Case Study: Uniqlo: A Supply Chain Going Global by Benjamin Yen
The University of Hong Kong Asia Case Research Centre, Case HK1085
This case study will serve as the basis for this group discussion. In less than 20 years, Uniqlo has become the leading fast-fashion retailer in Japan and a strong player in other Asian countries like China, Korea and Taiwan. The case concerns their global expansion to Europe and North America, and the supply chain implications of this expansion.
Before creating your initial post, consider the case content in light of the course coverage so far – such as supply chain design, sourcing, supplier relations, forecasting, various aspects of inventory management, and supply chain risk factors. Focus on why Uniqlo’s growth rate Uniqlo in the U.S. and Europe has been slow, and make arguments for decisions that may help them overcome current challenges. You should provide justification for your arguments by detailing your experiences or those that have been recently published (e.g., peer reviewed articles, magazine stories, or newspaper accounts).
You are required to create one post (using 250-350 words) and respond to the post of one other student (using 100-200 words).
As mentioned in the case study Uniqlo is one of the largest fashion retailers in the world, with multiple locations worldwide. Even though Uniqlo has unique management that helps the company have a competitive advantage with an agile supply chain, the brand expansion through US and Europe has been slow. (Yen, 2015)
One of the reasons that Uniqlo’s growth has been slow in the US and Europe, is that in the US there is high opening cost for shops and this prevents the company from determining profit. The cost to open a fiscal store in the US and Europe are much higher that in Japan or China, this affects the overall profit generation. The company failed to study its market before arriving in the US or Europe, since sizing is very different in Japan and this affects the purchase of its products. It is hard for Asian brands to establish in the US and Europe and try to differentiate and stand out from the competition, because of the different customer needs and preferences.(Li,2017) (Yen, 2016)
Uniqlo is a specific brand with minimalist style, with simple and high quality designs, while minimalism is popular in Japan, it is not in US. People tend to buy from fast fashion brands that are not minimalistic at all. Another reason the company’s expansion is slowing down is because of recent data that points out the overall world economy and highlighting Chinese economy is contracting, any slowdown in China will affect in a negative way the company. (Haung, 2019)
How can Uniqlo overcome this slowdown in expansion? The company needs to do extensive research in the US and Europe local market, where they can identify specific preferences and needs to tackle the consumption moment and prepare to compete against brands like Zara and H&M. Uniqlo has to research location cost and identify where the best strategic locations and stop spending money opening in places that are highly uncertain they will not generate profit. Managers have to create, analyze and deliver extensive supply chain risk assessments and identify how to reduce costs and increase overall revenue to continue with expansion. (Li,2017)