines by providing “the same item in many colors: socks come in 50 hues at its flagship store in Tokyo.”7 Furthermore, other advantages from its “SPA” strategy can be enjoyed: with lesser items offered, inventory management and control is simplified; cheaper and higher-volume arrangements can be negotiated with suppliers; wider audience appeal can be achieved; and overall cost savings can be funneled down to the end customer. It is thus little wonder that one of UNIQLO’s essential competitive edges against its opponents is its ability to remain at the forefront of price competitiveness. In essence, then, another phrase that befittingly encapsulates UNIQLO’s overall brand message is the slogan the company embraced back in the fall of 2010: “MADE FOR ALL”. UNIQLO has transformed from a Japanese company to a Japan-born company – this change has allowed it to adopt a more global position in the apparel retail industry, and it has therefore accordingly continued to emphasize its mission of designing and producing quality, casual clothes capable to worn by everyone in its marketing programs.
UNIQLO’s Marketing and Messaging Tactics: It’s All About Appealing to the Masses UNIQLO has long realized the importance of reaching all of its global customers in both an engaging and direct manner, especially in today’s current highly digitalized environment in which the ways companies can communicate with and reach their target audiences have significantly changed. One need to just visit one of UNIQLO’s various interactive campaign Web sites, such as www.uniqlosurprise.com or www.uniqlo.jp/uniqlock, to experience one of the company’s unique and creative promotional tactics, which of course keenly take advantage of the diverse media platforms available to be utilized by smart marketers today. Indeed, when it comes to commitment to discovering new and innovative ways to grab and keep the attention of the ever-mercurial consumer, the UNIQLO company is a source of plenty of great examples. Each season, UNIQLO’s marketing department produces fresh, new promotional campaigns, another significant difference between the company and its competitors. 3
A great place to begin experiencing the UNIQLO world is the company’s Web site, www.uniqlo.com, which offers consumers a complete gateway into the UNIQLO experience – here, a viewer can register for e-mail up-dates on promotions, events, product launches, etc., browse new collections, read any company Web news, visit any of UNIQLO’s sites dedicated to a specific region it operates in (i.e. China, France, Hong Kong, Japan, Korea, etc.), access company information, terms of use, and other policies, play games such as “Lucky Cube with Maru”, download music and screensavers, and peruse exclusive products created under one of UNIQLO’s many projects, such as The Designers Invitation Project, The UNIQLO Innovation Project, and The UT Project. Some quite recognizable names who have participated in UNIQLO’s projects include Vena Cava, Charlotte Ronson, Philip Lim, and Alice Roi. And then there is UNIQLO’s UT Project, launched back in 2007, which features limited-edition T-shirt collections designed by famous designers as well as musicians and photographers, such as Terry Richardson and Gareth Pugh. Moreover, although there is no exact date as of yet, UNIQLO has also announced that it will be opening its online store this fall 2012. Returning to the aforementioned UNIQLOCK campaign, UNIQLO’s ability to introduce breakthrough online advertising campaigns is exemplified. “The viral marketing project, designed to build brand awareness internationally, feature[s] a clock with spliced clips of wellchoreographed dancing and catchy lounge music all timed to match the ticking. It [runs] all year round, 24/7. In summer the girls dancing [wear] polo shirts; in winter cashmere; and at midnight, they slept.”8 The overall result is an attention-grabbing, viral platform in which consumers from all over the world are simultaneously entertained and exposed to UNIQLO’s products. UNIQLO’s advertisements often feature celebrities – this allows the company to quickly get its name recognized in new markets, because new target audiences who are unfamiliar with the UNIQLO brand at least begin to associate UNIQLO with a famous face they already know. The current global brand ambassador for UNIQLO is professional tennis star Novak Djokovic, but of course ads targeting specific countries utilize celebrities who are known by the particular country’s people. Other previous U.S.-associated UNIQLO faces include Susan Sarandon, Cyndi Lauper, Orlando Bloom, and Charlize Theron. Ads that use models always employ multiethnicity. Recently, however, most advertisements use regular people – a most recent one back in the spring of 2012 actually starred a 78-year old elderly couple, which indicated that the company was communicating to consumers that there exists no age barrier when it comes to 4
wearing its products.9 Some advertisements and Web sites focus on a specific UNIQLO product – such as HEATTECH, winter apparel that is naturally heat-generating – in order to communicate UNIQLO’s innovativeness both in the promotional strategies as well as technological R&D. Other promotional activities include hosting and sponsoring events and television ads. Social media platforms such as Facebook, Twitter, and YouTube also prove to provide two-fold benefits: first, UNIQLO can reach customers where they currently virtually thrive anyway; and second, UNIQLO can collect vital information about their shoppers and use this data to further more R&D and glean other insights.
The Competitive Landscape: Who are UNIQLO’s Competitors? What are Industry Alternatives? The competitive landscape of the apparel retail industry has grown especially intense due to the fact that this industry has become buyer-driven. Consumers consider brand appeal as well as price; fashion aesthetic is combined with quality, performance, comfort, etc. Hence, the birth of “fast-fashion” and mass-customization, and, ultimately, a more global approach, in which apparel retailers seek to establish themselves as everyone’s go-to supplier of clothing. Many companies, such as Gap, have been long-established; yet we must remember that compared to its main competitors, UNIQLO is a relatively new to the global apparel industry. Thus, due to its buyer-centricity, the industry has low barriers to entry – consumers are always seeking the next “best thing”, the newest trend, etc. – and thus will not shy away from letting only once-worn jeans and sweaters from hanging forgotten in closets. Successful retailers thus need to be quickly responsive to fashion trends, regularly churn out creative and innovative designs, keep their audience engaged and interacting with them, and keep costs low – simultaneously. UNIQLO must also consider the threat of substitutes. Probably the closest alternative to casual, basic apparel is active-wear. In fact, many active-wear companies (such as Nike and Adidas) have been quick to infuse their athletic clothing with some fashion appeal. The lines that separate clothing categories – “casual”, “business”, etc. – seem less distinct than ever, as new sub-categories are appearing: “business-casual”, “semi-casual”, etc. However, UNIQLO still maintains an upper-hand when it comes to competition and industry alternatives – as the company controls all operations – from design to production to manufacturing to selling and 5
marketing – it is able to prevent competitors from mimicking its designs or using its production methods. Future competitors, currently non-existent, are thus a threat, but currently, UNIQLO has two general categories of competitors: “direct” ones that compete with UNIQLO in specific countries and international ones. Three of UNIQLO’s biggest local, Japanese competitors are Bossini, Muji, and Giordano. Of course, other countries in which UNIQLO operates each have their own local competitors; Malaysia, for example, is home to Padini and F.O.S. On the international battleground, UNIQLO faces Gap, Zara, H&M, Benetton, and Top Shop. Interestingly, in a Wall Street Journal article back in April, UNIQLO actually stated Apple as its main competitor: “We don't see ourselves as having competitors in the fashion-retailing space. At Apple, as at Uniqlo, the customer service and the customer experience is all important. People have limited time and money to buy things and they can choose where they shop.”10
SWOT Analyses Below, three SWOT analyses are presented: the first is UNIQLO’s, and then the following two delve into the analyses of two of UNIQLO’s major competitors. To best understand UNIQLO’s overall competition, a competitor has been selected from each of the two “general” categories described: international and direct. UNIQLO’s SWOT Analysis Strengths
Weaknesses
• “Made For All” – striving to become a global brand • “SPA” – allows for producing high quality products at lower costs, also can align all strategies (i.e. operational, supply-chain, inventory, distribution, marketing) • R&D, innovation • dedicated marketing – engage customers, get information • No. 1 position in Japan • caters to a relatively broad audience (men and women, all cultures, etc.)
• only one store in some countries of operation (i.e. Malaysia) – still quite “foreign” in new countries • focuses on winter-apparel • simple, minimalist, casual-wear won’t work well in fashion capitals like Paris, Milan, London • too many layers in distribution channels
Opportunities
Threats
• many countries relaxing trading regulations • pursue presence in cold-climate countries like Canada • strengthen spring and fashion lines in order to assure year-round customer loyalty • teenagers (13 – 16 year-olds) • new technologies can lead to more innovative clothes, faster ways to connect w/ consumers, etc. 6 • e-store (will open this fall)
• external forces and changes in consumer tastes, economic conditions (i.e. a recession) • consumers can always switch brands • foreign currency fluctuations • currently non-existent competitors • fluctuations in labor prices, raw material prices
GIORDANO’s SWOT Analysis Strengths
Weaknesses • lack of storeroom in store – must rely on distributor • not too up-to-date with trends – products are too standard, limited variety
• well-known presence in Asia Pacific – Hong Kong’s greatest “homegrown retail story” • cheap, affordable, convenient – has over 1,300 retail outlets in 3 continents and an e-store • extensive manufacturing factories in China • expert in marketing and branding • exceptional customer service • social responsibility
Opportunities • growing interest in China • customer’s increased buying-power and need to be engaged by companies • globalize? • add variety and more fashion to products – work on product development
Threats • competition intensifying – emergence of currently non-existent players • Southeast Asia’s unstable economy and political atmosphere
GAP’s SWOT Analysis Strengths
Weaknesses
• inability to become a “trend-setter” • often loses touch with core consumer – marketing campaigns don’t speak to a specific-enough audience and are too ambiguous • dependency on suppliers / third-party vendors • lack of control in production processes
• other brands: Piperlime, Old Navy, Banana Republic – broadens market for GAP • long-established company – reputation • expert in branding, distribution, marketing, R&D, etc. • classic, durable but high-style for all ages • money available to remodel stores or build new ones • international presence is growing – world-wide stores • huge vendor-base and established customer-base
Opportunities • Europe, India, and China • strengthen e-commerce • more targeted marketing • reconnect with core customer • become a “trend-setter” • product category expansions
Threats
• economic changes, changes in fashion trends • the buyer-centric, highly competitive apparel retail industry in general – threat of currently non-existent players • fluctuations in labor price, raw materials price, currency, production costs • problems accessing prime real estate in key locations • emergence of discounters
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Works Cited
1. Bhatnager, Parija. “Will Japan knock off the Gap?” CNNMoney. 23, August. 2005. Web. 8, October. 2012. <http://money.cnn.com/2005/08/23/news/international/ international_retailers/>
2. Bhatnager, Parija. “Will Japan knock off the Gap?” CNNMoney. 23, August. 2005. Web. 8, October. 2012. <http://money.cnn.com/2005/08/23/news/international/ international_retailers/>
3. Nagata, Kakuaki. “Choice, chic, cheap: no one feels fleeced.” The Japan Times. 17, November. 2009. para. 10. Web. 7, October 2012. <http://www.japantimes.co.jp/text/ nn20091117i1.html>
4. UNIQLO Business. Fast Retailing Inc., Ltd. 4, Sept. 2012. Web. 17, Sept. 2012. <http://www.fastretailing.com/eng/group/strategy/>
5. “Uniqlo: Uniquely positioned.” The Economist. 24, June. 2010. para. 7. Web. 8, October. 2012. http://www.economist.com/node/16436304
6. UNIQLO Business Model. UNIQLO Business. 6, July. 2012. Web. 17, Sept. 2012. <http://www.fastretailing.com/eng/group/strategy/uniqlobusiness.html>
7. “Uniqlo: Uniquely positioned.” The Economist. 24, June. 2010. para. 8. Web. 8, October. 2012. http://www.economist.com/node/16436304
8. Thorniley, Tessa. “How Uniqlo used digital marketing to build a global brand.” WARC Exclusive. January 2011. para. 9. Web. 9, October. 2012. <http://www.warc.com/Content/ContentViewer.aspx?ID=3a940af0-ffc7-4c97-92d4 f9e29e4cff1b&MasterContentRef=3a940af0-ffc7-4c97-92d4f9e29e4cff1b& Campaign=NewAPSOTW> 8
9. Gaudoin, Tina. “Uniqlo: Cheap and Very Cheerful.” 19, April. 2012. para. 8. Web. 11, October. 2012. <http://online.wsj.com/article/SB10001424052702304444604577 341394217275310.html>
10. Gaudoin, Tina. “Uniqlo: Cheap and Very Cheerful.” 19, April. 2012. para. 8. Web. 8, October. 2012. <http://online.wsj.com/article/SB10001424052702304444604577 341394217275310.html>
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