1. Introduction
Being world’s 10th largest clothing brand, with net worth of $9.64 billion (2022), Uniqlo presents an interesting case study. This article presents the detailed strategic analysis of Uniqlo by discussing its key strengths, weaknesses, opportunities and threats.
2. Uniqlo company overview
| Year founded | 1974 |
| Parent company | Fast retailing |
| Uniqlo headquarters | Yamaguchi, Japan |
| Uniqlo CEO | Tadashi Yanai |
| Uniqlo employees (total- 2022) | 30,000 plus |
| Total Uniqlo outlets | 2,312 |
| Uniqlo number of countries | 25 countries |
| Uniqlo products | Fast fashion clothing & accessories for women, men & kids |
| Uniqlo sector | Lifestyle and retail |
| Uniqlo similar companies | H&M, Outfitters, Nike, Adidas, Zara, GAP and MUJI |
| Uniqlo revenue (2022) | ¥1.1187 trillion (+20.3% increase yearly) |
| Uniqlo profit (2022) | ¥158.3 billion (+42.4% increase yearly) |
| Uniqlo market cap (2022) | $9.6 billion |
3. Uniqlo SWOT analysis
3.1. Uniqlo strengths
3.1.1. High product quality
Many customers on Quora and other similar platforms repeatedly ask- Is Uniqlo good quality? And almost every answer is- ‘pretty much!’
Uniqlo is a win for quality and style. Based on customers’ ratings, Uniqlo earns 30th rank in world’s top 100 high quality fashion brands. Although, some of the Uniqlo products are a little more expensive than H&M, but its quality ranking (30th in top 100 brands) is higher than H&M (215 in top 1000 brands).
3.1.2. Wide variety
Uniqlo offers wide product variety, ranging from women, men and children’s clothing and accessories. Particularly, Uniqlo business casualwear has gained high popularity among customers. Uniqlo’s business casual collection is giving tough competition to H&M.
3.1.3. Competitive positioning
Uniqlo competitors find it tough to compete with Uniqlo due to high product quality and distinct brand image. Uniqlo competitor analysis shows that Uniqlo produces more variety of colors and sizes than its competitors, as depicted in following graph:
Source: VIRAC
3.1.4. Affordable product category
Although, Uniqlo is considered a bit more expensive than competitors, but following table shows that overall, Uniqlo offers more affordable items than H&M and Zara:
Source: VIRAC
3.1.5. Top performer in parent company portfolio
Uniqlo is the most valuable brand that makes highest contribution to its parent company revenue. Following graph shows the Fast’s (parent company) worldwide performance by business segments:
Source: Statista
3.1.6. Strong presence in home market
Uniqlo holds strong presence in home market, and is highly popular among local customers. Following graphs provide a snapshot of Uniqlo’s positioning in its home market:
Source: Uniqlo Clothing Japan
3.1.7. Global dominance
Forbes considered Uniqlo to be ready to dominate the global fashion industry. In 2020, Uniqlo made 83% of its parent company revenue in comparison to Zara that made only 70% of parent company revenue.
3.1.8. Effective marketing strategies
As per Washington Post, H&M is unable to compete Uniqlo despite offering extensive discounts. Customers prefer Uniqlo due to higher quality and better website. Uniqlo marketing strategy includes a creative blend of digital marketing, celebrity endorsements, and traditional advertising channels.
A recent example of its innovative digital marketing strategy is- ‘Fast Moving Image Campaign’, which grabbed the fashion customers’ attention all over the world.
3.1.9. Omni-channel retailing
Wall Street Journal considered Uniqlo to be better positioned than H&M and Zara due to effective Omni-channel retailing. The company is giving tough competition to its western rivals by offering seamless experience through online and brick-and-mortar retailing.
3.2. Uniqlo weaknesses
3.2.1. Inventory issues
In 2021,Uniqlo’s sales reduced due to insufficient inventory of thermal clothing. Even in cold weather, Uniqlo was unable to achieve its sales target due to inventory shortage.
3.2.2. High employee turnover
Uniqlo has long suffered the high employee turnover, which is now compelling the brand to rebuild its social infrastructure. Comparably ranks Uniqlo in bottom 45% of similar companies based on their ability to retain the staff.
3.2.3. Failure in USA
Despite the huge success in Asian market, Uniqlo is unable to increase its market share in USA, and is generating a very mediocre sales revenue from this region. As per Bloomberg, Uniqlo is struggling to make profits in North America after suffering years of losses.
3.2.4. Low brand awareness and recall
Uniqlo has low brand awareness, particularly in sub-urban areas, which limits its ability to strengthen presence in USA and western countries.
3.2.5. Limited variety for hot weather
Uniqlo offers limited variety that suits hot weather. The rising temperate all over the world caused 5% decline in Uniqlo’s operating profit in 2020.
3.2.6. Higher costs
Uniqlo’s cost of production is continuously rising due to inflation and soaring fuel prices. It is compelling Uniqlo to raise the price of its summer collection. Like, Uniqlo has planned to increase price of stretch jacket from ¥5,990 to ¥6,990 in 2023.
3.2.7. Unhealthy work climate
Uniqlo employees consider work environment to be highly toxic and stressful with no work life balance. It hurts the Uniqlo’s brand image as an employer.
3.2.8. Uniqlo controversy
Uniqlo has recently been surrounded with various controversies. In 2021, Uniqlo was criticized for profiting from exploiting Uyghurs, and airing controversial advertisement in which it mocked Japan’s wartime victims.
3.3. Uniqlo opportunities
3.3.1. Global expansion
The global apparel market is expected to grow from $1.53 trillion (2022) to $2 trillion (2027), as depicted in following graph:
Source: Statista
Uniqlo may expand its business operations by opening more outlets in the Asian and North American region. Uniqlo’s parent company is already planning to open 300 more outlets in all over the world, with specific focus on North America.
3.3.2. Rising demand for Heat-Tech wear
There is growing demand for the tech wear. Due to extreme weather conditions, the preferences for the tech innerwear are continuously rising over past ten years. Uniqlo can take it as an opportunity to launch more heat-tech and cold-tech wear.
3.3.3. Fashion rental
Online fashion rental market is growing with 10.6% CAGR rate from 2021 to 2026. As customers are becoming more price sensitive, Uniqlo may introduce ‘rent the fashion’ model to convert this threat into an opportunity.
3.3.4. Sports events
Considering the rising use of sports events as brand promotion tools, Uniqlo may sponsor more sports events, as it will increase the brand awareness and recall in western countries.
3.3.5. Online influencers
The online influencer market size will grow from $148 million (2019) to $337 million (2027), as depicted in following graph:
Source: Statista
Uniqlo may hire more online influencers, particularly from North American region to fuel the growth.
3.3.6. Reselling options
As fast fashion customers are placing high importance to sustainability, fast fashion brands like Uniqlo can use the tech to make fast fashion more sustainable. One way to do this could be to create online re-selling options.
3.4. Uniqlo threats
3.4.1. Weather conditions
The extreme weather conditions in Japan affect the fashion brands’ seasonal sales. Like in 2022, the cold weather reduced the Uniqlo’s spring season sales by 14%.
3.4.2. Self-checkouts and shoplifting
As per CNN, the self-checkouts added by fashion brands like Uniqlo and H&M are not only annoying customers, but the threat of shoplifters has also increased.
3.4.3. Intensifying competition
Although, the demand for the fashion and clothing apparel is growing, but the industry is getting intensively competitive. Uniqlo directly competes with H&M, Zara and Macy, and this growing competition can limit the Uniqlo’s growth potential.
3.4.4. Decreasing loyalty
Around 2 in 5 customers say they are not loyal to any fashion apparel brand. The declining customer loyalty can increase the switching risk for Uniqlo.
3.4.5. Environmental consciousness
A report by McKinsey revealed that around 67 percent of the fashion customers now consider sustainability as an important factor while making the purchase. This growing concern towards environment, along with stringent environmental regulations are affecting the growth prospects of fast fashion brands like Uniqlo.
3.4.6. Economic uncertainty
The Russia-Ukraine war and pandemic- both have pushed the global economy towards recession. The economic recession can reduce the consumers’ purchasing power, and negatively affect fashion industry.
4. Summary- Uniqlo SWOT Analysis
| Strengths: High quality and wide variety Strong competitive positioning Strong presence in home market Innovative marketing strategies Global dominance Omni channel retailing | Weaknesses: Inventory issues Employee turnover and unhealthy climate Failure in USA due to low awareness Limited summer variety High costs controversies |
| Opportunities: Global expansion Heat-tech Fashion rental and reselling options Sports events Online influencers | Threats: Weather conditions Shoplifting Decreasing loyalty Environmental consciousness Economic uncertainty |
5. Recommendations
• Resolve inventory issues by keeping thermal stock in sufficient quantity
• Increase presence in the Asian countries, and pay more attention to North American region
• Invest more on influencer marketing and other innovative marketing tactics to increase brand awareness and recall
•Increase hot weather product variety
• Address controversies surrounding Uniqlo by investing on public relations and stakeholder communication
• Integrate sustainability into fast fashion model by including online fashion rental and re-selling options
• Improve self-checkout technology to enhance customer experience and reduce shoplifting threat
• Focus marketing efforts on building customer loyalty
6. Conclusion
Uniqlo SWOT analysis suggests that Uniqlo is one of the most successful clothing brand. The limited presence in USA, inventory issues, limited summer variety, internal HR issues, and controversies are some major challenges that Uniqlo needs to address to maintain its competitive positioning in global fashion market.
7. References
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How Uniqlo is killing it with their Digital Marketing Campaign. (n.d.).
Dvorak, P. (2020, October 6). Uniqlo Takes On H&M and Zara With Focus on Asian Stores. WSJ.
Matsuyama, K. (2022, April 14). Uniqlo Owner Gets Serious About Conquering North American Market. Bloomberg.com.
Halliday, S. (n.d.). Fast Retailing suffers on Asia woes, Uniqlo sales hurt by warm weather. FashionNetwork.com.
Imada, K. (2022, December 13). There’s a big price hike for Uniqlo’s spring/summer wear next year. Time Out Tokyo.
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