UNIQLO Business Strategy
Last Updated: 2014.07.11
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Developing products of exceptionally high quality
Becoming Japan's Top Brand by Expanding Urban Market Share
Expanding UNIQLO International
HEATTECH
AIRism Comfort Takes the World by Storm
Developing Products of Exceptionally High Quality
To ensure the development of products of exceptional quality, UNIQLO has refined its SPA* (Specialty store retailer of Private label Apparel) business model, allowing for control of the entire business process — from planning and design to material procurement and sales.
Production Factory in ChinaUNIQLO is continuously developing products of exceptional quality, in order to “create clothing with new and unique value and to satisfy customers worldwide.”
Product Development Based on Customer Feedback
Customer opinions and needs play a vital role in UNIQLO’s product development. The UNIQLO Customer Center receives approximately 90,000 comments from customers annually. Our HEATTECH products, for example, 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 this customer feedback that makes it possible for UNIQLO to produce the high-quality apparel that it does.
Material Procurement from Around the World
The UNIQLO Material Development Team is able to procure high-quality materials at low costs through direct negotiations with and bulk purchases from material manufacturers globally. For instance, take the denim fabric that is nearly synonymous with UNIQLO. This is woven, dyed and manufactured to meet UNIQLO’s specifications by the global denim manufacturer KAIHARA Co., Ltd.. In addition, it is efforts like this that have made it possible for UNIQLO to secure high-quality, long-staple cotton — which can only be harvested from three percent of the world’s cotton plants — for UNIQLO’s popular Extra-Fine Cotton plain T-Shirts.
Expert Technical Guidance at Factories Emphasizes Quality
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, known as the Takumi Team, boasting many years of experience in the Japanese textile industry. These specialists are sent directly to our 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.
* SPA stands for “Specialty store retailer of Private label Apparel,” meaning that the company’s activities are fully integrated from manufacturing through sales, including material procurement, design, product development, production, distribution, inventory management and final sales.
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Becoming Japan's Top Brand by Expanding Urban Market Share
Boost Market Share in Promising Urban Areas
According to the Ministry of Economy, Trade and Industry (METI), Japan's department store, supermarket and apparel retail sales totaled 10.7 trillion yen in 2007. Based on METI's data, UNIQLO's market share in Japan in 2013 was 6.2%. (Its 2013 menswear market share was 10.0%, and its women's wear market share was 4.7%.) However, given its origins as a chain of suburban roadside stores, UNIQLO has traditionally been underrepresented in major urban areas such as Tokyo, Osaka and Fukuoka.
Since opening our first in-mall stores in 2004, UNIQLO's image has been transforming from a suburban discount retailer to a high-quality, high-street brand. Commercial property developers recognize UNIQLO's power to attract customers, and we receive many invitations to open stores from prime large-scale shopping malls, urban department stores and fashion buildings.
Our new global hotspot store, the BICQLO Shinjuku East Exit Store, has enjoyed great success in a location formerly occupied by a prominent department store. We will continue to expand our urban market share by aggressively opening stores in major cities. In spring 2014, we plan to open global hotspot stores in Ikebukuro and Okachimachi, two thriving Tokyo commercial districts on a par with Shinjuku.
UNIQLO's Successful Large-Scale Store Model
Maintains Efficiency and Boosts Total Sales Floor Space
UNIQLO Japan: Sales Floor Space & Sales per Square MeterIn 2005, UNIQLO began opening large-scale stores of over 1,600 square meters in Japan. Today, large-scale stores account for approximately 20% of UNIQLO's total, and the majority of openings are of large-scale stores. As we expand our total sales space, we are careful to avoid any cannibalization of business. When we open a new large-scale location, we make sure to close regular-sized (800 square meters) stores nearby.
In the apparel industry, sales and profitability per square meter in a given store typically decrease as sales area increases. However, UNIQLO's business model for profitable large-scale stores has proved highly successful. UNIQLO's big break came with the opening of a store in Tokyo's trendy Harajuku district. In 2000 and 2001, our popularity surged, and sales per square meter increased. Since then, we have maintained sales per square meter of approximately one million yen per year (the figure in fiscal 2013 was 933,000 yen).
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Expanding UNIQLO International
Expanding UNIQLO's Presence in Global Markets
In the year ending August 2014, we expect UNIQLO International sales will increase to ¥400.0 billion, operating income will expand to ¥35.0 billion, and the number of UNIQLO stores located outside of Japan will rise to 632 stores. UNIQLO International already accounts for over 30% of total UNIQLO sales. Favorable new-store expansion in the Asian region has proved the key driver of recent growth, and we are now focusing our attention on another promising location for future expansion: the United States.
Within the Asian region, our Greater China operation (China, Hong Kong and Taiwan) is growing rapidly, with approximately 100 new stores opening each year. We have expanded our horizons for new store openings across Southeast Asia and Oceania, encompassing Singapore, Malaysia, Thailand, the Philippines, Indonesia and Australia. Across the Pacific, we have now reached a point where we can begin building a genuine store network in the United States. We aim to expand our store network in the United States to 100 stores over the next few years by opening between 20 and 30 new stores each year.