Boyden Executive Search

Japan’s Fast Retailing aspires to make its preeminent brand, UNIQLO, the world’s largest clothing retailer using an Asian-centric growth strategy.

Fast Retailing is currently the world’s third-largest clothing retailer behind Inditex of Spain, which owns Zara, and H&M of Sweden. Both are known for following ever-fickle fashion trends. But under the leadership of founder and CEO Tadashi Yanai, UNIQLO takes a different approach, specialising in perennial basics. Yanai has also set UNIQLO on an atypical path to growth. Rather than go after his Western competitors’ main markets, Europe and America, he intends to keep expanding in Asia.

Yanai’s vision for taking UNIQLO to the top of the retail industry is to make it the first Asian “SPA”, a speciality store selling private-label apparel. “Asia is the engine of growth today,” he says, in reference to region’s rising middle class. UNIQLO plans to open its first shop in India this year, and is considering expanding into Vietnam and other East Asian countries. It already has a presence in Indonesia, Singapore and Thailand.

Fast Retailing has performed well over the past few years; its shares have been rising since 2015. Analysts attribute this success in large part to the company’s international expansion and improved logistics. UNIQLO earns most of the company’s operating profit, which was ¥236.2 billion ($2.15 billion) in the year to August 2018. Last year UNIQLO’s international revenue overtook its sales in Japan, where a shrinking population is forcing it to close stores.

UNIQLO is particularly successful in China, where more than half of its overseas stores are located. China brought in around 70% of its total international revenues last year. Retail industry analysts credit the firm’s strategy of appointing Japanese-educated Chinese executives, who understand both the culture of the Japanese business and that of China, The Economist notes.

UNIQLO’s good-quality basics and specialty fabrics are its differentiators, and its popular Heattech range for cold weather is a main driver of sales – but it is unlikely to catch on in Asia’s tropical countries. In the U.S., UNIQLO has struggled outside big cities. Fashion-retail analyst Takahiro Saito says this is partly because the same business model already exists there, with stores such as Gap. The Japanese retailer has a similar problem in Europe, but partnerships with ambassadors like tennis star Roger Federer and collaborations with designers are showing promise.

Yanai is confident that he can guide UNIQLO through the necessary adjustments, climactic, cultural and otherwise. As he sees it, the biggest risk to UNIQLO’s Asian plans is anti-globalisation sentiment. This could make it harder to move products and people across borders and disrupt supply chains, but UNIQLO has shown a degree of adaptability to foreign challenges that is unique.

This website uses cookies to ensure you get the best experience on our website.  Learn more