UNIQLO Supply Network Design

This report analyzes UNIQLO's supply chain strategy and network operations in Asia Pacific countries and suggests approaches to boost its international business growth.

Running head: UNIQLO 1
UNIQLO Supply Network Design
Student
Institution

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Introduction
In a period of 20 years, UNIQLO’s growth was unstoppable and grew to become the 4th
largest retail and consumer goods Company in the world. In Japan, UNIQLO remains as the
biggest and fast-growing retailer; and a strong retail and consumer goods player in the Asian
Pacific countries like Taiwan, China, and Korea (Yen & Lentini, 2016). UNIQLO has since 1998
realized double-digit growth in sales rates; and this is the result of the company’s aggressive
pricing policy integrated with top quality products and services; a combination that has proved
difficult for the Asian based customers to ignore and resist. UNIQLO’s success can be
associated with the use of an agile supply chain strategy bolstered by the “fast-fashion”
technique used by H&H and pioneered by INDITEX, the two biggest fashion retailers globally.
Also, the success of UNIQLO resulted from its reliance on the counter-current approach and its
inability to fully rely on the fashion trends when designing, manufacturing, and marketing its
clothes (Usui, Kotabe, & Murray, 2017). This report will analyze whether the strategies used by
UNIQLO in Asia Pacific countries could fit well is adopted worldwide. Also, the report will
analyze whether the low growth rate experience by UNIQLO in the US and Europe was caused
by its current network operations. Last, the report will provide suggestions on the approaches
that UNIQLO should adopt to boost its international business growth.
UNIQLO network operations had proved effective in the Asia Pacific region, but could the same
model be scaled worldwide?
UNIQLO’s success in Asia Pacific countries such as Korea, China, and Taiwan is
attributed to many strategies. First, UNIQLO used the aggressive pricing strategy combined with
a strategy of producing and selling high quality clothes; exactly what the Asian market
demanded/ wanted. Second, UNIQLO adopted the agile supply chain model/ strategy that made
its products to take a “fast-fashion” tune in the Asia region (Satoshi, 2017). Third, the model of
UNIQLO demanded that its suppliers offer competitive prices, and it also gave the suppliers a
constant technical support in the creation, development, and perfection of their clothes
production techniques; also, UNIQLO supported the suppliers with high flow of orders. After
some years of its operations, UNIQLO begun to partner with other companies such as Toray, a
worldwide company that manufacturer’s synthetic and composite fiber, whereby it excelled in

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the selling of natural materials (Anwar, 2017). Last but not least, UNIQLO used the “Just-in-
Time” model.
With these network models and operations proving effective in the Asian Pacific region,
an analysis of UNIQLO’s market case study is important to determine whether the same model
can be effective if scaled worldwide (Avex, 2017). Based on the case study, UNIQLO’s network
operations would prove effective if scaled globally. One of the main reasons behind this position
is UNIQLO’s position as the world’s only “LIFEWEAR” brand, SPA model implementation in
other countries was based on agile supply chain strategy, that suppliers were arranged in a
network-like structure, and that the business environment in Asia countries was the same like
most of other global markets (Anwar, 2017). In this case, UNIQLO focused on providing
fashionable, high-quality, affordable/ cost-effective, and comfortable clothing products not only
to the Asian countries but also to the world market. In the use of agile supply chain in its SPA
model, UNIQLO created tight partnerships with other global players even operating in the other
sectors.
Also, UNIQLO network operations model used in the Asian Pacific region would prove
effective if scaled worldwide because UNIQLO only limited its operations to this region, and
never focused on expanding internationally. In the case, the Asian customers were becoming
bored with UNIQLO’s trendy fashion apparel while the other regions were demanding the same
products (Chow & Li, 2018). The aggressive market expansion model would greatly help
UNIQLO expand globally and exploit more markets hence more profitability. In terms of
population, UNIQLO focused on Chinese regions with over 5 million people, while other world
cities would still have more population than the company’s target in the Asian regions. In
addition, the JIT inventory system would be highly cost effective for UNIQLO if applied in other
worldwide markets because it was risk free and one of the most convenient models for UNIQLO
in Asia Pacific Countries (Reboux, 2017). The other reason is that UNIQLO could launch private
labels in these other markets and still thrive with trading partners.
Was the low growth rate UNIQLO experienced in the US, and particularly Europe, also due to
the limitations of its current network operations?

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In the attempts to expand the company’s retail operations in the U.S., and particularly
Europe, UNIQLO did various network mistakes and thus failed to dominate the U.S. market. The
main reason behind this failure as per the case is the difficulties that Asian brands find in thriving
or meeting the tastes and preferences of the western countries customers (Wang & Li, 2018). The
network operation of minimalism, which UNIQLO recognized as the most simple made its
operations become overshadowed by other fast-fashion brands like H&M and ZARA in the
United States (Chow & Li, 2018). The other limitation is that UNIQLO was not ready to
transform the size of its clothes in the North American market, and especially Europe. According
to (Avex, 2017), the U.S. and especially Europe has a larger body structure in comparison to the
Asian region; thus this made it difficult for over-weighted American people to fit a fit apparel in
UNIQLO.
Other than the design of the clothes, there are still other reasons limiting UNIQLO’s
growth in the U.S. and Europe (Reboux, 2017). For example, the case states that United States
had only 44 stores whereby most of the stores are located in the big cities. In addition, issues of
extreme weather and global warming significantly affected UNIQLO’s growth in the U.S
market. Nevertheless, the biggest problem is brand awareness (Sandar & Lee, 2015).
Unlike UNIQLO, other companies such as H&M and INDITEX launched a different
market expansion technique, the “fast-fashion” business model that parted with seasonal
collections developed by “star” designers early in advance of sales dates, and the sub-contractors
manufactured them months prior to reaching low-cost destinations and stores, and traditional
fashion warehouses that maximized marginal-unit cost reductions while at the same time creating
more “time-to-market (Reboux, 2017)’. Retailers like UNIQLO did not follow this model, and
confined themselves to the regional network operations; a strategy that made the company find it
difficult to thrive in Europe as it ended up accumulating unsold inventories in the stores each
season.
What would you suggest to UNIQLO in terms of improving its network capabilities to support
business international growth?
UNIQLO’s international growth can be greatly boosted through global brand awareness.
In my personal view, there is less brand awareness of UNIQLO’s retail products/ clothes even in

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the NY City where the retailer runs nine stores (Usui, Kotabe, & Murray, 2017). With poor brand
awareness, UNIQLO will still find it troublesome to thrive or grow internationally especially in
the European markets. In solving this problem, UNIQLO should go beyond the existing OOH
commercial and invest more/ focus more on social media in order to attract young customers,
audience, or target market (Avex, 2017). Social media marketing using YouTube channels,
Facebook, Twitter, and Instagram would greatly help UNIQLO attract younger audience who
value new fashions and clothes designs.
The other approach that I would suggest for UNIQLO to implement in order to improve
its network capabilities to support international business is to use the internationally accepted
business cultures other than concentrating on minimalism (Satoshi, 2017). With this approach,
UNIQLO will be able to out-perform ZARA in the U.S. market and other European markets. In
marketing its brand in the international markets, UNIQLO should familiarize with the
international business cultures with which more customers will be attracted. Also, the delivery
system used in the international markets should be flexible and cost effective to the company’s
network model (Usui, Kotabe, & Murray, 2017).
In addition, UNIQLO should become an innovative retailer and consumable company
strongly focused to create a strong economic growth which is diverse and reliable to all
population ages (Usui, Kotabe, & Murray, 2017). The western region where European countries
are situated has favorable market conditions that suit UNIQLO’s business network capabilities.
With this in mind, UNIQLO should implement the “fast growing” model in these regions and
ensure that marketing is done extensively with promotions, gift cards, and discounts to these
regions. Last, UNIQLO should change the clothes size for the American market. Changing the
clothes design would make this brand known to European countries hence increased market
presence (Yen & Lentini, 2016).
Conclusion
In conclusion, UNIQLO is among the fastest growing retailers in the world. The
performance of UNIQLO in Japan and Asia Pacific regions has been incredible over the past 20
years; and this success is associated with its cultural blend, aggressive pricing policy, high
quality products, and business partnerships just to mention a few. Sustaining market growth and

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expansion in Asia for the past two decades has not been an easy task; strong market strategies
have been employed with a lot of creativity and market research. However, the performance of
UNIQLO in the U.S., and in Europe particularly has not succeeded due to problems associated
with clothes design/ size, minimalism culture, poor brand awareness, and competition from other
U.S. fashion brands. Therefore, UNIQLO should invest in social media marketing to increase
brand awareness in Europe and to ensure that its clothes/ brand finds a reputable position in the
American/ European market.

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References
Anwar, S. T. (2017). Zara vs. Uniqlo: Leadership strategies in the competitive textile and apparel
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Avex, L. (2017, May 24). Why UNIQLO failed to dominate US market? Retrieved from
Medium.com: https://medium.com/@avex1994/why-uniqlo-failed-to-dominate-us-
market-e7f3d4d6ecc1
Chow, P. S., & Li, C. K. (2018). Towards Closed-Loop Fashion Supply Chains—Reflections
from Retailer-Facilitated Used Apparel Collection Programs. In Contemporary Case
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Reboux, B. (2017). UNIQLO: A stitch in time. Case studies in Asian management, 87-102.
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transformation/
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