This case study reviews a Japanese-founded company UNIQLO, which launched the All-Product Recycling strategic initiative over 15 years ago, which embraces reusing and recycling. Customers may drop used clothing off in local stores, which then distribute it to people in need or recycle it (RE.UNIQLO, n.d.). The scope and commitment to this initiative are especially remarkable given that UNIQLO operates in the fast fashion industry.
Industry Analysis
The success of an ordinary retail firm may vary significantly depending on the local market. While emerging markets may provide ample expansion opportunities, developed countries, like the North American region, may offer excellent growth prospects (Anwar, 2017). UNIQLO’s brand has gained widespread popularity across Asia-Pacific and Australia but has limited success in Europe and North America (Anwar, 2017). Thus, market entry opportunities for UNIQLO are more restricted in the global north compared to an average company but are promising in the south.
In terms of rivalry and substitution, the company faces intense competition from varying brands. Within the global apparel retail industry, several most prevalent competitors are H&M, Zara, Gap, and Benetton (Anwar, 2017). An average apparel retailer relies heavily on unique features and fast trends. UNIQLO, likewise, establishes its style of simple and practical clothing paired with a broad palette of pastel colors (Elizaga, n.d.). However, as new trends are becoming more complex and change faster, UNIQLO may struggle as competitors may replace it with brighter or more fashionable apparel.
Another question that concerns the fast-fashion firms is that of suppliers. Many firms increasingly rely on manufacturing operations in Asia, and UNIQLO is not an exception (Anwar, 2017). With most of its suppliers being in Asia, it is arguably less vulnerable to shortages than some companies with headquarters in other global regions. Nonetheless, when it comes to the firm’s internal structure, there may be a critical weakness. The lack of flexibility and speed required for adjustment in the swiftly changing fast fashion market may prevent many firms from succeeding. UNIQLO’s Japan-based, centralized senior management may be more susceptible to this issue (Elizaga, n.d.). Hence, if the company continues to react to changes in the global market unhurriedly, it may be more prone to profit losses.
Furthermore, the complementary services and products the fashion retail industry delivers vary. An average firm may often sell shoes and clothing in curated combinations, such as complete wardrobes or ‘looks.’ UNIQLO may be less affected by this factor since much of its clothing is ‘capsule wardrobe’ style. Lastly, global clothing consumption has ramped up in recent years (Xiaopei Wu & Li, 2020). This phenomenon occurs due to fast fashion, online sales increasing accessibility, and a growing proportion of middle-class buyers in the emerging markets (Xiaopei Wu & Li, 2020). Hence, an average firm that relies on online sales provides ultrafast collection changes, and targets developing economies is heavily regulated by buyers’ power. UNIQLO is affected relatively the same as other industry members in this aspect.
Structural Issues
First, UNIQLO’s strategic initiative toward sustainable apparel consumption may alter the substitution dynamic. Much of its signature style hinges on quality, practicality, and innovative aesthetic. Hence, it is likely that integrating opportunities for customers to recycle their used clothing could increase brand loyalty. For instance, customers in Japan may get additional rewards for new purchases if they donate old clothing (RE.UNIQLO, n.d.). Incorporating this initiative would allow the company to stand out and lower substitution risks.
However, it is vital to acknowledge that many brands in the fashion industry could be moving toward recycling initiatives in the future. For instance, there is a well-acknowledged clash between the fast fashion industry and sustainability (Xiaopei Wu & Li, 2020). Hence, as UNIQLO caters to audiences that appreciate high quality and recycling potential, it may lose buyers looking for more diverse and cheap options. Thus, the initiative may hinder the firm’s future development in emerging economies.
Willingness to Pay
As mentioned above, there may be several distinct customer segments formed by UNIQLO’s initiative. One category, located in emerging economies, is oriented toward cheaper and faster production and is less willing to pay for higher quality materials. The other category, mostly in developed countries, consists of customers who value sustainability enough to pay more for recyclable items. Thus, the strategic initiative in question may have opposite effects on two distinct customer segments. The most significant impact potentially will occur in the emerging market since that is where most of UNIQLO’s sales occur.
Cost Effects
Regarding the cost effects of UNIQLO’s sustainability initiatives, the costs of implementing the initiative may likely be high. As the company continues to emphasize strict quality control and sustainable solutions, its costs will rise (Anwar, 2017). However, one of UNIQLO’s primary principles is global affordability, which would push it to limit the rise (Elizaga, n.d.). For instance, the company could utilize clothing-to-material recycling programs to limit purchasing of raw textiles.
Competitive Advantage
The first aspect highlighted in the analysis is the unstable situation in local markets. The selected sustainability-oriented strategic initiative may aid UNIQLO in enhancing its appeal to Western markets since their interest in recycling has grown significantly in those areas. Moreover, the advantage of UNIQLO’s strategy hinges on the potential for diminishing popularity of fast fashion. Marketing the company as a ‘slower’ brand committed to the future may help attract new audiences. Essentially, the consumers would be making interdependent choices between sustainability and convenience, which often come as direct opposites in fast fashion. However, if UNIQLO committed to developing its All-Product Recycling initiative globally, it may find a way to combine both and gain ultimate advantage for two very different markets.
References
Anwar, S. T. (2017). Zara vs. Uniqlo: Leadership strategies in the competitive textile and apparel industry. Global Business and Organizational Excellence, 36(5), 26–35. Web.
Elizaga, L. U. (2017). The contrast of fast fashion giants: Zara, H&M, and UNIQLO. National Dong Hwa University.
RE.UNIQLO: A new life for UNIQLO clothing. (n.d.). UNIQLO sustainability: The power of clothing. Web.
Xiaopei Wu, J., & Li, L. (2020). Sustainability initiatives in the fashion industry. In R. Beltramo, A. Romani, & P. Cantore (Eds.), Fashion industry—an itinerary between feelings and technology. IntechOpen. Web.