How do you go from a
single store in Hiroshima just 27 years ago to 1100 stores across 14 countries
with $11billion and EBITDA of $1.5billion? Can adding chemistry to fashion take
you to be the 4th largest apparel group in the world (with plans to
overtake Zara, H&M and Gap shortly)? How does dressing the world’s best
tennis player - Novak Djokovic - play a part in this? What’s the Uniqlo entry strategy
into Australia and how have they learnt from their past mistakes? The Uniqlo’s
presentation to the 2012 Westfield Retail Study tour spoke of their innovations in fashion manufacturing, their attitude
towards recruitment and culture, along with the way they "arrive" in
a new country to be very intriguing.
Location; store design; visual merchandising; PR/marketing; customer service; who and how they employ & induct; culture; profitability; and a product that tests apparel traditions – Uniqlo gets top marks in every area.
In 1985 under the name ‘Unique Clothing Warehouse’, a unisex casual wear store opened in Hiroshima by a 35 year old Mr. Tadashi Yanai. Now known as Uniqlo, in 1995 they hit 100 stores in Japan and entered into a strategic arrangement with Toray industries - a synthetic chemistry company specialising in fibres and textiles. Their first innovation led to the production of a ‘micro fleece’ jacket for a fraction of the price of comparable products and in the minds of many provided the catalyst for Uniqlo's rapid global expansion which was to follow. But it wasn’t always easy for Uniqlo and their parent company Fast Retailing.
‘Learn by your mistakes’
is a phrase easier said than done. It was in 2000 and with 500 Japanese stores trading well, a thirst for
international expansion saw a number of stores open in London. But in the words
of Mr. Yanai, “we failed completely”. Three years later and most of the London stores
had closed. Two store openings in Beijing in 2005 were closed within a year. With
no brand recognition, poor store locations and the perceived need to hire
experienced local store managers, their international growth strategy was a
disaster. Greater determination and a detailed plan which addressed the reasons
for failure has since seen the successful opening of 200 international
stores in China, France, Hong Kong, Malaysia, the Philippines, Russia,
Singapore, South Korea, Taiwan, Thailand, the United Kingdom and the United
States.
So what’s changed? What
can we first expect in Melbourne in 2013 as their Australian store rollout
kicks off? Having sat through a riveting presentation by their Head of
International Expansion – Mr Shoichi Miyasaka - and having shopped at their
stores in Japan, New York, Paris and London, I have a few ideas.
Poor store location and
fitout were a major factor in their first London experience but the flagship
stores they have opened over the last 12 months point to something very
different. Each store contains a real wow factor! Located smack bang in the middle of Tokyo's most
expensive retail real estate in the ‘Ginza’ district and surrounded by every
luxury brand you can think of, you can't miss the massive 12 storey (4,959 sq metres)
jewel in the Japanese crown that opened in March 2012. Boasting the latest and
trendiest in the Uniqlo range of products, it acts as a ‘showcase’ for the
brand and employs 520 staff, including 100 foreigners whose language skills
also cover English, Korean, Chinese, French and Spanish.
The PR and marketing used to create brand awareness when they
first arrived in Shanghai involved massive staged promotions and pictures which
heavily featured the name UNIQLO and included advertising blitzes on buses,
subways, billboards, flyers, even paper bags used by sandwich shops. Stage 1 had
images of just the product (ie. top, trousers and accessories) with emphasis on
colour and design - the aim to highlight the quality and fashionability of the
product. Stage 2 comes a few weeks later and shows an image of the exact same
product, but with the addition of price (jeans at AUD$23 and t-shirts AUD$10),
shocking the customer at the low prices after admiring the quality. The 3rd
stage then shows an image of the same product along with the price, but this
time the exact same product is worn by high profile celebrities who have
endorsed and partnered with the Uniqlo way. These include Charlize Theron,
Susan Sarandon, Cyndi Lauper, Dakota Johnson and Orlando Bloom to name a few.
By mid 2012 Uniqlo was expanding rapidly in the US, China, the UK
and France, and had begun searching for a site in Australia. It was also the
year Novak Djokovic claimed his fifth career Grand Slam title - the
2008, 2011 and 2012 Australian Open, 2011 Wimbledon and the 2011 U.S. Open. In
addition to this, he also won the Men’s Singles title at the China Open in
Beijing and competed strongly in the French Open. In a great coup, Uniqlo beat
rivals Adidas and Nike to sign him to a 5 year deal as the prime Uniqlo Global
Brand Ambassador. In late 2012 they announced the launch of “Clothes for Smiles”,
a program developed in collaboration with
Djokovic which will establish a US
$10 million fund and use it to bring smiles to kids all over the world,
nurturing their dreams and giving them the tools to build a better and brighter
future. The fund will be established from the USA winter sales of two of their
product innovations - HEATTECH
and Ultra Light Down.
So what is Heattech and
Ultra Light Down? Does hiring Store Managers with NO retail experience work?
Where will Uniqlo be by 2020? Will Novak Djokovic win another Australian open?
The answers to all of these in Part 2
Until then, happy hiring
Garry
