AT THE PEAK

OF FASHION:

Developing a Leadership
Strategy for a Large Fashion
Retailer UNIQLO
Immerse yourself in the case and find out how to become
a manager in practice. Suggest the best possible solution how
to lead hundreds of people and plan a range of 1000 items? You
need to develop a new strategy for the best store of UniQlo the
leader of the fashion industry! Suggest how to meet the needs of
thousands of people a day, leave customers satisfied with their
purchase, and charge them positively for the rest of the day!
Do not forget to think about the ideal planning of the range, the
inventory, marketing, and promotions.

AT THE PEAK OF FASHION: DEVELOPING A LEADERSHIP STRATEGY FOR A LARGE FASHION RETAILER UNIQLO

CONTENTS

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INTRODUCTION

UNIQLO HISTORY: FROM THE

FIRST STORE TO THE GLOBAL
EXPANSION
6

UNIQLO: UNIQUE CLOTHING

& STORE ENVIRONMENT
8

COMPETITORS
BUSINESS MODELS
15

CHALLENGES GOING
GLOBAL
18

UNIQLO IN RUSSIA
AND RUSSIAN FASHION
LANDSCAPE
21

UNIQLO BUSINESS MODEL

AND PROMOTIONAL
CAMPAIGNS

APPENDIX

11

24

AT THE PEAK OF FASHION: DEVELOPING A LEADERSHIP STRATEGY FOR A LARGE FASHION RETAILER UNIQLO

INTRODUCTION

INTRODUCTION

INTRODUCTION

Today, Karina, the managing director of the

first UNIQLO store in Moscow, came in to
work a little earlier than usual. Anticipating
the imminent arrival of her colleagues,
Karina left her belongings in the managers
room, and made her way to the salesroom.
As usual, she went along the control route,
past the shelves that were neatly stacked
with clothes, expecting the arrival of the
first customers. Jeans, trousers, even
piles of colourful T-shirts, stands with
perfectly ironed shirts, soft and comfortable
hoodies... Karina herself loves the products
of UNIQLO they are of high quality,
comfortable to wear, attractive, functional,
and most importantly free of anything
superfluous. That is the essence of UNIQLO.
Soon, the colleagues began to arrive.
Exchanging cheerful greetings and brief
news, they were all in a hurry to get changed
and start preparing for the new day at work.
Karina had plenty of responsibilities of her
own. She was responsible for the stores
main financial indicators, managed her
teams work, made sure that customers
were satisfied, planned the stocks of goods,
and organized the retail space and local
marketing campaigns.
Karinas work had been very highly rated
by the heads of the company, as she always
stood out through her perfectionism. It was
the desire to be the best and to work in one

of the most successful companies in the

fashion retail business that led her to the
UNIQLO Manager Candidate leadership
programme, and then to Japan, where
she learned a lot and found close friends,
and finally, to central Moscow one of the
fashion capitals of the world, where she
soon became the head of Russias first
UNIQLO store.
Karina moved into fashion retail at a time
when global consumerism came to be
replaced by the newer trend of more targeted
selection of new products. In view of the
changing economic situation, consumers
began to attach greater importance to the
price-quality ratio. The whole retail sector
saw a slight decline in consumer activity, and
thecustomers increasing fastidiousness in
choosing products.
There has certainly been no decrease in
the number of customers at UNIQLO, but
Karina did notice certain changes in the
buyers activities. This meant that in order to
maintain the same high positions, the store
manager had to devote even more time to
working with staff, carefully selecting the
range, and to marketing activities.
Most recently, the companys global
leadership
announced
the
Healthy
Competition between Stores campaign
to establish the best UNIQLO store in
Europe. As part of this new competition, all
managers will have to develop a leadership

strategy for their stores and share with

the global managers their ideas regarding
improved customer service, new methods
of promotion and forming team interaction,
which would ultimately lead to an increase
in sales and enhance customer satisfaction.
Karina, like other store managers in
European countries, was expected to deliver
a reasonable initiative within the standards
of quality and productivity of a company
with a global reputation. It was planned to
improve the efficiency of work by carrying
out local marketing activities that did not
contravene the advertising policy and
strengthened the image of UNIQLO, through
a competent management of the personnel,
through a change in navigation and display
of goods inside the store, and by increasing
brand loyalty.
Colleagues in Japan have promised a special
prize for the best UNIQLO store the launch
of a pilot podium project showcasing the
latest collections and technologies in the
world of fashion at the store itself, where
all employees will be able to act as models
and appear on the catwalk. This is worth
fighting for, one would presume! Karina had
no doubt that she could achieve the first
significant results within a year.
Meanwhile, visitors were already filling the
salesroom. Customer advisors, promptly
responding to requests from customers,
were selecting the right sizes, colours and

AT THE PEAK OF FASHION: DEVELOPING A LEADERSHIP STRATEGY FOR A LARGE FASHION RETAILER UNIQLO

INTRODUCTION

styles, trying to provide them with an atmosphere of hospitality and good cheer. Karina
always tried to be in the thick of things: she watched customers, helped them with their
choice, asked them for their opinion on the product, and collected feedback.
Karina loved interacting with customers. The store gave her the drive and the responsibility
that she would never have felt sitting in a big office chair. She really liked the atmosphere
of emancipation and freedom, when there was no need to comply with a certain formal
dress code, or to wear a watch of a specific brand. Instead, one could pick their own image,
and it could be a different one every day. The management valued her primarily for the
good results; the employees for the friendly atmosphere in the store, the opportunity to
learn and improve their knowledge of the fashion industry; and the customers for quality
products and friendly service. After all, customer satisfaction is the Japanese companys
core value, and this is confirmed by the fact that the stores book of feedback mostly
contains kind words and gratitude from the customers, rather than complaints.
As usual, the day was tense and busy, but Karina never stopped thinking about new
challenges. Gradually, ideas and suggestions began to mature in her mind. Going into the
managers room in the evening, Karina recorded her goals for the immediate future in
the diary.
She needs to hurry: already within a week, Karina will have to work through each of the
tasks in detail, and provide a detailed action plan for moving the store into a leading position.

_____________________________________________________
1
UNIQLO regards 50 % - 45 % - 5 % (for womens, mens and
childrens clothing, respectively) as an ideal ratio
2
The ratio between positive and negative feedback from
customers

AT THE PEAK OF FASHION: DEVELOPING A LEADERSHIP STRATEGY FOR A LARGE FASHION RETAILER UNIQLO

UNIQLO
HISTORY:
FROM THE
FIRST STORE
TO THE GLOBAL
EXPANSION

UNIQLO HISTORY: FROM THE FIRST STORE TO THE GLOBAL EXPANSION

UNIQLO HISTORY:
FROM THE FIRST
STORE TO THE
GLOBAL EXPANSION

Three years ago, when Karina was still

working on her Masters thesis on the
fashion industry, Moscow was sizzling with
the news about the long-awaited entry of the
Japanese fashion retailer into the Russian
market. Immersing herself into the history
of UNIQLO, Karina immediately imbued
its principles and values. She fully shared
company founder Tadashi Yanais ideas, and
wanted to see the Japanese brands quality
clothing sold in Russia.
UNIQLO is a Japanese unisex casual wear
designer, manufacturer and retail chain,
which has been expanding at an extremely
quick pace and large scale.
This all started in 1949 when Hitoshi Yanai
opened a multi-brand store for mens
apparel, called Ogori Shoji in Ube (West
Japan). The small family business rapidly
became profitable, due to the rise in the
Japanese economy after World War II.
In 1972, Tadashi Yanai joined the family
business, and in 1984 the company opened
a unisex casual clothing store in Hiroshima,
under the name Unique Clothing Warehouse.
Soon the name UNIQLO was born as
a contraction of unique clothing. This
warehouse-style shop offered understated
garments, in line with Tadashi Yanais simple
and rational vision of the apparel world.

The chain quickly grew in size, and in

1991 the name of the parent company was
changed from Ogori Shoji to Fast Retailing,
which was soon listed on the Tokyo Stock
Exchange.
By 1994, there were more than 100 UNIQLO
stores in Japan, and by 2001 the number of
domestic outlets exceeded 500. The early
2000s also saw the success of UNIQLO in
selling fashion blockbusters: first, the fleece
fever in 1999-2000 with 35 million pieces
sold in Japan, followed by the sensational
success of the HEATTECH (a unique and
highly functional line of innerwear) in
2003 with record sales of more than
64 million pieces sold in the domestic
market3.
In 2001 leadership of the domestic market
had already been reached and UNIQLO
decided to expand overseas, opening their
first UNIQLO outlet in Shanghai (China) and
four outlets in London (UK). At this time, the
company started a long journey of adopting
its business to other cultures and gradually
achieved global recognition. In 2006,
UNIQLO opened its first American flagship
store in Soho (New York) and in 2009 the
first French flagship was launched in Paris.
By the end of 2014, UNIQLO was operating
stores in 15 countries which included
China, Taiwan, France, Russia, Singapore,

the United Kingdom, the United States

and others, besides its native market. In
total UNIQLO had 852 stores in Japan and
633 overseas4. Under the guidance of CEO
Tadashi Yanai, Fast Retailing has grown
into the largest retail apparel company in
Japan and the fourth largest in the world
behind Spanish retailer Inditex (Zara), H&M,
and Gap.
Fast Retailing won the fiscal 2014 Retailer
of the Year Award from the World Retail
Congress for exceptional, world-class
performance. It was a great achievement
for the company, as its CEO commented:
I see this as a testament to UNIQLOs
unique position as the worlds only LifeWear
brand. LifeWear means everyday clothes
for a better life: high-quality, fashionable,
affordable and comfortable.
UNIQLO International is the clear driver
of Fast Retailings current growth. Two
hundred new stores are scheduled to open
in fiscal 2015, with Greater China and other
parts of Asia expected to perform strongly.
Within the next couple of years, the company
expects revenues at UNIQLO International
to surpass those of UNIQLO Japan.

_____________________________________________________
3
Choi Eugene K. (2011), The rise of Uniqlo: Leading Paradigm
Change in fashion business and distribution in Japan, ESKA/
Entreprises et Histoire
4
Fast Retailing official site

AT THE PEAK OF FASHION: DEVELOPING A LEADERSHIP STRATEGY FOR A LARGE FASHION RETAILER UNIQLO

UNIQLO: UNIQUE CLOTHING & STORE ENVIRONMENT

UNIQLO: UNIQUE
CLOTHING

UNIQLO has an unconventional marketing

strategy. Unlike other successful brands
such as H&M, Topshop, and Zara, UNIQLO
does not produce fast fashion to be worn
and disposed of each season. Instead, it
produces basics: t-shirts, jeans, socks, tops
for men, women, and children, and keeps
costs low by preordering huge volumes of
clothing many months in advance. Such
basics, the firm believes, have the added
benefit of appealing to a wider audience
than the preppy Americana sold by Gap or
the faddish wares of Zara and H&M. Instead
of having a target segment and making
clothing to suit the segments specific
tastes like most clothing retailers, they
have chosen to focus on providing clothing
of high quality for virtually everyone.

Basics are not normally considered the

most exciting part of the business, but
UNIQLO has managed to transform them
into a goldmine. UNIQLO apparel has three
key competitive advantages which are
detailed below:
The first advantage comes from the design
of their clothing, which combines simple
aesthetics with high-quality craftsmanship.
With many colors to choose from, it is easy
for UNIQLOs shoppers to customize their
clothing and style. Apparel components
may be worn in conjunction with other
items, all featuring the same basic design,
appropriate for various occasions given
their smart-casual appearance. And such
components necessary to complete an

individuals style or look are included within

each store.
The second element of UNIQLOs value
proposition is their sensible pricing. To
compare, pricing at UNIQLO is greater than
that of general stores, but lower than similar
items at major department store chains.
Often the quality and style of clothing is
sacrificed to keep prices low, but UNIQLO
sacrifices none of these by producing
attractive, inexpensive products resulting in
a higher overall value at a set price.
Finally, UNIQLO offers innovative technology
of its fabrics. For example, HEATTECH
fabric provides lightweight insulation, while
tops in the AIRism line have special fibers
that keep you cool and dry in hot weather.
Thus, reducing the design costs and at the
same time investing more on the quality
of fabrics, UNIQLO can sell items like
pure cashmere sweaters and Japanese
selvedge jeans at affordable prices, which
is an in-between that attracts both the
quality seekers and those who are budget
conscious.
In all, UNIQLO has created a distinctive
brand identity and its positioning has been
so effective that the company now has
more than 1400 stores worldwide, which
has made Tadashi Yanai the richest man in
Japan.

AT THE PEAK OF FASHION: DEVELOPING A LEADERSHIP STRATEGY FOR A LARGE FASHION RETAILER UNIQLO

UNIQLO: UNIQUE CLOTHING & STORE ENVIRONMENT

UNIQLO: STORE
ENVIRONMENT

Besides the quality of goods, UNIQLO

attentively manages in-store service,
which is usually the second if not the first
component of retail business success. Instore UNIQLO maintains clothing organized
by color culminating in a rainbow display.
The sales floor is kept clean and bright,
and embraces modern minimalism, free
from any possible distractions, leaving
the clothing central to the design of the
space. UNIQLO embodies an unbranded
fashion philosophy that is deeply rooted in
its Japanese origin but still demonstrates
a contemporary and culturally inclusive
experience. UNIQLO has standards even
for the music: they have a global music
palette meant to be familiar, optimistic,
and vaguely international.

the employee break rooms, so that every

employee is informed exactly how much
business the store does on any given day,
and in each department, down to the
number of jeans sold.

UNIQLO is a company that prescribes,

records, and analyzes every activity
undertaken by every employee, from folding
techniques to the way advisers return
charge cards to customers (which is done
in a Japanese style, with two hands and
full eye contact). 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 ,Please let me know if you need
my help and other common replies which
are the benchmarks of polite service. The
financials are completely transparent, and
sales are charted and posted each day in

However, UNIQLO has a lot to offer

in terms of future growth and career
development. They share experience, have
some international vacancies and believe
that a good manager can only grow within
a firm. That is why manager positions are
proposed only for internal employees;
even an experienced external candidate
has only the option to apply for an adviser
position. Human development is one of the
major tasks for local store managers to
perform they are fully empowered to
assess and promote people from within
their team.

UNIQLO is regularly hiring new employees

as the retail business has high staff turnover
and UNIQLO in Russia is no exception. The
adviser role implies a lot of activity and
requires sharing the corporate culture.
Students are the best candidates for this
job as they are ready to work hard with
flexible working schedules. But for them
this is the first working place in life, and only
a few of them look forward to the future
and consider an adviser role as the start of
a long-term career.

Working conditions are friendly, but require

discipline. Employees should always smile,
be helpful, start work on time etc. There
are standards for virtually every task. Take
folding for instance, which UNIQLO treats as
if it were a scholarly discipline, with specific
rules, best practices, and mandated times
for completion. Employees at most retail
stores fold with the assistance of a plastic
board, but UNIQLO employees are taught
the body fold technique and are expected
to fold six shirts in one minute while the
staff are told to practice this on their own,
after work, until they get it right.
To some extent, all companies have rules
and guidelines, but UNIQLO is on another
level entirely. There is always a sense
of urgency about everything. UNIQLOs
obsession is more like an exaggerated
version of kaizen, the Japanese concept that
translates roughly as the continuous search
for perfection. UNIQLO has a relatively flat
power structure and encourages employees
to suggest ideas for improving productivity.
Experimentation, however, must go through
the proper channels. There is a poster in
every UNIQLO managers office outlining
the Ten Accountabilities. One of them
says: As a store manager, always follow
company direction. Do not work in your own
way.

AT THE PEAK OF FASHION: DEVELOPING A LEADERSHIP STRATEGY FOR A LARGE FASHION RETAILER UNIQLO

UNIQLO: UNIQUE CLOTHING & STORE ENVIRONMENT

THINKING BIG

Tadashi Yanai wants to move beyond the

primary mission to enrich peoples lives
by providing truly great clothing to offer
customers everywhere the worlds best
stores, service and products. 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 that shows
how serious UNIQLO is about contributing
to the world.
In 2014 UNIQLO took on some relevant
social responsibilities. For example, the
company redistribute quality secondhand
UNIQLO clothing to refugees, displaced
persons and others around the world, either
through global partnership with the Office
of the United Nations High Commissioner
for Refugees (UNHCR) or with the help of
various non-governmental organizations.
In addition, UNIQLO is actively hiring people
with disabilities worldwide, constantly
monitoring
thoroughly
the
working
conditions at partner Chinese factories and
always pressing for minimizing production
facilities environmental impact across the
whole value chain.

To Be a Top Global Company

The Fast Retailing Way
FR Group Corporate Philosophy
Changing clothes. Changing conventional wisdom. Change the world.
Group 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 clothes
To enrich peoples lives through our unique corporate activities, and to seek to grow and
develop our company in unity with society

The CEO of the company said: I believe

our most important mission is to use our
business to change the world for the better.
And the company does its business in a way
to prove this message.

10

AT THE PEAK OF FASHION: DEVELOPING A LEADERSHIP STRATEGY FOR A LARGE FASHION RETAILER UNIQLO

UNIQLO
BUSINESS
MODEL AND
PROMOTIONAL
CAMPAIGNS

UNIQLO BUSINESS MODEL AND PROMOTIONAL CAMPAIGNS

UNIQLO BUSINESS
MODEL AND
PROMOTIONAL
CAMPAIGNS

UNIQLO was the first company in Japan to

establish an SPA (Specialty store retailer of
Private label Apparel) model encompassing
all stages of the business - from design
and production to final sale. Although SPA
was not a very new concept for leading
fashion retailers, the company managed
to fine-tune the model to guarantee the
development and production of unique
and well-made products. UNIQLO makes
centralized adjustments to production
to reflect the latest sales trends and to
minimize store operation costs such as
personnel expenses and rent. This is how
UNIQLO provides such high-quality clothing
at such reasonable prices.
The product development in UNIQLO is
oriented towards the customers needs and
wants. The customer plays a vital role in
the product development and feedback can
be gathered from any possible source. For
example, in Russia they have a questionnaire
for customers, which can be optionally
completed. Each year, around 70,000
customer comments are received regarding
the company. Customers provide feedback
on certain products, so UNIQLO can improve
their apparel products. For example, brandnew HEATTECH products have been refined
each year based on customer feedback
such as comments asking for softer fabric,
a function to keep skin both warm and
prevent dryness and an expanded range
of colors. It is precisely the ingredient that
makes it possible for UNIQLO to produce the
high-quality apparel that it does.

12

Development
and
procurement
of materials

Planning

Proposals

Price
negotiations

R&D
(Designers/Pattern makers)

Proposals

Sales promotion plans

Designs

Materials
manufacturer

Merchandising

Production
volume
guidance

(External)

Order
design sample

Samples

Production departments

Guidance for
adjusting
production

Takumi

Marketing

Quality control/Monitoring
of production schedules

Production

Production
planning

Sales
(promotion
)

Technical guidance

Partner factories
(External)

Warehouse
(External)

Sales

Order
guidance

Inventory control

Place orders

Markdown guidance

Stores and e-commerce business

Feedback

Customer
center

Opinions

Customers

AT THE PEAK OF FASHION: DEVELOPING A LEADERSHIP STRATEGY FOR A LARGE FASHION RETAILER UNIQLO

Feedback

UNIQLO BUSINESS MODEL AND PROMOTIONAL CAMPAIGNS

Moreover, product development works

in collaboration with the marketing and
merchandisers department. Merchandisers
play a vital role from product planning
through to production. After meeting with
the R&D designers, merchandisers then
apply the concepts for each season to
product plans, materials and designs. Next,
they decide the product lineup and volume
for each season, paying close attention to
a detailed marketing strategy. One other
important task for our merchandisers is
to decide when to increase or reduce production during a season. Any decisions about
adjusting production in line with demand
are made jointly with the product planning
department. As for marketing each season,
UNIQLO conducts promotional campaigns
for core products such as fleece, Ultra Light
Down, AIRism and HEATTECH. During these
campaigns, UNIQLO advertises these core
products unique qualities and noteworthy
features on TV and through other media.
For example, weekly flyers in the Friday
editions of Japans national newspapers,
which are delivered to most households,
promote the apparel that will be discounted
through until the following Monday.
One step before producing the developed and
planned apparel is material procurement.
UNIQLO Material Development Team
procures high-quality materials at low
costs through bulk purchases from global

13

material manufacturers. The company

seeks partners from around the globe for
quality products like their denim fabric
produced by KAIHARA Co., Ltd. The global
efforts of UNIQLO make it possible to secure
high-quality materials for the products.

and new products to fulfill orders. At the

end of each season, merchandisers and the
marketing department help coordinate the
timing of markdowns and limited-period
sales (typically 20-30 % off the regular
price) to ensure that the inventory sells out.

UNIQLO pays close attention to the production technology and maintains the quality
of produced apparel. In order to produce
millions of products of standardized quality,
it becomes important to implement quality
control across factory production technology
and management. UNIQLO has a team of
technical specialists (about 400), known as
the Takumi Team, members of which boast
several years of experience in the Japanese
textile industry. These specialists are sent
directly to the partner factories in China
to offer technical instruction and share
their abundant experience. At the same
time, the supervisors from the Production
Department, based in the Shanghai office,
make weekly visits to partner factories to
check the quality and progress of production.
We have established production offices in
Shanghai, Ho Chi Minh City, Dhaka, Jakarta
and Istanbul to help ensure our clothes are
made to the highest global standards.

Finally, freshly made items are distributed

to the stores. UNIQLO had 852 stores in
Japan at the end of August 2014 and now
that it is a huge chain, UNIQLO has had to
change its approach to the management
of its stores dramatically. The previous
chain of centrally managed retail stores,
which has spearheaded UNIQLOs growth
up to the current point, was transformed
into a group of individual stores managed
by empowered local employees. This has
been motivated by the broad success of the
franchise stores. Managers of franchise
stores embrace Fast Retailings corporate
vision, values and culture, and local
employees feel secure in their positions
and in their prospects for long-term
employment. The UNIQLO Kichijoji global
hotspot store, opened in October 2014, is
a great example of a community-focused
store. A range of fun ideas proposed by local
staff was incorporated into the opening
events, including in-store displays which
referenced Kichijojis strong manga culture.
They also gave customers a commemorative
mug designed by a local illustrator.

The Inventory Control department maintains

the optimum level of store inventory by
monitoring sales and stock on a weekly
basis, and dispatching necessary inventory

AT THE PEAK OF FASHION: DEVELOPING A LEADERSHIP STRATEGY FOR A LARGE FASHION RETAILER UNIQLO

UNIQLO BUSINESS MODEL AND PROMOTIONAL CAMPAIGNS

DEDICATED
PROMOTIONAL
CAMPAIGNS

Following the global expansion, the

companys global advertising and marketing its external communications have
decisively shifted. Throughout the last half
a decade, a growing emphasis has been
placed on creative campaigns that include
digital marketing rather than traditional
forms of marketing.
Our emphasis is on digital marketing
because we feel that by harnessing the
power of the web we can overcome language
barriers as we expand globally. We also
believe that an image speaks a thousand
words and images and music transcend
language. Combining the web and placing
an emphasis on image and sound can be
extremely powerful when creating global
campaigns, Daisuke Hase, UNIQLOs
public relations and global marketing
communications spokesman explained5.
UNIQLOs creative vision in the digital sphere
first grabbed the worlds attention in 2007
when the companys Uniqlock campaign
took the online advertising sector by storm.
The viral marketing project, designed to

build brand awareness internationally,

featured a clock with spliced clips of wellchoreographed dancing and catchy lounge
music all timed to match the clocks ticking.
It ran all year round, 24/7. In summer the
girls dancing wore polo shirts; in winter,
cashmere; and at midnight they slept.
Uniqlock swept the board at a raft of major
advertising awards in the following year,
even scooping a Grand Prix at Cannes. The
web animation, Uniqlock, was perceived as
very advanced at the time. In addition, the
animation could also be embedded into
blog sites, which meant it was distributed
naturally.
In 2008 UNIQLO launched another
international campaign Uniqlo jump, using
quirky online audio and video to advertise
the companys autumn/winter collection. Six
hundred and ninety-six UNIQLO employees
from around the world were photographed
jumping in the new collection, and the
resulting images and films were distributed
via Flickr, YouTube and a blog site ahead of
the launch of the official campaign site.

Equally unique and much-lauded in the

advertising sector was UNIQLOs 2009
autumn/winter campaign to promote its fall
collection Tokyo 2009 Collection. A simple
website that was linked to UNIQLOs online
retail sites in the US, UK, Korea and China
ran alongside TV advertisements. The site
featured an interactive catwalk that allowed
web viewers to explore the clothing ranges
worn by models. It created a personal fashion
experience and a few clicks led through to
UNIQLOs online retail stores for shoppers
in Europe, China, Japan and Korea who had
spotted the models wearing something they
liked. The campaign was praised at the time
for being, not simply unique but also very
simple and effective: look, like, buy.
By building a digital presence, UNIQLO is not
simply driving more consumer engagement
but it is also shifting its advertising from
paid media to owned media. In the longrun, this may be a more effective way for
the brand to deepen its relationship with its
customers.

_____________________________________________________
5
Tessa Thorniley (2011), How UNIQLO used digital marketing to
build a global brand

14

AT THE PEAK OF FASHION: DEVELOPING A LEADERSHIP STRATEGY FOR A LARGE FASHION RETAILER UNIQLO

COMPETITORS
BUSINESS
MODELS

COMPETITORS BUSINESS MODELS

COMPETITORS
BUSINESS MODELS

Overall most of the key fast-fashion retailers

apply the Specialty Store Retailer business
model in a particular way. It was GAP in the
mid-eighties that first introduced the idea to
integrate all stages of the clothes-making
business, from design and production to
final sales. This integration strategy led to
a progressive globalization of the fashion
apparel manufacturing system under the
total control of corporate headquarters,
enabled by the technical innovation in
IT and computerization. SPA companies
partner with local factories for production,
by establishing secured contracts with
regional producers, in order to reduce costs
and benefit from partners expertise.
The American GAP and the Italian Benetton
are widely recognized as the most
representative of this first chronological
sequence of the SPA business model.
Both companies offer standardized basic
and good quality apparel items at an
affordable price. They moved from a very
retail-oriented position at their beginning
towards a production-focused perspective.
As for UNIQLO, the Japanese firm is also
considered as a classic version of SPA.

_____________________________________________________
6
2013, Case The Future of Retail Clothing: Will Uniqlo turn the
World Japanese, Edhec Business School
7
Forbes The Future Of Fashion Retailing
8
Inditex Annual Report 2013

16

This formula has been followed similarly

by many retailers for decades, but in recent
years a major shift has led to great success
for fast-fashion giants Zara and H&M. In the
90s, the European apparel brands focused
on enhancing the fashion elements in their
value chain, beyond the total integration
strategy. The business value shifted from
the initial standardization of items or offthe-peg to an off-the-catwalks vision6.
The idea was to quickly adapt the creations

of couture designers to street fashion

garments, at an affordable price.
That was the starting point of what is
widely recognized as the fast-fashion
industry. In this most-flexible version of
SPA, strategic competitiveness drives from
reduced production timelines and the ability
to lead fashion trends. Retail digitalization
is required to accurately estimate market
demand and trends.
The most typical representatives of this
business model are Zara (Spain), H&M
(Sweden) and Next (UK). Quickly, those
firms also focused on reaching a global
scale, by aggressively penetrating foreign
markets and developing international retail
networks.
Zara: Responding to Consumer Trends7
Spanish apparel company Zara has built its
strategy around fashion trends, embracing
the fast-changing tastes of its customers.
To do this successfully, Zara has developed a
highly responsive supply chain that enables
delivery of new fashions as soon as a trend
emerges.
Zara delivers new products twice a week to
its 1,991 stores operating in 87 countries8.
The companys strategy involves producing
clothes in small batches, stocking very little
and updating collections often.
Instead of other brands that only update
once a season, Zara proposes new designs
twice a week. The vast commercial and
design team constantly develops new

designs based on customer opinion

gathered directly from the store, or catwalk
trends. It then takes the company only 10 to
15 days to go from the design stage to the
sales floor. This is a staggering pace, helped
by the fact that around 50 % of clothing
is manufactured in neighborhood markets Spain, Portugal, Turkey and
Morocco, instead of Asia. Because of this
streamlined model, Zara is not forced to be
ahead of the curve. Rather, they exist on the
curve, evaluating trends beforehand, and
then following.
Zara was designed to be responsive from
its inception. Rather than subcontracting
manufacturing to Asia, Zara built 14 highlyautomated Spanish factories, where robots
work around the clock cutting and dyeing
fabrics and creating unfinished gray goods,
the foundations of their final products.
Like UNIQLO, Zara leverages automaker
principles; these automated factories use a
just in time inventory approach pioneered
by Toyota Motor Company.
Zara has also created a partner network of
more than 300 small shops in Portugal and
Galacia to handle the finishing work; here,
the gray goods are transformed into dresses
and suits. By following this approach, if an
item looks like a winner, Zara can quickly
ramp up manufacturing and get items to
their stores in a matter of days.
Zara has been very successful with this
approach, which is a big reason why its
parent company is now the worlds largest
clothing retailer.

AT THE PEAK OF FASHION: DEVELOPING A LEADERSHIP STRATEGY FOR A LARGE FASHION RETAILER UNIQLO

COMPETITORS BUSINESS MODELS

H&M: Building a Bridge between Timeless

and Trendy9
H&M is the second largest apparel retailer
in the world, just behind Inditex. With 2,936
stores in 53 countries10 H&Ms business
concept is to offer fashion and quality at
the best price, and its strategy is to always
have the best customer offering in each
individual market.
H&M was a pioneer in pursuing vertical
integration with its own distribution
network with the companys clothing
collections created in-house in Sweden.
H&M always offers a wide and varied range
of new fashions, from the latest trends to
sustainable classics to wear season after
season. The collections are created by
H&Ms own designers, pattern makers and
buyers, who all work in tandem. This team
of people of different ages and nationalities
finds inspiration everywhere: from travel,
films, fashion and the catwalk to the street

and trend seminars. When designing the

collections the focus is on quality, best
price and capturing the feel of a trend.
Flexible planning of the product range
and efficient logistics result in continually
adapted products according to customers
preferences.
H&M outsources production to a network of
800 suppliers: 60 % of the production takes
place in Asia, the rest in Europe. It has an
approach that is a hybrid of the UNIQLO
and Zara models. It manages to merge
a commitment to longevity while staying
responsive to fashion trends.
H&M offers two main collections each year,
one in spring and one in fall. Within each
season, there are several sub-collections
that allow H&M to continually refresh
its inventory. The primary collections
are traditional long-lead items; the subcollections are trendier items with short
lead times.

The enabler to H&Ms ability to react quickly

is its network of 20 to 30 production offices,
which are placed close to its suppliers. These
offices work with both the buyers in Sweden
and the production facilities, reviewing
samples, checking quality, and choosing
the suppliers, which will handle each order.
Generally, the items with very short lead
times are manufactured in Europe, with
longer-lead items manufactured in Asia.
Like Zara, this allows H&M to be more
responsive to trends.
H&M also has a world-class IT
infrastructure, which is key to its success.
Each store is connected with corporate
logistics and procurement systems and the
central H&M warehouse. The IT systems
also reach as far as the design and product
development teams, so executives have
visibility into the entire process, from
product design to sales. This leads to more
effective management across all channels.

_____________________________________________________
9
Forbes The Future Of Fashion Retailing
10
H&M Annual Report 2013

17

AT THE PEAK OF FASHION: DEVELOPING A LEADERSHIP STRATEGY FOR A LARGE FASHION RETAILER UNIQLO

CHALLENGES GOING GLOBAL

CHALLENGES GOING
GLOBAL

UNIQLO is Japans leading clothing retail

chain in terms of sales and profit, holding
a 5.5 % share of Japans domestic apparel
market. For Japanese consumers, UNIQLO
is the only company that offers clothing
made with luxury materials at reasonable
prices. UNIQLO products are considered as
an investment on the domestic market:
the garments are top-quality temporal
items, designed to last in ones wardrobe,
as they can adapt to any style and can be
worn in many circumstances, whether at
work or for leisure. Due to its strong and
historical establishment on the domestic
market, UNIQLO is perceived as a proximity
brand, very close to its local customers.
However, initial global extension was a little
more challenging. UNIQLO made its first
attempts to expand abroad in 2001, opening
21 stores in the UK and later three in the US.
The majority of the first English stores were
small storefronts in the suburbs, while three
American stores opened in malls in New
Jersey. Within five years, however, UNIQLO
had closed many of them. The problems
had been multiple. The initial choice of
replication outside Japan was entirely
wrong, according to UNIQLO managers.
The stores were, like in Japan, located
in secondary zones and suburban malls.
Moreover, the assortment did not fit the local
needs: very basic products, unisex line-up.
Finally, the UK and US staff were not trained

well enough to UNIQLO culture, values

and objectives: the sales results were very
deceptive. This situation was worsened by
the total absence of promotional campaigns
on the brand, the store openings and the
products. As a result, there was no impact
at all and no reaction on the consumer side.
Tadashi Yanai was fascinated by failure.
In 2005, he announced a reversal strategy
for international expansion: to keep the
stores in Japan, but focus international
growth on splashy stores in the major cities
of each continent. The owner decided to
reposition the fashion brand to appeal to a
wider, more multicultural set of consumers
but without losing its Japanese-ness a
quality that can be glimpsed as much in the
technologically hip way it communicates
with shoppers, as in the discipline of its
clothing designs.
As Tadashi Yanai stated in a recent interview:
We really have to transform this company
to be successful and compete. Before we
manufactured in China and sold in Japan.
Now we need to manufacture in the world
and sell to the world.
The UNIQLO team worked quickly, and the
transformation was surprisingly fast
it designed and built the Soho store
(Manhattan) in about eight months, with
150 workers working overtime seven days a

week. Unlike many retail flagships, the store

is purposely non-referential: UNIQLO is the
brand that happens in a nonexistent space,
says Kiersztan. Its a white box, always
on a white background. Its not a lifestyle
brand. The drama of the store, therefore,
would come from the overwhelming sense
of plenitude11.
In any case, the company saved the pure
values it offered on the domestic market,
but changed slightly in the way these were
presented. In the UNIQLO vision, there is no
abstract notion: clothes are seen as simple
and essential items, that help the customer
feel comfortable, well dressed, with style,
every day. In fact, UNIQLO does not want
to dictate style or trends. It does not want
to turn customers into shop window
models. The brand philosophy is more a
mindset focusing on change, diversity and
challenging conventional wisdom, which
considers fashion garments as a toolkit
with elements or pieces of information, full
of details, to help the customer develop
his/her own style.
For UNIQLO, the core idea is to enable the
customer to mix Western fashion with a
Japanese twist. The influence of Japanese
culture lays both in the attention given
to details and the opportunity given to
the client to create or recreate their own
original style.

_____________________________________________________
11
2014, Uniqlones, New York Magazine

18

AT THE PEAK OF FASHION: DEVELOPING A LEADERSHIP STRATEGY FOR A LARGE FASHION RETAILER UNIQLO

CHALLENGES GOING GLOBAL

UNIQLO NEW
WESTERN FLAGSHIP
STORES

UNIQLO has selected an experiential

approach to conquer overseas markets.
The UNIQLO experience relies primarily on
Experiential Retailing to actively engage
and immerse the consumer in the brand
universe.

contrary to the existing image, but rather

reinforces UNIQLOs cultural Japanese
roots, while expressing the Japanese cool
and futuristic side of the brand. UNIQLO
also aims to convey the other side of brand:
functionality, emotion and beauty.

Experiential Retailing can be defined as a

retail strategy that transforms products
and services into a total consumption
experience, satisfying emotional or
expressive (hedonic) desires as well as
rational or functional (utilitarian) needs of
the consumer (Kim et al. 2007)12. This instore experience is made possible through
the use of elaborated store environments,
technology, interactive facets, highlytrained staff and entertainment.

As Japan is often considered by Western

consumers as a leading nation for high
technology, a strong emphasis has first been
placed on the use of in-store interactive
hi-tech to reinforce the Japanese cool side
of UNIQLO, e.g. promotional messages
displayed by red LED-lights, image walls,
color-changing
LED-illuminated
star
risers, hundreds of monitors throughout
the space, and image-changing LED panels
in the glass elevator cabs, plus rotating
mannequins to give the stores a futuristic
look. This hi-tech touch must make people
think Here, its Tokyo!

Therefore, stores have been considered as

the primary promotional media to convey
the brand identity and values in overseas
markets. For this, a distinctive store model
has been designed, in which technology,
design, sensory marketing, premium
customer service and innovative in-store
events play an important role.
As a result, UNIQLO has chosen to enter
Western markets through so-called
flagship stores. Those super-large stores
are currently located on the best highstreets worldwide, such as on 5th Avenue in
Manhattan and Oxford Street in London.

_____________________________________________________
12
Kim,Y., Sullivan, P., and Forney, J. C. (2007). Experiential
Retailing. New York, NY: Fairchild Publications

19

The company purposely created an

environment, which is unique and very
different from the key fast-fashion
competitors. Surprisingly this is not

In addition, some minimalistic hints of

typical Japanese style can be found in the
first megastores: sleek modern design
and industrial chic to express the ultracontemporary cool aspect of Japan.
Overall service principles were the same
as in domestic stores. In order to deliver
a consistent store experience, a great
emphasis has also been placed on a
premium level of service in UNIQLO stores.
Based on the Japanese sense of hospitality,
the UNIQLO in-store service policy is a basis
for brand differentiation compared to
competitors. However, some other Japanese
traditions such as the salespeople yelling
promotions in-store have been abandoned
for foreign markets, due to cultural factors.

The visual dimension is considered

crucial for UNIQLO differentiation. Indeed,
merchandising and displays are used to
expose and ultimately sell the wide range
and colorful image of the brand. The store
walls are a massive, beautiful and vibrant
colorama of products, visually expressing
UNIQLOs multicolored aspect and textile
expertise, while eliciting positive emotions
from its consumers.
Besides from color, the visual display
is used to differentiate UNIQLO from its
sometimes messy fast-fashion competitors.
Each and every UNIQLO store must be
very clean, without any dirty areas, and be
nicely organized, which is a real difference.
Another objective is to limit to a minimum
the number of damaged products on
the store surface to positively impact on
consumer perceptions. In order to also
reinforce consumer functional benefits,
UNIQLO merchandising is very attractive
and clear. As UNIQLO sells basic clothes, it
must be easy for the consumer to shop in
the stores.
In this sense, products are always placed in
the same location. This is to foster repeated
purchase without any change or distraction
for the consumer. As one can find routine
products in supermarkets, the UNIQLO
consumer can find his daily wardrobe in
UNIQLO stores.
To boost customer shopping experience,
UNIQLO also used innovative in-store
animations in some Western shops. For
example, The Mickey Touch Wall Party.

AT THE PEAK OF FASHION: DEVELOPING A LEADERSHIP STRATEGY FOR A LARGE FASHION RETAILER UNIQLO

CHALLENGES GOING GLOBAL

Within this campaign customers were

encouraged to act and create in-store,
through a drawing app in a massive
multi-touch wall - in order to give their
interpretation of the current t-shirt theme
(Mickey in 2011). The multi-touch wall also
enabled interactive customer battles on
the screen. Another example Heat-Tech
Game, was provided in 2012: the concept
was to convert customers energy through
an innovative floor surface that transformed
footsteps to energy at the entrance of the
flagship store. Alongside the kinetic pads
that power digital screens through the shop
floor, heat spots popped up in high-streets,
where passersby can interact with them
through a custom-made game, converting
their social energy to redeem a piece of the
HEATTECH product. This original event was
backed-up by online actions: it was also
possible to convert energy on UNIQLOs
Facebook page or through its mobile app,
with all the social media conversations
on the event showcased on the in-store
screens.

20

Additionally, UNIQLO provided various instore events. Thus, in-store events were
created to promote the unique manga
t-shirts line. Those events are temporarily
immersing customers in the manga
universe, welcoming autograph sessions
with manga authors or game creators, and
staging parades of manga heroes.
To emphasize its involvement in arts and
music, UNIQLO also organizes acoustic live
sessions in its flagships to commemorate
the biannual release of the UNIQLO-Music
Labels collaboration t-shirts: e.g. the live
Scandal concert at UNIQLO Ginza in 2012.

the brand innovativeness and uniqueness.

Finally, in order to always surprise the
customer, UNIQLO also systematizes
constant change of its store layout and shop
windows.
All in all, this experiential approach has
been very pertinent: nearly 500 people
were queuing outside the Soho store and
more than 800 people in Paris the day the
flagships opened. At the moment, UNIQLO
has nine flagship stores worldwide (New
York Soho and 5th Avenue, Paris, London,
Shanghai, Osaka, Taipei, Seoul, Tokyo), all
of them being very profitable.

When opening new flagships or for

specific fashion events, such as London
Fashion Week, UNIQLO sets up VIP parties
celebrating fashion, technology, art, design
and Japanese culture through interactive
experiences and artistic performances in
flagships or pop-up stores. During the time
of the event, limited edition items can be
purchased by mass-customers, reinforcing

AT THE PEAK OF FASHION: DEVELOPING A LEADERSHIP STRATEGY FOR A LARGE FASHION RETAILER UNIQLO

UNIQLO
IN RUSSIA
AND RUSSIAN
FASHION
LANDSCAPE

UNIQLO IN RUSSIA AND RUSSIAN FASHION LANDSCAPE

UNIQLO IN
RUSSIA AND
RUSSIAN FASHION
LANDSCAPE

Having UK, France and USA conquered

UNIQLO set its sights on the other
megalopolises, including Moscow. The first
ever Russian UNIQLO shop opened up on
2 April 2010 in Moscows downtown Atrium
shopping center.
It was a long-awaited opening and there
were a lot of talk and expectations about
Russia having the fourth largest retail chain
in its domestic market.
UNIQLO also helped a lot to increase the
initial brand awareness and supported
its expansion with sound advertising. At
Kurskaya metro station in Moscow in the
middle of spring the walls at the escalators
had been covered by publicity boards of only
one company Japanese UNIQLO. At one
exit promoters distributed weighty colorful
catalogues of the chain. Additionally there
were huge posters in Atrium UNIQLO
advertised jeans for 599 RUR and cashmere
sweater for 1999 RUR.
The first day of sales caused a real stir. To
avoid overcrowding, the Japanese were
allowing people into the store in groups of
a certain size. Because of this, the queues
stretched from the store, located on the
second floor of the Atrium, all the way to the
exit from the shopping centre. Promoters
with flags helped the new arrivals find their
places in the queue. People were recalling
the day in January 1990 when Russias first
McDonalds opened on Tverskaya Street.
Moscows UNIQLO store is divided into two
equal sections, male and female, which

22

mirror each other. T-shirts are hanging

opposite other T-shirts, jeans opposite
other jeans. The sales ratio of 50% - 45% 5% for womens, mens and kids clothing is
considered ideal.
The first UNIQLO store set the prices for
basic products on par with H & M almost
60% lower than Benetton, and one-and-ahalf to two times lower than Zara.
In Russia, the traditional range was
supplemented with special collections,
such as the +J collection. Its prices are
comparable with UNIQLOs basic products.
It was developed by the famous German
designer Jil Sander, who in 1968 founded
the fashion house Jil Sander, and sold it to
the Prada Group in 1999.
TNS Media Intelligence recorded 138
advertising outputs by UNIQLO on the radio,
press and outdoor advertising (billboards,
not including the metro and the street
banners). Such investments were clearly
made with a focus on future development one store would have found it
difficult to recoup the costs.

operates clothes with calm colours account

for more than two-thirds of the sales, more
fashionable products with brighter colours
were in higher demand in Russia. Soon
after hearing the opinion of the customers,
UNIQLO changed its networks positioning
in Russia, increasing the share of bright and
fashionable products within its range.
Talking about the Russian market it
should be noted that in 2011-2013 Russia
was one of the worlds most promising
fashion markets. But in the middle of 2014,
weakening currency and surging interest
rates have seen the country experience an
economy recession.
Slow GDP growth and a decrease of average
disposed income have impacted upon local
demand. Consumers have felt the rise in
prices for goods and have started to avoid
unnecessary spending or look for better
deals.
Changes in Customer behavoir

Not saving
28%

The Company planned further expansion

in Russia. At the end of a 2010 year the
company had two stores open Atrium and
Belaya Dacha.
During the first year of operation, the
company also tried to adapt to the local
market. For example, the management
changed the range policy slightly. While
in other countries where the company

Avoiding
temptation

5%

Low price purchase

AT THE PEAK OF FASHION: DEVELOPING A LEADERSHIP STRATEGY FOR A LARGE FASHION RETAILER UNIQLO

28%

Avoiding
unnecessary
spending

20%
19%

Looking for
special offers

Source: Accenture, 2013

UNIQLO IN RUSSIA AND RUSSIAN FASHION LANDSCAPE

In such economic conditions, companies

need to worry about increasing their sales
and keeping customers loyal. The latest
Accenture study revealed that product loyalty
drivers for the fashion market remained the
same for multi-channel customers.
Key Customer product loyalty drivers
(% of consumers)
Assortment
Price
Earned trust

78
51
48

But the question of service became more

severe. The probability of changing the
seller due to dissatisfaction with the service
is increasing. The percentage of consumers
who were renouncing one retailer in favor of
another because of poor quality service has
been growing. Almost 40% of respondents
said they would buy elsewhere if their
favorite store will no longer match their
expectations.
As for the purchase habits, the average
Russian consumer still prefers traditional
stores. 46.2% of Russians go shopping
with their spouse, 21.5% make purchases
together with friends, 20.5% - with children.
In 2014 the share of customers buying
clothes in the shopping centers increased
by 6.5% compared to 2013.
Online trade is gradually developing.
Purchases from international and national
e-commerce platforms keep surging. But
the Internet is still used mostly as a source of
information than the place to buy products.

23

Despite the complexity of the Russian

market, UNIQLO again announced its
intention to expand. In 2014, the company
opened another new store in Moscow,
and sees further potential for expansion.
There are plans to open new outlets at the
Kievskaya (Evropeyskyi shopping centre)
and Okhotnyi Ryad metro stations. This will
bring the total number of UNIQLO stores in
Russia to 7.

According to the European Fashion and

Textile Export Council, in 2014 some changes
of consumer behavior were admitted:
ILess money spent on clothing
IAlthough salaries and wages rose at lower
2-digit rates, inflation rates between
6-7 % consume half of the monetary gain
IDramatic changes in consumer behavior
for clothing: now rational against past
emotional
IRussian consumers keep asking: What
is the fair price for a garment? Pricequality awareness continues to rise as
well as the trend to choose mediumpriced clothing when really needed
IClothing and must have brands do
not confer status anymore, replaced by
iPhones, iPads, handbags, travel and
jewelry
ISpontaneous purchases decreased by 8%
in 2013
IPurchasing decisions are delayed until
the discount phases: the smart shopper
conquers retail
IShopping for pleasure slumped by 18%
last year. While 5-7 shopping malls were
visited at downtown or urban locations in
the past, today Russians visit only 1-2 and
prefer shopping much closer to home
IRussians are racing through shopping
malls at a speed of 120 steps-per-minute.
This speed prevents them from taking a
closer look at displayed items.
IShopping of premium and luxury clothing
transferred to foreign destinations: halfprice saving opportunities

The Japanese retailers concept has a

chance to be successful in Russia. UNIQLO
puts emphasis on quality, and Japanese
quality has always been held in high regard
in our country. It is true that we have people
who prefer more fancy products than
those that make up UNIQLOs core range.
However, competent positioning could
allow the retailer to achieve great success,
according to the experts within the fashion
industry.

The main sources ofThe

information
(% ofofconsumers
main sources
informationusing
(% ofthe
consumers using the
channel while selecting
while
selecting
and
making
a purchase)
channel while selecting and making
a purchase)
88

Advice from relatives, friends, colleagues

(word of mouth)

86
78

Information in the store

(vendors, showcases)

70
66

Corporate websites
(company, brand or product)

72
65

Information in social networks,

blogs, forums, etc.

60
64

Reviews on the Internet

(expert reviews, comparison sites

73
59

Printed advertising
(newspapers, magazines)

64
55

TV / radio advertising

56
51

Internet advertising in search engines

(Google, Yandex)

54

2013

2012

AT THE PEAK OF FASHION: DEVELOPING A LEADERSHIP STRATEGY FOR A LARGE FASHION RETAILER UNIQLO

APPENDIX

APPENDIX

APPENDIX 1
Fashion Retail
Ranking by sales,
2014

Major Global Specialty Share Retailers of Private Label Apparel (SPA)

Country

Sales
Change (%)
End of
Sales
(Billions (2014 to 2013,
Fiscal Year ( Trillion)
of dollar) local base)

ZARA (INDITEX)

Spain

Jan. 2014

2.28

22.04

+4.9

Hennes & Mauritz

Sweden Nov. 2013

1.91

18.45

+6.4

Gap

USA

Feb. 2014

1.67

16.14

+3.2

FAST RETAILING(UNIQLO)

Japan

Aug. 2014

1.38

13.33

+21.0

Limited Brands

USA

Feb. 2014

1.11

10.77

+3.0

PVH(Calvin Klein,Tommy Hilger)

USA

Feb. 2014

0.84

8.18

+35.5

Polo Ralph Lauren

USA

Mar. 2014

0.77

7.45

+7.3

NEXT

UK

Jan. 2014

0.64

6.20

+5.4

Abercrombie & Fitch

USA

Feb. 2014

0.42

4.11

-8.7

AMERICAN EAGLE OUTFITTERS

USA

Feb. 2014

0.34

3.30

-4.9

Company Name
(Flagship Brand)

Source: UNIQLO Annual Report 2014

25

AT THE PEAK OF FASHION: DEVELOPING A LEADERSHIP STRATEGY FOR A LARGE FASHION RETAILER UNIQLO

APPENDIX

APPENDIX 2
The UNIQLO
performance
measures

Fiscal Performance by
Business Segment

UNIQLO Japan

Operating Income
(billions of yen)

110.6

Contribution to Group Sales

96.8

(billions of yen)
1,500

+ 14.2%
YoY

Global Brands

251.2bln

1,200

18.2 %

FY

13

14

UNIQLO
International

413.6bln

900

30.0 %

UNIQLO Japan

600

715.6bln

UNIQLO International

Operating Income
(billions of yen)

34.7

51.8 %

300

18.3

+ 89.6%
YoY

0
FY

10

11

12

13

14

FY

13

Source: UNIQLO Annual Report 2014

26

AT THE PEAK OF FASHION: DEVELOPING A LEADERSHIP STRATEGY FOR A LARGE FASHION RETAILER UNIQLO

14

APPENDIX

APPENDIX 3
Comparison of
Apparel Company
Business Models

UNIQLO

Gap

Zara (Inditex)

H&M

Business Model

Vertical
Integrationlike SPA

Horizontal
Division SPA

Vertical
Integration
SPA

Horizontal
Division SPA

of items

300

500-700

1,200

2,500-3,000

Cycle

10

10

Nb of items / Year

900

2,000-2,800

12,000

25,000 -30,000

From planning to display

26 weeks

9 weeks

4 weeks

4 weeks

Product Planning

Strong

Strong

Strong

Strong

Production Control

Strong

Medium

Strong

Weak

Sourcing

Strong

Strong

Strong

Strong

Production

Outsourcing

Outsourcing

Partly
outsourcing
Partly-owned
factories

Outsourcing

Materials Development

Medium-High

Weak

Medium

Weak

Nb of designers

80+

120

Designers: 80
Patteners: 50

Place of Production

More than 90% All over the

in China
world

Corunna
(Spain): 60%

Asia: 60%
(China 30%)
Europe: 40%

--

Source: Case. The Future of Retail Clothing: Will UNIQLO turn the World Japanese, Edhec Business School, 2013

27

AT THE PEAK OF FASHION: DEVELOPING A LEADERSHIP STRATEGY FOR A LARGE FASHION RETAILER UNIQLO

APPENDIX

APPENDIX 4
Performance
by Group Operations,
2014

(Billion of Yen)

2015

2014
1Q Actual

UNIQLO Japan

208.4
42.1

232.6
51.1

+11.6%
+21.4%

(to revenue)

20.2%

22.0%

(+1.8pct)

Revenue

114.0
15.4

168.0
24.3

+47.4%
+57.8%

(to revenue)

13.6%

14.5%

(+0.9pct)

Revenue
Operating prot

65.9
7.3

78.1
9.5

+18.5%
+30.1%

(to revenue)

11.1%

12.2%

(+1.1pct)

Source: UNIQLO Annual Report 2014

28

y/y

Revenue
Operating prot

UNIQLO International Operating prot

Global Brands

1Q Actual

AT THE PEAK OF FASHION: DEVELOPING A LEADERSHIP STRATEGY FOR A LARGE FASHION RETAILER UNIQLO

APPENDIX

APPENDIX 5
UNIQLO number
of stores

UNIQLO Operations
UNIQLO Japan
Directly-operated
Large-scale
Standard
Franchise
UNIQLO International
China
Hong Kong
Taiwan
South Korea
Singapore
Malaysia
Thailand
The Philippines
Indonesia
Australia
U.K.
U.S.
France
Russia
Germany

FY2010

FY2011

FY2012

FY2013

FY2014

944
808
788
102
686
20
136
54
13
0
48
3
0
0
0
0
0
14
1
2
1
0

1,024
843
822
129
693
21
181
80
15
1
62
5
2
0
0
0
0
11
1
1
3
0

1,137
845
824
147
677
21
292
145
16
17
80
7
5
4
1
0
0
10
3
2
2
0

1,299
853
834
177
657
19
446
225
18
37
105
12
10
10
6
1
0
10
7
3
2
0

1,485
852
831
199
632
21
633
306
22
46
133
18
21
20
16
4
1
10
25
6
4
1

Source: UNIQLO Annual Report 2014

29

AT THE PEAK OF FASHION: DEVELOPING A LEADERSHIP STRATEGY FOR A LARGE FASHION RETAILER UNIQLO

APPENDIX

APPENDIX 6
Core fast
fashion brands
perceptual map

High Price

Basse Couture

Haute Couture

Low Price
Source: Zara fashion official site, 2014

30

AT THE PEAK OF FASHION: DEVELOPING A LEADERSHIP STRATEGY FOR A LARGE FASHION RETAILER UNIQLO

APPENDIX

APPENDIX 7
Russian total
textile clothing and
accessories market

50

1.000 million
Recovery Phase
nominally 6% p.a.

40
Boom
Phase

38,2
37,4

32

33

34,7

36,5

30

Stagnation
Phase

29,1

CPM
Take O 2003

35,4

27,4
Financial
Crisis

20
China Market
Entry 2004
10

3,0

0
2003

4,0
2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Source: Clothing market report russia in spring 2014, European Fashion and Textile Export Council

31

AT THE PEAK OF FASHION: DEVELOPING A LEADERSHIP STRATEGY FOR A LARGE FASHION RETAILER UNIQLO

2014p

2015p

APPENDIX

APPENDIX 8
UNIQLO stores
in Russia

UNIQLO ATRIUM

UNIQLO MEGA KHIMKI

32

UNIQLO MEGA BELAYA DACHA

UNIQLO OTRADA

AT THE PEAK OF FASHION: DEVELOPING A LEADERSHIP STRATEGY FOR A LARGE FASHION RETAILER UNIQLO

UNIQLO RIO-DMITROVKA

APPENDIX

APPENDIX 9
P&L statement,
Uniqlo Store, 2014

Budget
Net Sales
COGS
Gross prot
Marketing
Selling
Personnel
Depreciation
Rent
Logistics
Others
SG&A total
Contribution Prot
Headquarter Expense
Other Expenses (FX Loss)
Operating Prot

1 000 000
466 550
533 450
34 674
11 000
95 000
45 000
120 000
38 000
15 385
359 059
174 391
93 144
81 247

% Sales

Actual

% Sales

100,00% 1 120 000 100,00%

46,66%
570 065
50,90%
53,35%
549 935
49,10%
3,47%
68 320
6,10%
1,10%
11 468
1,02%
9,50%
109 760
9,80%
4,50%
47 040
4,20%
12,00%
165 885
14,81%
3,80%
50 400
4,50%
1,54%
16 064
1,43%
35,91%
468 938
41,87%
17,44%
80 996
7,23%
9,31%
83 453
7,45%
0%
23 764
2,12%
8,12%
-26 221
-2,34%

Source: UNIQLO Russia materials

33

AT THE PEAK OF FASHION: DEVELOPING A LEADERSHIP STRATEGY FOR A LARGE FASHION RETAILER UNIQLO

% Bgt
112%
122%
103%
197%
104%
116%
105%
138%
133%
104%
131%
46%
90%
-32%

vs. Bg
120 000
103 515
16 485
33 646
468
14 760
2 040
45 885
12 400
680
109 879
-93 395
-9 691
23 764
-107 468

APPENDIX

APPENDIX 10
Sales inventory
report Uniqlo
Store 2014

Department
Description
Store, Total

Sales

Inventory

Actual, Yen

Ratio (%)

Actual, Yen

Ratio (%)

1 120 000

100,0

4 000 000

100,0

Kids

61 600

5,5

172 000

4,3

Womens

689 920

61,6

2 032 000

50,8

Mens

368 480

32,9

1 796 000

44,9

Kids and Baby

61 600

5,5

172 000

4,3

Women's Outer

349 440

31,2

444 000

11,1

Women's Bottoms

73 920

6,6

480 000

12,0

Women's Shirt

26 880

2,4

68 000

1,7

Women's Cut and Sewn

44 800

4,0

156 000

3,9

Women's Knit

118 720

10,6

252 000

6,3

Women's Accessories

8 960

0,8

80 000

2,0

Women's Inner

67 200

6,0

552 000

13,8

Men's Outer

150 000

13,4

292 000

7,3

10 Men's Bottoms
11 Men's Shirt

53 760

4,8

528 000

13,2

26 880

2,4

116 000

2,9

12 Men's Cut and Sewn

13 Men's Knit

47 040

4,2

128 000

3,2

39 200

3,5

244 000

6,1

14 Men's Accessories
15 Men's Inner

17 920

1,6

84 000

2,1

33 600

3,0

404 000

10,1

Source: UNIQLO Russia materials

34

AT THE PEAK OF FASHION: DEVELOPING A LEADERSHIP STRATEGY FOR A LARGE FASHION RETAILER UNIQLO

APPENDIX

APPENDIX 11
Store scheme
UNIQLO Atrium

ELECT
ROOM

IT ROOM

ACCESS 1
FITTING ROOMS

1
BREAK
ROOM

MANAGER

13

12

11

10

9
7

ACCESS 2

8
ALT.
ROOM

STOCK
ROOM

CASH REGISTERS ZONE

CASH WRAP

VISUAL PANELS

Mirror
Mannikin
CONTROL ZONE 2

Clothing rack
4X MONITORS

Hanger

35

MALL
DISTANCE BETWEEN

LEASE LINE
ROLLER SHUTTER
GATE SENSOR
GATE SENSOR

AT THE PEAK OF FASHION: DEVELOPING A LEADERSHIP STRATEGY FOR A LARGE FASHION RETAILER UNIQLO

4X MONITORS

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