Friday, February 12, 2010

Uniqlo's Expansion Strategy

Fast Retailing Company of Japan, which owns the very successful global retailer Uniqlo, indicates in today's Wall Street Journal that they will be on the hunt for acquisitions in Europe and the United States. The company has tried to gain a foothold with its Uniqlo brand in these western markets, but it has struggled at times. I visited the company's flagship store in New York City (in SoHo) with a group of my students. The store is terrific and apparently quite successful. However, the company closed several suburban locations that it attempted to open in the Northeast.

One thing that I found fascinating about Uniqlo was the T-shirt design competition that they conduct each year. People submit thousands of entries each year, and Uniqlo produces and sells the top submissions. In New York, the store features an amazing wall of t-shirts with innovative designs. This competition represents yet another wonderful example of how to truly engage your customers, while also reaching outside the firm to tap into innovative ideas.

As for the acquisition strategy, Fast Retailing will have to be cautious about following in the Gap's path. The Gap operates multiple chains (Banana Republic, Old Navy), and it has struggled to maintain true distinctiveness among these brands at times. The lines have become blurred, and that has hurt the core brand in particular. Of course, the Gap operates these chains in the same geographic market. Fast Retailing appears to be focusing on acquisitions in areas where Uniqlo is not strong, so perhaps they have less of this overlap concern.


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Vernia Soriano said...

Having a design competition for the next line of shirts is a good strategy for Uniqlo. You see, when the customers design the shirts, there’s a great possibility that most of the shirts will be sold. This is their way of asking their customers about what they love, which, in turn, also helps Uniqlo garner top sales. Well, Uniqlo is truly expanding, and being successful these days could only mean that their strategy is working.

-Vernia Soriano-