How UNIQLO is Winning the Fast-Fashion Rat Race.
The secret lies in Uniqlo’s product versatility and operational agility.
‘Customer is King’
The age-old business mantra grows increasingly relevant in today’s climate where technology and the expanding middle-class income has sped up demand and set new bars of expectations for customer service. The global economy has been dominated by our consumer-centric culture and has effectively revolutionized present business systems. Uniqlo, a child subsidiary of Fast Retailing Co, provides an exemplary case for the fast-fashion retail industry. As a player in an industry that emphasizes heavily on consumers’ fluctuating and erratic trends and demand, Uniqlo has strived from affordable, high-quality basics. Despite only selling simple white-tees and variations of such, this Japanese powerhouse is rivaling head-to-head with big names like Inditex (otherwise known as, Zara) and H&M.
In spite of competition, Uniqlo’s charismatic CEO, Tadashi Yanai sees the game differently for their brand. Yanai, who has been celebrated for his vision and forward-looking strategies has boldly claimed that Uniqlo is not a fashion company, but a technology company.
“Our competitor is Apple. We don’t see ourselves as having competitors in the fashion-retailing space.” Takao Kuwahara, chief executive of Uniqlo U.K told the Wall Street Journal.
He continues, “At Apple, as at Uniqlo, the customer service and the customer experience is all important… People have limited time and money to buy things and they can choose where they shop.”.
As exemplified by its business model, Uniqlo has successfully unified its entire clothing-making process. Their model has been crafted to ensure that each departments orbit their customers. Subsequently, each business process would be carefully consider and tailor the specific needs and desires of Uniqlo’s customers.
Product Development: Designed for All, Made for All.
Uniqlo’s approach to designing and creating apparel has been said to mimic the iterative approach to product development embraced by technology companies. Unlike the likes of Zara or H&M, Uniqlo is designed to be more product-focused. This means that Uniqlo’s brand prioritizes the requirements of its consumers instead of following “…the cyclical, trend-driven rhythm of the fast-fashion retail industry”.
Why should you waste your money on Zara’s textured wool-blend oyster white coat (I’ll repeat myself, wool-blend) when you could spend the same amount on Uniqlo’s Ultra Light Down jacket?
Still, of course, fashion purchases are often if not always, irrational. We still want that wool-blend oyster-white Zara coat to complete our ultimate winter look. But Uniqlo knows that underneath our thin acrylic-woolen sweaters, we need their extra warm HeatTech undershirts — maybe even two layers of it.
That is how Uniqlo pilots its product development strategies. It's driven based on consumers’ functional needs, instead of their irrational desires.
Uniqlo invests in generating high-quality, performance-enhanced, basic casual wear by focusing on in-house design and fabric innovation. The product development team doesn’t try to capture and replicate copies of the latest runway trends. Instead, Uniqlo’s point of differentiation lies in how it plays with tech-innovation and basic clothing wear that could be attuned to our everyday needs. Some of their renowned lines include HeatTech, AIRism, UV Cut, and LifeWear — all of which have been rightfully patented to retain their competitive advantage.
While Zara tries to compress its apparel-making processes (from designing, manufacturing, distributing, and retailing) all within the span of two-weeks, Uniqlo aims to achieve the opposite. On the other hand, Uniqlo plans its wardrobe production up to a year in advance!
‘LifeWear is the theme of our collection. But it’s meant to be continued every season. Like iPhone 4, iPhone 5. It’s the idea of continuation, but with updates: new elements, new fabrics” Uniqlo’s design director, Naoki Takizawa.
On top of that, customer concerns are addressed directly by the production department. Uniqlo’s production teams are very hands-on with monitoring and resolving quality and management challenges, by their weekly factory visits. The Takumi Team are Uniqlo’s designated industry experts and are assigned to transfer their expertise on overall factory management. Each must have a minimum of 30-years of experience in the Japanese textile industry. Moreover, this system allows the production team to be closely plugged into the minds of buyers. As the product team works tightly with the marketing team, this approach enables the brand to better navigate through its strategy and execution.
Seamless and Agile Operations.
Subsequently, considering the brand’s product-focused nature Yanai draws particular attention to Uniqlo’s operations management. Through the continuous refinement of its production and manufacturing system, Fast Retailing is set to achieve product quality as well as operational sustainability and agility.
Although it took the company years of fine-tuning, Uniqlo has learned and adapted from these hard lessons for it to finally arrive where it is now. Below are two strategies Fast Retailing has implemented to maximize operative control and efficiency.
Vertical Integration.
Vertical integration refers to the process when a company acquires other companies that operate under its production process. This is typically done to strengthen the supply chain, reduce production costs, capture upstream and downstream profits, and access multiple distribution channels.
Uniqlo has effectively executed this strategy by integrating all of its operations of planning, material development, and marketing and sales into a single entity, the manufacturing retailer. With this strategy, the brand cooperates closely with Japanese textile suppliers, foreign manufacturing facilities, and partners.
“It’s not just about Yanai’s leadership… The company can take risks because it controls everything. That’s rare in the retail industry.” Dairo Murata, JPMorgan Securities analyst.
Fast Retailing has acceded into a partnership with Toray Industries, Japan’s chemical and textile giant. For big manufacturers like such, Toray would ordinarily target to keep factories operating all-year. Such agreements would typically conflict with fast-fashion companies that switch its supplies seasonally, or when demand simply falters. Nonetheless, given Uniqlo’s minimalistic product nature, an all-year-round operation works conveniently. Under this agreement, Fast Retailing has modified its production schedule to accommodate to Toray. An all-year-round commitment lets Uniqlo change its production plans on a dime.
“[Uniqlo] often changes colors or cuts with just a few weeks’ warning — something it couldn’t do if it didn’t reserve a manufacturing plant for a year in advance” as reported by CBS News.
Just-in-Time Inventory: Optimizing Big Data.
Also known as the Toyota Production System, this model aims in producing what is needed when it is needed, and in the amount needed — understood respectively in Japanese as, Muda, Mura, and Muri. The Just-in-Time inventory system is at the heart of Uniqlo’s brand value as it pursues to minimize waste.
To retain inventory at its optimum level, Uniqlo closely analyzes weekly sales patterns at all its stores using advanced technology. As a tech-enthusiast himself, Yanai has extended the brand’s reach to large tech firms such as Google for improved forecasting systems. He believes it is crucial for Fast Retailing to keep its operational systems relevant and updated, in order to strive in today’s digital era. With big data, the brand is able to better predict consumer behavior patterns, and consequently, enhance inventory management.
Ultimately, the main reason why I’m confident Fast Retailing will win this rat race is because of how uniquely they’ve positioned themselves in the market. As discussed above, Uniqlo’s two strategic pillars are in its product versatility and its operative agility. Unlike competitors who are on an incessant and tireless chase to produce poor imitations of runway trends, Uniqlo’s product-focused nature allows the company to invest in its continuous systems refinement. That being said, as fashion trends grow increasingly playful and erratic, Uniqlo will continue to render itself as a reliable and sustainable brand. Demand for basic apparel is also unlikely to falter in the long-run as the dynamic fashion industry consistently label such goods alike as necessity purchases.
With Tadashi Yanai and his team consistently oiling its wheel, Uniqlo is committed to becoming one of the largest global retailers. I’m excited to see what the future holds for this Japanese clothes giant, and how Yanai will navigate Uniqlo through the imminent uncertainties of retail digitization.
