{"id":24464,"date":"2017-11-15T17:37:41","date_gmt":"2017-11-15T22:37:41","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/uniqlo-uniquely-capable-of-beating-zara\/"},"modified":"2017-11-15T17:39:21","modified_gmt":"2017-11-15T22:39:21","slug":"uniqlo-uniquely-capable-of-beating-zara","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/uniqlo-uniquely-capable-of-beating-zara\/","title":{"rendered":"Uniqlo: Uniquely Capable of Beating Zara?"},"content":{"rendered":"

Basic Beginnings \u00a0<\/strong><\/p>\n

\"\"<\/a>
Uniqlo’s Production Cycle<\/em><\/figcaption><\/figure>\n

Starting with one store in Hiroshima, Japan in 1984, Uniqlo has grown to over 1300 stores in 15 countries [1]. Their customer promise has remained the same\u2013 to provide high-quality, innovative, and functional clothing at affordable prices. Compared to other \u201cfast fashion\u201d retailers such as Zara or Forever 21 that launch new styles weekly, Uniqlo\u2019s product development cycle is more similar to technology companies. Uniqlo\u2019s year-long process is needed to research, source and test new fabrics, and then negotiate with vendors to place cost-efficient high-volume orders [1]. Uniqlo then deploys takumi,\u00a0<\/em>or textile \u201cmasters,\u201d to production floors to ensure quality dyeing and sewing, a testament to its emphasis on fabric innovation and quality over trendiness [1]. Therefore, while innovative on textiles, they offer a limited variety of styles but in a high variety of colors [2].<\/p>\n

Fearing Fast Fashion <\/strong><\/p>\n

Once upon a time, fashion collections were introduced twice a year. Now, technological advances at various points in the supply chains have condensed production cycles, decreasing design, lead, and production times and transforming the expectations of fashion retail consumers. Customers demand four to six collections a year that need to keep up with unpredictable trends, forcing retailers to adjust their merchandising and design processes accordingly [2]. In order to compete with other fashion retailers, Uniqlo is starting to think about the impacts of shortened production cycles on its value proposition. Competitors like Zara are able to respond to customer demands quickly, turning a design from the runway into a product in 13 days [2]. As such, the consumer expectation is to find stores with high volume and variety of products that reflect the current trends. Given that pressure, Uniqlo\u2019s slow development cycles run the risk of missing out on responding to customer demands and expectations, even if it\u2019s about changes in fabric quality and fit rather than design.<\/p>\n

\"\"<\/a>
Uniqlo’s New Offices<\/em><\/figcaption><\/figure>\n

Spending on Speed<\/strong><\/p>\n

In March 2017, in the midst of slowing sales growth, CEO Tadashi Yanai announced that it plans to match Zara\u2019s design to delivery time [2]. It opened a new 200,000 sq. ft office in an industrial area in Tokyo that will bring together design, production, and marketing resources in one facility, hoping that this increase in collaboration will increase speed to market [2]. In addition, the new facility will also help Uniqlo expand its e-commerce\u00a0business and same-day delivery service in the Tokyo area [3]. In conjunction, Uniqlo is ramping up its hiring of tech talent who can help develop more sophisticated AI algorithms that could help factories, distributors and stores predict what the customer wants, and reduce excessive inventory [4].<\/p>\n

 <\/p>\n

 <\/p>\n

Keeping Up With Competition<\/strong><\/p>\n

Without a doubt, given competition, speed needs to be a core element of Uniqlo\u2019s operational strategy. Nevertheless, it must still maintain its competitive advantage as a destination for high-quality, low-cost basics. Though other retailers have had first mover advantage in retail\u2019s \u201cspeed-to-market\u201d evolution, there are several ways in which Uniqlo can catch up.<\/p>\n

    \n
  1. Customized Basics: <\/strong>Although the \u201cfast fashion\u201d retailers have different value propositions to their customers \u2013 Zara and Forever 21 focus on disposable trends while Uniqlo focuses basics – there is an opportunity to focus on developing more \u201ccustomized\u201d basics. In particular, integrating AI and customer feedback, Uniqlo should offer a wider variety of sizing options for different body types.\u00a0 This gives the customer that same sense of responsiveness and variety of a fast fashion retailer, without losing its core value proposition.<\/li>\n
  2. Build a Stronger E-Commerce Presence: <\/strong>The condensed supply chain has changed a customer\u2019s store experience. In particular, given the rapidly changing selection of styles, there is a sense of exciting exclusivity, prompting purchases on a whim [5]. Although Uniqlo\u2019s core competency and strategic advantage is fashion basics, its lack of variety and product exclusivity decreases customer store visits. However, Uniqlo is strategically positioned to build a strong e-commerce channel given its emphasis on commoditized basics. Currently, Uniqlo\u2019s brick and mortar locations are large and highly stocked, leading to an often overwhelming experience. The e-commerce channel currently represents only 5% of sales [6]. In line with other retailers, it should offer more convenient delivery services, leveraging its urban store network to create a \u201cship-from-store\u201d model that decreases the shipping times. Given the commoditized nature of basic apparel, it can further emphasize convenience by offering a subscription service for items that customers regularly replenish, such as socks or undergarments.<\/li>\n<\/ol>\n

    Nevertheless, these suggestions are contingent on the continued viability of Uniqlo\u2019s business model. Is their \u201cbasics-only\u201d strategy still competitive in the current landscape, or does Uniqlo need to keep up with trends?<\/p>\n

    (790 Words)<\/p>\n

    Sources:\u00a0<\/strong><\/p>\n

    [1] Uniqlo, \u201cUniqlo Business Model\u201d, http:\/\/www.fastretailing.com\/eng\/group\/strategy\/uniqlobusiness.html<\/a>, accessed November 2017<\/p>\n

    [2] \u00a0Kazunori Takada and\u00a0Grace Huang, \u201cUniqlo Thinks Faster Fashion Can Help it Beat Zara\u201d, Bloomberg Newsweek, \u00a0March 7, 2017, https:\/\/www.bloomberg.com\/news\/articles\/2017-03-16\/uniqlo-turns-speed-demon-to-take-on-zara-for-global-sales-crown<\/a>, accessed November 2017<\/p>\n

    [3] George Anderson, \u201cWill Uniqlo Beat Zara with Speed and Customer Focus\u201d, Retailwire, March 17, 2017, http:\/\/www.retailwire.com\/discussion\/will-uniqlo-beat-zara-with-speed-and-customer-focus\/<\/a>, accessed November 2017<\/p>\n

    [4] Hishashi Awato, \u201cUniqlo\u2019s Retail Empire Embarks on a Digital Revolution\u201d, \u00a0Nikkei Asia Review, August 26, 2017, https:\/\/asia.nikkei.com\/Business\/Companies\/Uniqlo-s-retail-empire-embarks-on-a-digital-revolution?page=1<\/a>, accessed November 2017<\/p>\n

    [5] Kasra Ferdows, Michael A. Lewis and Jose A.D. Machuca, \u201cZara\u2019s Secret for Fast Fashion\u201d, HBS Working Knowledge, https:\/\/hbswk.hbs.edu\/archive\/zara-s-secret-for-fast-fashion<\/a> , accessed November 2017<\/p>\n

    [6] Chloe Sorvino, \u201cInside Billionaire Uniqlo Founder Tadashi Yanai’s Quest To Build The World’s Biggest Retailer\u201d, Forbes, April 5, 2017, https:\/\/www.forbes.com\/sites\/chloesorvino\/2017\/04\/05\/too-big-data-for-his-drawers\/#3fb7fe432b8a<\/a>, accessed November 2017<\/p>\n

    Figures:\u00a0<\/strong><\/p>\n

      \n
    1. http:\/\/www.fastretailing.com\/eng\/group\/strategy\/uniqlobusiness.html<\/li>\n
    2. https:\/\/www.architecturaldigest.com\/story\/uniqlo-new-headquarters-japan-are-a-city-of-their-own<\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"

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