What strategies are behind the success of Uniqlo, a Japanese casual wear designer, manufacturer and retailer?
I was recently in the Uniqlo store on 34th street in Manhattan and was blown away by the quality and styling of the clothing, the store size and product scope, the presentation, the breathtakingly low prices, the service experience, the innovations and the energy. How did Uniqlo pull that off? And why has Uniqlo experienced dramatic profitable growth over two decades?
In 1994 it had approximately 100 stores in Japan. In 2015, it will have 840 stores in Japan and 1,170 stores outside of Japan, 820 of which are under the Uniqlo brand (and another 270 under the GU brand, which is a low-priced version of Uniqlo). In fiscal 2014 it will continue a sharp sales trajectory with sales around 14 billion dollars becoming a top five global “own brand” clothing retailer.
6 Key Strategies Behind the Success of Uniqlo
Uniqlo’s success didn’t just happen by chance. There are certain strategies that have been key contributors to the company’s noteworthy progress. Here are six key elements that other brands can learn from.
1. Uniqlo has a clear vision of its brand.
To provide high quality, performance-enhanced, basic casual wear at the lowest prices. Its clothing is up-to-date and fashionable, but not trendy.
Its fabric innovation and in-house design provide exceptional and unique functional performance. Uniqlo provides “made for all’ clothing that can be worn whenever and wherever. It is not, like some competitors, a firm that sells copies of the latest runway fashions.
2. Uniqlo brands its innovations.
This provides substance to its quality and performance positioning and sets it apart from most price-driven, value retailers. One of their signature innovations is HeatTech, a fabric developed in conjunction with a material science firm that turns moisture into heat and has air pockets in the fabric to retain that heat.
The HeatTech fabric is thin, comfortable and enables stylish designs very different from the standard for warmth clothing. The HeatTech innovation keeps improving over time with new fiber technology. In 2003, 1.5 million HeatTech products were sold while in 2012 over 130 million units were sold over 250 items.
Not to mention their AIRism (a stretchy fabric) and Lifewear (a blend between casual and sportswear) technologies and more. All are branded, which means competitors have an uphill struggle to match this point of differentiation.
3. Its operational strategy gives it both a cost and agility advantage.
Its low cost operation is based on Uniqlo’s ownership of product planning, design, manufacturing and distribution. The direct link between the stories and a stable group of suppliers means that what is being sold is directly translated into manufacturing orders.
There is no six or nine month planning cycle, but stock is upgraded in weeks or even days. The customer thus has a direct influence on the ordering process, because what is being made is based by what they are buying.
4. The driving force is a charismatic owner-founder.
Tadashi Yanai is a hands-on leader who supports a strong, unique culture that is hard to duplicate. His influence is everywhere, as the values and goals of Uniqlo are translated into processes, measures, organizational structure and people. The organization is flat, and employees are encouraged to make suggestions.
He made a decision, a very rare one in Japan, to conduct all the business of the firm in English. Without question, this has enabled international success. He also has managed to avoid the most serious silo problems that hold back most Japanese firms, in fact most firms, which go global. The culture he has put in place supports innovation, customer experience, teamwork and organizational goals.
5. The emphasis on the in-store experience is over-the-top.
And, it involves hiring, training, and micro-managing all touchpoints. Every activity undertaken by every employee, from a person’s folding technique to the way advisers (floor salespeople are called advisers) return charge cards to customers (Japanese style, with two hands and full eye contact) are recorded and analyzed. Each morning, employees practice the ways in which they are taught to interact with shoppers including the six standard phrases such as “Hello, my name is (blank), how are you today?” The financials are completely transparent, and sales are charted and posted each day. The firm is now building a Uniqlo University in Tokyo where 1,500 new store managers will be trained each year.
6. The firm thinks big.
Yanai wants to move beyond the primary mission to enrich people’s lives by providing truly great clothing to offer customers everywhere the world’s best stores, service and products. He wants to exceed Zara and become the top private label retailer in the world. Already tied for the number 2 brand spot in Japan (and HeatTech is in the top 50), Yanai wants to become the number one brand in every country where Uniqlo operates.
In 2004, that ambition grew as the Uniqlo Way was developed under the theme, “Changing Clothes. Changing conventional wisdom. Change the world.” There is an element of corporate social responsibility there that shows how serious Uniqlo is about contributing to the world. Their recycling effort, for example, has moved tens of millions of discarded Uniqlo clothing to needy people around the world.
Everything from a clear vision to big picture thinking has contributed to Uniqlo overall success. Where will it end? Visit a store and see what you think. I wouldn’t bet against Tadashi Yanai.
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