Uniqlo: The heir apparel

Already huge in Japan, Uniqlo has a plan to rule the world with a style that is entirely unique. Canadian retailers spent the last two years preparing for Target’s arrival and some are now focusing their attention on the arrival of Nordstrom. It may not be long until they have yet another retailer to contend […]

Kristin Laird July 08, 2013

Already huge in Japan, Uniqlo has a plan to rule the world with a style that is entirely unique.

Canadian retailers spent the last two years preparing for Target’s arrival and some are now focusing their attention on the arrival of Nordstrom. It may not be long until they have yet another retailer to contend with.

Tokyo-based Uniqlo has publicly stated it intends to be the number one retailer in the world by 2020. Uniqlo (pronounced You-nee-klo, a contraction of “unique clothing”) wants to hit $50 billion in sales by then to surpass competitors Zara, H&M and the Gap. That’s a whole lotta v-neck T-shirts.

There have been rumours the company plans to set up shop in Canada either on its own or through a partnership with Hudson’s Bay—although neither camp will confirm it. But given that ambitious goal, it seems inevitable that Canada would be on the retailer’s radar.

Uniqlo already operates more than 1,100 stores worldwide, including locations in the United Kingdom, France, Russia, China, Hong Kong,
Taiwan, South Korea, Singapore, Malaysia, Thailand and Japan, and embarked on a U.S. growth plan to open 200 locations in the next seven years.

If Canadian retailers aren’t yet familiar with the Uniqlo model, this should serve as a warning. The retail chain mass-produces quality, affordable basics in a rainbow of colours that are easy to incorporate into any wardrobe. Throw in a high level of detail-oriented customer service and an engaging in-store shopping experience and retailers have a few reasons to keep an eye on Uniqlo.

Here’s what makes Uniqlo so, well, unique.

The Clothes

While the majority of the retail industry is driven by trends or price, Uniqlo is trying to change what shoppers come to expect from a casual clothing retailer. What sets a Uniqlo pair of skinny jeans apart from another, for instance, is the company’s dedication to developing innovative, technologically advanced products that withstand the wears and tears of everyday living.

Uniqlo’s Ultra Stretch Jeans maintain their shape and mould to the body to help eliminate bagginess. It sounds like a simple design concept, but this attention to detail is what sets the retailer apart from the competition and why the brand is so coveted—you’re purchasing an exceptionally made product at a reasonable price.

“The clothing they make are designed to withstand both seasons and fashion,” says Jason Dubroy, vice-president, managing director, shopper marketing at DDB Canada, who has spent time in Uniqlo’s New York City location. “Every wardrobe needs to have a few items of Uniqlo in it because it basically goes with anything and it lasts longer than some of the pieces you would buy at the other stores.” Heattech, AIRism and Silky Dry are a few examples of the technology-led collections that have been developed to cater not to fashion, but the consumer’s lifestyle.

Uniqlo sells around 1,000 items, far fewer than its trend-driven rivals H&M and Zara which race to get looks from the runway onto store racks. Facts and Details reports that Uniqlo keeps clothes on the shelves longer and sometimes makes a single item in as many as 50 colours. At the end of each season the merchandising and marketing teams will decide when to host limited-time sales, discounting between 20% to 30% off to ensure items sell out. Though Uniqlo is often pitted against Zara, H&M and the Gap, the most appropriate comparison is American Apparel, which takes a similar approach with its lineup of basics, but on a much smaller scale. (And has a very different advertising approach, ie. no soft-core porn imagery. See Pg 32.)

In moves similar to that of Target, Macy’s and H&M, Uniqlo is also known for higher-end, carefully tailored collections from well-known fashion designers. The retailer partnered with Jil Sander and Charlotte Ronson on past collections.

While Uniqlo helps fill the closet of minimalists and fashionistas alike, it also caters to a more active consumer.

“Sportswear is a very strong market at the moment,” says Isabel Cavill, senior retail analyst at Retail Planet in the U.K. “You’ve got Canada’s Lululemon and H&M is looking to go further into sportswear so this is another area Uniqlo is looking to excel in and I think it has done it very well and in an intelligent way of expanding its customer base and looking like a technological retailer.”

The retailer supports its commitment to the lifestyle market through sponsorship deals with top performing sports personalities such as tennis player Novak Djokovic and golfer Adam Scott, who was wearing a Uniqlo shirt when he won The Masters earlier this year.

Customer Service

Japan is recognized for its exceptional customer service where employees are always attentive and courteous. It’s a practice that extends across all of Uniqlo’s markets and a refreshing approach for North American consumers who have grown accustomed to considerably lower service levels.

In a March 2013 episode of CBS Sunday Morning a group of retail employees (or advisors as they are referred to internally) stand on a backlit staircase reciting a corporate mission statement in cult-like unison before customers start streaming into the New York City location.

“Hello. How are you today? My name is Uniqlo. Let me know if you need any assistance.”

Each store employee is dressed in black; a handful of them are also wearing red and white branded kimonos. Everything is done with purpose and precision. From folding a pile of skinny jeans at lightening speed to properly returning a customer’s credit card (cupped in both hands, bow slightly at the hip) even the smallest tasks are etiquette-driven and rooted in Japanese culture. Transactions at chekout are processed in as little as 60 seconds. Uniqlo leaves very little room for error.

While Uniqlo employees are encouraged to share their ideas on how to improve the business, they must go through the proper channels to first share their ideas and wait for approval before implementing them in store. According to New York Magazine, there’s a poster in every Uniqlo manager’s office outlining the “Ten Accountabilities.” Number eight reads: “As a store manager, always follow company direction. Do not work in your own way.” Does rigidly sticking to Japanese customs and management styles work in other areas of the world? It does, according to founder and CEO Tadashi Yanai. He told The McKinsey Quarterly that Uniqlo’s first international location in London failed “spectacularly” in 2001 because it conformed to the British way of doing things instead of sticking to its strengths. The retailer’s high level of customer service has served the brand well. In 2000, Uniqlo opened a university to train managers on imporving service standards. Yanai told New York Magazine just after signing the lease on its grand NYC flagship store that he intended to send graduates from the university around the globe.

In-Store Experience, Merchandising and Real estate

Uniqlo experienced a few bumps in the road when it first entered the U.S. market in the mid 2000s. The retailer leased a handful of standard-size mall locations in New Jersey in the 7,000 to 10,000 square foot range. The locations failed to give the brand the exposure it needed to fuel further growth. Uniqlo suffered a similar fate in the U.K., expanding at a rate that outpaced brand awareness and therefore consumer demand. The chain has since learned from its mistakes, and committed to sprawling flagship locations that tend to occupy space on the high street of large city centres. (And also why any kind of store-in-store deal with Hudson’s Bay seems unlikely.)

The retailer’s Fifth Avenue location in New York City, for example, is 89,000 square feet and boasts 100 dressing rooms and 50 cash registers. Uniqlo’s parent company, Fast Retailing Co., signed a $300 million, 15-year lease for the space, which is located near competitors Gap and Zara. It is said to be the largest retail lease ever signed in New York.

Today, flagship locations are stacked floor-to-ceiling with multicolour sweaters, jeans and cotton shirts. Rotating mannequins wear the latest fashions.

“In a world where it’s just as easy to shop [online] as it is to shop [in-store] I think they’re doing a great job both for themselves and for the industry in making their physical environment interesting and engaging and stimulating places,” says David Roth, CEO of WPP’s U.K.-based retail practice, The Store.

The technology Uniqlo is known for extends from the clothes to the in-store experience. LCD screens line the perimeter of the store to display recent marketing campaigns and promotions, LED-illuminated rainbow staircases connect each floor and LED dot matrix signboards run throughout various departments.

“The Fifth Avenue store in New York is by far the best example I’ve ever seen of mixing physical store and technology in one environment where it feels that the technology being put in the store are designed into the experience as opposed to drafted in afterwards,” says Roth, who has shopped at Uniqlo in Shanghai and New York City.

The San Francisco location, meanwhile, introduced “Magic Mirror” technology that allows the customer to switch between different colours to help them determine their preference without the bother of trying on one item in multiple hues.

Advertising

While there seems to be few flaws with Uniqlo’s model, a recurring challenge for the retailer is lack of brand awareness outside of the Asian market. “They’ve got a massive footprint but unlike some of the other competitors they don’t start off with a great word-of-mouth advantage and they have to build that from scratch and that’s not difficult to do, it just takes money and time,” says Roth.

Each season Uniqlo conducts promotional campaigns for core products, but also relies on splashy displays that often include pop-up shops to generate buzz. Prior to opening its global flagship store in New York City’s trendy SoHo neighbourhood in 2006, Uniqlo converted shipping containers into temporary shops and placed them throughout the city. Each container was staffed with at least two employees and were equipped with change rooms. The effort was part of a larger advertising campaign that introduced the tagline: “From Tokyo to New York.” and inlcuded Uniqlo paper—a free online and print publication that featured interviews with designers, local celebrities and artists. Five years later Uniqlo stressed its “Made For All” brand philosophy with a three-phase advertising campaign to support the opening of its second and third NYC locations. The retailer moved away slightly from its Japanese heritage and instead leveraged American culture.

Online Uniqlo has found unique and interesting ways to promote its brand. In the U.K., it launched “The Lucky Counter” Twitter promotion that reduced prices on items every time someone tweeted about it. Users were able to visit a dedicated website where they could pick from 10 pieces they wanted to see on sale. Selecting an item prompted a pre-written tweet to pop up on the screen.

The retailer also broke ground online for its global launch with Uniqlock, an online microsite with a running clock that changes to five-second vigenttes, every five seconds. The effort won the Grand Prix in the Titanium and Cyber Lions at the 2008 International Advertising Festival in Cannes.

This article originally appeared in Marketing‘s July 8 issue.