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Uniqlo: the next ten years

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UNIQLO: THE NEXT 10 YEARS

Uniqlo: the next 10 years

Introduction
In August 2010, Fast Retailing, the parent company to the Uniqlo brand and apparel
chain, officially became the largest seller of clothing by value in Japan. Over the past
20 years, Fast Retailing had gone from an unknown, regional retailer, to become not
only the largest in its sector at home, but also one of the most international of all
Japanese retailers. It was a favourite of both Japanese press and of significant
interest to overseas investors. In short, Fast Retailing was considered to be one of the
most successful Japanese retail companies in history.
Yet, since the early Spring of 2010, all was not well. Fast Retailing’s success in
previous years had been marred by worsening results, notably its inability to achieve
growth in like-for-like sales.1 Despite ongoing bullish comments to the press and a
strong outward image of ambition and confidence, by the end of 2010, these results
were getting steadily worse, not better.
Your task is to come up with a new marketing strategy for Fast Retailing and
particularly its Uniqlo brand with view to positioning the company for its goals over
the next 10 years. The two most significant goals are:
• To be the world’s largest apparel retailer

• To hit sales of 2 trillion JPY per year, just over double that of 2010

Fast Retailing: Brief History

Fast Retailing was incorporated in 1963, but, as with many Japanese companies,
prefers to trace its roots back further, in this case to 1949. It began as a single, family
owned men’s wear shop in Ube City, Yamaguchi Prefecture, some 950 km south of
Tokyo. The company was incorporated as Ogori Shoji in 1963, but the Uniqlo name
was born in 1984 with the opening of the first store under this brand in Hiroshima
City. From 1984 to 1991, Uniqlo expanded northwards, opening almost entirely in
out-of-town, roadside locations. Although the store sold unisex, casual apparel, the
name Uniqlo was derived from ‘unique clothing’.
In 1991, the company changed its name to Fast Retailing, and with continued
expansion reached 100 stores by 1994.

1Like for like sales or “same store sales” or “comparison sales” are sales for stores within a retail chain that have
been in operation for at least the past 12 months. In other words, this indicates sales figures that exclude new sales
added by opening of new stores. Each company defines same store sales in its own way so figures are not
necessarily comparable.
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UNIQLO: THE NEXT 10 YEARS
In 1997, Fast Retailing adopted the so-called SPA system of supply chain
management already pioneered by a number of western companies such as Benetton
and Gap. Under the SPA system, Fast Retailing took control of every aspect of its
supply chain (see Exhibit 1). This meant designing the clothes, procuring raw
materials, contracting factories for production, and outsourcing logistics for both raw
material supply and finished product supply to its stores.
In November 1998, Fast Retailing opened its first Uniqlo store in Harajuku in Tokyo
and began to expand into other major urban centres. It also launched the fleece
jacket. It was the fleece which became a sudden and monumental hit for Uniqlo. At
one point in 2001, one newspaper estimated that 75% of all Japanese owned at least
one piece of Uniqlo brand apparel.
Modelled very closely on Gap, the company Fast Retailing felt it had to beat, it was
also the first Japanese retailer to launch attractive, brand orientated marketing
campaigns including TV commercial advertising. Although never stated by the
company itself, it is also significant that the Uniqlo logo – a red square containing the
company’s main brand – is conspicuously similar to that of Gap which uses a very
similar design factor of a blue square containing the company name. Uniqlo’s logo
was designed for it by a California based brand consultant.
In 2001, sales turnover and gross profit reached a new peak, and with over 500 retail
stores in Japan. To huge acclaim from the Japanese press, Uniqlo launched its first
overseas venture in the UK. It began with four stores in London, growing to around
16 stores around the country over the next year or so. At roughly the same time, it
established Fast Retailing (Jiangsu) Apparel Co., Ltd. in China, opening its first
Chinese Uniqlo outlet in Shanghai.

Other major landmarks

• 2004.1: Fast Retailing took an equity stake in Link International, later renamed as
Link Theory Holdings, the marketer of the USA Theory apparel brand. The
connections between the two companies come from a personal tie between the two
presidents. Although Link later acquired Helmet Lang in Germany in 2006 and
expanded the Theory brand in Japan, results declined in the second half of the
decade and Fast Retailing acquired the company outright in 2009, with plans to
make it a core part of its North American business.

• 2004.2: National Standard, a women's apparel brand, made a consolidated

subsidiary, but the business was later shut down in May 2006.

• 2004.10: The first large-format Uniqlo store opened in Shinsaibashi, central Osaka,
at 2,100 sqm. The store was extremely successful and in 2010 it was relocated to a
larger space nearby with the sub-brand g.u. taking the original Uniqlo store.

• 2004.12: Established a joint venture with Lotte Shopping in South Korea to expand
Uniqlo operations there.

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UNIQLO: THE NEXT 10 YEARS
• 2004.12: Established the design subsidiary Uniqlo Design Studio, New York, Inc. to
enhance the R&D functions.

• 2005.3: Acquired Onezone, the owner of Foot Park, a medium sized retailer of
footwear in Japan. This was the first venture into footwear and is currently
consolidated under the GOV Retailing subsidiary. Onezone was a bankrupt and
then rehabilitated company at the time of acquisition, but it has never performed
well under Fast Retailing’s management.

• 2005.5: Acquired French women’s and girls brand Comptoir Des Cotonniers.
Although medium sized, the brand was considered to have great potential both for
expansion in Europe and introduction into Japan. At the time of acquisition, Fast
Retailing emphasised the experience and expertise of the company’s founders and
executives as being a key attraction in the deal. However, within months, all the
founding managers had left the company among rumours of discontent. Comptoir
Des Cotonniers Japan was established in September 2005, but store expansion
began slow and has recently virtually stopped. The company has had several
presidents, chosen for international retail background, but it has failed to maintain
a consistent strong leadership. Results have been so poor, despite the position at
acquisition, that Fast Retailing now assesses the company as one in need to
additional support.

• 2005.9: Aspesi Japan established to market the Italian brand of the same name in
Japan, but this venture was cancelled in July 2008.

• 2005.9: First Uniqlo store opens in Seoul, Korea

• 2005.9: First store opens in major mall in New Jersey. The store was variously
labelled experimental and flagship, but it was closed in April 2007. Outside
observers suggested the store was out of line with local customer expectations of a
basics apparel retailer in similar vein to the problems faced in the early stages of
entry into the UK.

• 2005.9: First store in Hong Kong opens in Tsim Sha Tsui shopping district.

• 2005.9: First Body by Uniqlo store for women’s underwear opens in Ginza. The
venture proved unsuccessful despite a distinct lack of competitors in Japan and the
small chain that grew from this venture was closed down in August 2009.

• 2005.10: The flagship Ginza store was opened. It remains one of the largest stores
in the domestic chain at around 2,300 sqm and has be subsequently expanded from
the original – the current store opened in late 2009. It is one of the few Uniqlo
stores that is said to carry the full range of Uniqlo branded product.

• 2005.10: The first Uniqlo Kids store opened, but after a small rollout, the sub-brand
was closed in July 2009. Again, this is despite the lack of alternative competition in
the market as a whole.

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UNIQLO: THE NEXT 10 YEARS
• 2005.11: Company structure was shifted to a holding company as now currently
favoured by large Japanese retailers. This has numerous operational benefits,
allows for incubation and nurturing of new, subsidiary brands and chains, but also
protects key brand assets from unwelcome share accumulation and potential hostile
takeover. It is also a reflection of the weakness in parts of Japanese retail groups,
with a single brand or chain often dominating profits for the whole group while
other parts struggle. This is certainly the case at Fast Retailing, but it is by no means
unique.

• 2006.2: Acquired Petit Vehicule SAS, the company controlling the French lingerie
brand, Princesse Tam.Tam. The brand has since failed to perform to levels pre-
acquisition and has little presence in Japan. In 2010, Fast Retailing noted the brand
as being one set for further attention and expansion in Europe.

• 2006.2: The first Comptoir Des Cotonniers store opens in Japan.

• 2006.3: Tokyo headquarters relocated to Kudanshita-kita, Chiyoda-ku in Tokyo – it

was later relocated to Roppongi. Tokyo became the main business hub for Fast
Retailing despite the official HQ being in Yamaguchi. This situation is very common
among Japanese retailers, many of which maintain a distant, regional HQ for little
more than historical reasons.

• 2006.3: GOV Retailing established as a new subsidiary to develop discount lines of

casual clothing. This began with the g.u. brand. g.u. was established on seeing an
opportunity to rent cheap space in Daiei GMS outlets. Although Daiei was once the
leading retailer in Japan, it had fallen on hard times and thought Fast Retailing
stores would be one way to improve footfall and image.
g.u. opened in around 50 Daiei outlets around the country, but largely due to the
continuing decline in the reputation of Daiei, it failed to perform well. Fast
Retailing has maintained investment in the brand, however, and since 2009 has
rapidly expanded into stand-alone and shopping centre g.u. outlets with some
success. g.u. product is very similar to much of the Uniqlo product, but produced to
slightly lower standards and at much lower costs, justifying a lower retail price.
The brand hit the headlines in 2009 when it introduced 990 JPY jeans, the first
sub-1,000 JPY jeans. This marketing ploy was extremely successful and perfectly
timed to meet the worries of consumers about high prices, has since been emulated
by many competitors.

• 2006.4: Acquired a controlling stake in Cabin, a long time major retailer of

women’s clothing in Japan, but one that had been virtually bankrupt for many years
with consistently declining sales. Cabin was a traditional retailer which relied
almost entirely on the manufacturer/wholesaler supply network. The chain, of some
200 or so stores, including names such as Zazie and Enracine, was seen as the main
motivation for the takeover, although in the press, Fast Retailing naturally
emphasised its roll as a saving angel for an old, traditional chain.

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UNIQLO: THE NEXT 10 YEARS
The acquisition was a disaster, however, and Fast Retailing shut-down the Cabin
operation entirely in 2010 at considerable cost. Some stores will be converted to
g.u. or Uniqlo outlets, but many will be closed entirely.

• 2006.6: A strategic alliance with Toray Industries was established. This has proved
a key aspect of Fast Retailing’s success in the second half of the past decade.
Through joint development of new merchandise lines that utilise “high tech” fabrics
developed by Toray, Uniqlo has found more than one successful new line. Famous
lines to come out of the alliance include Heat Tech, Silky Dry, Micro Fleece and so
on.

• 2006.10: Established a business and capital alliance with View Company, the
developer and operator of footwear chains View and Coo Ici. This was later acquired
outright by Fast Retailing as its second major footwear acquisition and is now part
of GOV Retailing.

• 2006.11: Uniqlo Soho New York Store opened in New York City as the first global
flagship store with 3,300 square meters of sales floor space. The Soho store is
marked as a new beginning for Uniqlo’s international operations has it took on a far
more upgraded and upscale design and shop service level than previously seen.
While the first overseas venture into the UK attempted unsuccessfully to suggest
that Uniqlo was a cheap and good quality apparel retailer, the New York store
emphasised Uniqlo as a fashion brand for the first time. It was also the first store,
possibly in the world, to introduce a Katakana (Japanese script) Uniqlo logo in
addition to a romanised one. The store proved a massive hit and was then emulated
in the Paris store (see below) and to some extent in Singapore and some of the
newer China stores.

• 2007. 3: Opened the Kobe Harborland store, the largest Uniqlo store in Japan, with
over 3,300 square meters of sales floor space. This is another opportunity of a
Uniqlo store taking advantage of a depressed shopping centre offering low cost
rental space to allow for a very large store opening.

• 2007. 4: UT t-shirt specialty store opens in Harajuku (UT stands for Uniqlo T-
shirts). While this can be see as another sub-brand and the Harajuku store
something of a marketing vehicle for Uniqlo, the design of the store and its
merchandising (t-shirts are stocked and sold in tubes), the unique design of the
shirts, and the high quality of the cotton used in the shirts, all brought considerable
acclaim and attention. One of the tactics used when sales dipped in 2010 was to
introduce the UT lines to larger Uniqlo stores in general.

• 2007. 5: 3,300 sqm Uniqlo Setagaya Chitosedai Store opens, the biggest Uniqlo
store in eastern Japan.

• 2007. 10: Heat Tech appears for the first time to major success. Heat Tech is a man
made fabric underwear line for men, women and children that is designed to be

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UNIQLO: THE NEXT 10 YEARS
thin, but have good warmth for winter. It remains one of Uniqlo’s core product
lines.

• 2007. 11: Global flagship store on London’s Oxford Street with fashion aspects
taken from the opening in New York.

• 2007. 12: First large store opens in South Korea

• 2007. 12: Experimental store opens in Paris suburb of La Defense.

• 2008.6: UniqloCK screensaver wins Cannes Lions Grand Prix at one of the top
three global advertising festivals.

• 2008.8: Joint venture established with Wing Tai Retail of Singapore to expand
Uniqlo business in the country. There are currently 3 Uniqlo stores in Singapore
selling a wide range of Uniqlo merchandise including, as is common for
international brands there, cold weather clothing.

• 2008.9: GOV Retailing re-established, merging together the g.u., View Company
and Onezone subsidiaries.

• 2008.11: Global sales campaigns for Heat Tech in five major cities outside Japan.

• 2008.11: Joint venture agreement established with Pacific Textiles Holdings

Limited and Crystal International Limited, both of China, and Ananta Group of
Bangladesh to form CPAT (SINGAPORE) PRIVATE LTD. to develop a production
base in Bangladesh. This was the first time Uniqlo product was to begin major
production outside of China. Many of the factories in other Asian countries will still
be managed by long-time partners from China, however.

• 2008.12: Uniqlo Shenzhen Taiyangguangchang Store opens as the first store in

southern China.

• 2009.3: 990 JPY jeans appear (see above).

• 2009.3: Design contract signed with Jil Sander. Result was the +J range introduced
into Uniqlo stores consisting mostly of women’s business attire. The first products
went on sale in October 2009

• 2009.4: First Uniqlo store opens in Singapore at Tampines, and large flagship
opens at the West Exit to Shinjuku Station.

• 2009.9: Uniqlo Shoes is launched as a sub-brand, with shoes appearing in larger

Uniqlo stores for the first time.

• 2009.9: Uniqlo achieves massive same-store sales, up around 30% (Exhibits)

attracting huge investor attention

• 2009.10: Paris flagship store opens in Opera.

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UNIQLO: THE NEXT 10 YEARS
• 2009.11: Celebrated the 60th anniversary of Fast Retailing with a commemorative
sale, attracting 2,000 people to the Ginza store for its 6 a.m. opening.

• 2010. 3: Wholly owned subsidiary established in Taiwan with predictions of up to

100 stores on the island in the future.

• 2010. 4: First Uniqlo opens in Russia, in the upscale Atrium commercial complex
located in the heart of Moscow.

• 2010.5: Opened forth Uniqlo global flagship store, Shanghai West Nanjing Road
Store, in Shanghai, China.

• 2010.8: Confirms acquisition of large space in central New York for new flagship
due to open in 2011.

• 2010.11: New store in Kuala Lumpur, Malaysia

• 2010.12: New store for Bangkok, Thailand announced.

• 2010.12: Announcement that 800 store managers (all domestic store managers)
and 100 middle managers will be sent overseas for around 3 years each in order to
gain international experience.

Tadashi Yanai
Always a family business, the current chairman and president, Tadashi Yanai, was
born in 1949 and had taken over running of the company by the time the first Uniqlo
store was opened. He is now ranked by Fortune magazine as the richest man in Japan
in terms of total assets, largely as he holds the majority stake in his own company,
even though it is publicly listed.
Yanai has an excellent press in Japan and seems to genuinely enjoy the fame and
limelight based on the frequency that he appears in the public eye. He is notably
modest when referring to past achievements, but extremely aggressive in terms of
future ambition.
In 2010, in one press interview, Yanai indicated that his own sons would not succeed
him as president of the company, although whether this would be a permanent or
temporary decision remained unclear. In addition, he suggested that he would step
down as president at around the age of 65, which can be considered young for a
person in this position in Japan.

Uniqlo’s implementation of SPA

SPA is a commonly used term in Japan’s apparel today, standing for Speciality-store/
retailer of Private-label Apparel. In brief this is the business model made famous by
Gap and Benetton and which is now used, in several forms, by the majority of large
apparel retailers in the world.

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UNIQLO: THE NEXT 10 YEARS
In short, the SPA system is one where the entire supply chain is planned and
controlled by the retailer. This generally means the retailer is the brand and store
operator, but also that it designs the merchandise range, sources raw materials, and
arranges factory production. It then arranges logistic supply from factory to store.
The system is particularly suited to the apparel sector because of the constantly
changing nature of fashion and the relative simplicity of clothing as a product
category.

SPA as used by Uniqlo

Until very recently, Uniqlo product was manufactured entirely in China. The
company has built long term relationships with key suppliers. Recently the rising cost
of China production along with import and political problems arising from an
exclusive source in China has led Uniqlo (and a number of other Japanese chains) to
decide to manufacture product in other Asian countries, notably Bangladesh,
Cambodia and Vietnam. In many cases, the companies running the new factories in
these areas are the same Chinese companies the chain has worked with for many
years rather than new companies local to the new production centres.

Role of Mitsubishi
In addition, Uniqlo is known to have close links to the Mitsubishi Shoji trading house.
Mitsubishi handles much of the logistics, warehousing, factory management
oversight and quality control administration required for Uniqlo’s supply chain. This
is a factor not generally talking about in the press or in company reports, but it is
another example of trading houses maintaining a significant measure of interest and
control in aspects of importing into Japan. It is normal for Japanese companies to
keep a Japanese intermediary in the chain rather than rely on non-Japanese
companies.
Mitsubishi is also known to contribute to Uniqlo’s merchandise planning, with its
own consultants travelling frequently to other major fashion centres in the world to
report back on trends and ideas there.

Quality control
From an early stage, Uniqlo established its own quality control centre in Japan. It
claims, with justification, that this was one of the earliest and best examples of direct
control of expected manufacturing quality by a Japanese company sourcing in China.
By not simply relying on locals or other intermediaries to establish finished quality, it
could justifiably say that its products were of the quality suitable for Japanese
markets. This is a stance it maintains today.

Overseas expansion and ambitions

Fast Retailing, as led by Tadashi Yanai, could be said to be Japan’s single most
ambitious and aggressive retailer. It is its stated aim to become the largest apparel
retailer in the world by 2020 – in 2010, it was number four, but still only about half
as large as Inditex, the world’s largest.

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UNIQLO: THE NEXT 10 YEARS
Although Fast Retailing has grown impressively through expansion at home, with
around 800 stores now in place, there is only so much more that can be done. In
2010, around 10% of total sales came from overseas stores, but the company aims to
take this to 50% by 2020 if not sooner. Such a figure would be unprecedented for a
Japanese retailer. It suggests a genuine need to think internationally and act as a
global company, hence a new emphasis on English as the in-house corporate
language from 2012.

Marketing Strategy
Fast Retailing is undoubtedly one of the best retail marketers that Japan has ever
seen. Although aspects of its sales promotion and business model are clearly not
unique, the company has increasingly shifted to develop its own characteristics and
techniques. It is undisputedly a marketing driven company as a whole. In this alone,
it sets itself apart from not only most Japanese retailers, but also from the majority of
Japanese companies which, generally speaking, still emphasis technical ability,
particularly in product development, over customer orientation.

Merchandise Lines
Fast Retailing is today a group of companies offering a range of merchandise lines.
However, some 74% of all sales come from the Uniqlo brand alone, and 90% of this
comes from the Japanese market. The company clearly recognises this as something
of an issue it must address, but that is not to deny the success of Uniqlo in the
Japanese market alone.
As already outlined, Uniqlo’s initial booming success arose thanks to the mass
production and sale of good quality fleece jackets and other fleece items in the early
2000s. The over saturation of both this type of product and the Uniqlo brand in
2001-02 is generally thought to be the main reason why the company suffered a
major reversal of fortunes that year.
Since then, Uniqlo lines have been greatly expanded, although fleeces do remain a
core part of the chain’s winter ranges. In particular, post-2002, Uniqlo began to move
away from its historical stance as a unisex clothing company and increase
differentiation between men’s and women’s lines. This has led to a massive increase
in women’s lines and a shift in marketing stance towards the more fashion end of the
market.
With the introduction of the Heat Tech range of cold weather underwear lines
developed in partnership with Toray, Uniqlo scored another massive hit. It has since
added Silky Dry as a similar underwear range targeted at warm weather, although
results have not been anywhere near as spectacular as for Heat Tech.
It has also introduced numerous other merchandise lines over the years on an almost
trial and error basis. Since 2009, these include:
• Neo leather: PVC jackets designed to look like leather targeted at younger
consumers
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UNIQLO: THE NEXT 10 YEARS
• Stretch leggings: leggings and spats in a very large range of designs aimed at women

• UV blocking cardigans: women’s cardigans using UV reducing fabrics for to protect

against tanning

• Leggings-pants: stretchable leggings designed in highly flexible denim-like material

to resemble very tight fitting jeans

• UT: high quality, logo designed t-shirts, featuring everything from Disney
characters to anime, to famous food brand logos

• UJ: higher quality denim jeans

• Down jackets: made exceptionally thin and light weight

• Bra-tops: sold in summer 2009, these are camisole tops with built in bras. This was
a particularly popular product and one of the few summer lines to score a hit.

• +J: The first range of women’s business wear designed by Jil Sander.

Uniqlo’s merchandise ranges and strategy is under constant review and enhancement
as it should be with any apparel retailer, but it was cited by Tadashi Yanai as being a
weakness during the poorer sales results of early 2010. Yanai suggested that Uniqlo
had become too concerned with fashion. He summed up Uniqlo’s merchandise
strategy in a quote made at the announcement of results for FY2009 as follows:
“There weren't enough big hit products in the second half, and we failed in
the spring/summer marketing” (Nikkei, 11 October 2010)

Pricing
Uniqlo maintains a distinctive pricing policy. It has a series of prices for various
ranges, rounding to the nearest 10 JPY. This is much simpler and easier for
customers to understand than is typical for many retailers in Japan.
As merchandise ranges come in large blocks, for example fleece tops, standard prices
are usually implemented across the range. In addition, prices can be marked down
uniformly to sell end of season stock and provide short-term sales promotions on
some items, for example at weekends.
Uniqlo’s core marketing message for much of its history is:
“Low price, reasonable quality”
In terms of where it started in the late 1990s, this position was completely
understandable. In the UK, when Uniqlo first opened, this particular position was
part of its initial problem as the brand was seen neither as cheap, nor particularly
good quality, nor fashionable – all three thing being relative to what is available in
the local market.
In Japan, two things have happened. First, competitors have moved to meet Uniqlo
with similar price points or even undercut Uniqlo at the bottom end. General
Merchandise Chains and discount chains have introduced higher volume items such

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UNIQLO: THE NEXT 10 YEARS
as jeans to directly compete with Uniqlo at lower prices. In addition, many chains
have developed their own ranges of warm weather and cold weather underwear using
man made fabrics designed for the purpose. Again, in most cases, these products are
deliberately positioned below Uniqlo in terms of price.
Secondly, as noted above, Fast Retailing has introduced a second line chain called
g.u. to emulate Uniqlo at far lower price points. This is being expanded rapidly at
present, and with considerable attention given to markets where consumers would be
more open to lower prices, for example in Kansai.
Even today, compared to the majority of overseas casual apparel chains operating in
Japan, such as Gap, Uniqlo is indeed very price competitive.

Store Strategy
The store is a very significant part of Fast Retailing’s overall marketing strategy, and
it is, again, one of the few Japanese retailers to have grasped the concept of the store
as part of the brand and even part of the USP for a retailer.
All stores are branded, and, as mentioned above. since the opening of the first store
in New York, it is now normal for stores to carry the logo in both English and
Japanese. This logo is of course used on all in-store packaging, carrier bags and so on.
Where the logo is not used, and has not been used since around 2001, is on product.
While Gap and other major global apparel chains frequently use their product to
advertise their brand, Uniqlo does not. This may be partly in recognition that it
became too ubiquitous in the early part of the last decade or it may be due to a desire
to emphasise the function of the products on sale.
It is also clear that merchandise in Uniqlo is far more uniform with a broader but
shallower range than most of the other large apparel chains, so that, generally
speaking, it is more likely that numerous customers will buy identical products
compared to customers at Gap, Zara and so on. This too would be a reason to not
over use the store brand on merchandise.
Uniqlo stores in particular are distinctive and have a clear positioning in the market.
The chain uses clear, strictly organised form of product display, with a considerable
emphasis on neatness and straight lines. The neatness of stores is something that is
claimed to have alienated UK customers when the brand first arrived in the market,
and it is not a particularly common form of display even in Japan. The majority of
Uniqlo stores make little or no use of mannequins or product arrangements, although
some recent inner city stores have changed this policy.
In Japan, the Uniqlo chain is developed in a multi-format mix of stores based on
location and target market. These vary from very large stores of up to 3,000 sqm,
down to kiosk style stores opened inside train stations. Only the largest stores carry
anything close to the full range of products available under the Uniqlo brand, with
children’s ranges and the recently launched Uniqlo footwear range reserved for these
stores.

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UNIQLO: THE NEXT 10 YEARS
As with many retailers in Japan, volume expansion through rapid rollout of stores is
a core element of the company’s business strategy. In Uniqlo’s case it makes a lot of
sense because having a large chain leads to increased economies in the
manufacturing sector and supply chain. While world leadership of apparel retailing
may be a goal in itself, the business model of massive production of similar products
also dictates a rapid rollout of stores.
Recently, Uniqlo has been taking advantage of availability of presumably lower rent
space in department stores to open large format outlets inside these city centre
retailers.
Uniqlo also maintains a clear online presence and sales channel through Uniqlo.com.

Advertising and Promotion

Fast Retailing was one of the first retailers in Japan to use TV advertising as a means
of brand promotion for its Uniqlo chain. While TV advertising is commonly used by
retailers, the most common objective is to introduce product promotions or prices to
customers local to particular stores. Some chains, such as Bic Camera, have run TV
promotions aimed at introducing the store or company, but the equation of Bic
Camera with the creativity of Leonardo De Vinci probably failed to impress too many
people.
Uniqlo ads are seen as highly professional and, in many cases, in a form that could
appear in numerous markets around the world. In the past, Uniqlo has employed
Japanese celebrities such as Norika Fujiwara in its advertising, and has also used
Agnes Dean, a well known supermodel. In 2010, it launched campaigns featuring
Hollywood stars Charlize Theron and Orlando Bloom in new TV commercials for its
latest range of Heat Tech.
Fast Retailing uses the full gamut of promotional techniques in its advertising,
including billboards, magazines, PR, and the internet. It maintains its own Youtube
channel and has run a number of viral advertising campaigns over the years,
including the widely acclaimed Uniqlock campaign.
In general, its catalogue and in-store signage features young models, mostly
simulating the student or early 20s market.
In addition to “low price, good quality”, Uniqlo’s latest catch copy appearing on ads
and in stores is “Made for All”. This is perhaps the clearest expression there is for the
desired positioning of the brand as it stands in 2010.

Questions to consider
• What is the current positioning of the Uniqlo brand?

• What are the USPs (Unique Selling Points) of the Uniqlo brand? What are the
strengths and weaknesses of the company and what opportunities and threats does
it face?

12
UNIQLO: THE NEXT 10 YEARS
• Who are Uniqlo’s competitors? How do they compare and how are they relatively
positioned?

• How should it adjust specific elements of its strategy to enhance its strengths and
correct weaknesses?

• Based on its current objectives, how must Uniqlo be adjusted in order to meet its
goals and to compete in an international market?

13
UNIQLO: THE NEXT 10 YEARS
Exhibit 1: Uniqlo’s business model

Source: Fast Retailing Annual Report 2009

14
UNIQLO: THE NEXT 10 YEARS
Exhibit 2: World Apparel Retail Ranking by Turnover, 2009-2010
Company Country Ac/s Sales ¥100m YonY %

Inditex Spain 2010/1 14,017 6.5

Gap USA 2010/1 13,266 -2.3

H&M Sweden 2009/11 13,158 14.5

Fast Retailing Japan 2010/8 8,148 18.9

The Limited USA 2010/1 8,066 -4.5

Next UK 2010/1 4,835 4.1

Ralph Lauren USA 2009/3 4,690 2.8

Esprit Hong Kong 2009/6 4,150 -7.4

Liz Claibourne USA 2009/12 2,814 -24.4

Abercrombie & Fitch USA 2010/1 2,737 -15.9

Source: Fast Retailing Website; JapanConsuming.

Exhibit 3: Billboard in Singapore MRT (Subway)

Source: CampaignAsia.com

15
UNIQLO: THE NEXT 10 YEARS
Exhibit 4: Charlize Theron & Orlando Bloom: Campaign Ambassadors

Source: Uniqlo Website

Exhibit 5: Net Sales & Operating Profits at Fast Retailing, FY2001-FY2010

Chart 1
900 140

Net Sales
Operating Profits
675 105
Consolidated Sales ¥bn

Operating Profit ¥bn

450 70

225 35

0 0
01

02

03

04

05

06

07

08

09

*
10
20

20

20

20

20

20

20

20

20

20
FY

FY

FY

FY

FY

FY

FY

FY

FY

FY

Source: Company Reports; JapanConsuming.

16
 UNIQLO: THE NEXT 10 YEARS
Exhibit 6: Monthly Year on Year Same
SameStore
Store Sales Change for Uniqlo, 2003-2010
Sales 2001 to 2010
140
Same Store Sales

130

120
YonY Change 100=0

110

100

90

80

70
S D M J S D M J S D M J S D M J S D M J S D M J S D M J S

Source: Company Reports; JapanConsuming.

17

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