UNIQLO Marketing Report

UNIQLO Assignment 1: Marketing Environment

“Hello, my name is Uniqlo, how are you today?”

“Did you find everything you were looking for?”

“Let me know if you need anything. My name is Uniqlo.”

Toh Yi Qing / 1303130G / TD01 /Visual Communication

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/CONTENT/ Company Profile History and Growth

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Company Analysis 2P - People & Physical Environment Unique & Emotional Selling Point SWOT Analysis Main Competitor

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References Bibliography

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5 HISTORY & GROWTH

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HISTORY & GROWTH

The evolution of uniqlo from unique clothing warehouse UNIQLO was originally named as Unique Clothing Warehouse in 1984 by the present owner and CEO of Fast Retailing Co., named Tadashi Yanai. Fast Retailing is a Japan’s tailor shop first started by Yanai’s father, before he took over in 1984 where he launched his first warehouse-style, casual wear apparel retailing in Hiroshima, Japan.

Shortly after, the name UNIQLO, a contraction of “unique clothing” was born.

In 1985, Yanai traveled to Hong Kong hoping to learn about market values.

Inspired by the high quality finish of casual goods such as polo shirts, he felt that casual goods could be a business opportunity as well that would surpass the previously defined borders of the production and retailing industries. The concept he wants to convey for the UNIQLO brand was “new casual brand that all people could wear at any time”.

In 1991, UNIQLO started opening chain stores within Japan. By 1994, UNIQLO already own about 100 stores locally.

1998 was big turning point as UNIQLO became more urbanized – it was when the Harajuku store in Tokyo opened. Also, their fleece campaign launched in 1998 was a great success, when a $20 rainbow color fleece campaign aimed at Japanese middle class succeeded in the market.

This was the year when UNIQLO turned from a suburban casual clothing store into a Japanese household name. However, due to the over-ambitious expansion of the fleece campaign, UNIQLO’s best selling item soon suffered losses – sales and profits dropped. This was because the consumers start realizing everyone is wearing the same thing. However, they soon recovered from it after their expansion of women ware.

HISTORY & GROWTH

Believing that a company would not survive unless it is run based on universal concepts, Yanai started targeting at foreign countries in 2001 starting from United Kingdom in London. Yanai wanted to create a chain of stores that had a clear sense of identity.

However, UNIQLO faced multiple failures in global expansions in the beginning due to factors such as over emphasis on basic casual clothing. In 2001 when their first overseas stores were opened in UK, its net sales dropped by 21.61%. 21 stores were opened in UK by 2002 but only 8 remained opened by 2006. UNIQLO then started to improve its merchandise and global strategy and eventually managed to return to a sustainable growth from 2004 (Shen, 2014).

UNIQLO focused on large-format stores for their new store strategy and by August 2013, there were 177 large-format stores.

It was also the year when the HEATTECH

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product line, a collaboration between UNIQLO and Toray Industries, was launched during the fall/winter season as an innerwear for men. By 2005 similar products were sold to women as well.

In 2006, UNIQLO started opening global flagships stores in major cities around the world starting from New York’s Soho district. This is part of their strategy to build an international store network. (Company Introduction, 2014) Currently, Yanai owns a total of 1486 stores worldwide as of August 2014.

Yanai is aiming to turn UNIQLO into the world’s largest apparel retailer by 2020. 

9 2P - People & Physical Environment

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2P - PEOPLE & PHYSICAL environment

People Good Customers Service

“Hello, my name is Uniqlo, how are you today?”

“Did you find everything you were looking for?”

“Let me know if you need anything.

My name is Uniqlo.”

2p - people & physical environment

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UNIQLO places a strong emphasis and takes pride on providing good customers service to all customers. This is a practice that extends across all of Uniqlo’s markets. Retail employees have to go through a long period of training before they can work at the stores. Training at Japan’s Uniqlo stores goes into great depth on how to treat customers, and it’s no different for new employees at American stores (Morsehead, 2012).

In a March 2013 episode of CBS Sunday Morning a group of retail employees stand on a backlit staircase reciting a corporate mission statement in cult-like unison before customers start streaming into the New York City location.

“Hello. How are you today? My name is Uniqlo. Let me know if you need any assistance.”

Each store employee is dressed in black; a handful of them are also wearing red and white branded kimonos. Everything is done with purpose and precision. From folding a pile of skinny jeans at lightening speed to properly returning a customer’s credit card (cupped in both hands, bow slightly at the hip) even the smallest tasks are etiquette-driven and rooted in Japanese culture. Transactions at chekout are processed in as little as 60 seconds. Uniqlo leaves very little room for error (Uniqlones).

So far, Uniqlo’s Manhattan stores have received top marks on customer service from consumer reports. This gives UNIQLO a good reputation and customers would want to visit the stores again.

Hence, this marketing strategy of providing good customers service has worked.

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2P - PEOPLE & PHYSICAL environment

Physical Environment One of the reasons why UNIQLO did not work so well when it first entered the U.S. market in the mid 2000s is because of the unsuitable physical environment. Most of the stores were small shops, located in standard-size mall locations in New Jersey.

New Jersey, being the fourth-smallest state in U.S., was unable to give the stores the exposure it needed to fuel further growth.

(Lard, 2013) Learning from this lesson, Yanai then begin to close down all the small shops that were unsuccessful and start opening flagships in locations that tend to occupy space on the high street of large city centres. UNIQLO opens its first flagship at the retailer’s Fifth Avenue location in New York City with 89,000 square feet, 100 dressing rooms and 50 cash registers. Using their advancement in technology, UNIQLO uses LCD screen to display recent marketing campaigns and promotions. They also have LED-illuminated rainbow staircases.

This flagship has been very successful as compared to having small shops all over the places because it being located in New York City, a high street city, made complete use of the physical store and technology in one environment. When people are attracted to the huge store, they will head in to shop and will be amazed by the facilities and technologies used inside. After the success in the flagship store in NYC, UNIQLO has moved on to open more global flagship stores in places like London, Paris, Shanghai, Taipei, Seoul, Hong Kong, etc (Uniqlo Business Strategy, 2014).

Therefore, in this case, physical environment has been successful in helping UNIQLO to expand globally and build an international store network.  

2p - people & physical environment

UNIQLO’s Flagship Stores

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2P - PEOPLE & PHYSICAL environment

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Unique& Emotional Selling Point

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unique selling point

UNIQLO’s Unique Selling Point Fast Advancement in Fabric Manufacturing Technology - HEATTECH The fast advancement in technology development is one of UNIQLO’s USP. They make use of high technology when developing their products, and claiming themselves as Japan’s advance manufacturing technology (Uniqlo Business, 2012). UNIQLO works closely with fabric manufacturers to develop high-performance materials that are heat-retaining, help to retain the skin’s moisture, quick-drying, and antimicrobial, with elasticity and superior thinness. It continues to improve the new materials for several years, and when it considers these products ready for launch, the products are prominently featured in promotional campaigns (Fast Retailing Co., Ltd. UNIQLO, 2009) One example of how UNIQLO make use of their high-technology to produce highperformance materials is with the launch of their HEATECH clothing. The HEATECH is a heat-retailing fabric that was first sold during the fall and winter in 2003. It targets at a wide range of customers with low-priced quality products. What is so

good and special about HEATTECH is that wearers can feel approximately 1 Degree Celsius warmer at rest when wearing this thin garment compared to garments made with just regular cotton. Just by wearing this garment, the amount of warmth that you will feel will remain constant even if you were to slightly lower your thermostat.

Instead of wearing thick layers of clothes during the cold season, people can just buy the HEATTECH as it is much more lighter and cheaper but at the same time comfortable. Moreover, they produce a wide range of HEATTECH products ranging from T-shirts to undergarments targeted at people of all ages. Based on statistics, it had record-breaking sales of 28 million units in 2008. It is counted that approximately one out of four Japanese buy the HEATECH product (Shen, 2014).

This product is something that no other fashion companies could do, and hence it is a strength of UNIQLO - something that no other companies can compete with since no one else has the technology.

unique selling point

UNIQLO’s Emotional Selling Point UNIQLO’s ESP targets at the Japanese as they redesigned their logo something similar to their Japanese flag with the bold red. This logo helps to develop a strong sense of identity among the locals and therefore they would feel emotionally attached to it.

UNIQLO’s HEATTECH - wide variety of design and colours

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19 SWOT Analysis

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SWOT Anaylsis

Strengths

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1. Offering high quality material clothing at an affordable price One of UNIQLO’s top strength is their high quality material clothing that is offered at a reasonable and affordable price. The main reason why they are able to do this is because they negotiate with global materials manufacturers directly and mostly order in bulk, which cut down on the cost of manufacturing the products. (they do not have their own factories) Their highquality yet low-priced basic casual clothing have added value to the consumers. This was because in the 1990s, in the retail market there were only two kinds of casual clothing – the cheap and poorly made kind or the brand labels that were of good quality but expensive. Therefore, he thought that if he were to sell good quality clothes at an affordable price, people would buy and it would be successful in the market. However, instead of making clothes of the very latest trends, Yanai focused on basic items as “components”

What makes UNIQLO stronger than other brands in terms of products is their high quality material clothing that is offered at a reasonable and affordable price.

to be arranged with other components by the customers themselves. Instead of targeting at a very specific age group, Yanai chose to target at people of all ages, both males and females, simply because he felt that casual clothing should not only target at teens (which was a trend in the 1980s). The concept he wants to convey for the UNIQLO brand was for a “new casual brand that all people could wear at any time” (Yanai, 2001). He was able to keep the production cost low because of the vertical integration system in which all operations are integrated with the cooperation with excellent Japanese textile suppliers, foreign manufacturing facilities and other partners.

Indeed, when he launched the $20 Fleece Campaign aiming at the Japanese middle class group, it succeeded in the market and sold 2 million in autumn/winter 1998 and 8.5 million in autumn/winter 1999.

(Fast Retailing Co., Ltd. UNIQLO, 2009).

In 2000, the total sales turnover amounted to 418.5 billion yen, being featured in media for their good marketing strategy.

(Iida, 2006)

swot analysis

UNIQLO’s Fleece Campaign

2. Ability to create new demands with new functional materials UNIQLO developed its innovative HEATTECH materials with synthetic finer manufacturer and strategic partner Toray Industries. Steady improvements over the years have assured the continued success of these items. By collaborating with specific manufacturers, UNIQLO offers clothes with new, unique functionality at affordable prices.

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SWOT Anaylsis

Weaknesses 1. Overlooked the U.K. Marketing Strategies in 2001 One weakness UNIQLO have would be the lack of research in marketing strategies in 2001 when the first expanded globally to the United Kingdom. Although UNIQLO’s clothes was very popular locally, it was not as well-known in western countries like the United Kingdom. In 2001, Yanai wanted the company to operate worldwide just like GAP. When the fleece campaign was a success, Yanai took this opportunity to expand UNIQLO to the U.K. in 2001. Initially, he planned to open 50 shops in U.K. in three years.

However, business did not turn out as well as in Japan – net sales decreased by 21.61% and gross profits drop drastically by 32.86 over previous fiscal year. (Shen, 2014) This is partly because UNIQLO did not do enough research for the British management climate and business conventions(Iida, 2006). Yanai said that “the advance in the U.K. was too hasty, and that this rough-and-ready method caused a slew of flows that set the subsidiary into a quagmire”. The shops were not well-organised and the

staffs working were also not well-trained to satisfy customers. Another reason for the failure in global expansion is also because feasibility studies were not well-prepared before the expansion. For example, the management did not realize that polo shirts would not sell in the U.K. because of the humid and dry weather, which is very different from Japan. Therefore, UNIQLO has suffered a great loss because of this weak point in 2001. From this example we can see that UNIQLO’s global strategy in this case has failed - oversimplified replication Japanese business model in the western retail environment will not work (Shen, 2014).

It was not until 2004 when UNIQLO returned to a sustainable growth after improving its merchandise and global strategy in time.

swot analysis

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2. Had weak branding and struggled to maintain an identity in the early 20s Even though UNIQLO’s Fleece Campaign was a great success in 1998, the company still had difficulties establishing a strong brand of its own in the early 20s. This was because the shop was recognised by people as a discount retailer as there is this stereotype that people agreed to buy “discounted clothes with poor quality”. Therefore, since that point of time when the Fleece Campaign was launched, UNIQLO was perceived as very cheap brand. It was said that “in the early stage of the company that when customers bought some cltohes in the UNIQLO shgops, many of them tended to throw away the bag on which the logo of UNIQLO was inscribed because it was not associated with high-class status”. (Iida, 2006) Therefore, this shows that UNIQLO had a very weak branding in its early years and it was not until 2005 when Yamai decided to rebrand it’s entire identity that the brand’s name have changed for the better.

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SWOT Anaylsis

Opportunities 1. Using online platforms to sell UNIQLO’s products overseas eg. Taobao As UNIQLO is heading towards the global market, they have been opening hundreds of stores outside of Japan ranging from the Asian countries to as far as United Kingdom. Even so, it would still be difficult to reach out to more people who might not have UNIQLO stores in their regions or countries. At that point of time

by April 2009, UNIQLO already opened 30 stores on the coast of China but none in the inland regions.

Therefore, UNIQLO sees an opportunity in making use of the online platforms to sell their products to people in those regions. Besides opening their own online stores, they also seek partnership with Taobao Mall, China’s largest consumer e-commerce company with almost 100 million registered users as of December 31, 2008 to launch their online sales business of casual wear in China in 2009 (Spelich, 2009). They see this partnership as an opportunity to make inroads into the growing online Chinese consumer market. (NakaJima, Kuzushima, & Huang, 2011) According to a report published by Taobao, which operates the Taobao Mall, UNIQLO recorded 3,000 transactions in its first 11 days of operation, accounting for sales of 300,000 yuan (approx. SGD$60,000).

By October 2009, UNIQLO became the first apparel company in the Taobao Mall to exceed 100 million yuan (approx. SGD$ 2002741) in monthly sales. This also received huge coverage in China’s media such as Internet news.

Clearly, this showed that launching online sales in the inland markets has been highly effective in reaching out to more people especially those living in inland regions or even people are just too busy to shop at the stores.

Hence, their collaboration with the Taobao Mall had been really successful.

swot analysis

2. Rebranding their identity towards more universal as an global business strategy opportunity to reach out to the international market Yanai wanted to expand UNIQLO to the global market but results were not very successful since 2001 because of it’s strong national identity which makes it difficult for people from other countries to relate to. Therefore in 2005, Yanai took the opportunity to rebrand UNIQLO’s identity, hoping that people would erase the image of UNIQLO as the ‘C&A of the East’. He aims to transcend cultural boundaries and appeal to customers from all around the world.

Firstly was the change in the company’s logo. By increasing the brightness and saturation of the red from the previous logo’s wine red to better match Japan’s current flag, the logo now has developeted a stronger sense of identity.

Old logo

New logo

In March 2012, UNIQLO made English their “official language” among its management and head office staff. It is an attempt to promote a global mindset among their workforce at a time when the Japanese market was begining to decline and new opportunities are arising outside of their country. UNIQLO sees English as an essential in maintaining communications between it’s departments. Those working in stores outside of Japan were also trained on English.

Besides these, Yanai also opened global flagships stores in the busy streets of different countries, which was quite successful as there were many people attrached to the architecture of the stores and also the advanced technologies such as LED used by UNIQLO.

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SWOT Anaylsis

Threats 1. Business overseas affected due to riots and protests In September 2012, many Japanese brands in China have their business affected greatly due to the anti-Japan protests in China. The protest was sparked by ownership dispute over the Diaoyu Island between the two nations.

Because of this, UNIQLO was forced to shut operations in China to avoid the violent demonstrations. Despite attempt by UNIQLO to place Chinese flags in display windows to the hopes of heading off potential trouble (Sauer, 2012), they were still forced to temporarily more than 60 of their stores in China due to protests by September 18 2012 (Dolan, 2012).

Also, in attempt to avoid trouble from protests, a UNIQLO outlet in Shanghai posted a sign in the window outside the store saying that the “Diaoyu islands belong to China”. However, this has sparked off a huge commotion in Japan.

After that sign was posted, UNIQLO’s headquarters received 1,400 complains from Japanese customers, and many saying that they will not buy from the store

again. On September 18, 2012, the stock price of the company dropped by 7%.

Even after reopening their Beijing branch after the protests subsides, the store start offering shopping bags without the company’s logo and nearly all of them preferred to take their shopping bags home without the logo. (Uniqlo Suffers Blowback for Appeasing Chinese Public, 2012) 2. Business affected due to natural disasters Natural disasters are unavoidable and can be unpredictable at times. When natural disasters like earthquakes occur, shops within those areas would be adversely affected. For instant, the Japan earthquake and tsunami that occurred in March 11, 2011 caused the number of new stores opening in the first half of the year to be reduced. (Results Summary for Fiscal 2011 First Half (Six Months through Feb. 2011), 2011).

swot analysis

Attempts by UNIQLO’s staffs to ease the tension and to avoid protests in their shops

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29 Main Competitors

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SWOT Anaylsis

Direct Competitor - Giordano Similar to UNIQLO, Giordano sells clothes that are in affordable price. Both of them are in the mass market and are heading towards fast fashion. Giordano is one among the popular and established casual apparel retailer in Asia Pacific Region which employs about 11,000 staff with over 1,895 shops operating in 30 territories worldwide.

Indirect Competitor - Zara Zara, being a high street fashion would be an indirect competitor of UNIQLO being in the mass market. UNIQLO’s clothes are in complete contrast to Zara’s lavish one-piece dresses. UNIQLO produces jeans, under garments, jackets, and children’s clothes that are casual but are of high quality. This is different from Zara which tends to work on short-term fashion trends. Uniqlo’s designers work as project teams to develop new fabrics before studying fashion trends. http://finone.com/ ComparisonofTheGloba%20BigThreeFastFashionBrands.pdf Conpetition between UNIQLO and Zara can been seen in the busy streets of New York City, where one of UNIQLO’s flagship is located at. It is located near high street fashion competitors like Zara.

31 Bibliography

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Bibliography

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Yanai, T. (2001, June 8). The Secret to Uniqlo’s Overwhelming Success and Japan’s Textile Industry.

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