Uniqlo Case

1 January 2017

The brand represents 90% of the Fast Retailing mother group turnover based on 2009 figures. The group specializes in designing in-house casual clothing for men and women of all ages, with 2,258 stores under its various group companies spread across Japan, China,South Korea, Hong Kong, Singapore, UK, US, and France In order to explain that growth and success, let’s have a look at their national development strategy. Tadashi Yanai had the simple idea of selling quality products with the best value for money.

We will write a custom essay sample on
Uniqlo Case
or any similar topic specifically for you
Do Not Waste
Your Time
HIRE WRITER

The system is not based on fashion trends or on the development of new seasonal products; it aims to produce a pretty small range of functional products. That way they can buy large quantities of the same materials, and do great economy of scale. It seems like a simple principle but they applied it in such a way they could reduce their prices and keep a decent margin on the products. As far as the distribution channels are concerned, Tadashi Yanai discovered the “SPA” (Specialty Store Retailer of

Private Label Apparel) model, first used by GAP, in the early 80s. Unlike the stores which sell lines made by the other brands, “producer-distributor” sells only clothes of its own brand. Today, if the conception of products is the responsibility of the social siege of the company, their production is often relocated in countries with moderate costs of hand of work. We can say that they have a very direct approach to market coverage. In the economic context of stagnation Japan was in in the early90s, that concept had a great success.

Furthermore, Uniqlo has also developed a big system for online sales, and online marketing, which is a cheap and efficient way to get to the customer, providing a huge online catalogue, and a well-designed web-site, proposing a unique site for each country they are in. Uniqlo is present in 11 countries, France, China, Hong-Kong, Japan, South Korea, Malaysia, Russia, Singapore, Taiwan, United Kingdom, and the U. S. A. Quoting the C. E. O “Our focus for future UNIQLO growth is shifting outside of Japan.

I am convinced that the opening of our New York Fifth Avenue global flagship store in October 2011 will prove a giant leap forward in our quest to earn worldwide recognition for UNIQLO as a leading Japanese brand”, Uniqlo is definitely looking towards globalization in the future, and the awaited growth seems just tremendous as Tadashi Yanai aims for the stars:” Within a few years, I want us to be able to consistently open between 200 and 300 new stores overseas each year, and I am looking for UNIQLO International to overtake UNIQLO Japan in terms of sales in fiscal 2015. Uniqlo is planning on strengthening the Japanese market on the first hand, with a fundamental reform of the Japanese apparel, and on the second, making UNIQLO Global, by aiming for Asia first place on the market, and on a long term strategy, aiming for world ‘s first place. * 2. The internationalization process in the European Union Uniqlo globalization process, as far as the European market is concerned, starting with the opening of four outlets in London from 2001 to 2002. This wish to expand to the European market is easy to understand considering the great success of Uniqlo in Asia.

First of all, the main reason for Uniqlo to expand to the European market is to make more money. But, basing ourselves on the second chapter of Global marketing: a decision-oriented approach by Svend Hollensen, we can say that there are several motivating factors for entering a new market. In Uniqlo proactive motives, we can list the obvious profit and growth goals; their unique products developed by their R&D team they consider to be a potential hit in new markets (the HEATTECH heat generating clothing); and the foreign market opportunities for their low cost range of quality products.

The most relevant proactive motive in my opinion for Uniqlo to come to the European market are the competitive pressures. The two biggest competitors of the business, the Spanish group INDITEX (owners of Zara and many other brands) and The GAP, which are both using this SPA model mentioned in the first part, are very present in the European Market. Uniqlo is trying to get close to the European customer and brake that psyche barrier that European customers still have with Asian products (low cost but poor quality), and try to show a better image, and above all let the brand be known by the European customers.

It is a fact that the early beginnings of Uniqlo on the European markets were disappointing. The main problem was the lack of knowledge from the European customer who had never heard of Uniqlo. People would not buy the products, and the whole European project cost a lot to the group, so that their profit dropped from 2002 to 2004. But we can’t say it was a failure because it fits the Japanese firms strategy mentioned in the exhibit 2. 1 of Global marketing: a decision-oriented approach by Svend Hollensen. Japanese firms exploit foreign opportunities by using a price penetration strategy”, they are also known to accept early losses due in this case, to the great financial shape the firm was when they decided to enter the European market. They are entering the process with a long term strategy. Anyhow the profits never reached expected outcome in the UK, according to the financial times, they had to close 18 of their 23 sites “after failing to hit the spot with shoppers». They decided to have a “re-launch” of their London shops with a different approach. Mr.

Yanai said it had been a mistake to build a network of stores before fine-tuning the offer. The marketing was to be really different. In the meantime, the Fast Retailing group also bought French brands like “Le comptoir des cottoniers” in 2005 and “Princesse Tam Tam” in 2006, targeting a second country in the European market. In 2007, according to the ODD agency official website, the agency Uniqlo communication agency Uniqlo approached to have a better launch in the UK:” A tease and reveal campaign created intrigue and drew people to the stores”, this much more edia oriented approach seemed to be the answer to the European market penetration for Uniqlo, as the “Launch day sales exceeded any other store launch figures in just 3 hours. ” Still in collaboration with ODD, Uniqlo launched the UT event, that is a yearly based event, where all creative from around the world are invited to design unique shirts for a unique collection, meant to be sold on these UT happenings, with in stores DJ’s and a big advertising campaign. These UT happenings contribute to give the brand its innovative and modern image essential to succeed in their target market of young European people.

Uniqlo’s presence on the UK market is now both an economic and a brand image success, and is a golden door to the whole European Union. According to the French periodic “Le Figaro. fr”, after the opening of the first French store in Paris, their objective as far as the European Market is concerned is to open no less than 300 stores all over Europe, with big surfaces such as 2000 square meters each until the year 2020. * 3. German market analysis Now that we know a bit more about Uniqlo’s globalization strategy and its wishes towards an expansion in Europe, let’s focus our researches on the German market, which Uniqlo hasn’t reached yet.

In this part we will first give you an overlook of the German business environment, we will then go into a more market specific analysis of the German market, in order to understand the principal challenges the company should face if they want to enter it, and the screening criteria that will be the most relevant for them to use. In order to carry out this market research in the most complete and accurate way, we shall follow the “12 C” framework. 3. 1 « 12C » framework analysis of the German market. Framework source Doole and Lowe (Global marketing lecture topic 4) The following figures are coming from http://www. estatis. de and https://www. cia. gov/library/publications/the-world-factbook/geos/gm. html . unless mentioned. 3. 1. 1 Country analysis On 31 December 2009 Germany had about 81,802,000 inhabitants. The capital is Berlin, with more than 3,404 thousand inhabitants. The spoken language is German, and as founding members of the EEC, their currency is Euro. The total country area is 357,022 square kilometers. Germany is the largest economy in the European Union, with a 3% GDP increase in 2011 (now 31,427 Euros per inhabitant and 62,540 per person in employment).

Germany’s Global Exports represented 969 billion €, and Imports 745 billion € in 2008. Their biggest partners in imports are EU (57. 7%), China 6. 8%, U. S. A (6. 7%), Russia 4. 1% and Switzerland 3. 5%. (http://www. wto. org 2008). Germany is well served with transports, with more than 320 airports, 17 harbors (including the 2nd biggest harbor of Europe in Hamburg), and one of the most dense road architecture with more than approximately 650,000 km of roads, which is huge compared to the area of the country. (http://en. wikipedia. org/wiki/Transport_in_Germany ).

According to the Environmental policy-making in Britain, Germany and the European Union by Rudiger Wurzel, Germany has always been a leader in environmental policies in Europe and in the world. Germany is in the middle of Europe, and surrounded by 9 countries, it leaves them very vulnerable to external pollution, that is why they have been known to be very strict when it comes to environment standards. Still according to Wurzel, here is a quote from a German official in the Economics of Industry about their environmental policy: «German environmental policy has been conducted against Industry”.

Those words may look hard but they reflect the ongoing conflict between a successful economy and strict environmental policies in Germany. The respect of these norms must be a very important factor to be taken in account, as far as both economic costs and brand image are concerned for Uniqlo. 3. 1. 2 Concentration: Here is a chart of the total German population by age groups and marital status. In red are highlighted the most relevant segment as far as Uniqlo costumers are concerned. Specification| Unit| 2003| 2004| 2005| 2006| | By age groups from … to under … years| under 6| 1,000| 4,519. 3| 4,435. | 4,346. 1| 4,245. 2| 6 – 15| 1,000| 7,642. 8| 7,489. 5| 7,303. 7| 7,196. 2| 15 – 25| 1,000| 9,621. 7| 9,678. 1| 9,689. 6| 9,610. 6| 25 – 45| 1,000| 24,461. 1| 24,088. 7| 23,736. 4| 23,319. 0| 45 – 65| 1,000| 21,426. 8| 21,441. 9| 21,492. 1| 21,644. 6| 65 and over| 1,000| 14,860. 0| 15,367. 5| 15,870. 1| 16,299. 3| Total| 1,000| 82,531. 7| 82,500. 8| 82,438. 0| 82,314. 9| By marital status| Single| 1,000| 33,730. 3| 33,847. 4| 33,954. 2| 34,035. 7| Married| 1,000| 37,256. 1| 36,991. 2| 36,678. 6| 36,339. 3| Widowed or divorced| 1,000| 11,545. 3| 11,662. 3| 11,805. 3| 11,940. 0| Source www. detatis. de

We can see that the targeted segment represents approximately 40% of the total population. With the high GDP per capita of Germany, this is a favorable environment in terms of market potential. Of course we will get useful lintel when we will get to the clothing market analysis. As we have seen in the section 3. 1. 1, the population is dense in a small country, with considerable means of transport, which is again a positive factor to consider. Here is a map of the population density in Germany: www. bibb. de We can notice that population is concentrated near big cities and mostly to the western side of the country.

It is yet another positive factor to consider from a logistics point of view. Uniqlo strategy is to open big stores in very populated areas, which appears to be a suitable policy in Germany. 3. 1. 3Culture and buyer behavior approach: First of all one must consider the fact that getting cultural and consumer behavior intel is very difficult. Sources are usually subjective and nothing is better than first-hand information acquired by the company itself or professional cabinets. That’s why performing one of the above is a must do for any company before going into any market. I will try to give you the ost accurate view from existing data. Sources: http://www. cyborlink. com/besite/germany. htm; http://geert-hofstede. com/germany. html German decision process is considered to be very slow and based more on reflex than on instant action. a) Buyer Behavior According to Geert Hofstede rating system, we can determine a “German behavior profile”, considering five main treats in their behavior. The result of this analysis shows that Germans are mostly individualistic. This trait is interesting for Uniqlo and the clothing market; they tend to buy unique products that fit their way or their families.

The Uniqlo UT campaign mentioned in section 2 is a great way to reach this kind of consumers. They are also considered as a masculine society, which can be defined as follows:” A high score (masculine) on this dimension indicates that the society will be driven by competition, achievement and success, with success being defined by the winner / best in field – a value system that starts in school and continues throughout organizational behavior. ” This trait meets the individualistic one in favor for the Uniqlo strategy, using local stars and designers to create unique clothes that could definitely target this kind of consumers.

The Germans are also recognized as a short term orientation culture. Societies with a short-term orientation generally have great respect for traditions. This makes it a difficult environment for market entry, Germans are more likely to buy what they know and be more hesitating in trying new products, a critical factor to consider for Uniqlo. b) Religion Roman Catholics are in the southern part of the country, and Protestants, can be found in the northern region. There is a very small percentage of Muslims in Germany. Here is a chart of the percentage of each religious group in Germany. http://www. yborlink. com/besite/germany. htm 3. 1. 4 Choices analysis My main source for this analysis will be a report on “the situation of textile and the clothing industry in Germany” from a German University in the Leonardo Da Vinci project. I only used the graphs of the overall German industry and used them for my purpose, as it is freely available information (portale. parma. it/fashion-net), and none of their analysis. In order to see clearly the clothing supply, I will first give a view of the regional (German) clothing industries, and then analyze the external supply, the international potential competitors. ) Regional industry Over the last decade, the clothing industry in Europe has been suffering a lot from the new Asian competitors, offering prices with which they could not compete. This graph shows the evolution of the number of clothing businesses in Germany, which reflects this phenomenon: Source MERKEL On the other hand, the importation of clothing has been on a rise since the middle 60’s. The biggest part of the textile and clothing imports comes from Asia with a share of 10,7bn Euro for 2005, representing a 38. 4% of the whole German importation. Source MERKEL

Although the local industries are declining in terms of numbers and turnover, German companies are global leaders in the technical textiles segment: their market share is around 45%. This may seem not to affect the clothing importation trend, but it is something of the utmost importance for Uniclo advertising campaigns on their innovative line of products (Heattech technology). It also means that possible collaborations with German technical industries is to be considered. (http://www. dbresearch. com) b) International competitors: Here is a list of the Europe biggest clothing suppliers in 2005.

There is an existing competition, and all the actors have set foot in Europe already, and were present before Uniqlo. Those figures are from 2005 and didn’t take in account Uniqlo, but still there is a very competitive environment to face. But Uniqlo, and especially the fast retailing power allows them to pretend to have the financial background to enter such a competitive market. 3. 1. 5: Consumption analysis: The way the Germans dress, and so consume clothing products, can be defined as follows: “Clothes in Germany resemble styles in the rest of Europe, especially the northern countries.

Conservative garments, colors and styles are common, although there is often an independent flair in women’s outfits”. (http://www. ehow. com/). This has to be analyzed in pair with their buyer behavior, classical and conservative style. I have based research on the Eurostat figures: http://epp. eurostat. ec. europa. eu/statistics_explained Especially the report called” Business relations in the EU clothing chain: from industry to retail and distribution” dated October 2007. The overall clothing consumption in Germany was 56 880 million Euros, representing a 4. % of the overall consumption. The most successful retail format in Germany according to 2005 figures is specialty chains, with a 29% of the market share, followed by independent stores with a 28%, Mail order stores with 15%, and finally Hypermarkets and department stores with both 14%. If Uniqlo is planning to open a store, it would be considered as a specialty chain one, and those figures could match a market share big enough to consider entering a market. Furthermore, specialty chains market share has gone up significantly in Germany between 2000 (26%) and 2005 (29%).

Following the same source, and according to the ”KPGM Trends in retailing 2005”, it emerged that successful retailers in Germany are the ones combining individualization of offer, reduction of the brand and sales line portfolio, vertical integration and the search for cost leadership. It is more than interesting intel for Uniqlo and their potential way of getting into the market. Although it already seems to be Uniqlo’s strategy all over the world, it shouldn’t need much adaptation as far as the market entry process is concerned. Also it has to be crossed with their first UK experience that was a failure. . 1. 6 Contractual obligations and Commitment analysis of the German market: Sources: http://www. 7signals. de/en/export-guide-to-the-german-market. pdf http://www. fedex. com/us/international/irc/profiles/irc_de_profile. html? gtmcc=us Germany is a member of both the World trade organization and company and the European Economic Community. As a country of the European Union, if a foreign company wants to enter the German market, it would have to respect both the German laws and the European Union laws. As we all know, there is a free circulation of goods inside the European Union.

It means that goods produced or previously imported in another country inside the European Union are custom free. As the laws are very technical, I’m going to quote two relevant statements concerning importation laws. The first one is about goods coming from outside the E. U: “Customs duties in the EU are calculated advalorem, meaning: derived from the value of the imported goods. This customs value is equivalent to the sales price (cif-price), evidenced by a commercial invoice, and adjusted by adding the costs of transport, insurance and loading in case they are not included in the sales price. Another tax to be considered is the VAT that strikes every product in the European Union. For imported products, this is how it works: “Goods coming into Germany from non-European countries are subject to an “import turnover tax” (Einfuhrumsatzsteuer) of 19 percent. It is equivalent to the value-added tax (Mehrwertsteuer) which is levied on all domestically sold items, thus placing the same tax burden on imported and domestic products. The import turnover tax is charged on the customs valuation on the imported good plus a customs duty. Another important thing you need to take into account when importing products to Germany is their interest in what we have already underlined, their environmental policy and the particular attention they pay to certifications. It should be wise to get a recognized certification. In conclusion Germany has not really any Technical Barriers to trade, at least no more than the UK, where Uniqlo has already settled. 3. 1. 7:Channels analysis: Sources: http://www. 7signals. de/en/export-guide-to-the-german-market. pdf It is free for any company to decide which distribution channels they are illing to use in Germany, and there are not any laws about it. Here is a chart referencing the different sales partner and a quick description of each. www. 7signals. de/en/export-guide-to-the-german-market. pdf As Uniqlo is now well established in UK, the distribution channels have to be well thought in order to cost the less possible. We will see what should the best way be in part 4 of this market research. As we have mentioned in 3. 1. 1 country analysis, the country is very easy to deserve and you can easily find logistic solutions you need. 3. 1. 8: Communication

Uniqlo has been successful in the UK and in the USA by settling shops in very urban zones and making a big advertising campaign around it, inviting regional stars etc… Germany has the same media infrastructure as those two countries and the consumers are very media oriented in this western European country. This section can’t go without Uniqlo’s capacity to pay analysis, because all the marketing and advertising campaign doesn’t rely on the country means, which are unlimited in that field, but more on what the company could afford, and of course their marketing strategy.

Whether they repeat what they know or adapt to the German market. 3. 1. 9 Capacity to pay/Currency Source : www. standardandpoors. com The currency is Euro, as in all the European Union, and is rating (sources imf. org) 1 Euro = 97. 2239311 Japanese yen, and 1 Euro = 1. 2643 U. S. dollars. Although recently there have been many doubts about the future and the very recent downgrade of France and Austria by Standards and Poors reflects that well, Germany stands above and German economy is still doing well. It is still rated as an AAA country, in terms of reliability and security it is a very good point.

The country is not under any threats and is considered as one of the most reliable economy in Europe. We have already gone through the Fast retailing group turnover in the first section of our study, and we know the economic power Uniqlo can rely on to cover all the costs inherent to a new market entry, that is why we don’t need to go further in here. We also know the strong will of expanding to Europe of Tadashi Yanai and the globalization strategy of Uniqlo. Neither their capacity to pay nor the currency rate should represent a serious threat to Uniqlo’s entry on the market. 3. 2: Market analysis conclusion:

With this analysis of the market based on the 12c framework, we can have a fair idea of the viability of an entry on the market. In my opinion, there have been many positive points concerning the possibilities for Uniqlo to adapt and grow in the German market. There are still a few sides they will have to strongly take care of, first being the conservative way of thinking, and buying of the German consumer. Being a company from Asia, they can be considered as price piercing companies, leaving quality aside, which is as we have pointed out, something very important for surviving on the German market.

It shouldn’t be much of a problem, knowing how Uniqlo has succeeded in proposing quality products at a competitive price. They have focused on quality, making economies of scale by selling a simple standardized range; which could fit the German style. It is something they need to stress on a marketing point of view. Uniqlo strategy and product evolution is based a lot on customer’s feedback, they have a big international experience, and they are used to a competitive environment. They seem economically able to enter any market of this kind, pay the taxes, and Germany has no special trading barriers.

We will see in the next part of this study what strategy would be the most efficient for the company to enter the German market. * 4. Evaluation of the market entry strategy of Uniqlo into the German market within the next twelve months: First of all, as far as production and management of the shops are concerned, they are based on the SPA system mentioned in part 1. It is their actual model and it is what makes them competitive and able to grow fast as they have done in the last decade.

All the quality improvement system and costumer’s feedback is continuously evolving and can adapt to any consumers behavior. That is a strong base of their success and shall remain as it is. Looking at what happened in the UK with their successful “re-launch” in 2007, and the success of the recent opening of a flagship stores in the US (Wall Street Journal: September 23, 2011, 12:30 PM ET), I would recommend the same approach as far as Germany is concerned. The right entry mode should be to open a large flagship store in a dense urban location.

As we have pointed out in our analysis, it should be in a city of great population density. From a marketing point of view, and to avoid the UK launch failure, they should use one of those successful methods. First by opening a “pop up” store to make a buzz around their brand and their flagship store like they did in the US, or by organizing special openings and events as they have done with UT (see section 2), with German stars and people. They also should use the media coverage to their advantage and use a more global way of advertising.

Of course the email advertising and the web sites of Uniqlo are very well made and attractive, but the brand needs more. Now that it has become a global brand and its strategy is to expand, I recommend they use a global TV advertising campaign, where they can show their commitment to quality, innovation and, as far as the German market is concerned, and environment. They have to show they are different from the very present competition in Germany. Along with France, it is supposed to be a gate of entry to the European market, so they must install a strong brand image. Uniqlo has never depended too much on trend analysis or existing theories,” says Uoki Takizawa in charge of the Innovation Project. «The Independent article: Uniqlo: Back to the future. This shows the will of Uniqlo to be less fashion oriented and more dedicated to make the ultimate basic product. This is also a point to emphasize in the German market in particular. In order to differentiate themselves from their competitors, they are not looking to produce new collections all the time generating big costs.

They just try to innovate in terms of HEATTECH textiles and happenings. This strategy should fit the German market perfectly. * Conclusion: Uniqlo is already a globalized company, part of the clothing retailing giant group Fast Retailing, and his results all over the world are very good, in terms of market share, and brand image. It is very healthy as far as finances are concerned, and the SPA system they are using to improve their reactivity fits totally their brand image.

The German market is very interesting in terms of geographical specificities, and facilitates a lot logistics issues. The demand in importation and clothing goods is still on the rise, and their economy stands still, even with the crisis European Union is going through. The buyer behavior of the German consumer fits the image of the brand, in terms of quality and innovation. A decisive area to improve for Union is the environmental certification, which is determining on the German market, for the brand image, and the demand that comes from it.

A limited
time offer!
Get authentic custom
ESSAY SAMPLEwritten strictly according
to your requirements