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UNIQLO: Strategy toward the World-Leading Apparel Company

Outline

Abstract
Japan’s most renowned apparel company, UNIQLO, has its origin in Ube, a small city situated on the western edge of Japan’s main island. The company itself grew out of the small holding of the business founder’s father, with the generational change in ownership triggering a rebranding and a spell of intense growth.

Mr. Tadashi Yanai succeeded his father in 1984. He subsequently renamed the company UNIQLO and conducted a drastic transformation of the business from a small menswear manufacturer and retail shop into an all-round casual clothing company targetting both men and women of all ages. Since the first UNIQLO store opened in Hiroshima in 1984, UNIQLO has been quickly expanding both in Japan and overseas under the mission: 
“To create truly great clothing with new and unique value, and to enable people all over the world to experience the joy, happiness and satisfaction of wearing such great clothing.”

UNIQLO’s strength, “SPA Model”
UNIQLO’s largest strength lies in its established Specialty store retailer of Private label Apparel (SPA) model, which encompasses all stages of the business from design and manufacturing, to logistics and final sales. Thanks to this SPA model, UNIQLO can provide high quality casual wear at a low price. Most importantly, the establishment of the SPA model has allowed the company to conduct high-volume production of designer clothes in a nearly ideal manner and to quickly provide them to customers at UNIQLO stores. Having such a comprehensive business line in apparel design, manufacturing, and sales is critically important in so called “fast fashion.”

Morphing into a global enterprise
However, initially UNIQLO focused too much on offering low price, a strategy that was at risk of creating a price collapse due to competition with other low cost clothing retailers. By striving to make clothing that was suitable for a variety of people, UNIQLO’s design tended to lack individual character and this aspect established a reputation that many people thought was the weak point of the company. Further, the company rushed all too quickly to expand the chain stores for market development in Japan.

To overcome this situation, in around 2004 UNIQLO changed its business direction and decided to actively collaborate with famous designers, thereby achieving variety and excellence in design while firmly maintaining its affordability. Moreover, a strategic collaboration with Toray, a major textile manufacturer, has yielded the recent well-known and best-selling Heat-tech series underwear, which has a highly effective heat insulation capacity.

In this way, UNIQLO has gained a successful business foundation allowing further innovations in design and functionality of their products. Aggressive collaboration with outside organizations in the product planning stage has broadened the company’s vision and facilitated a successful cross-pollination of ideas.

With the establishment of the SPA model and the subsequent expansion in design and functionality, UNIQLO has transformed its business style from domestic to international market-oriented. Currently, it is extensively expanding its business around the globe; with growth in Asian counties especially remarkable. Sales in the Asian markets account for about 70% of the company’s total overseas sales. As a Japan-originated apparel company, UNIQLO is swiftly building significant business infrastructure in counties beyond Asia such as France, Russia, the United Kingdom, and the United States. As of September 2011, the number of overseas stores has reached 186. Moreover, the company is striving to further enhance its global brand identity by aiming to open 200–300 stores annually and increase overseas sales to a level in excess of domestic revenues.


Nov 16, 2011

About the author
Eriko Kinashi is a reporter for Japanest NIPPON
http://www.uniqlo.com/us/
( UNIQLO CO., LTD. (USA) )