{"id":24782,"date":"2017-11-15T19:45:25","date_gmt":"2017-11-16T00:45:25","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/uniqlo-transformation-to-a-digital-consumer-retail-company\/"},"modified":"2017-11-15T19:48:51","modified_gmt":"2017-11-16T00:48:51","slug":"uniqlo-transformation-to-a-digital-consumer-retail-company","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/uniqlo-transformation-to-a-digital-consumer-retail-company\/","title":{"rendered":"UNIQLO: Transformation to a Digital Consumer Retail Company"},"content":{"rendered":"

UNIQLO, a global leading apparel company in the fast-fashion industry from Japan, pursues a rapid digitalization of its supply chain to provide superior value to the demanding consumers. With the full commitment of Yanai Tadashi, the CEO of UNIQLO, the company launched Ariake Project<\/em> in 2017 to revolutionize its entire supply chain model with the latest technology, aiming to gather information quickly and facilitate world-class production. [1]<\/a>This bold change has benefitted the business greatly – UNIQLO generated JPY 1.87 trillion in revenue with +4.2% YoY during FY 2017, the largest sales ever in the company\u2019s history.[2]<\/a><\/p>\n

\"\"<\/a><\/p>\n

Urgent Need of Digitalizing the Supply Chain<\/strong><\/p>\n

SPA (Speciality store retailer of Private label Apparel) has been a longstanding strength of UNIQLO.[3]<\/a> In SPA, UNIQLO owns the entire supply chain process. SPA model helped UNIQLO to establish a competitive advantage in providing quality products at reasonable prices. However, in the fast-moving fashion industry where UNIQLO is still positioned below Inditex (ZARA) and H&M[4]<\/a>, Yanai felt the urgent need of further transforming SPA to respond quickly to the consumers in the digital age. Yanai reflects his decision to launch Ariake Project<\/em>, \u201cToday, everyone of all ages uses the internet, and that is dramatically influencing the way we shop. To stay abreast of changing needs, clothing manufacturer-retailers like ourselves have to mold a new, dynamic industry unfettered by conventional barriers between business fields.\u201d[5]<\/a><\/p>\n

Ariake Project<\/strong><\/p>\n

Launched in February 2017, Ariake Project<\/em> opened the largest warehouse the company owns in Ariake City in Japan, moving the head office there for merchandising, R&D, product development, and marketing teams to function together on one floor.[6]<\/a> This change helps the company to gather and share information on customer needs across the whole supply chain at the fastest speed, encouraged by the quicker decision-making process. This also enables the company to put a tight control and management on the logistics required for its supply chain. Ariake Project aims to enhance technology to capture the consumer needs at real stores. UNIQLO partnered with Accenture PLC to practice Big Data strategy in measuring various consumer behaviors in stores across the country.[7]<\/a> Yanai thinks that combining the Big Data of who purchased what at which located store will give the company a better know-how to develop a production plan and cycle that are more tailored and flexible to the consumers. UNIQLO has not yet succeeded in fully utilizing the gathered data however, Yanai believes that the early investment in the technology and an effort in gathering a large volume of data continuously will help the product development to be driven by data in the medium term.<\/p>\n

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Integration of \u201cReal\u201d and \u201cVirtual\u201d<\/strong><\/p>\n

In the short term, Ariake Project<\/em> emphasizes on the integration of physical stores and online stores operation to push the company to become a true digital consumer retail company.[8]<\/a> Yanai defined the vision to make UNIQLO always accessible by closing the gap of the real stores and online stores, and believed that this will be another value-add of the company in the competitive landscape. To accomplish this, UNIQLO launched several technological innovations to digitize the downstream side of the supply chain, from the retailer to customer. UNIQLO established a new distribution system by expanding online store. Online store now offers customers same-day or next-day delivery service, as well as the service for them to pick up their orders at the nearby UNIQLO stores or local convenience stores. The company also started the Semi-Order service online that delivers custom-made clothing to consumers within a week, and this pushed the company to pursue their value proposition of creating and providing LifeWear<\/em> for everyone.[9]<\/a><\/p>\n

\"\"<\/a><\/p>\n

Embracing E-Commerce & Scaling the Digitized Supply Chain<\/strong><\/p>\n

Despite the technological innovations that UNIQLO executed, the challenge still remains at boosting e-commerce sales. Online sales currently accounts for 5% of the total revenue, while the industry standard makes up 11%.[10]<\/a> As Yanai holds up the goal of reaching 30% in near future[11]<\/a>, it is critical that UNIQLO accelerates its speed in improving the e-commerce experience for consumers. My recommendation is to invest in mobile, creating a better website and application to provide consumers an excellent shopping experience. UNIQLO\u2019s superior customer service should not be limited only in physical stores – to upgrade the integration of \u201cReal\u201d and \u201cVirtual\u201d, the mobile e-commerce space should embrace the Artificial Intelligence and machine learning technology to become a personalized store for customers. Another recommendation is to scale the Ariake Project globally. UNIQLO\u2019s international success if fueled by Greater China and Southeast Asia, however, USA is the market UNIQLO most struggles.<\/p>\n

Though two questions still remain: Are these technological innovations powerful enough to make UNIQLO #1 globally? How can UNIQLO compete and surpass the rapid growth of its rivals ZARA and H&M in digitizing the supply chain to be a digital consumer retail company?<\/p>\n

 <\/p>\n

[Word Count: 800]<\/p>\n

[1]<\/a> Fastretailing.com. (2017).\u00a0CEO Message | FAST RETAILING CO., LTD.<\/em>. [online] Available at: http:\/\/www.fastretailing.com\/eng\/about\/message\/ [Accessed 15 Nov. 2017].<\/p>\n

[2]<\/a> Fastretailing.com. (2017).\u00a0Results Summary | FAST RETAILING CO., LTD.<\/em>. [online] Available at: http:\/\/www.fastretailing.com\/eng\/ir\/financial\/summary.html [Accessed 13 Nov. 2017].<\/p>\n

[3]<\/a> Fastretailing.com. (2017).\u00a0UNIQLO Operations Business Model, Expanding Internationally Store Development in Japan Product Creation<\/em>. [online] Available at: https:\/\/www.fastretailing.com\/eng\/ir\/library\/pdf\/ar2011_en_08_n.pdf [Accessed 15 Nov. 2017].<\/p>\n

[4]<\/a> Fastretailing.com. (2017).\u00a0Top Interview<\/em>. [online] Available at: http:\/\/www.fastretailing.com\/jp\/ir\/library\/pdf\/ar2016_04.pdf [Accessed 14 Nov. 2017].<\/p>\n

[5]<\/a> Fastretailing.com. (2017).\u00a0Interview with the CEO | FAST RETAILING CO., LTD.<\/em>. [online] Available at: http:\/\/www.fastretailing.com\/eng\/ir\/direction\/interview.html [Accessed 14 Nov. 2017].<\/p>\n

[6]<\/a> Reuters Japan. (2017).\u00a0\u7126\u70b9\uff1a\u793e\u904b\u304b\u3051\u308b\u30e6\u30cb\u30af\u30ed\u9769\u547d\u3001\u65e9\u671f\u306e\u53ce\u76ca\u52b9\u679c\u304c\u8ab2\u984c\u306b<\/em>. [online] Available at: https:\/\/jp.reuters.com\/article\/focus-uniqlo-revolution-idJPKBN18Q0U1 [Accessed 15 Nov. 2017].<\/p>\n

[7]<\/a> \u76f4\u54c9, \u7267. (2017).\u00a0\u300c\u3059\u3079\u3066\u5909\u308f\u308b\u300d\u30e6\u30cb\u30af\u30ed\u306e\u65b0\u30b5\u30d7\u30e9\u30a4\u30c1\u30a7\u30fc\u30f3<\/em>. [online] Nikkei Business Online. Available at: http:\/\/business.nikkeibp.co.jp\/atcl\/report\/15\/258308\/102500053\/?P=2 [Accessed 15 Nov. 2017].<\/p>\n

[8]<\/a> Fastretailing.com. (2017).\u00a0Top Interview<\/em>. [online] Available at: http:\/\/www.fastretailing.com\/jp\/ir\/library\/pdf\/ar2016_04.pdf [Accessed 14 Nov. 2017].<\/p>\n

[9]<\/a> Fastretailing.com. (2017).\u00a0Interview with the CEO | FAST RETAILING CO., LTD.<\/em>. [online] Available at: http:\/\/www.fastretailing.com\/eng\/ir\/direction\/interview.html [Accessed 14 Nov. 2017].<\/p>\n

[10]<\/a> Reuters Japan. (2017).\u00a0\u7126\u70b9\uff1a\u793e\u904b\u304b\u3051\u308b\u30e6\u30cb\u30af\u30ed\u9769\u547d\u3001\u65e9\u671f\u306e\u53ce\u76ca\u52b9\u679c\u304c\u8ab2\u984c\u306b<\/em>. [online] Available at: https:\/\/jp.reuters.com\/article\/focus-uniqlo-revolution-idJPKBN18Q0U1 [Accessed 15 Nov. 2017].<\/p>\n

[11]<\/a> Fastretailing.com. (2017).\u00a0Interview with the CEO | FAST RETAILING CO., LTD.<\/em>. [online] Available at: http:\/\/www.fastretailing.com\/eng\/ir\/direction\/interview.html [Accessed 15 Nov. 2017].<\/p>\n","protected":false},"excerpt":{"rendered":"

To respond quickly to the demanding customer needs, UNIQLO has digitized its supply chain to transform into Digital Consumer Retail Company. 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