In 1998 a provincial Japanese clothing company opened its first shop in an upmarket district of Tokyo

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In 1998 a provincial Japanese clothing company opened its first shop in an upmarket

district of Tokyo. Surprisingly, it chose a zip-up fleece as its new signature line. Until

that point, fleeces had been expensive items usually worn by climbers, hikers and

other outdoorsy types who had little interest in fashion. But Uniqlo's fleece, which by

the following year came in 50 colours from lavender to burgundy, was an immediate

hit. Launched in the wake of the Asian financial crisis, the top was noteworthy because

it was so cheap - it sold for just ¥1,900 ($19), around half the price of those in other

shops. Two million were sold within 12 months. Within two years, enough fleeces had

been bought to clothe nearly a third of the population of Japan.

 

Uniqlo was the first clothing company to use special C-shaped fibres that capture dead

air, which the company claims make the fleece 1.5°C warmer than others in the

market. Minerals have been added to the material that supposedly transform the sun's

heat into infra-red emissions to make the item even warmer.

 

Uniqlo's parent firm, Fast Retailing, is now the world's third-largest clothing company,

after Inditex (which owns Zara and H&M). Its success has been driven by technology,

which is the results of the company's own research and developments that have

transformed the way people live and work. Even before the outbreak of coronavirus,

advances in communications and cloud computing meant that the professional people

could do their jobs anywhere. Dress codes have become less formal. One sign of this

shift is the shrinking market for office attire. According to Euromonitor - a research

group, sales of men's suits in America shrank by 14% in value from 2013-18. The rise

in athleisure - gym kit worn as everyday clothing - means that we now work out and

hang out in the same gear. The covid-19 pandemic has only hastened the decline of

what we once called "workwear". Casual clothes of the type Uniqlo offers, in which you

can both take a Zoom class and watch Netflix is now very popular.

 

Unlike most clothing companies, Uniqlo measures its significant milestones not in

iconic outfits but in manufacturing breakthroughs. After its success with the fleece,

Uniqlo rolled out more product lines that were distinguished by their functionality: a

first-of-its-kind bra top with sewn-in cups, thermal underwear, moisture-wicking fabric

and lightweight puffer coats filled with down. It sold more than 11 million warm, easily

packable " Ultra Light Down" pieces in the two years after they were launched in 2009.

 

An industrial company called Toray, located outside the city of Kyoto has been at the

heart of these hi-tech innovations. Toray is best known for developing the carbon fibre

used in Boeing's Dreamliner aeroplanes. Uniqlo's founder, Tadashi Yanai,

approached the head of Toray in the late 1990s to develop the material used in the

fleece. Today over 1,000 researchers in Toray work on inventing new fabrics.

 

Yanai initially envisioned Uniqlo as a Japanese version of Gap, selling simple,

functional clothes. But over the past decade Yanai's company has grown

internationally and outstripped the label that inspired it. A brand that started by selling

American sportswear to the Japanese has ended up selling Japanese ingenuity to the

world.

 

Every day Tadashi Yanai comes to work in the same $15 navy-blue Merino-wool crew

neck jumper. This is significant for two reasons. First, Uniqlo's offerings are versatile

enough to suit anyone from a billionaire to a Brooklyn barista. Second, though Yanai

became rich through fashion, he is not obsessed with it. He grew up above his father's

clothing shop in Ube, a small town in western Japan, but "never felt any value

associated with clothes".

 

A sense of duty lured him home after he graduated from university and he took over

the family enterprise as its employees began to retire. Yanai resolved to commit to the

business, everything he had, with determination. As he sees it, this drive was shared

by many people in his generation, who grew up with the memory of the country's

ruinous defeat in the second world war and were determined to prove themselves. He

grumbles that younger Japanese lack "inspiration", as he calls it. Aged 70, he

continues to work as hard as ever:

 

But Yanai also chose to overturn almost everything his father had created. When he

took the reins in 1984, the company had 22 shops across Japan. His father was a

tailor who made all the clothes in-house. Yanai instead imported well-known American

labels. The chain's new name, Unique Clothing Warehouse, was intentionally ironic (it

was shortened to Uniqlo in 1988). Branches of Uniqlo grew outside the big cities.

Yanai's business was a huge success. By its tenth anniversary, Uniqlo was Japan's

fastest-growing retailer and Yanai had become the country's richest individual. Many

Japanese, though, regarded the brand as provincial and cheap.

 

In 1995 the chain launched a campaign, "Say something bad about Uniqlo, Get ¥1",

which triggered nearly 10,000 complaints about everything from the poor quality of the

discounted clothes to the sub-standard customer service. "To be known for being

cheap is sad," Yanai said. He knew he needed to return the company to its roots by

taking the manufacture of clothing back in-house.

 

Yanai realised that Uniqlo would have to take charge of every stage of the

manufacturing process. He initiated the collaboration with Toray and drew on Japan's

rich tradition of textile design. Significantly, he became one of the first Japanese

clothing entrepreneurs to turn to Chinese factories to make goods on a mass scale.

Once a production line had been established, a million items could be stitched together

with little more effort than it took to produce 5,000. The combination of cheap labour

and bulk orders allowed Uniqlo to keep prices low.

 

Yanai was less sure when it came to launching shops abroad. "When we first opened

in China, we offered pseudo-Uniqlo at a cheaper cost, but that was never accepted by

Chinese consumers," he said. The company's first forays into America and Britain also

failed. Yanai has written a number of business-strategy books, the most famous of

which translates as "One Win, Nine Losses". Yanai thought he needed to tailor the

shop's offerings to each country. But it turned out that Chinese consumers, like

Americans, British and others, just wanted "great access to a great product".

Today the ubiquity and predictability of Uniqlo's products are part of the brand's

identity, an essential component of Yanai's aspiration to become "the first truly global

clothing brand from Asia". Yanai believes that globalisation and the rise in international

travel has led to a convergence of taste across the world. Hipsters in India and Vietnam

want to wear the same clothes as their peers in Tokyo and Paris. "Very few retailers

tend to think this way because they focus on their own country's clothing only," he

said.

The firm made a concerted effort to court high-profile designers and, in 2009, it

announced its first collaboration. Collaborations were already common on the high

street: Karl Lagerfeld's partnership with H&M had begun five years earlier. Uniqlo's

was different. The designer was Jil Sander, a German minimalist, and the association

gave the company much needed cachet among the fashion set. Tomas Maier, the

designer at Bottega Veneta who himself became a partner later, told the New York

Times that the Sander collaboration "opened the door for a lot of people to look at

Uniqlo".

The Sander collaboration lasted five seasons. Since then, Uniqlo has established

many other partnerships with designers such as JW Anderson, Christophe Lemaire

(who after two seasons came in-house to design the edgier U diffusion line) and

Alexander Wang. What they all have in common is a preference for the "intellectual"

over the "hot", according to Vanessa Friedman, fashion critic at the New York Times.

Other collaborations catered to specific kinds of customers: kurtas (collarless shirts)

for the Delhi store from Rina Singh, an Indian designer and Hana Tajima for a line of

modest wear for countries such as Malaysia and Indonesia with large Muslim

populations. The perception of unsophisticated provincialism had been shed.

The intellectual approach to fashion extends to the unveiling of the company's

collections each year. Rather than host catwalk shows, Uniqlo organises an annual

"exhibition". Last year's, which was held at Somerset House in London, featured

various "experimental zones" including a tunnel constructed from airism fabric, one of

Uniqlo's trademarked fabric innovations, and a mirrored room displaying the full

spectrum of Uniqlo sock colours on the feet of disembodied mannequins.

Uniqlo's lack of flamboyance chimed with the times. As austerity bit in the aftermath

of the financial crisis of 2008, ostentation was shown the door. "It was suddenly so

uncool to look rich," Christina Binkley, a reporter for the Wall Street Journal, told Vox

in 2018. The rhinestone-encrusted 2000s in all their blinged-out glory were done: the

past ten years have seen an impulse towards simplicity.

 

Uniqlo's low prices and cerebral patina proved popular with young, urban

professionals, and gained the backing of voices that mattered. In 2010 New

York magazine wrote that "seemingly out of nowhere, Uniqlo's cheap, skinny, rainbow

coloured basics became a kind of New York uniform". Last year the Atlantic postulated

that "Uniqlo is Gap for Millennials".

Every clothing brand tries to create classics. Few actively avoid the latest fashion. This

is precisely Uniqlo's promise. Katsuta Yukihiro, Uniqlo's head of Research and

Development and his team try to work out which trends will not resonate on a global

scale and pounce on ones that do. He claims that he knew from the minute he saw

skinny jeans on the streets of Los Angeles that they were versatile enough to become

what Uniqlo calls "essential".

When you ask Uniqlo executives to explain the appeal of their brand, they invariably

circle back to their own portmanteau coinage, "Lifewear", a concept that proves rather

difficult to define. Katsuta describes it as "quality clothing at affordable prices to make

everyday life better and more comfortable". Aldo Liguori, the Italian-born head of

publicity at Uniqlo, told me that it means, "I cannot tell you what you need. Only you

know what you need and how we can fit with your daily life." Yanai insists that Lifewear

was not just a "slogan" but "means quintessential, everyday life". John Jay, president

of global creative at Fast Retailing, said that the company was motivated by "respect

for everyday people".

Uniqlo produces a relatively limited number of lines - Retviews, a firm that analyses

retail sales, found in October 2019 that the Japanese firm offered fewer than 2,000

distinct items in its European stores over the course of a year, compared with more

than 6,000 by Zara and 17,000 by H&M. But many of these are multiplied through a

rainbow of colours. Katsuta argues that this lets customers find their own style through

combining items. "Our clothes shouldn't have individual attitude. People should create

their own by mixing and matching," he said.

Similarly, the interior design of Uniqlo stores around the world is deliberately spare,

creating a blank canvas for shoppers. "It's a white box, always on a white background.

It's not a lifestyle brand," said Markus Kiersztan, who helped design the flagship store

in New York in 2010. Unlike competitors that often feature aspirational pictures of

models in perfectly fitting garb, Uniqlo stores use rotating putty-coloured mannequins

("a neutral colour that is not white", a PR officer tells me). These are generally dressed

in three or four layers, a styling trademark introduced by Jay, the company's president,

who sees layering as the simplest way to create own look. Jay was also

responsible for scrunching the sleeves up, now another Uniqlo trademark. Yuniya

Kawamura, a professor of sociology at Fashion Institute of Technology in New York,

told me that it reminded her of the 12-layer kimonos that court ladies wore during the

Heian period in the 9th to 12th centuries: "They sometimes wore even more layers,

and the different arrangements and combinations of colours showed a wearer's unique

taste and style." Underneath the layers of clothes are layers of history.

 

For all its desire to take on the world, Uniqlo is keen to stress its Japanese heritage.

Yanai took pride in pointing out that the denim in the men's selvedge classic-fit jeans

is spun, dyed and woven in Hiroshima by a manufacturer that uses traditional

techniques. He did not mention that the jeans were designed in Uniqlo's office in Los

Angeles and that a factory in Bangladesh sews and finishes them.

At first glance there seems nothing obviously Japanese about Uniqlo's wares. But a

strong strain of minimalism pervades Japanese culture. Buddhism remains an

important influence in Japanese society even in an increasingly secular age, and

among its core tenets are renunciation and detachment - concepts that mean being

able to suppress one's lust for the material elements of daily life. Mario Praz, an Italian

critic, contrasts the Japanese style with the suffocating abundance of Victorian

interiors in Europe and America which, he says, stemmed from horror vacui (fear of

emptiness). More recently, young people in the West have also grown less enamoured

with acquiring stuff, hence the widespread popularity of another Japanese export:

Marie Kondo, a professional de-clutterer. As is customary with all interactions

involving money in Japan, customers' credit cards are handed back to them with two

hands.

Uniqlo's plainness and restraint appeals to consumers across the globe. These design

principles also help the company negotiate the tension between the low cost of its

garments and the perception of good quality. Kawamura recalls an old Japanese

proverb, "The nail that sticks out gets hammered down." She adds: "In a society that

traditionally values conformity and harmony, dressing like everyone else is seen as

socially desirable." When everyone is wearing a solid-black sweater, she said, "no one

knows whether that is Uniqlo or Yohji Yamamoto (a Japanese avant-garde designer)."

As a guide for its manufacturing process, Uniqlo invokes kaizen, the idea of

continuously improving, which is another popular principle within Japanese

management circles. Materials are constantly being refined, becoming ever lighter and

less obtrusive. In 2011, HeatTech, one of Uniqlo's flagship fabrics, contained 88

threads; in the following incarnation it was somehow warmer with only 64. "When

people need to make clothes to stay warm, they are inclined to go thicker," Katsuta

has said. "We have done the opposite." Where many other apparel-makers aim to

make a splash, it sometimes seems as though Uniqlo's ultimate goal is to refine its

clothes into invisibility.

As for its worldwide appeal, the main source of Uniqlo's growth these days comes not

from Western markets but the middle classes of China and South-East Asia. Uniqlo

has now overtaken its two closest rivals, H&M and Zara in China. In 2018, a third of

the company's overall profits came from its 700 Chinese outlets.

 

Yanai is not complacent enough to believe that Uniqlo has cracked the problem of

global fashion. On the wall of his office there is a photo taken of a crowded pavement

on Fifth Avenue in New York in 1947, which at the time was the most modern city in

the world. Men wear suits, women wear gloves, everyone is in a hat. "As time goes

by, how people styled themselves went through a dramatic change," Yanai said. "We

need to be prepared for what happens next. 

 

Question 1

Analyse Uniqlo's success based on Michael Porter's Theory of National Competitive Advantage.

 

Question 2

Evaluate how Uniqlo has used location economies to create value for its customers.

 

Question 3

Describe how Uniqlo has managed to retain its Japanese culture despite being a global brand.

Question 4

Tadashi Yanai says that, "globalisation and the rise in international travel has led to a convergence of taste across the world". Examine how the rationale behind the statement has enabled Uniqlo to change its strategy to overcome its initial failures in America and Britain.

 

Question 5

As the first truly global clothing brand from Asia, describe how Uniqlo has differentiated itself from its western competitors.