What the success of Uniqlo in China can teach luxury

Uniqlo can teach luxury brands a thing or two. Not only has the Japanese casual wear company weathered the strong headwinds caused by the closure of operations in Russia and the weakening of the Japanese currency, it has also outclassed more established rivals and local players.

The reactive risk management approach adopted by most retailers forced many of them out of business during the pandemic. But in a market that Everlane brought, Selectedand Urban Outfitters on their knees and obliterated a giant like H&M, Uniqlo has continued to win over the young and trendy Generation Z and connect with new consumer segments.

The breakthrough in the Chinese fast fashion market is particularly difficult for global brands. Such clothes continue to be widely available in the domestic market, and direct-to-consumer e-commerce clothes like Shein have become giants by leveraging social media and producing disposable, trendy and affordable clothes. However, Uniqlo appealed to the sensitivities and emotions of consumers and conquered the local market.

Currently, it operates stunningly 869 ports in China and CFollowing the global trend towards store closings, the Japanese retailer has launched an aggressive store expansion plan in the country. Only this month Uniqlo plans to inaugurate 20 new bricks and mortar, covering Yunnan, Sichuan, Anhui, Zhejiang and other provinces. Uniqlo will also inaugurate its first new footprints in Shengzhou, Yueqing and Yongkang in Zhejiang, Huainan in Anhui and Jingmen in Hubei, according to EqualOcean. Two more Shanghai stores will open on June 24.

Why does Uniqlo thrive while other fast fashion brands fail? Here you are what luxury can learn from the Japanese titan and how it works wonders on land.

Vertical integration

Geopolitical conflicts and COVID disrupted access to supply chains and provided an important lesson on the importance of vertical integration. During the outsourcing of raw materials and the transfer of production to workshops and ateliers in emerging markets, several brands have opened up to substantial risks: reputational crisis, delays, cancellations, cost increases and so on. Conversely, a luxury brand like Hermès which is vertically integrated (with in-house tanneries, production sites and own crocodile ranches in Australia) showed little wear and tear from the pandemic.

In the most literal sense, Uniqlo is a vertically integrated organization that has full control of the supply chain processes. This gives Uniqlo a competitive edge over its competitors, as it can reduce unit cost and achieve greater quality control. Elsewhere, all research and development processes and innovations are maintained internally; thus, Uniqlo can register its technical fabrics.

Prioritize technology over retail

Tadashi Yanai, founder and CEO of Fast Retailing, which owns Uniqlo, has said in the past: “Uniqlo is not a fashion company, it is a technology company.” Similar to how Chow Tai Fook is more than a jewelry company, Uniqlo uses advanced technology including Artificial intelligence and blockchain to make the shopping experience perfect.

Instead of producing cheap and trendy clothes like Shein or imitations of famous designers like Zara and H&M, Uniqlo offers technical garments with universal appeal. In the past, the group has developed sustainable, high-performance branded fabrics such as HeatTech, AIRism, 3D Knit, UV Cut and LifeWear.

Uniqlo’s HeatTech uses micron-sized fibers to generate heat from the wearer’s body. Photo: Uniqlo

From time to time, technology is used to monitor production and transform supply chain management. For example, last spring, Uniqlo announced it would bring a automated warehouse network in China. In addition, the company has experimented technology-enabled kiosks and emphasized in-store technology such as UMood: a wearable technology that suggests garments based on the mood of the consumer.

Collaboration and personalization

Uniqlo has embraced celebrity collaborations and brand partnerships without falling into the influencer trap and constantly chasing the latest A-lister. So far he has published successful collaborative collections with Marni, Theory, JW Anderson, Ines de la Fressange Paris and Mame Kurogouch. These design collaborations open Uniqlo to new demographics and markets, while also strengthening the brand profile.

Uniqlo’s first-ever collaboration with Marni incorporates the luxury brand’s distinctive colors and patterns. Photo: Uniqlo

Through collaborations with brand ambassadors and supporters, Uniqlo has promoted the values ​​of the label by engaging its audience in a credible and reliable way. That tennis sensation Roger Federer and triple Olympic medalist snowboarder and Olympic skateboarder Ayumu Hirano vouch for Uniqlo is a testament to its market value and success.

In addition to commissioning smart ties, Uniqlo creates memorable and engaging shopping experiences for fans: dal The! customization program, to leverage data to engage customers across touchpoints and deliver personalized in-store experiences. Ultimately, the chatbot it offers personalized advice and the Google-based voice assistant linked to “Uniqlo IQ” are features that help Uniqlo understand their customer base and design hyper-personalized marketing campaigns.

Stay away from political controversies

Ultimately, he is walking a smart tightrope. While H&M and Nike faced backlash over their comments on Xinjiang cotton, Uniqlo avoided controversy by staying out of politics. Despite pressure from the United States, the Japanese company has refused to take a stand or demonstrate its loyalty to the West. “Uniqlo’s sales continued to grow following the cotton incident, leaping 17% in 2021 and making sure it is the largest fast fashion brand in China,” Bloomberg says.

Tadashi Yanai reinforced the ethics of independence and authenticity by stating an interview with Nikkei, “The US approach is to force companies to show their loyalty. I wanted to show that I will not play that game. “The position is refreshing. Luxury brands must learn to become proactive companies, the ones that manage crises Before they happen rather than after the damage has been done.