UNIQLO Co. Ltd, is a Japanese casual wear designing and manufacturing and retailers. In Japan, UNIQLO is the leading clothing retail chain in terms of both sales and profits. After its global expansion in 2005, the company has now operating in Hong Kong, China, Taiwan, United Kingdom, South Korea, France, Singapore and United States with over 2700 stores worldwide. This casual wear giant rank in No. 4 in global retailers with over 11.21 Billion USD sales in 2013. Besides the huge success in sales performance, the company rank as No. 1 in “Best Retail Brands 2013” from Interbrand. Since UNIQLO opened its first store in Hong Kong in Sep 2005, the no. of stores in increased steadily to a total of 22 stores in 2014. This report will focus on the way that UNIQLO demonstrate its business model and brand strategy in Hong Kong.
“UNIQLO is a new Japanese company that ensure it provides casual clothes for all kinds f people”, mission statement from UNIQLO ‘s website. From the statement, there’s no specific or primary target consumer for the brand. Actually this the main strategy of UNIQLO, undifferentiated targeting but focus on provide high quality basic casual wear with affordable price for which everyone can wear in everyday. Unlike to other fashion retailers, H&M and Zara which have permanent collections are targeting to young women and men for fashionable items.
But in income level, UNIQLO focused on Mass Market in fashion industry, which targeted for those with medium income who are looking for trendy daily clothes. The high income group which prefer hi-end branded fashion are not the primary target segment for UNIQLO.
UNIQLO HK also demonstrated undifferentiated strategy in store level and also website page. From window display of casual wear from Women, Men and Kids, and in real store visit the consumer comes from all walks of life, from kids to elderly.
UNIQLO provides functional clothing that comes in wide variety of selection which comes with exceptional high quality and styles. There are 3 main product and brand portfolio under UNIQLO, 1)Unilqo or (LifeWear), 2) UT and 3) Seasonal Collections. All these available in Hong Kong.
UNIQLO (Life Wear), aim at as Comfortable Fashion Enahancing Eveyone Life. Life Wear apparel is high quality fashionable basic wear that people can go with their daily lives, signature example with be the Unilqo fleece,, HEATTECH and AIRism inner wear, Ultra Light Down and cashmere sweaters. Unilqo promote these high quality basic clothing items of LifeWear as “component” or essential items for daily lives. You can find same items but comes with different colors, for example socks come with in 50 different design and colors. LifeWear scarifies the choice of items to high quality when comparing to other International competitors like ZARA and H&M and local competitors like Giordano.
UT -T- shirt Convenience Store, Trendy T shirts partnership or cross over with other brands. UNIQLO joint venture with different famous brands from different industry to using their logo or characters as the designs o UT, for example Coca-Cola for Beverage industry, The Simpson from US cartoon, Disney Characters. UT also features limited edition collection of Tshirt designed by famous artist from singer to photographer for example With these partnership projects, UNIQLO launch thousand of new designed UT in different market over the world. UT targeted to young teenage to young adult to provide affordable and fashionable T-shirts.
Designer invitation / Seasonal Collections , Unilqo invited famous designers of hi end fashion brand for example +J with German designer Jil Sander in 2009, uu/UNIQLO undercover with Japanese designer Jun Takahashi and latest INDS DE LA FRESSANGE for Spring / Summer in 2014. These projects bring the designs of hi end fashion to become affordable daily casual wear. These collections targeted to young women (20 – 40 years) who are sensitive to latest fashion trends.
In conclusion, UNIQLO does not define its target customers in terms of gender, age, or ethnicity. It targets all people. Apparel makers often focus on specific designs to satisfy their target customers, but UNIQLO serves a wide range of customers by offering high-quality, casual basics. UNIQLO’s product offering is broad, which covers men’s, women’s, and children’s items. Products in the casual category range from T-shirts, sweaters, and pants, to jackets, and even include underpants, undershirts, and shoes.products themselves are an important source of competitive edge. UNIQLO strives at developing products of high quality, in various collections to enable the company to reach the highest possible number of customers. As a consumer product company, UNIQLO launch different new products to increase competitive advantage and meet changing customer needs and expectation.
From the graph, you can see the continuous innovation and launch 1 -2 new key product worldwide in each year. “We are not a fashion company” , “We are a technology company.” UNIQLO CEO Tadashi Yanai. Quality is the key to UNIQLO product, that why UNIQLO has its oven Research and Development centre to develop its new functional material used for make clothes. HEATTECH seris of warm keeping inner wear will be an example of new material of development new high quality fabric garment.
International context standardization & adaptation/ localized /
Marketing Positioning is the perception of consumer regarding the company and products relative to competition. And these are affected by 5 main factors: 1) Product quality 2) Price 3) distribution 4) image 5) marketing communication Product positioning process
Define market / identify product feature / Unique selling point / understand competition / marketing communications / maintain brand position From the positioning map of Hong Kong retail fashion brands below, UNIQLO provide relative high quality when compared with its medium pricing. In HK consumer perception, hi-end international brands like Burrberry is with superior quality and pricing and while local brands like Baleno come with lower price and low quality. In product quality aspect, UNIQLO is relatively higher than local brands and international brand like H&M. In pricing, UNIQLO take in the medium pricing strategy which target the mass market, the average income group. When comparing the distribution point, UNIQLO has less distribution outlet when compare with local brands Giordano and Baleno which with small stores strategy by open small outlet in MTR station and shopping centres.
UNIQLO now has 22 outlets in HK, and most of them are in high traffic large shopping mall in each district. Each stores a relatively larger than normal local brand outlet which provide a more spacious and comfortable shopping environment. The originated image of UNIQLO from Japan make HK consumer have the perception of high quality Japanese products. Despite now all UNIQLO product are made in China and South East Asia country like Thailand Vietnam. The Image of Japanese brand make the brand differentiate from local brand and also gain the advantage of international brand.
Product life cycle
From the product life cycle of view, Unilqo HK is the later stage of “Growth Stage”. As the UNIQLO HK is still introducing new product from Worldwide UNIQLO in order to target more new consumers and grasp market share. The no. of outlet are still increase readily despite facing the difficult of limited location with large space for outlet selection and also threat of high rental in HK. UNIQLO HK also launch Print ad and TV commercial for new product or seasonal product also brand building advertising to help encourage repeat purchase.
Price decision is affected by 6 mains factors
1) Pricing Objectives,
2) Buyer’s perception
3) Perceived value for money
5) Marketing Mix
6) Channel members
UNIQLO establish an “Specialty Store Retailer of Private Label Apparel” (SPA) model , meaning its business model incorporates the entire clothes-making process from procurement of materials, product planning, development and manufacture through distribution and retail to inventory management. With these business model, it can gain benefit of vertical integration of company’s operation from manufacturing to marketing promotions and also economic of scale of raw material procurement & production. It can provide product with much lower cost than competitors, even it sales the product same price as competitors it still can maintain its profit.
With the support of SPA, UNIQLO can provide HK consumer with high quality, low priced, value of money causal wear. For example it cashmere sweaters which price HKD199 while similar cashmere sweater cost for over HKD 400 in department stores.
Pricing strategies of UNIQLO is HK is combination of Penetration and Competition. During the opening of first Unilqo Store in Hong Kong at Mira Mall Tsim Sha Tsui, it created crowds of Hong Kong consumer to this first flagship store. HK consumer are attracted by its low price and quality compared with ESPIRT and Giordano another fashion retail stores. All designer T Shirts are in same price. It created an image of Branded Japanese causal fashion but with affordable price. Since then UNIQLO remain its pricing strategy, low price in order to get penetration to HK fashion retail marketing and gain market share rapidly. Compared with other local competitors brands with longer history, e.g. Giordano, ESPIRIT and Bossini. It win in the battle field of mass market of medium income group who look for quality but trendy casual wear, by more trendy design than Giordano and better quality than Bossini, especially in the products like jacket, jeans and inner wear these daily casual wear
In the battlefield with other international fashion brand like ZARA, GAP and H&M. UNIQLO understand their competitors’ competitive edge of fashionable and trend style. UNIQLO counteract with their competitive lower price of Seasonal and designer invitation collection to attract young women. The pricing of Unilqo product set competitive or even lower than their competitors. This make UNIQLO’s success in Hong Kong, this can proven by its increase in outlet from 1 stores in 2005 to 22 stores in 2014, average 2 new stores opening in Hong Kong.
When compare pricing of UNIQLO HK with other markets, HK’s pricing comparative higher than China and Japan. But UNIQLO HK doesn’t take reference to Pricing in Japan. Market
Index (HK as 100)
UNIQLO has to maintain it competitiveness in pricing and at same time keep balance in its profit. The pricing point is the majority result of benchmark the pricing of competitors. From example below of similar patterned T-shirt, the pricing of Uniqlio is very close the it main local competitors of Giordano and Bossini.
1) Critically evaluate if the brand’s marketing activity is delivering values to its customers. Why? From its mission statement “UNIQLO is a new Japanese company that ensure it provides casual clothes for all kinds f people”. We can knew that the value proposition s are 1) high quality with comparative low price, 2) provide causal cloth of as component or essential clothing which can wear everyday, 3) provide added value to its products from new technology.
From the product range of UNIQLO in HK, you can find casual wear for infant to adult, from colorful kid wear to formal business shirt. UNIQLO provide high variety of clothes for people from different walks of life with different needs.
Store environment is one of the important element in marketing of UNIQLO. Flagship store is one of the brand building tool. All UNIQLO stores are comes with spacious, bright and comfortable environment fot consumer to shopping and also extend their shopping time in the store. All UNIQLO stores’s design follow their corporate identity, with big red logo, same color wooden floor, same design of shelf and template of in-store advertising and display. There’s no difference in interior design for Hong Kong UNIQLO with UNIQLO in Shanghai and UK. In Apr 2014, UNIQLO HK just open its 10th global flagship store in Causeway Bay which with 3 level, occupies 37,500 square feet retail store. Mentioned by Pan Ning, the managing director of UNIQLO Hong Kong and chief executive of Fast Retailing China, said it was imperative for the apparel chain to build up its presence in the city, despite the high rents.” The outdoor wall of this flagship store provide an excellent advertising opportunities and as strong brand building tool itself.
Another value added to consume is its in-store layout and service of Staff. UNIQLO will display all the product and different sizes on shelf for consumer’s easy access and trial. And there’s no sales staff which will selling UNIQLO to consumer actively but provide comfortable and display as much as product to consumer to select. By this self serviced environment and culture of UNIQLO, it reduce its staff in-store in great extend and make consumer feel less pressure and free to select their casual wear.
Channel strategy of UNIQLO
UNIQLO HK sell their product to consumer in their own retail outlet directly without any intermediate of like distributors or and department store. This can help UNIQLO reduce their distribution cost and margin. Hence further lower the price of their products to meet competition or reserve margin for profit.
In each season UNIQLO will launch promotional campaigns for hero products like Ultra Light Down Jacket, HEATTECH and T shirts. In the campaign, Uniqlue will have advertisement in TV, newspaper and Magazine. Beside adaptation the Advertisement from UNIQLO Corporate, UNIQLO HK will also localize their advertisement and message. For example UNIQLO HK invite local celebrity Bosco Wong as spokesperson for its Ultra Light Down Jacket and launch series of TV commercials and print advertisement. With the used of local celebrity can help HK consumer to get more familiar with the brand and also raise their interest especially amount the young people. Beside the advertisement, you can see the Point of Purchase display inside the store are also display with same message with advertisement. Even staff in the in-store can regard as POP display, all staff must wear the hero production or promotional product all the time and they become the mobile showcase and model in the stores.
The promotion of UNIQLO also further enhance and deliver the value for money products to consumer. Most often promotion are Price off, such as direct price of single item, further discount by bulk purchase (buy 2 pcs in discount price), Special price of limited items in promotion period to urge consumer to make purchase immediately.
Online and Social Media
UNIQLO combined its causal wear philosophy with cooking and launched its own Apps of UNIQLO Recipe in 2013 which awarded as the Best App in Apple App Stores. With other apps like digital virtual store, Wake up social app gain good response in worldwide and also HK. This help further strengthen its brand image of causal for all walk of life.
Social Corporate Responsibility
UNIQLO launched several CSR program in corporate and world wide such as Clothes for Simles with Top Tennis Player Novak Djokovic ; working with Grameen Bank in Bangladesh to create a local social business. In Hong Kong the most well known CSR program will be the “UNIQLO Recycle”. This program encourage consumer to donate their used clothes to UNIQLO, after UNIQLO collected and pass through process of cleaning and sorting. These clothes will pass to people in need over the world. These program help UNIQLO build their positive image of humanity and environment friendly to HK society.
How UNIQLO can moving forward?
UNIQLO is already a very successful fashion retail company. In order to keep the brand ‘s competitive and gain the market share. Take Hong Kong market as an example, UNIQLO should focus more one 2 initiaitive,
1. Localization of product
In advantage of its large scale and vertical planning and production system, UNIQLO can produce same products in low price and high quality product to worldwide. Even its Seasonal Collection can enhance it variety and refresh the consumer. But these designer and brands may not familiar to Hong Kong consumer. UNIQLO should add local element to the design of HK products or even tailor made new collection for Hong Kong, such as using HK unique landscape, local food as design pattern or even corporate with Young Local designer to add HK element to its collection.
2. Go Premium
Even UNIQLO provide high quality casual wear, but still in certain portion of HK consumer it still a casual wear brand with product make in China. In order to meet the increase population of high income young Middle Class, who are willing to paid more for more fashionable and higher quality clothes, UNIQLO can launch a new product line, UNIQLO Premium. Similar concept with local brand G2000 launched Black Label collection. With resource of UNIQLO, it can invite designer from luxury brand like HUGH BOSS, GUCCI etc , .and using high quality material for this collection to provide s product with excellent quality but in reasonable price.