Opportunities and Threats Faced by UNIQLO & the Insights of its Chairperson

This article analyzes the opportunities and threats Uniqlo had to face and manage to become a successful retail chain. It also examines the insights Tadashi Yanai had that other players in fast fashion retailing did not possess. 

UNIQLO.

UNIQLO is a Japanese-based company that designs, manufactures, and retails casual wear (Segers, 2016). Since it was founded 69 years ago, it has had numerous opportunities to boost its profit. Altogether, threats and challenges are inevitable as it had to face many of them and strive for survival through all means possible to overcome the challenges and keep itself floating the market wave. The firm runs its business across fifteen countries worldwide. It is accredited for producing quality wear and availing it to the market at discounted prices that are affordable to the majority (Surhone et al., 2011). Below is a detailed presentation of the opportunities and threats this mega-producer faced and had to overcome over the years.

Opportunities

The first opportunity that the firm obtained was that they were able to secure and develop a captivating brand image (Underwood, 2013). This is the impression that comes into the minds of the consumers regarding some products and/or services once the producer’s brand name or business name is mentioned. UNIQLO was able to develop its brand image through vigorous advertising while at the same time being consistent with one theme. They also captured a larger market share by presenting quality products that satisfied their customers. Their marketing strategies also promoted brand awareness and thus creating popularity and favorable competing grounds in the market. The company has also been enjoying reduced shipment fees and, as a result, a reduction in overall costs. This allowed the firm to escalate its income leading to its net growth. The benefit of reduced shipment fees has also been shared with consumers by reducing the market price and, as a result increasing its market share.

The development of new technology came as an opportunity for UNIQLO. It provided them a chance to strategize differentiated marketing in their market zones. It was then that the company was able to retain customers loyal to it through its exceptional services while at the same time attracting new customers by means of other value-sloping schemes. The development of the market diluted the advantages the firm’s competitors had over it. This provided an increment in its fighting power over its rivals. By gaining an increased market share, the company acquired a steady cash flow, enabling it to embark on further investments. They were able to open more branches to sell their products internationally and endorse and settle on new technological advancements and product segments. All this is to unlock new opportunities in other product categories. In conclusion, low inflation rates have also been a stepping stone for the company toward its success. It has increased market constancy and enabled UNIQLO customers to access credit services at lower interest rates.

Threats

The amount of profits that UNIQLO has been milking from its business undertakings are at risk following an increment in the cost of raw materials. There have also been emerging issues of imitation of their products or production of counterfeit products, usually of low quality. Such products lead to customer dissatisfaction which eventually results in low sales. Since UNIQLO operates in different countries, prevailing liability laws in those nations are different. They may cause exposure of the firm to a large number of liability claims due to policy discrepancies in various markets. Over the years, the company has made numerous product developments. This is because it has faced exploitation by competitors making it unable to maintain regular supply of innovative products.

Amounts of profits have also been put at risk by escalating pay levels. Skyrocketing prices in China and other threatening movements, including the $15/hour, are risky for the firm’s profits. Over the last two years, various competitors have vested in the market after seeing the high and stable profits from the business. This has resulted in tough competition, which has generally threatened the firm’s overall sales. The business also faces adverse and undesirable results in its undertakings following major economic, legal, and/or political environment changes. Naturally occurring disasters which are more evident in China also put the business at risk of reduced profits or even incurring losses altogether. In addition, UNIQLO competitors have also developed new and superior technologies and, as a result, produced superior products that outweigh the firm’s goods at the market.

Insights of Tadashi Yanai

The richest man in Japan is Tadashi Yanai. He is the chief executive officer, president and chairman of UNIQLO, and author of ‘23 management principles (TATE, 2012). He saw to it that the principles were printed on plastic and pocket-sized cards and provided them to employees of UNIQLO, who carried them around the workplace. Tadashi frequently referred to these principles as the “soul” of his firm. Although UNIQLO’s brand is not leading in fashion, the firm sells a wide variety of clothes that are always affordable and wearable.

Yanai’s insights embraced hard work, teamwork, and change. He believed that capabilities are essential compelling factors for the brand name to be managed. He also included in his statements that public relations depended on capabilities. It was Tadashi’s choice to invest in equipping his staff associated with public relations with appropriate equipment and expertise to aid the company’s customers in embracing video and live content marketing through mobile. Had his moves towards embracing technology remained obsolete, beginning in 2013, moving onward would have proved challenging for Yanai and UNIQLO. However, his insights and further exploration of technology paid him handsomely. Therefore, he remained firm in his belief that change is inevitable and should be embraced by everyone who desires to see different and more admirable results.

Tadashi has a vision to convert Fast Retailing into the leading global retail outlet by 2020 (Nagata, 2018). It is his strong belief that his company has the potential to achieve this vision as it possesses adequate resources for the same. He also shifted his production from official wear to casual wear, which was able to achieve higher sales and thus generate more revenue as compared to the former. These casual wear not only did they attract clients from Japan but also from all over the globe. Yanai took charge of the whole process by ceasing the external supply of distributors, designers, and producers to lower the market price and attract more customers. He now runs design, production, and distribution using his staff, which has proven effective in curbing cost escalation.

Tadashi has also been wise enough to subcontract production of his goods to china based factories during times of economic slump. This move effectively reduces costs for clients with low purchasing power during such times. His procurement and supply chain is perfectly managed such that he simultaneously controls quality and market price. Although at the initial stages of business expansion, three outlets collapsed in the USA, an outlet that was later opened in a prime area picked up pace and operated to its maximum capacity. The main reason behind the collapse of the first outlets was a lack of brand awareness amongst the natives. The second attempt was therefore characterized by massive advertisement campaigns using movie artists. The number of outlets based in the USA has increased to seven, with Yanai targeting to have established two hundred outlets by 2020.

Whereas other brands aimed to capture the outdated fashion game, Tadashi was driven by long-term visions that were extra ordinary and mainly focused on international expansion and advancement. His insights have been the key drivers of overall organizational success.

References

Nagata, K., 2018. The Japan Times. [Online] Available at: https://www.japantimes.co.jp/news/2018/02/05/business/corporate-business/fast-retailing-co-president-tadashi-yanai-says-asia-key-making-firm-global-industry-leader/#.Ww3qEkiFPIU [Accessed 30 05 2018].

Segers, R., 2016. Multinational Management: A Casebook on Asia’s Global Market Leaders. Illustrated ed. s.l.: Springer.

Surhone, L. M., Tennoe, M. T. & Henssonow, S. F., 2011. Uniqlo. s.l.: Betascript Publishing.

TATE, R., 2012. WIRED. [Online] Available at: https://www.wired.com/2012/10/uniqlos-ceo-future-of-retail/ [Accessed 30 08 2018].

Underwood, M., 2013. Uniqlo Analysis. [Online] Available at: http://uniqloanalysis.blogspot.com/2013/05/swot-analysis.html [Accessed 30 05 2018].