Operation & Management of MNEs

Individual Assignment
Wisely 许良义

1. Why was Uniqlo successful in Japan?

Uniqlo build its business with delivering high-quality basic casual clothing at low prices. There are
several factors that lead Uniqlo to become the Japanese number-one apparel brand and retailer:

 Japanese consumer’s preference fit Uniqlo’s value proposition of high quality at low prices.
 Uniqlo founder, Tadashi Yanai, was a prominent and vocal leader that focused on sales
growth and profitability. He had a strong emphasis on profitability that was rare in Japanese
business. The firm largest shareholder also has a strong control and top-down approach, that
authorized firm to make quick changes that other traditional local companies could not.
 New marketing approach inspired from several US apparel chains. Where customers can
stroll comfortably around the store and select items freely, without requiring salesman.
 Deployed SPA (Specialty retailer of Private label Apparel) model. Uniqlo designed and set
price according to what it wanted. Uniqlo’s approach also differ from some foreign apparel
retailers by adding production experts that worked with suppliers to improve the outcome and
relationships with suppliers that allowed access to specific inputs but maintain low costs.

2. How was Uniqlo’s business model similar to or different from that of its main competitors?

Domestic Competitors Similiarity Different

Shimamura Low-priced in sales Has a fashion-oriented apparel
design
Purchased directly from
manufacturers in high volumes
and bargained hard
Muji Simplicity in design Various of product lines:
household items, foods,
stationary and apparel ( Uniqlo
focused on casual basic
clothing)

International Competitors Similiarity Different

Forever 21 Has a trendy apparel design
Gap Had a various brands that
aimed at different type of
Vertical integrated business customers
H&M model, outsourced to low-cost Focused on fast inventory
countries updates and large volumes
Zara High speed in supply chain.
Higher priced and more fashion
conscious compare to Uniqlo.
3. Why was Uniqlo not doing well in US market?

Tadashi Yanai aware that as world’s second largest market for apparel, entering US market is crucial to
becoming a successful global brand. Some factors that resulted Uniqlo situation in US market：

 Low brand awareness

Uniqlo stores that were opened in malls in New Jersey suburbs and Americans do not know
Uniqlo yet and it resulted failure. At that time, Uniqlo do not have name recognition in overseas
market.
 Lack of localization toward the local market
Uniqlo did not localize according to the market environment.
o Uniqlo USA did not imply to the local store design, as they imitate Japanese style in the
store by placing metal shelving where it is very efficient and functional, but in the US that
was only used for discounters.
o Uniqlo standardize its usual custom to US market and it turns out awkward to the US
customers. Every time we enter Uniqlo in Asia, the employees will greet us (Welcome to
Uniqlo). In US, customers are not used to these conventions.
 Uniqlo’s basic style approach
Uniqlo design does not compatible to the local market preference. Even though it has a really high
quality but the apparel’s style apparently looks very simple for the local customers. The casual
basic clothes makes Uniqlo subtle compare to other brands.

Despite all the hurdles, Uniqlo is still determining to have a breakthrough in US market. Uniqlo
utilize all the practices they got across the world to exist in US market.