Marketing and Managerial Breakdown Analysis of Uniqlo

Marketing and Managerial Breakdown Analysis of Uniqlo with strategies

1. Analysis of Uniqlo By Dylan Seltzer ‹#› MGMT-3000-2; Prof V. Zinnoury

2. What is Uniqlo’s Vision ? “We believe we can turn the power of clothing into a force for good. By designing, making and selling good clothing, we can make the world a better place. Good clothing means simple clothing, high in quality, and built to last. t's clothing that enriches the lives of people who wear it by giving them comfort, protection and pleasure. It is produced in a way that is harmonious with nature, without excessive burden on the environment. Good clothing is made by people of diverse backgrounds working with energy and enthusiasm, under conditions where their health, safety and human rights are respected and upheld. And we will extend this same spirit to our customers and all our stakeholders, working with them to aspire to a better society where we all thrive. his is our promise: to always work toward a better, more sustainable society.” - Unqilo’s sustainability statement 1. Sustainability : Fast Retailing Co., Ltd. "Sustainability Statement." Last modified February 27, 2020. https://www.fastretailing.com/eng/sustainability/vision/statement.html. ‹#›

3. Uniqlo’s Mission : Respecting health, safety, and human rights of the people in locations where they operate Enable all workers to achieve personal growth. People Planet Community Reducing the environmental impact through our business activities Create products through technology and innovation that meet their values Strengthen communities by engaging global and local stakeholders Partnering with customers looking to create a better world Committed to providing happiness through clothing 1. Fast Retailing Co., Ltd. "Sustainability Statement." Last modified February 27, 2020. https://www.fastretailing.com/eng/sustainability/vision/statement.html . 2. Uniqlo. "Sustainability Mission." Accessed November 8, 2024. https://www.uniqlo.com/th/en/sustainability/mission/. ‹#›

4. Six Material Issues that Uniqlo focuses on: Create New Value through Products and Services Respect Human Rights in Our Supply Chain Respect the Environment Strengthen Communities Support Employee Fulfillment Governance Fast Retailing Co., Ltd. "Sustainability Statement." Last modified February 27, 2020. https://www.fastretailing.com/eng/sustainability/vision/statement.html. ‹#›

5. Strategic Leadership Team Board Of Directors: Tadashi Yanai Nobumichi Hattori Masaaki Shintaku Naotake Ohnom Kathy Matsui Joji Kurumado Yutaka Kyoya Takeshi Okazaki Kazumi Yanai Koji Yanai ‹#› Tadashi Yanai CEO & President About Tadashi Yanai: Born in Japan Attended Waseda University, graduating in 1971 with a Bachelor's degree in Economics and Politics. Founder and president of Fast Retailing (Uniqlo’s parent company) Learned about the fashion industry under his father’s wing Renowned as an inspirational leader Business of Fashion. "Tadashi Yanai." Accessed November 8, 2024. https://www.businessoffashion.com/people/tadashi-yanai/.

6. Strategic Leadership Visionary leadership Yanai had a clear vision of Uniqlo's strategy to deliver high quality clothes at an affordable price that ignores fast-fashion trends. Yanai was also ranked number no. 54 on the list over the best-performing CEOs in the world by Harvard Business Review. Efficiency Uniqlo’s slogan “made for all” embodies their brand to eliminate gender and age barriers, highlighting practicality , comfort, and casual design . Their clothes are made to look simple and essential, yet also universal. Yanai emphasized cost-effective production and supply chain management. They utilize technology to effectively produce their products at low costs while also maintaining high quality materials. Sustainability Uniqlo prided themselves in working towards reducing carbon & other environmental footprints and improving working conditions within supply chain 1. Fast Retailing Co., Ltd. "Sustainability Statement." Last modified February 27, 2020. https://www.fastretailing.com/eng/sustainability/vision/statement.html . 2. Roll Business & Brand Leadership. Accessed November 8, 2024. https://martinroll.com/resources/articles/strategy/uniqlo-the-strategy-behind-the-global-japanese-fast-fashion-retail-brand/ . 3. Foll, Martin. "Uniqlo: The Strategy Behind the Global Japanese Fast Fashion Retail Brand." Martin Roll Business & Brand Leadership. Accessed November 8, 2024. https://martinroll.com/resources/articles/strategy/uniqlo-the-strategy-behind-the-global-japanese-fast-fashion-retail-brand/. ‹#›

7. Competitive Positioning Global Presence Uniqlo has a strong global presence and outreach around the world with over 2,000 stores globally in 25 different countries . Uniqlo's positions themselves to compete with competitors by being in top markets like China, US, and Europe. Product Diversification Uniqlo focuses on having clothing that is functionable and stylish, while also being affordable and high quality. Uniqlo has a concept within their brand called “LifeWear” which is about their clothes being designed for everyday use that is beautiful yet practical. Uniqlo utilizes high tech in their materials for warmth, comfort, and sun protection through HEATTECH, AIRsim, and UV CUT. Branding and Marketing Uniqlo has branded themselves as a clothing company that blends modern style with comfort and technology, positioning themselves in a different direction than competitors. They also collab with famous models and renown designers to elevate their brand appeal. Fast Retailing Co., Ltd. "Strategy & Tactics." Accessed November 8, 2024. https://www.fastretailing.com/eng/group/strategy/tactics.html. GlobalData. "Number of Uniqlo Stores by Region." Accessed November 8, 2024. https://www.globaldata.com/data-insights/retail-and-wholesale/number-of-uniqlo-stores-by-region/. ‹#›

8. More about Uniqlo’s LifeWear concept: ‹#› - Uniqlo's website Uniqlo. "LifeWear." Accessed November 8, 2024. https://www.uniqlo.com/eu/en/contents/lifewear/.

9. Competitive Advantage: Cost Leadership: Supply chain: Uniqlo has a very sufficient supply chain that operates in a unique way. Zara, one of their biggest competitors is quick to change their apparel with current trends, whereas Uniqlo takes the opposite approach by planning production of its wardrobe essentials up to a year in advance. Sourcing : Uniqlo sources its materials from various manufacturers around the world to ensure quality materials at low costs . This also mitigates supply chain disruptions and importing costs since they have stores around the world that are closer to the production. Technology integration: The use of tech like HEATTECH in their products separates themselves from competitors and helps create an emphasis on climate protected apparel for different seasons. Uniqlo also integrates tech within their online and physical stores by using data analytics to learn what their customers like the best and optimize inventory management . Uniqlo is ahead of the game in fashion retail in many ways. Sustainability: Uniqlo’s sustainable practices align themselves well with their customers and stand out from competitors by committing to their recycling program. Uniqlo cares about the environment and does not want to contribute to harmful environmental footprints, giving them a competitive edge. 1. F oll, Martin. "Uniqlo: The Strategy Behind the Global Japanese Fast Fashion Retail Brand." Martin Roll Business & Brand Leadership. Accessed November 8, 2024. https://martinroll.com/resources/articles/strategy/uniqlo-the-strategy-behind-the-global-japanese-fast-fashion-retail-brand/ . ‹#› 1

10. Competitive Advantage cont’d: Loyalty : Supply chain: Uniqlo has a very sufficient supply chain that operates in a unique way. Zara, one of their biggest competitors is quick to change their apparel with current trends, whereas Uniqlo takes the opposite approach by planning production of its wardrobe essentials up to a year in advance. Economies of Scale: Uniqlo is able to achieve better terms than other manufacturer through economies of scale by partnering with specific companies that accommodate their needs at lower costs. 1. Foll, Martin. "Uniqlo: The Strategy Behind the Global Japanese Fast Fashion Retail Brand." Martin Roll Business & Brand Leadership. Accessed November 8, 2024. https://martinroll.com/resources/articles/strategy/uniqlo-the-strategy-behind-the-global-japanese-fast-fashion-retail-brand/ . 2. Fast Retailing Co., Ltd. "Uniqlo Business Strategy." Accessed November 8, 2024. ‹#› 1 2 1

11. ‹#› Porter’s 5 force model Threat of new entrants Supplier Bargaining Power Customer Bargaining POwer Rivalry Among Existing Competitors Threat of Substitutes Breaking down Porter’s 5 force model:

12. 1. Threat of Substitutes - 4/5 rating Since Uniqlo is in the fashion industry, there are many other fashion alternatives to be wary about from other brands and companies. Abundance of similar products Thrifted clothes (ex. Goodwill, Arc, and other secondhand clothing) Fast-fashion brands with higher quality material Premium brands with different style Shopping malls with other alternative brands with similar clothing next door Although threat of substitutes is concerning in the fashion industry, Uniqlo has a powerful edge with its sustainable and technological innovation approach 1. MBA Skool Team. "Uniqlo Five Forces Analysis." MBA Skool. Accessed November 8, 2024. https://www.mbaskool.com/five-forces-analysis/companies/18292-uniqlo.html. ‹#›

13. 2. Threat of New Entrants - 3 /5 rating Barriers to entry: Since Uniqlo is in the fast fashion industry , there are minimal barriers to entry as it is an uncomplicated field, but Uniqlo has positioned themselves away from competitors with widespread global supply chain, sustainability practices, economies of scale, and innovative technologies that make it hard for new entrants to replicate. Brand Loyalty/differentiation: Uniqlo has a great trust in their customers with their unique approach to fashion, creating a detailed brand loyalty across the globe. Capital intensity: Uniqlo has become one of the biggest fast fashion brands in the world, which would require new entrants to have substantial investments in production, distribution, supply chain management, marketing, and brand-building. 1. MBA Skool Team. "Uniqlo Five Forces Analysis." MBA Skool. Accessed November 8, 2024. https://www.mbaskool.com/five-forces-analysis/companies/18292-uniqlo.html . 2. Fast Retailing Co., Ltd. "Uniqlo Business Strategy." Accessed November 8, 2024. https://www.fastretailing.com/eng/group/strategy/uniqlobusiness.html. ‹#›

14. 3. Rivalry Among Existing Competitors - 5 /5 rating Intense Market : The fast fashion industry is competitive with hundreds of other brands within a short radius, especially shopping malls and outlet centers. 1. MBA Skool Team. "Uniqlo Five Forces Analysis." MBA Skool. Accessed November 8, 2024. https://www.mbaskool.com/five-forces-analysis/companies/18292-uniqlo.html . 2. Fast Retailing Co., Ltd. "Uniqlo Business Strategy." Accessed November 8, 2024. https://www.fastretailing.com/eng/group/strategy/uniqlobusiness.html. ‹#› Biggest Indirect Competitors: Patagonia/REI & other outdoor clothing brands Everlane & other sustainable friendly brands Lululemon & other athletic clothing brands Online brands like SHEIN & Amazon Depop (online reselling brands) Biggest Direct Competitors (affordable, high-quality and functional clothing: ZARA - H&M - Gap - Old Navy Muji - American Eagle Urban Outfitters - Forever 21

15. 4. Customer Bargaining Power - 5 /5 rating Mounds of choices : Unfortunately for Uniqlo, due to the intense industry they are in, there are extensive amount of substitutes and competitors that customers can choose from with ease. Customer reviews, testimonials, and overall experience directly impacts sales and revenue. Low Switching Costs: It is very easy for customers to choose an alternative brand that offers similar clothing for low switching costs, increasing the bargaining power that customers have. Price Sensitivity: Uniqlo has built their brand around affordable prices, pressuring Unilqo to keep prices low for their customers 1. MBA Skool Team. "Uniqlo Five Forces Analysis." MBA Skool. Accessed November 8, 2024. https://www.mbaskool.com/five-forces-analysis/companies/18292-uniqlo.html . 2. Fast Retailing Co., Ltd. "Uniqlo Business Strategy." Accessed November 8, 2024. https://www.fastretailing.com/eng/group/strategy/uniqlobusiness.html. ‹#›

16. 5 . Supplier Bargaining Power - 2 /5 rating Global Sourcing: Uniqlo does not own any factories but instead has production from factories around the globe that creates easier access for distribution and less supply chain disruptions. There is less dependency with several suppliers Strong Relationships/Vertical Integration: Uniqlo has built really strong relationships with partnering factories and holds annual conventions to ensure logistical smoothness. “UNIQLO continues to ensure responsible procurement and high-quality products by maintaining win-win relationships with partner factories.” - Uniqlo website (production network ) Switching Costs: Uniqlo can easily switch suppliers without minimal costs or risks, leading to low bargaining power for suppliers 1. MBA Skool Team. "Uniqlo Five Forces Analysis." MBA Skool. Accessed November 8, 2024. https://www.mbaskool.com/five-forces-analysis/companies/18292-uniqlo.html . 2. Fast Retailing Co., Ltd. "Uniqlo Business Strategy." Accessed November 8, 2024. https://www.fastretailing.com/eng/group/strategy/uniqlobusiness.html. ‹#›

17. ‹#› Porter’s 5 force model Threat of new entrants Supplier Bargaining Power Customer Bargaining POwer Rivalry Among Existing Competitors Threat of Substitutes Summarizing Porter’s 5 force model for Uniqlo: 5 /5 1.5/ 5 4 /5 3 /5 5 /5 Average: 3.7/5 Uniqlo has a moderate level of threats with high buying power and intensive competitors They also have a competitive edge through stable supplier relationships, innovative technology embedded into their apparel, and cost-efficient operations

18. SWOT Analysis ‹#› Strengths Weaknesses Opportunities Threats Global Reach Affordability Tech usage and innovation Supply Chain efficiency Partnerships and collaborations Sustainability practices Brand Identity Focuses on basics rather than trends Dependence on Asia Limited product options International market challenges External manufactures can be seen as a weakness and a strength Expand further in emerging markets More sustainability initiatives E- Commerce Growth Personalization and customization Product Diversification Data analytics Intense Competition Supply chain disruptions Customer preference changes Foreign exchange risks Uncertainty in economy Physical store dependency 1. The Strategy Story. "Uniqlo SWOT Analysis." Accessed November 8, 2024. https://thestrategystory.com/blog/uniqlo-swot-analysis/.

19. ‹#› P E S T E L Trade policies and tariffs: Uniqlo operates globally Political stability: Operation smoothness depends on stability in Japan, China, and US Labor Laws Government Regulations Economic Growth: Unemployment/wage inflation Interest rates Inflation and Exchange rates: fluctuation in currency exchange can impact UNiqlo since most of their sourcing is global Demand for material needs like comfort and athleisure Lifestyle changes and health trends Sustainable fashion shift: Consumers are are intrigued by environmental friendly practices Cultural differences: Since Uniqlo is global, different countries are interested in different kinds of clothing E-Commerce & Online shop: Online presence is becoming more popular each year, making it critical for Uniqlo to enhance their e- commerce and engage with their community through digital means Supply chain management: Using tech for logistics, inventory management, and supply chain operations can aid Uniqlo to operate more efficiently and cost-effectively. Innovative Technology: Uniqlo successfully incorporates tech into their clothing (HEATECH, AIRism) Data Analytics: To learn customer preferences Sustainability: Uniqlo already has manu sustainable initiatives and should keep pushing forward with them Supply Chain: Usage of raw materials Animal Welfare: Animal-based materials can be a concern for customers and they need to ensure ethical treatment Carbon Footprint Climate Change Law Changes: Environmental, employment, data protection, privacy, intellectual property Health & Safety Regulations Trade Regulations 1. The Strategy Story. "Uniqlo PESTEL Analysis." Accessed November 8, 2024. https://thestrategystory.com/blog/uniqlo-pestel-analysis/.

20. VRIO Analysis ‹#› Resource Value (V) Rarity (R) Limitability (I) Organization (O) Conclusion Unique Product Quality and Innovation Yes Yes Partially Yes Sustained Competitive Advantage Efficient Supply Chain Yes Partially No Yes Temporary Competitive Advantage Brand & Global Recognition Yes Partially Partially Yes Temporary Competitive Advantage 1. ChatGPT prompt: VRIO analysis breakdown using “Unique Product Quality and Innovation,” “Efficient Supply Chain,” “Brand & global recognition” 2. VRIO Analysis Wiki. "Uniqlo VRIO Analysis." Accessed November 8, 2024. https://vrioanalysis.wiki/uniqlo-vrio-analysis/.

21. Political Influences - scenarios Shift in trade policy: If sticker import tariffs are enacted on apparels and textiles, Uniqlo’s cost of goods (COS) would go up and therefor profit margins would decrease, and/or there would need to be shifts in sourcing and production. Regulation changes around labor standards and sustainability practices: Operational costs could increase and require manufacturing/sourcing adjustments to meet new requirements. Economic Stability: Election Results lead to uncertainty in some markets Fluctuations in exchange rates could affect Uniqlo's profit potential in international markets, as well as economic instability potentially causing a decrease in consumer spending ‹#› 1. Harvard Business School Online. "How Politics Influences Business." Harvard Business School Online Blog. Accessed November 8, 2024. https://online.hbs.edu/blog/post/politics-and-business.

22. Financials: From FY2020 to FY2024, Fast Retailing (Uniqlo’s parent company) has shown a significant upward trend in net profit: Growth in Net Profit: 2020–2021: A significant growth of 88.3%, from ¥90.36 billion to ¥169.85 billion 2021–2022: Another strong increase of 61.2%, from ¥169.85 billion to ¥273.33 billion. 2022–2023: A more modest growth of 8.4%, from ¥273.33 billion to ¥296.23 billion. 2023–2024: A more substantial increase of 25.7%, from ¥296.23 billion to ¥371.99 billion. Key Observations : Steady Revenue growth: Overall, Uniqlo has increased revenue each year with expectations of continuing in the same direction. This indicates strong sales performance through their global outreach. Profit: UNiqlo has a good gross profit, which means they are selling at a high margin ROE: They have a strong ROE at 17.51, indicating the company is effectively using shareholder investment to create profit COS: 54.22% COGS is pretty typical for retail companies, but it does indicate they are spending a lot on production ‹#› 1. Fast Retailing Co., Ltd. "Financial Summary." Accessed November 8, 2024. https://www.fastretailing.com/eng/ir/financial/summary.html. 2. Fast Retailing Co., Ltd. "2022 Annual Report: Financial Summary." Accessed November 8, 2024. https://www.fastretailing.com/eng/ir/library/pdf/ar2022_en_financial_sp.pdf.

23. Recommendations: ‹#› E-Commerce/Digital Presence Exploration : As mentioned in previous slides, online shopping is becoming more and more popular, therefore it is important to offer customers a seamless online experience. Enhancing their mobile app with more customization options, faster delivery, and local language support would be very beneficial Market Expansion: Uniqlo already has a strong global presence with ties all over the globe. With this competitive edge, they could focus on expanding to even more to emerging markets that are keen on fashion They also only have 69 stores in the US, and I recommend opening up more across the country in bigger cities like LA, NYC, Chicago , Boston, & Denver Cost of sales optimization: Since COS is over 50%, Uniqlo could find ways to cut down on production costs so they could improve profit. Some ideas to reduce COS include: Bulk purchasing Improving inventory management Relocate production closer to important markets Sustainability Expansion: Expand more on RE.UNIQLO program to focus more on recycling, less plastic usage in packaging, and incorporate eco-friendly materials 1. Roll Business & Brand Leadership. Accessed November 8, 2024. https://martinroll.com/resources/articles/strategy/uniqlo-the-strategy-behind-the-global-japanese-fast-fashion-retail-brand/ .

24. Bibliography Fast Retailing Co., Ltd. "Sustainability Statement." Last modified February 27, 2020. https://www.fastretailing.com/eng/sustainability/vision/statement. Uniqlo. "Sustainability Mission." Accessed November 8, 2024. https://www.uniqlo.com/th/en/sustainability/ mission Business of Fashion. "Tadashi Yanai." Accessed November 8, 2024. https://www.businessoffashion.com/people/tadashi-yanai/ . Roll Business & Brand Leadership. Accessed November 8, 2024. https://martinroll.com/resources/articles/strategy/uniqlo-the-strategy-behind-the-global-japanese-fast-fashion-retail-brand/ . GlobalData. "Number of Uniqlo Stores by Region." Accessed November 8, 2024. https://www.globaldata.com/data-insights/retail-and-wholesale/number-of-uniqlo-stores-by-region/ . 1. The Strategy Story. "Uniqlo SWOT Analysis." Accessed November 8, 2024. https://thestrategystory.com/blog/uniqlo-swot-analysis/ . 1. MBA Skool Team. "Uniqlo Five Forces Analysis." MBA Skool. Accessed November 8, 2024. https://www.mbaskool.com/five-forces-analysis/companies/18292-uniqlo.html . 2. Fast Retailing Co., Ltd. "Uniqlo Business Strategy." Accessed November 8, 2024. https://www.fastretailing.com/eng/group/strategy/uniqlobusiness.html Fast Retailing Co., Ltd. "Financial Summary." Accessed November 8, 2024. https://www.fastretailing.com/eng/ir/financial/summary.html . Fast Retailing Co., Ltd. "2022 Annual Report: Financial Summary." Accessed November 8, 2024. https://www.fastretailing.com/eng/ir/library/pdf/ar2022_en_financial_sp.pdf . Business of Fashion and McKinsey & Company. The State of Fashion 2023: Industry Report. Accessed November 8, 2024. https://www.businessoffashion.com/reports/news-analysis/the-state-of-fashion-2023-industry-report-bof-mckinsey/ . Harvard Business School Online. "How Politics Influences Business." Harvard Business School Online Blog. Accessed November 8, 2024. https://online.hbs.edu/blog/post/politics-and-business . Chat GPT ‹#› * Most data/research was taken from Uniqlo’s parents company website (Fast Retailing)

25. Thank You! ‹#›