Uniqlo's Market Entry Strategy in India: BUS710 Report

This report provides an in-depth analysis of Uniqlo's potential market entry into India, examining the suitability of the Indian business environment for the fashion retailer. The report begins with an executive summary and company background, outlining Uniqlo's resources and strengths and weaknesses. It then delves into an external environmental analysis, assessing the political, economic, socio-cultural, technological, legal, and environmental factors impacting Uniqlo's prospects in India. The report identifies the target market as upper-middle-class consumers of both genders and analyzes the competitive landscape. Finally, the report concludes with strategic recommendations for Uniqlo's successful market entry into India, including the need for market research, product line stretching, and competitive pricing strategies. The report highlights the potential of the Indian market for Uniqlo, while acknowledging the competitive challenges and the need for a well-defined marketing plan. This report provides a detailed overview of the key elements of Uniqlo's marketing plan for entering the Indian market.

Running head: MARKETING IN AN INTERNATIONAL ENVIRONMENT
BUS710
Marketing in an International Environment
Student’s name:
Name of the university:
Author’s note:

1MARKETING IN AN INTERNATIONAL ENVIRONMENT
Executive Summary
This report focuses on Uniqlo’s entering in Indian fashion market. Uniqlo is one of the top
fashion retailers in the world. In the first part of the report, the background of Uniqlo is given
along with resources. In the following part, the external environmental analysis is given. Indian
political and economic situations provide the positive signs of entering the Indian market. India
has a large customer base and fashion trends are different as per the customer wise. Indian legal
system is not rigid enough and India allows 100% FDI in the fashion industry. Uniqlo can target
the upper-middle-class people in both genders as the target market. Competition in Indian
fashion retailing is high and the customers’ bargaining power is also high in India. Uniqlo needs
to do market research and their product line stretching strategy along with competitive pricing
will work in India.

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Table of Contents
1. Introduction..................................................................................................................................3
2. Company Background.................................................................................................................3
Outlining Uniqlo..........................................................................................................................3
Outlining organisational resources..............................................................................................3
Strengths and Weaknesses of Uniqlo:.........................................................................................4
3. Market selection...........................................................................................................................4
External environmental analysis..................................................................................................4
Market segments..........................................................................................................................7
Target Market..............................................................................................................................8
Competitors’ analysis..................................................................................................................8
4. Conclusion.................................................................................................................................10
5. Recommendations......................................................................................................................11
Reference List................................................................................................................................12

3MARKETING IN AN INTERNATIONAL ENVIRONMENT
1. Introduction
The purpose of the report is to analyse the international marketing based on macro and
microenvironment of Uniqlo in a totally new international marketplace. This report is going to
highlight the suitability of business environment of India for Uniqlo brand, famous fashion Retail
Company. The scope of the report is to explain the market of India for Uniqlo brand and further
recommendation is given for the brand. However, this report provides further opportunity to
create a marketing plan for Uniqlo entering the Indian market.
2. Company Background
Outlining Uniqlo
Uniqlo is a wholly owned subsidiary of the parent company Fast Retailing. Uniqlo is in
the fashion retail industry and this company was founded in the year 1949. Uniqlo has it
headquarter in Midtown Tower, Tokyo, Japan. Uniqlo is a Japanese casual wear manufacturer,
designer and retailer. Fast Retailing took the strategy of a retailer of private-label apparel which
means Uniqlo sells the own clothing products and sell the products exclusively. Uniqlo has
almost more than 830 stores in Japan and sales figure touched among the top five retailers across
the globe. Uniqlo recently has 3290 stores worldwide (16 countries at present) (Uniqlo.com
2018).
Outlining organisational resources
Financial resources: In the year 2017, revenue of Uniqlo was $16,862,141 thousand and
only Uniqlo Japan made the revenue of 810 billion Yen (Uniqlo.com 2018). Operating profit of

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Uniqlo Global was 340 billion Yen in the year 2017. Consolidated revenue increased by 4.2%
from 2016 in the year 2017.
Human resources: Uniqlo had approximately 65,000 employees in the year 2017
(Uniqlo.com 2018). Most of the employees are from foreign countries in which countries Uniqlo
has its stores.
Technological resources: Uniqlo mainly focuses on transforming the production process
through using technologies so that the brand can make six collections a year which keep up with
the unpredictable trend. Uniqlo is offering same-day delivery for Tokyo based customers in e-
commerce and Uniqlo is also using sophisticated AI algorithm to connect the customers' needs
with distributors and factories (Usui et al. 2017).
Strengths and Weaknesses of Uniqlo:
Visionary leader Tadashi Yanai took the business concept from international brands and
Uniqlo's branding allows the company to sell the clothing products in overseas market. Uniqlo
focuses on the innovations including the heat tech fabric, air in clothing and technological
development (Turker and Altuntas 2014). Supplies and value chain of Uniqlo is strong which
help the organisation with streamlining the inventory. On the other side, Uniqlo faces the issue of
selling the weather-sensitive apparel and the organisation has the inability to penetrate the
foreign market successfully.
3. Market selection
External environmental analysis
Political

5MARKETING IN AN INTERNATIONAL ENVIRONMENT
India has a three-tiered democratic system. In India, ruling party decided to provide
special emphasis on ‘Make in India’ product and the government provides extra tax rebate on
India made products. India provides average stability in political condition; however, corruption
spreads almost every nook and corner of this country. India is a developing country and The
World Bank provides a rating of -1.16 points average in political stability which is weak. Make
In India initiative can provide benefit to Uniqlo if they think of manufacturing the clothing and
apparel in India.
Economic
The World Bank is projecting that India will see the GDP growth of 7.3% during this
ongoing fiscal deficiency, due to the demonetisation in 2016. Current GDP of India is $2.84
trillion and GDP rank is 6th. GDP per capita income is $2,134 and inflation rate is 4.28%
(Vaishnav 2017). The GDP per capita income in India is low which shows the lower disposable
income of the people. However, the Human Development Index is increasing with a rating of
0.62. India is ranked 100 in ease-of-doing business and during the year 2016-17, India had the
FDI inflow of $60 billion (Ganesan and Gajendranayagam 2017). Large FDI and growth of GDP
in Indian economy can provide an advantage to Uniqlo, whereas, poor disposable income can be
a hindrance for the business to have a large customer base. Fashion retail industry has witnessed
an increase in investment in last five years and in the fashion industry FDI reached the figure
$2.83 billion in the last ten years (En.portal.santandertrade.com 2018).
Foreign Direct
Invest
2015 2016 2017
FDI stock (million 282,600 318,400 377,600

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USD)
FDI inwards 7.2 7.0 n/a
FDI stock (% of GDP) 13.5 14.1 n/a
Table 1: FDI in figure (India)
(Source: En.portal.santandertrade.com 2018)
Socio-cultural
India provides an unparallel pool of educated, skilled workers and hard-working
employees. India is the second largest populated country in the world. India can provide one of
the largest markets of fashion retail products for the company. India is the best known for the
traditional clothing; however, in an urban area, people wear westernised dresses. Indian culture
comprises the values, customs and attributes along with habits, language and beliefs which are
different from Japan. Indian culture is depended on family-oriented ad social structure is not
rigid. Hofstede cultural dimension talks about the cross-cultural communication and it explains
the society’s culture (Mazanec et al. 2015). Hofstede model describes individualism as the
degree of independence a society has among the members and Japan scores 46, where India
score 48; almost the same. Uncertainty avoidance is about people’s culture is threatened by
unknown situations where India scores 40 and Japan scores 92. Steady fashion sense and the
huge population will be beneficial for Uniqlo to have the large market in India.
Technological
India is developed in scientific and technological factors and the skilled labours provide
help in developing the technological sphere in the fashion industry. Indian technology in fashion
retail is considered as a global powerhouse and India is advanced in AI using for designing in

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fashion. Indian fashion industry has already been using VR technology and the mobile sales
through AI-powered message bots (Goswami 2015). Technological advancement will beneficial
for Uniqlo to use in the manufacturing of the products and in the supply chain. In India, almost
500 million people use the internet using mobiles and desktops. Therefore, the fashion retailers
can reach the customers using the social media and internet platforms. 3D printing is new in
India and the fashion clothing manufacturers focus on 3D printing to attract the customers.
Legal
Indian government provides 100% FDI in the fashion retail for the single brand retail
trading entity. Foreign companies have to pay taxes of 42% if they earn more than 10 million
Indian currencies. Numbers of paying taxes per year in India is 25.0 and total share if taxes (% of
profit) in India is 60.5% (Das 2016). Different components of GST are applied in the sales and
taxes. FDI policy framework is operated by India’s central bank which is Reserve Bank of India.
Income Tax Act 1961 is followed while paying the tax and GST has been implemented in India
reducing and eliminating the complexity in taxes.
Environmental
Clothing manufacturing company can pollute water and they can use toxic chemicals
which can increase the level of textile in waste. The fashion manufacturing companies can also
use prints, colours and fabrics which are associated with the toxic chemicals. Environment
Protection Act controls Indian environment under the corporate houses. Around 7% of the
carbon emission results from the apparel and textile industry in India (Kumar and Sethi 2016).

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Market segments
Geographic segmentation is based on location and region of the area. In the fashion retail
industry, the geographic target market is the areas near to the stores of the fashion company.
Mostly, urban geographic areas are targeted by the marketers.
Demographic segmentation is based on the age, gender and socio-economic group of the
customers (Alt and Iversen 2017). In the fashion retail industry, the age of the customers is a
priority as the fashion brand can target the young generation who have good fashion sense. If the
fashion brand has the products for both genders, then, it can target both genders as potential
customers.
Behavioural segmentation of the fashion industry is the rate of usage, benefits sought,
readiness to purchase and loyalty status. The customers of fashion companies want ‘value for
money' products and the companies can target the customers who purchase fashion clothes on a
regular basis.
Psychographic segmentation is making the segregation based on lifestyle, personality,
class and attitude. Fashion retailers can target the customers based on the preferences of the
fashion clothing. The personality of the person defines the fashion sense and fashion companies
segment the market based on people's fashion sense and trend.
Target Market
The primary target market of Uniqlo will be both the genders, Male and Female who
belong to the upper middle and higher income group. The fashion market is price-conscious as
well as highly sensitive to the upcoming fashion trends. The upper middle class can afford the

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fashion clothing offered by Uniqlo. Higher income group know about recent fashion trend and
they are conscious about fashion sense.
Competitors’ analysis
Among the overall retail industries in India, fashion retail makes up the market size of
19% and Indian fashion industry values approximately USD 40 billion (Nagendra and Basu
2017). Bargaining power of the customers is high in India as this factor depends on the demand
in the market. Demand in fashion clothing in India is high as huge population and the choices of
the customers vary in the Indian market. India is one of the largest producers of the cotton and
India has a large area for cultivation. Therefore, the manufacturing of the fashion clothing has
more options to switch their suppliers. Fabric cost is 30% and 13% is the garment cost in the
fashion clothing industry (Khaire and Hall 2017). The threat of new entrant is always high in the
fashion clothing industry in India as the small players flooding in the domestic market along with
international companies with brands.
Competitive rivalry in Indian fashion retail industry is high and geographic location is a
disadvantage for the logistics as the companies cannot open stores in all locations. Japan has a
close vicinity to India and low cost of shipment will provide an advantage for Uniqlo. Uniqlo
will face rivalry from Raymond, Reliance Retail, Aditya Birla Fashion retail, Future Retail and
Tata Group.
Fashion Retailers Strengths USP
Reliance Retail  Among the topmost retail
 Own more than 550 stores in
India
 New fashion followers
 Own AJIO
 Has mobile application

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 Reliance Trends has a large
market share
 Has stores in large cities
Future Retail  Have its stores in 239 cities
across the globe
 330 million valued
customers
 Fashion Big Bazar (FBB)
 Has stores in Hyper City
Malls
 Largest retail
Raymond  Established in 1925
 Has more than 1100 stores in
India
 Park Avenue brand
 Has its stores in more than
55 countries
 Popular among rural and
urban areas
 Famous among men’s
clothing
Aditya Birla
Fashion Retail
Annual revenue is $278.4M
Employee 5300
Pantaloons is one of the famous
brands
 Established 1997
 Large customer base
 Present in almost all large
cities in India
Table 2: Fashion retailers in India
(Source: Self-developed)
4. Conclusion
Despite the presence of large fashion retailers in India, Indian customers always take a
chance with the new fashion trend. Uniqlo can set a new fashion trend in India with their

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exclusive fashion. India is a large market and entering the Indian market means having a large
customer base. Supply chain and technologies can help Uniqlo to flourish in the Indian market.
5. Recommendations
Uniqlo should take the strategy of foreign direct investment (FDI) in India as Uniqlo
already has a large market value in the international market. FDI will provide a competitive
advantage to Uniqlo as it will reduce the politics and cronyism.
Uniqlo should take the strategy of product line stretching as it is the product line
expansion where the company launches the same product line by adding additional features.
Product line stretching will help Uniqlo to reach large numbers of the customers for both males
and females.
Uniqlo should take a competitive pricing strategy as there are many other fashion
retailers in India. Competitive pricing will enable Uniqlo to fight against the competitors who
already have a large market share in India.
Promotional strategy of Uniqlo needs to be based on social media platform and online
platforms (PCC and SEO). Uniqlo can start the loyalty programme where the customers can have
the discount pricing if they have the membership cards. Uniqlo can start television advertising
using the famous celebrity as brand ambassador.