A business snapshot of the mass-market retail brand
📖 25 to 30 minute read
UNIQLO is a Japanese retail company known for its’ affordable and modern wardrobe essentials. Owned by Fast Retailing, UNIQLO is the third best selling clothing manufacturer and retailer in the world after H&M and Zara (Inditex).
When it started, UNIQLO’s unique selling proposition was its discounted basics wear. At that time this kind of affordable casual wear market was dominated by retailers such as GAP, Marks and Spencer, and Next. These brands massively inspired the founder and chairman Tadashi Yanai in his development and operations of UNIQLO. From the mid to late 2000s the company had some ups and downs but from that Yanai and his team were able to further refine the brand and make it more successful. Turning it into the popular and innovative retailer we see today. It’s now overtaken the other casual wear brands it used to look up to; and in a way they are trying to imitate the UNIQLO formula.
So what is the UNIQLO formula? This article explores this by looking at the brand story, values, its customers, products and company culture.
2. The UNIQLO brand story
After seeing the success of casual wear chains in the US and UK, Tadashi Yanai set out to replicate this in Japan. He evolved his father’s tailoring business to a mass-market clothing store in the 1980s. The first incarnation of UNIQLO opened in Hiroshima, Japan in 1984, initially called the ‘Unique Clothing Warehouse’. More stores popped up in the suburbs of Japan, which had no-frills store interiors to save on construction costs. The clothes were sourced from clearance warehouses and purchased in bulk from manufacturers, which meant they could be sold at a discount to customers.
A few years later UNIQLO shifted their business model from a reseller to a SPA (Specialty store retailer of Private label Apparel) like GAP. Taking full control of all processes from clothing design to the manufacturer to sales, ensuring they could offer better quality apparel and keep prices low. The brand image of affordable basics clothing proved effective during Japan’s economic slump in the early 1990s. When the chain store’s popularity grew as people bought their low-cost clothing to save money during the recession.
2.1. Early core product: the fashionable fleece
The customer impression of UNIQLO as a cheap suburban clothes store stuck for a while. But brand perceptions changed in 1998. When they expanded to major cities in Japan, starting with the opening of a 3-storey store in Harajuku, Tokyo. Combined with championing a core product: the polar fleece jacket, UNIQLO’s first blockbuster which sold 2 million that year.
UNIQLO repositioned the fleece. Traditionally seen as a relatively specialist outdoor item, brands such as Patagonia were selling fleeces at about $100 (USD). UNIQLO versions were pitched as everyday casual wear with the bonus of being warm and comfy, pricing their no-logo fleeces at an affordable $19 (USD). The fleece reached a bigger urban and fashionable market through the Harajuku store. This product positioning and pricing strategy of the fleece jacket drew in more customers. The fleece boom continued for another two years.
2.2. Altering the strategy: from fashion to technology centric
But over-reliance on the fleece meant that in the early 2000s UNIQLO’s sales declined and brand equity started to fade in Japan. As customers began to get bored of the plain styles and fleeces. At the same time UNIQLO’s launch of their first international stores failed. They initially tried to crack the UK market in 2001 but had to close a majority of stores two years later. The strategy that had worked in Japan like the fleece campaign and suburban stores, didn’t quite translate to UK customers. There was a lack of brand awareness and store expansion of 50 stores in three years was too ambitious.
Tadashi Yanai, owner and founder, resigned. But he was reinstated a few years later. And UNIQLO bounced back through product innovations, collaborations and by rebranding and repositioning.
Looking at what made them successful with the fleece, UNIQLO began to develop more hi-tech and functional basics apparel. Tadashi Yanai approached Japanese chemical company, Toray Industries. And in 2003 they partnered together to create their HEATTECH fabric for a line of light weight thermal wear. The HEATTECH fabric works by using body moisture to generate heat and has air pockets to retain that heat.
It was another blockbuster and still popular today, according to Yanai ‘has sold over one billion HEATTECH items in the 15 years since the product debuted’. It also helped with UNIQLO’s global expansion in other parts of Asia, Europe and the US. Since Japan has a reputation of being at the forefront of manufacturing technology; the brand were able to leverage this hi-tech image of Japan as part of the promotion of HEATTECH and attract people to stores.
2.4. Bare necessities
UNIQLO’s popularity grew during another recession in the late 2000s. From September 2008, its parent company Fast Retailing reported year-on-year sales growth for every month except two. At the time Tadashi Yanai said, UNIQLO have “always operated as if we are in a recession – making sure our costs are low, even when the economy was in a better shape.”
But UNIQLO’s approach is not to offer the lowest prices in the market, such as Irish fast fashion retailer Primark who sell t-shirts for under $3. Instead one of UNIQLO’s tactics is to position themselves as the go-to store for wardrobe essentials that need replacing more often like socks and underwear. Customers shop at UNIQLO for these small ticket items under $10 which gets them in store or online exploring what UNIQLO have to offer. Then perhaps making an impulse purchase of a graphic t-shirt or eventually some time in the future the customer may buy a higher priced investment piece like a coat.
2.5. Redefining casual clothing: lifewear
For a short time between 2010 and 2011 UNIQLO moved its focus away from its functional wardrobe essentials to more fashionable clothes that followed catwalk trends like competitors Zara and H&M. It didn’t work. Sales decreased by 25% at stores opened more than a year and shares fell by 26%.
Rectifying this oversight, UNIQLO put the attention back on their quality basics. And brought clarity to its brand identity by developing the term ‘LifeWear’ in 2013. LifeWear incorporates UNIQLO’s core products – HEATTECH, AIRism clothes, Ultra Light Down jackets, cashmere sweaters and UT limited edition designed T-shirts. It helped UNIQLO to redefine casual clothes that transcends fashion trends. Simply put by UNIQLO, as creating ‘clothes to make life better’. By firstly making basics more exciting, particularly with the graphic pop culture T-shirt collaborations. And secondly more useful and innovative. Previously performance enhanced clothing was only really offered by specialist sports and outdoor apparel brands. UNIQLO’s clothing offers similar technical benefits, presented as stylish and comfortable everyday wear. And lastly, making quality fabrics such as cashmere and merino wool more accessible with an affordable price tag.
3. Common threads: typical customers
UNIQLO appeals to a broad spectrum of people, as the slogan says, it’s ‘made for all’ meaning its’ clothes are designed to transcend age, gender and backgrounds. It could be at the risk of seeming too bland by not appealing to anyone in particular. But for many customers this means they can wear and style the clothes how they want. To understand how UNIQLO clothes integrate into people’s lives, here I imagine four types of typical customers…
The professional minimalist. These people optimise every aspect of their lives with bullet journals, Trello boards and iPhone reminders. It’s likely they work in tech. They shop at UNIQLO to build their capsule wardrobe. To reduce decision fatigue they have their own daily uniform. Thus, they don’t need to think about what they are wearing every day and prioritise the more important tasks. They like simplicity so want a minimal amount of choices when shopping. They want clean and classic style clothes that are built to last and can be worn for years. UNIQLO ticks all those boxes.
Likely to buy: A roll neck sweater, jeans, oxford shirt, plain t-shirt, cardigan.
The carry-on tourists. These smart packers roll to save space and know all the popular packing hacks. They want to bring the most versatile items with them travelling, which isn’t too bulky and well designed. On holiday, they may stumble upon a mega flagship UNIQLO or hybrid store in Tokyo, BICQLO looking to buy an extra pair of socks. But make additional purchases of a HeatTech t-shirt and Ultra Light Down vest, they know this will come in handy during and after their trip.
They could be couples or best friends or siblings or a parent and child who dress in the same way #twinning. It can be intentional or subconscious. They match styles to express their connection with each other. To show they work in harmony. Their relationship conformity. They shop at UNIQLO so they can buy the stripy tops, same red jeans, chequered shirts.
These individuals are creative and have strong sense of style. They shop at UNIQLO to buy basics. To layer and mix it up with clothes and accessories from other high street brands, designers and vintage shops.
There are different forms:
Those who follow some fashion trends for fun but they know what suits them so they don’t go overboard. They appreciate the affordable luxury of cashmere sweaters.
And others who are into streetwear so look out for the limited edition T-shirts at UNIQLO.
4. Keeping it simple
Since it is driven by customer needs and fabric innovations rather than rapidly changing fashion trends, UNIQLO sells a limited range of products compared to its competitors. Snapshot data from retail analytics company EDITED shows that UNIQLO even decreased its product assortment by 4.4% in the last 12 months whereas H&M increased their’s by 50.6%.
This is part of UNIQLO’s appeal for customers. In the same way, German supermarket chains Aldi and Lidl are so popular and successful (their stores stock about 1000 to 3000 range of products compared to 20,000 at a similar sized competitor supermarket). Offering a relatively limited selection of products keeps the shopping experience simple; reducing the amount of decisions the customer has to make which is a good thing according to psychologist Barry Schwartz. In his thesis ‘the Paradox of Choice’ Schwartz describes studies have shown that too much choice can be overwhelming for customers and lead to dissatisfaction.
4.1. Less is more
A smaller variety of styles also keeps UNIQLO manufacturing orders relatively consistent. So the company can buy fabrics in larger quantities which gives it more negotiation power with its suppliers. This consolidation keeps costs down, and products are affordable for customers without compromising on the quality.
4.2. The art of simplicity
As well as limited assortment, a sense of simplicity is also communicated in the shop design. UNIQLO stores are orderly, with colour coded, neatly folded clothes. And the mainline apparel is plain, there are minimal amount of patterns just stripes or polka dots or check. But UNIQLO doesn’t feel minimalist as such. It still manages to achieve its brand promise of catering to the masses. As each product is available in a wide selection of colours, sizes, cuts and fits and even offers free hemming alterations for purchases. It doesn’t appear to be a dizzying array of options rather there are straightforward choices to fit different body types and personal style.
5. X collaborations
Product assortment doesn’t dramatically change year on year, so how does UNIQLO keep things interesting and attract customers into stores regularly? Going back to the Aldi and Lidl analogy: these stores offer weekly ‘middle aisle,’ special buys of homeware and lifestyle goods like screwdrivers and gym wear to keep the shopping experience exciting for customers. Likewise, UNIQLO creates a sense of anticipation and excitement through their collaborations with artists and designers which they call ‘special collections’. These associations with other creative brands also allows them to reach new markets.
5.1. Super normal
In comparison to other high street retailers whose designer collaborations seem like a pure marketing move, UNIQLO’s partnerships feel a bit more thoughtful and long term. They choose designers such as Alexander Wang, Jil Sander, Tomas Maier and Lemaire who match and complement its values and aesthetics. Indeed, Paris based designer Christophe Lemaire was named an artistic director in 2016, and he has produced an embedded collection – UNIQLO U. It’s described as the future of LifeWear and is like an innovations lab within the company.
5.2. Hype wear
Another key partnership is with Japanese designer Nigo, who became a creative director for UNIQLO’s UT division in 2013. Nigo was famous for founding the niche and expensive streetwear brand, A Bathing Ape in the early 1990s. In understanding UNIQLO’s mission of using UT to express the cultural side of the brand; Nigo and his team have carefully selected interesting collaborators. Over the years, these have included Pharrell, KAWS, Museum of Modern Art, and Keith Haring. Making these, usually high-priced rare designs accessible to everyone.
More recently UNIQLO’s UT has been spreading a bit of Kikki K style inspiration, positivity and words of encouragement through a collaboration with typographer Pieter Ceizer. The ‘No Worries Club collection features hoodies, sweaters, t-shirts with the phrases ‘keep ya head up’ and ‘carry on’ and more. It also shows UNIQLO’s ongoing support of different international artists and respect for creativity. In contrast, Zara have been accused of copying designs of about 17 independent artists like Tuesday Bassen.
5.3. User generated creativity
UT graphic prints have also joined forces with familiar popular brands such as Disney, Lego and Sanrio. These have been creatively remixed them so they don’t just feel like logo licensed t-shirts. The creativity is even sometimes outsourced to customers. Through an annual global T-shirt design competition (UTGP) in which fans submit designs around a well-known brand theme, past examples include Nintendo, Marvel and Pokemon. It’s a marketing tactic that engages customers and empowers them to do the promotional campaigning for UNIQLO. As it creates a sense of community and advocacy for the brand on social media.
6. Level five leadership
Founder and owner, Tadashi Yanai, now one of Japan’s richest people started his career on the shopfloor of a large general merchandise chain store, JUSCO, selling menswear and kitchenware. Then in the 1970s he joined his father’s formal bespoke clothing business. Whilst managing these tailoring shops, six of the seven employees quit. Yanai’s management style needed to improve. He levelled up by studying businesses he admired by reading the biographies of the famous entrepreneurs. He called this his ‘quasi-experiences’ learning lessons in management from the success and mistakes of other companies. He also travelled to the US and UK visiting stores and observing what retailers there were doing. This all led him to open the first version of UNIQLO in 1984 and renaming his father’s company to Fast Retailing, implementing all that he learnt into the real world.
Yanai’s visionary leadership formed his 23 management principles which he crafted over a 30 year period. He describes these principles as the ‘soul’ of the company which are passed onto employees as part of their training. One element of the principles include putting customers first; based on Peter Drucker’s “The Practice of Management” about creating customer value which influenced Yanai. There are also details on learning from failure and disrupting yourself, touching on the concept of kaizen, continuous, incremental improvements. This commitment to innovation can be demonstrated in Fast Retailing’s $885 million warehouse automation, replacing 90% of the staff. Outward facing principles are also mentioned. Including connecting with the world and contributing to society. Illustrated through UNIQLO’s LifeWear concept on focusing on people’s needs and culture, and the organisation’s sustainability activities.
7. Marketing communications
John Jay, the President of Global Creative at Fast Retailing explained that UNIQLO’s term for its core products LifeWear was over 20 years in the making and that they were only beginning to talk about it in a concise way.
The LifeWear concept is at the centre of UNIQLO’s marketing communications. A global campaign in 2016 introduced the concept, asked “Why do we get dressed? Further campaigns have included “Because of life, we made LifeWear”. The phrase ‘Science and art of LifeWear’ are also thrown in to campaigns. It all seems quite philosophical and zen-like. What LifeWear does for UNIQLO is summarise the company’s brand values and purpose: Positioning UNIQLO as a more meaningful and thoughtful brand, almost an antidote to other generic high street fashion shops.
One way UNIQLO have been building brand awareness is through sponsorship. For example to represent UNIQLO’s art and culture side of the brand, the company sponsor Tate Gallery’s free after hour events called Tate Lates. The biggest part of the sponsorship money goes to professional athletes, their global brand ambassadors to wear UNIQLO clothes when performing. Competing with the more familiar multinational corporations, Nike and Adidas, it’s quite unusual to see a fashion high street brand doing this. It subtly gives more credentials to UNIQLO’s activewear and the item’s technical abilities to keep the person cool and comfortable.
The 2018 sponsorship deal with Roger Federer is particularly interesting since he was signed with Nike for so long and is now nearing the end of his tennis career. Federer not only wears UNIQLO on the court, he features in LifeWear campaigns modelling jeans and a shirt playing a piano. The partnership seems to compliment UNIQLO’s brand values of longevity. And looks to be a beneficial association for Federer’s personal brand as he begins to prepare for a career outside of professional tennis.
7.2. Digital marketing
UNIQLO uses the usual digital marketing channels: sponsored visual shopping ads appear in search results when looking for ‘cashmere jumper’, ‘jeans’ etc. Plus remarketing activities through Google sponsored inbox ads. This is all integrated with print media campaigns like advertorials in magazines to educate new customers about certain product innovations like HEATTECH.
In addition to a central global brand social media accounts on Facebook, Twitter, Instagram and YouTube, UNIQLO have country specific accounts to communicate their regional updates and campaigns. Part of their intention is to make communications with customers more targeted with local offers.
The UNIQLO website is clean and functional, with the ability to read and leave reviews for each product; and also features ‘lookbooks’ – allowing customers to see more photos of models wearing the clothes in the real world. As a nudge to get customers to buy online, website users see a pop-up on their first few visits to the website. The pop-up stating that in exchange for signing up to the email newsletter get a small voucher code off the next online purchase. These newsletter emails are sent regularly, highlighting seasonal offers and particular products. It’s a common way for companies to capture website users email address, nudging and nurturing them to make a purchase. There’s also a ‘click and collect’ option, delivering customers online orders to the store for free. Which is an effective tactic to get customers in store and possibly making another purchase.
All these digital marketing tactics seem to be working, with recent figures showing online sales in Japan expanding by 30.9% year-on-year, increasing the proportion of online sales from 7.0% to 9.7% of total sales. Which is perhaps still relatively small in comparison to other retailers. But UNIQLO is in the process of their digital transformation and investing heavily in AI and Big Data.
8. Customer experience
The highly organised physical UNIQLO stores were briefly discussed in the ‘keeping it simple’ section. In-store customer service is also on-brand. Comprehensive staff training aims to deliver speedy checkout experiences and standardised clothes folding of seven items a minute. An important part of the service is staff interaction with customers. To ensure customer experience is consistent and relatively smooth, staff are taught to say seven simple phrases such as ‘thank you for waiting’ and ‘did you find what you are looking for?’ It’s a mix of Japanese style polite customer service and the American style, ‘have a nice day’ chat. Which makes sense considering owner Tadashi Yanai’s took inspiration from American fashion retailers.
To keep up with increasing consumer expectations of personalisation and to future-proof the company, UNIQLO are using digital technologies to tailor the customer experience. In 2016 they introduced semi-made-to-order shirts and jackets for men in Japan, by establishing a new distribution system that supported increasing amounts of online sales. Customer measurements are supplied on the website or taken in store then delivered to the customer within a week the order was placed.
In August 2018, UNIQLO launched a digital concierge called UNIQLO IQ on their mobile app, the Line app and Google Assistant in Japan, and as a chatbot on Facebook messenger. This bit of machine learning technology is a shopping assistant that can give the customer personalised style recommendations and inspiration by asking them questions based on their preferences, horoscope and specific occasions; then clothes orders can be made within the app.
Both UNIQLO IQ and custom-fit clothes means a more personalised shopping experience and supports the brand promise of comfort and accessibility.
9. Sustainability and the future
There is growing ethical and environmental concerns of ‘fast fashion’ retailers who manufacture and sell cheap trendy clothes. UNIQLO is often classified as fast fashion because it is in the business of mass produced clothes and using low-cost labour suppliers. It faced controversy for its supply chain failures, outsourcing to factories with prevalent human rights violations. Roughly 600 million items of UNIQLO clothing are produced per year, the sheer volume of clothing production means it has a negative impact on the environment. It is likely the process uses gallons of fresh water and tonnes of chemicals, and it is probable millions of garments end up in landfill.
In response to this, UNIQLO implemented a number of sustainability activities under the mission statement “Unlocking the Power of Clothing”. Incentives include an in-store recycling program, refugee support through employment and clothing donations, and emergency disaster relief with clothing and financial help.
These are similar initiatives to its’ competitors Zara and H&M, who are also responding to their widespread exposé of poor practices and wastefulness. UNIQLO’s sustainability efforts feel a bit more authentic. Because the business models of other fast fashion retailers are built on keeping up with the latest style fads in quite a disposable way. Whereas UNIQLO’s brand values, summarised through the LifeWear concept, is of simplicity, quality and longevity. There could be an impending backlash to this throwaway culture of fast fashion and UNIQLO may benefit from it. With an increasing number of consumers wanting to build a more sustainable wardrobe; there may well be more of a demand for clothes with a timeless everyday style, enhanced comfort and functionality, all of which UNIQLO offers.
It could go full circle for UNIQLO. Going forward could mean going back to its tailoring roots. Since UNIQLO was built from founder’s Tadashi Yanai’s family business, a men’s bespoke tailoring store. Then evolved into a chain of ready-to-wear clothing store we see today; which mirrored the consumer demands between 1980s to 2010s for affordable clothes. Now with customers expecting more levels of personalisation, and there is technology to support and scale it; UNIQLO could shift once again into affordable custom fit apparel. They started with offering hemming alterations on jeans purchased in store, then offered semi-made to order shirts and jackets for men in 2016.
As well as meeting customer needs, UNIQLO’s ambitions to make more custom-fit clothes is perhaps a response to the rise of a new competitor – Zozotown online marketplace in Japan (the billionaire founder Yusaku Maezawa is best known for purchasing tickets on SpaceX’s Big Falcon Rocket to fly around the moon in 2023, becoming the first space tourist). Zozotown developed a relatively low cost polka dot bodysuit, Zozosuit that lets customers capture their measurements at home using a mobile app which 3D scans their body by connecting the dots of the bodysuit. It is described as being more accurate than a human tailor and have helped customers get a more perfect fit when ordering clothes online. Physical retail stores have always had the edge over online only retailers in allowing customers to find the perfect fit by trying it in-store. Now the Zozosuit solves this problem.
Let’s see how UNIQLO will continue to innovate. Making more custom-fit clothes and leveraging on technology could mean a decrease in mass produced apparel. Therefore the use of fewer natural resources, less waste and hopefully better working conditions in factories. This is summarised by UNIQLO’s parent company Fast Retailing’s philosophy of ‘changing clothes. Changing conventional wisdom. Change the world.’ ◼