Introduction
Uniqlo Company Limited is a Japanese firm that deals with designing, manufacturing, and retailing casual wear fashion products. The firm was founded in 1949 at Ube in Yaamaguchi Prefecture. The firm operates a fully consolidated subsidiary of Fast Retailing Company Limited and its headquarters are located at Tokyo, Japan.
Fast Retailing Company Limited adopted different strategies in its pursuit for competitive advantage. For example, in 1997, the firm adopted the private-label strategy, which was one of the major strategies used by The Gap – a major American retailer. Fast Retailing Company established its first Uniqlo store in Tokyo in 1998 and later spread to other cities.
In 2001, Uniqlo integrated internationalisation as one of its strategic actions. Consequently, the firm separated from the parent company, viz. Fast Retailing Company Limited. This move led to the establishment of outlets in different parts of the world. In 2002, Uniqlo established its first outlet in London. Currently, the firm operates 10 stores in different parts of the UK. Nine of the firm’s stores are situated in Greater London.
However, Uniqlo experienced a number of challenges after entering the UK retail industry, which led to a significant decline in the volume of sales. The UK fashion industry has undergone remarkable growth over the past two decades. Thompson (2012, par.1) asserts that the ‘industry is the most internationalised and fiercely competitive retail sectors, while structural changes have changed the way fashion retailers do business’.
This paper focuses on Uniqlo’s competitive position in the UK clothing retail industry. Findings of the study will give the firm’s management team insight on the best practices that it can adopt in order to gain sufficient competitive advantage. The paper focuses on internal and external business environments, with specific reference to the Uniqlo Company in the UK. Moreover, the paper evaluates the various strategies that Uniqlo should consider in order to improve its competitive advantage.
Market analysis
Businesses are subject to changes emanating from the environment of operations, which is comprised of external and internal environments (Baker 2012). Consequently, it is imperative for firm’s managers to gain ample understanding of the business environment. Conducting a macro-environmental analysis is one of the ways through which firms can gain an understanding of the external business environment.
Baker (2012, p. 23) argues that macro-environmental analysis ‘seeks to provide information about events and relationships in a company’s future environment’. Such information would assist the firm’s management team in charting the organisation’s future course of action, hence enhancing attainment of the desired competitive advantage.
In a bid to understand the macro environment, it is imperative for marketing managers to adopt effective business models such as the PESTLE model. The model aids in understanding the political, economic, social, and legal factors affecting a business. Aniqlo’s operations are not shielded from macro-environmental changes.
PESTLE model
The illustration below shows an analysis of the fashion business environment in the UK using the PESTLE model.
Political environment
The performance of businesses in the retail sector is subject to the prevailing political trends and structure in different ways. Some of these ways relate to political stability and policies on land-use planning systems. The UK is one of the politically stable countries in Europe.
Its stability has arisen from the adoption of a monarchical system of government. Consequently, the country is characterised by a relatively low degree of political risk, which has made the UK an attractive investment destination to a large number of foreign investors. On the other hand, the UK has implemented effective land-planning system, hence providing retailers with an opportunity to locate their businesses strategically.
Economic environment
Uniqlo’s management team should be conscious of the fact that the firm’s operations will be subject to economic changes. The global fashion industry has undergone remarkable transition over the past two decades and the UK clothing industry has not been excluded. Some of the major changes relate to economic uncertainty. The 2008 global economic recession coupled with the 2010 Euro Zone sovereign debt crisis has made consumers sceptical about the future (Nichols 2010).
Consequently, consumers have reduced their consumption on luxury and fashion products remarkably. Moreover, the consumers’ marginal propensity to save has increased remarkably compared to marginal propensity to spend. The commitment of the UK government to enhance the country’s economic recovery is likely to improve the consumer’s purchasing power and this trend is likely to lead to improvement in Uniqlos’ sales volume in the UK.
Social environment
Firms are also subject to changes emanating from the sociological environment. Some of these changes relate to changes in tastes and preferences. The changes in consumers’ tastes and preferences are motivated by lifestyle considerations, which are fuelled by change in the consumers’ beliefs and attitudes. Fombrun (2008, p.15) asserts that the ‘modern consumers are a mass of contradictions, many of which are inexplicable on any rational basis’.
Currently, branded products are more marketable as compared to non-branded products. The fashion industry in the UK has experienced a remarkable change with regard to the consumers’ tastes and preferences. The customers’ requirements relate to both the service provided and the product purchased.
One of the most evident trends in the UK fashion industry relates to the increment in demand for variety and high quality clothes. Consequently, it is essential for firms in the industry to consider adjusting their operations in order to meet the customers’ needs and expectations.
It is imperative for retailers to understand the prevailing demographic structures and trends. For example, the UK children have become a key element in the determination of their spending in the ‘tweenies’. Therefore, it is imperative for the fashion retailers to forecast possible demographic trends and their influence on the consumers’ behaviour (Fombrun 2008).
Technological environment
Technology has had a significant impact on the UK fashion industry. First, the emergence of information communication technologies has empowered consumers with regard to fashion trends. Consequently, consumers are increasingly demanding firms in the industry to design and develop fashion products in accordance with the prevailing market trends.
Technology has empowered fashion retailers by providing them with an opportunity to share data on fashion, hence enhancing their ability to make optimal business decisions. Technological changes in the UK with regard to information communication technology have changed how businesses undertake their marketing practices such as marketing communication. Moreover, the development of the broadband technology has revolutionalised how retailers communicate to their customers (Thompson 2012).
Firms are increasingly adopting emerging social networks such as Tout, Flickr, You Tube, Google +, and Facebook in their marketing communication. Similary, consumers have embraced technology in the consumption processes. Therefore, adopting the above technologies will improve the effectiveness and efficiency with which Uniqlo communicates with its prevailing and potential customers.
Technology has also provided fashion retailers with an opportunity to be effective and efficient in their manufacturing process. For example, improvement in computer-aided technology has enhanced the effectiveness and efficiency with which fashion firms design and produce their fashion products. Integrating these technologies will improve Uniqlo’s competitive edge and hence its position in the UK fashion market.
Legal environment
The UK government has instituted effective legal structures in an effort to stimulate the country’s economic growth through entrepreneurship. For example, the government has established a number of special economic zones in an effort to stimulate economic growth across the country.
Investors in the set economic zones are offered tax holidays. Moreover, the UK government has instituted comprehensive intellectual property laws in an effort to protect innovation. Consequently, investors cannot lose their invention to counterfeit products. The government also implemented laws that aim at curbing unfair business competition. Thus, both local and foreign investors are protected.
Industry analysis
Porter’s five forces
Prior to formulating the business-level strategy, it is essential for firms’ management teams to develop a comprehensive understanding on the forces that influences the industry’s level of profitability. The Porter’s five forces model is one of the tools that businesses can exploit. The model is comprised of five main components, which include the threat of rivalry, buyers bargaining power, supplier bargaining power, threat of new entrant, and threat of substitute.
Threat of entry: moderate
The UK fashion industry is characterised by a moderate threat of entry, which arises from the view that the industry has been dominated by global and local stores. Some of the major players include departmental stores such as Lewis, Selfridges, and John Lewis. The threat of entry is further minimised by the existence of supermarkets and individual stores such as Gap, Next, and Tesco, which have diversified their product offering by selling fashion clothes. Gap ranks as the leading casual apparel retailers in the UK (Companies and Markets 2013).
Moreover, the presence of variety stores such as M&S and BHS has diminished the threat of entry. The intense competition in the industry has led to a significant decline in switching cost. Consumers can easily shift to competing firms in their consumption process. New entrants face a major challenge in their quest to attain an optimal market position in an industry that is dominated by major competitors. The large fashion retailers in the industry have developed remarkable economies of scale, thus making it difficult for new entrants to succeed.
Threat of substitute; high
The UK clothing and textile industry has experienced a substantial increment in the volume of fashion products over the past decades. One of the major challenges relates to the existence of a large number of local and foreign retailers. The retailers produce and market different apparels. The intense competition presents a major challenge to fashion retailers as consumers can easily switch to competitors at a low cost.
For example, if the competitors are offering high quality and stylish clothes, the likelihood of customers switching to the products being offered is high. The threat of substitute is further complicated by the existence of counterfeit clothes in the UK clothing industry. Melik (2012) asserts that counterfeit clothes are increasingly being produced and sold in the UK market in an effort to raise cash for charity. This aspect presents a major threat in Uniqlo’s quest for an optimal market position in the UK.
Supplier power; low
According to Kohli and Thakor (2007), high supplier power refers to the ability of suppliers to influence product prices upwards through raw materials, labour, and other services that they provide to a particular firm. The UK clothing industry is characterised by a relatively low bargaining power due to numerous suppliers of the necessary raw materials. Consequently, the suppliers cannot influence the market price.
Buyer power; high
The industry is characterised by a high buyer bargaining power due to the intense competition. Consumers have a wide range of options to select from in the course of making their purchase decision with regard to apparels. This aspect has provided consumers with an opportunity to influence the market price of apparels downwards. The high buyer bargaining power has led to the creation of price wars amongst casual wear retailers in the UK in an effort to develop customer loyalty (Yee & Sidek 2008).
Rivalry-high
The UK fashion industry can be described as mature as evidenced by the intense competition emanating from local and global players and the large number of substitutes. In a bid to survive in such an industry, it is imperative for Uniqlo to ensure that it integrates effective operational strategies.
SWOT analysis
A number of industry trends and opportunities can be identified from the above analysis. First, the industry is experiencing unpredictable fashion trends emanating from the high rate of product innovation and development. The volume of counterfeit products has increased remarkably, which is a major threat to the survival of Uniqlo. Furthermore, the intensity of competition in the industry has increased significantly over the past decades. Below is a summary of the Uniqlos’ strengths, weaknesses, opportunities, and threats.
Businesses have experienced a significant increment in the degree of complexity emanating from different sources over the past decade. Some of the major sources of complexity relate to the high rate of development with regard to information technology, global economic changes, and change in consumer behaviour amongst others.
Despite these aspects, firms must survive in order to attain their long-term goals and objectives. According to Birkin (2012), developing and sustaining competitive advantage is a critical element in the long-term survival of firms. Business managers are increasingly being concerned on how their firms can attain the desired level of competitiveness.
Furthermore, most business managers are of the opinion that developing sustainable competitive advantage will play a critical role in their firms’ pursuit for above-average performance. In order to attain the desired level of competitiveness, it is imperative for business managers to integrate effective competitive strategies. Some of the strategies that Uniqlo can exploit in order to develop the desired competitive advantage are evaluated herein.
Developing competitive advantage
Brand equity
One of the most important aspects that Uniqlo should focus in its quest to attain competitive advantage is brand management. Kayaman and Arasli (2007) argue that branding is one of the most essential elements in the success of firms in different economic sectors.
Erdem et al. (2006, p.34) define brand as ‘a name, term, sign, symbol, design or combination of them which is intended to identify the goods and services of one seller or a group of sellers and to differentiate them from those of competitors’. Another study conducted by Michael Porter shows that branding becomes a source of competitive advantage if it enables an organisation to exploit operational excellence, product leadership, and develop customer intimacy.
Branding enhances the effectiveness with which an organisation develops a strong relationship with its customers (Rubini 2010). The intensity of competition in the UK clothing and apparel industry has led to the introduction of products of comparable quality. Consequently, it is essential for the industry players to consider the most effective strategy that it can integrate in order to build value for its products (Fombrun 2008).
Branding is comprised of a number of activities, which culminate in the development of a high brand identity. Branding serves a number of functions to consumers. One of these benefits relates to identification. Through branding, consumers are in a position to identify with a particular product due to its high quality, which culminates in development of a high level of customer loyalty (Healey 2008).
In a bid to leverage on brand management as a source of competitive advantage, it is imperative for Uniqlo to focus on how to develop brand equity. Rubini (2010, p.3) defines brand equity to include ‘the differential effect of brand knowledge on customer response’. The firm should take into account a number of aspects in the course of managing brand equity, which include brand vision, identity, awareness, image, loyalty, and premium.
Developing a clear brand vision
In an effort to attain competitive advantage by developing brand equity, it is imperative for the Uniqlo’s management team to consider a number of issues. First, the management team should develop a clear brand vision. The brand vision outlines what an organisation stands for and intends to deliver to the target audience consistently. In a bid to achieve this goal, the firm’s management team should integrate a number of leadership values.
One of the leadership values that Uniqlo should consider entails designing and developing innovative apparels in order to meet and exceed the customers’ expectations.
Moreover, the brand vision should be clear and consistent. The firm’s management team should focus on delivering the brand promise, which is essential in businesses’ efforts to develop a high level of trust amongst customers. With regard to consistency, the firm should ensure that the value that its products create to its customers is improved consistently in order to align with the market trends.
Enhancing brand identity
Hitt, Ireland, and Hoskisson (2009, p.6) define brand identity as ‘all elements by which the brand communicates with the world around it’. Brand identity is comprised of three main elements, which include the logo, brand name, and the slogan. The brand name acts as the foundation for a particular product or service identity.
Consequently, it constitutes the various elements of brand identity. Developing an effective and unique brand name is fundamental in an organisations’ effort to develop sustainable competitive advantage. Sahaf (2008, p.281) argues that the ‘brand name contributes to the success or failure of a product’. The brand name should be distinctive, short, easy to pronounce, timely, and simple. Furthermore, the brand name should be easily adopted by different advertising mediums (Sahaf 2008).
Adopting such a brand name enhances the effectiveness with which businesses differentiate their products. Hansen and Christensen (2003) argue that an organisation can change its corporate name successfully. On the contrary, changing the brand name poses a major risk to organisations’ equity.
Subsequently, an organisation’s brand name can be regarded as a long-term commitment. Currently, Uniqlo has adopted an effective brand name, viz. ‘Uniqlo’ in marketing its products. The brand name is derived from the term ‘unique’, which communicates the distinctiveness of the firm’s casual wear products (Williamson 2007).
Logo
A logo refers to a graphical mark that is used to distinguish a particular company and its products. Logos are considered as organisations’ intangible assets and they have become an essential element in organisations’ efforts to develop and sustain a high identity.
Foxall, Goldsmith, and Brown (2006, p.97) contend that logos ‘enhance the effectiveness and efficiency with which an organisation products and services penetrate the market especially in situations where consumers make purchase decisions at the point of sale, where the brand logo can be displayed prominently on the packaging or point-of-sale displays’. Logos enable consumers to be familiar and exposed to an organisation’s products and services.
Consumers comprehend graphic information more effectively and holistically as compared to textual logos. This aspect attracts consumers to a brand, hence influencing their purchase decision. Therefore, logos play a critical role in organisations effort to differentiate their brand.
Currently, Uniqlo produces plain casual wear, which has affected its ability to market its casual wear products to the UK consumers (Long 2009). In a bid to develop a strong customer base in the UK, it is imperative for the firm’s management team to consider improving its casual wear products by designing and integrating an effective logo. The logo should be incorporated in Uniqlo’s casual wear. The firm should also consider undertaking a continuous improvement on the logo, but it should only be modernised if necessary.
Slogan
The slogan is an essential element in an organisations’ branding effort as it increases the rate of consumer retention and desire to purchase in a particular store. Therefore, one can describe a slogan as an advertising statement, which aims at communicating what the brand entails. Barnes (2007) asserts that the slogan adopted should be clear and concise. The slogan should appeal the targeted consumer group and address the consumers’ needs.
Currently, Uniqlo has adopted the phrase ‘Made for Everyone’ as its slogan. This slogan communicates the market acceptability of the firm’s products amongst consumers from diverse demographic characteristics. Spies-Butcher, Paton, and Cahill (2012) are of the opinion that embedding the slogan and logo on the product aids in establishing a high brand identity amongst the consumers. Therefore, it is imperative for the firm’s management team to consider this move.
Building a strong brand awareness
Uniqlo should focus on creating a sufficient level of brand knowledge in the market. This aspect will increase the degree with which consumers identify its products. In a bid t achieve this goal, the firm should take into account two main elements, which include brand recognition and recall.
Brand recognition refers to the ability of consumers to confirm prior knowledge or exposure to a particular product or service if given the brand as a cue. This assertion means that the consumer is in a position to discriminate the brand. Brand recall on the other hand refers to the ability of the consumer to remember the brand if provided with a wide range of brands to select from (Pride, Hughes & Kapoor 2008).
Kuang, Yeh, and Yang (2009) contend that brand awareness is a fundamental component in consumers’ decision-making process. In their decision-making process, consumers think about the brand. Subsequently, increasing Uniqlo’s brand awareness will enable the firm to increase its market dominance.
In a bid to attain a high level of brand awareness, it is imperative for the firm’s management team to ensure that its products are of high quality, as consumers tend to prefer familiar and well-established brands. Kuang, Yeh, and Yang (2009, p.4) further argue that brand ‘awareness affects consumer decision making b influencing the formation and strength of brand associations in the brad image’.
Shimp (2013) is of the opinion that the core objective of advertising is to create brand awareness. Advertising aids in creating brand exposure. Therefore, it is imperative for Uniqlo’s management team to adopt an effective market advertising strategy in order to create the desired level of brand awareness.
The firm should consider leveraging on digital marketing. Green (2013, par.1) argues that it ‘is no secret that in this day and age, online presence equals brand awareness’. However, the effectiveness with which an organisation presents its brand online determines its success. Green (2013) further argues that it is essential for organisations to ensure that their brands are highly recognisable, authentic, and relatable, as this aspect will aid in differentiating the firm form competing products.
Uniqlo should strive to improve its online brand presence, which will enable the firm to attract a large number of consumers who are increasingly becoming technological shrewd. Uniqlo should consider a number of issues in order to leverage on its online brand presence successfully as illustrated below.
Consistent branding
The firm should consider adopting a consistent branding strategy in all the online platforms that it integrates in its brand awareness effort. This assertion means that Uniqlo should not adopt a different branding strategy on one marketing communication platform and a different one on another. Being consistent in its branding will enable the firm to reinforce its brand.
Optimising the company website
Uniqlo has developed an effective official website through which customers can access product information and purchase goods online. However, it is important for the firm’s management team to consider the most effective strategies that it can adopt in order to enhance the volume of traffic in the website.
Uniqlo should consider leveraging on the growth of search engines. Currently, consumers are increasingly using the Internet to search for product and service information. It is estimated that approximately 93% of consumers use the Internet to search for product information, while 83% use the Internet to evaluate alternatives.
This aspect illustrates the significance of the Internet in the consumers’ decision-making process (Reynolds & Olson 2001). Gao (2005) asserts that information search is a critical step in the consumers’ decision-making process. This knowledge presents a perfect opportunity in Uniqlo’s effort to enhance the level of brand awareness.
Uniqlo’s management team should consider registering with major search engines such as Google, Yahoo, Ask, and MSN in order to increase the volume of traffic to its website. However, the firm should evaluate the effectiveness of the search engine in order to determine its feasibility. Through this strategy, Uniqlo will be in a position to communicate its brand to a large number of potential customers (Riesenbeck & Perry 2008).
Social-media
Uniqlo should consider developing competitive advantage by integrating social media marketing. In the 21st century, social media has become an important component in businesses’ efforts to improve brand visibility, brand recognition, and brand loyalty.
Moreover, businesses are increasingly using social media by to grow their sales, as an organisation is in a position to reach a large number of consumers (Rubini 2010). The firms’ management team should consider creating awareness regarding its casual wear products on different social media platforms such as Facebook, Flickr, Twitter, You Tube, Metcafe, Vimeo, and Tout amongst other.
In 2010, Uniqlo adopted a social media marketing campaign through its Twitter account dabbed ‘the lucky counter campaign’ (Whitehead 2010). Consumers who commented positively regarding the firm’s product on Twitter were awarded a price discount. Moreover, it is important for the firm’s management team to consider creating blogs and wikis in order to interact with customers.
Green (2013, par.9) contends that blogging ‘is one of the most effective ways to improve the visibility of a brand online’. Moreover, blogging contributes towards the establishment of a strong relationship with different stakeholders such as customers and influencers.
Social media will improve the effectiveness and efficiency with which the firm interacts with its customers. One of the major concerns in its social media marketing effort should be how to gather sufficient market intelligence.
For example, the firm should use social the information [the customers’ opinion and comments] gathered on social media such as Facebook to develop and improve its products. Zarrella (2010) argues that such a move is critical in improving an organisation’s ability to develop products that align with the prevailing market trends.
Improving brand image
Uniqlo should focus on developing a strong brand image. One of the ways through which this goal is achievable is by ensuring that its casual wear products are characterised by appealing attributes. This aspect will culminate in the development of a strong perception regarding the consumers’ products and services.
In the course of developing a strong brand image, Uniqlo should focus on product-related attributes. Hoyer and Maclnnis (2008) define product attributes as the various ingredients that are used in the process of producing a particular product. Uniqlo should ensure that its casual wear products are designed effectively. The firm should seek the services of qualified and innovative designers. Fashion and innovation are inseparable due to the timeliness and newness of fashion products (Ind 2007).
In the course of designing its casual wear clothes, it is important for Uniqlo to understand the benefits that the consumers intend to derive by purchasing a particular product. These benefits are categorised into experiential, functional, and symbolic benefits. Functional benefits refer to the effectiveness with which a product satisfies the consumers’ motivation.
Experiential benefits refer to the consumers’ feeling after consuming a certain product or service, while symbolic benefits refer to the extent to which a product contributes towards the improvement of the consumers’ self-esteem and social status (Pride & Ferrell 2011).
Considering the high rate of technological advancement with regard to how clothes are designed and marketed, it is imperative for Uniqlo’s management to consider leveraging on modern technology. This move will contribute towards development of innovative and high quality products clothes (Mozota 2003).
Conclusion
Businesses operate in an environment that is characterised by a high rate of dynamism and change. Consequently, it is imperative for the firms’ management teams to understand the prevailing market conditions in order to develop and sustain a high level of competitive advantage. This paper has shown that the UK clothing market has become very competitive over the past decades due to the transformations within the macro environment.
For example, the attractiveness of the industry has led to the establishment of a large number of local and international companies such as Next, Gap, and Tesco. The market is characterised by a large number of departmental stores and supermarkets, which deal with different casual wear products. Moreover, changes in consumer behaviour with regard to apparel products have presented a major challenge to industry players.
The large number of industry players has made it difficult for new entrants to enter. However, the existing firms should strive to gain from the high market potential, which is only achievable if the firms develop and sustain a high level of competitive advantage. Numerous authors have asserted that competitive advantage acts as a defence mechanism in an organisations effort to attain long-term survival.
Despite the high degree of industry rivalry, Uniqlo can achieve long-term survival by enhancing its competitive advantage. However, this aspect will depend on how effective it implements its competitive strategies. Uniqlo should consider integrating effective brand management strategies. One of the elements that the firm should focus relates to improving its brand equity, which will entail a number of elements such as developing a clear brand vision and brand leadership.
Uniqlo should also focus on improving its brand identity by investing in the development of slogan, brand name, and a slogan. One of the major sources of weaknesses in Uniqlo’s effort to market its product in the UK is that it offers plain casual wear products. In a bid to improve its performance, Uniqlo should consider branding its casual wear clothes by embedding a logo and a slogan on the apparels manufactured.
It is also essential for the firm to consider developing strong brand awareness by integrating effective marketing communication strategies. The firm should consider leveraging on digital marketing by adopting emerging marketing communication technologies such as social media. Social media marketing will enable the firm to communicate to a large number of customers.
Through social media, Uniqlo will be in a position to interact with potential customers, hence enhancing the level of customer relationship. Furthermore, the firm should consider entering into a contract with major search engines. The contract will enhance the number of customers visiting the firm’s official website, hence improving the likelihood of increasing its sales.
Uniqlo should also focus on improving its brand image and to achieve this goal, the firm’s management team should ensure that its products are designed and manufactured effectively. High quality and safe materials should be used in manufacturing the casual wear clothes. Moreover, the firm should hire qualified, creative, and innovative designers to aid in the process of designing the casual wear clothes. Integrating the above strategies will significantly enhance the firm’s competitive advantage and hence its market position.
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