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Uniqlo

A winning brand strategy

Just 10 years ago, outside of Japan, if you mentioned Uniqlo nobody knew what you were talking about. If you mention Uniqlo today, everyone immediately associates it with the concepts of quality, affordability and fashion.

Over the past 10 years, Uniqlo has managed to grow at an astonishing pace, becoming one of the players in the fast fashion market alongside giants such as ZARA, H&M, Gap and Forever21. Underlying this success is undoubtedly a constant commitment to innovation as well as its company culture. The founder, Tadashi Yanai, is famous for his quote “Without a soul, a company is nothing”. This soul is reflected in the 23 management principles that Tadashi Yanai has created and passed on to every single Uniqlo employee. The essence of these principles includes putting customers first, giving back to society, and being self-disruptive.

Yanai's fascination with failure, always faced in a pragmatic way, can be read in the history of Uniqlo abroad. After some store openings in England and in the USA, it withdrew from the markets closing almost all of them with this statement by Shin Odake, CEO of Uniqlo USA: “It just didn't work”. But one can always learn from a mistake, and this is how their counter-strategy was born. In 2005 the company announced that suburban stores in Japan would remain, but growth abroad would focus on flashy stores which would be opened in the main cities of every continent, starting with the Uniqlo store in New York. Tadashi Yanai had one goal in mind: to overtake the Spanish Inditex, which owns ZARA. To do it, he put a brilliant strategy in place that involved the stores themselves. Inside the Uniqlo stores, everything is prescribed, recorded, and analyzed, from the way in which the t-shirts are folded, to the way a credit card is returned to the customer. This strict codification of the rules of conduct is in compliance with kaizen, the Japanese concept that could be translated as a continuous search for perfection.

The history of the Uniqlo brand begins in 1972, when Tadashi Yanai inherited his father’s chain of 22 men's tailoring stores, Ogori Shoji in Ube, Yamaguchi. Shortly after he became president of the company in 1984, he opened a new store in Hiroshima called Unique Clothing Warehouse, which was later shortened to Uniqlo. Inspired by his travels to Europe and the United States, where he discovered large casual clothing chains like Benetton and Gap, Tadashi Yanai saw immense potential for the Japanese casual wear market and set goals to evolve the business strategy by purchasing goods in bulk at low cost. Tadashi Yanai also discovered that many foreign fashion chains were vertically integrated, taking control of the entire business process: from design to manufacturing to retail. By 1998, there were 300 Uniqlo stores throughout Japan.

A constant search for perfection has led Tadashi Yanai to continuously face new challenges. Consumer perception of the brand was one of the most important challenges that Uniqlo worked on as it was perceived to be a discount retailer selling cheap and low-quality apparel to the suburbs. This perception completely changed when the brand launched their Global Quality Declaration in 2004, a commitment to stop making low-priced, low-quality clothing. Since then, people have begun to notice Uniqlo for its high quality fleece jackets. The perception of the brand immediately shifted from being cheap and low-quality, to being affordable but high-quality.

Today, Uniqlo is known for providing high-quality private label casual-wear at low prices. As of September 2019, the brand has grown to more than 2,250 stores in 25 countries in Asia, Europe and North America in just 22 years. It is the largest clothing chain in Asia with over 800 retail stores in Japan alone.

Fast Retailing's market capitalization is over 49.2 billion USD and employs more than 56,000 people worldwide. For 2020, Fast Retailing posted revenue of 22 billion USD and a profit of 2.5 billion USD. Japan, the company's domestic market, contributed 38% of total revenue, with one in four Japanese claiming they own a Uniqlo down jacket. Fast Retailing has grown at an incredible pace in the past 5 years and its confidence is reflected in its revenue forecast of 9.5% growth for FY2021.

The Uniqlo brand message embodies a clear vision: “Uniqlo is a modern Japanese company that inspires the world to dress casual”. The company strategy that has worked for Uniqlo so far is to “totally ignore fashion” instead of chasing fast-fashion trends like other competitors. The brand philosophy “Made for All” positions its clothing to transcend age, gender, ethnicity, and all other ways to define people. Contrary to its name “Uniqlo”, the clothes are simple and essential yet universal, allowing the wearer to adapt them to their own personality.

The company sets itself apart from its price-oriented competitors by branding its signature innovations with names like HeatTech, LifeWear, and AIRism. Uniqlo provides a superlative physical shopping experience by running its stores flawlessly, inculcating a positive employee culture, and through in-store technology such as video tutorials describing product attributes.

Another aspect that characterizes Uniqlo's corporate culture is Uniqlo's focus on teamwork, a flat organizational structure with employees strongly encouraged to provide suggestions.

The Uniqlo brand was created to be centered around the Japanese philosophy of simplicity and essentiality, and this is reflected throughout the brand's marketing, communications and operations. It is truly impressive how Uniqlo has managed to transform itself from a single men's tailoring shop from Tokyo into a global casual wear giant and one of the best-known brands in Japan and Asia today. Under Tadashi Yanai’s effective and visionary leadership, Uniqlo’s parent company Fast Retailing is targeted to become the world’s largest fast fashion retailer.

Building and sustaining a brand that is relevant is one of the hardest aspects of building a strong brand today. Uniqlo, with its presence in different markets, has managed to withstand this challenge of building a relevant and resonant brand personality.


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