Retailing and Flagship Store

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//It is a very fine read. I am impressed with the amount of information you have compiled in a short period of time. It is written / edited well. The case questions are fairly broad and strategic in nature and I am not sure how the data provided in the case help the reader address the questions.

Overall, it is an excellent report. Grade: Excellent (4 / 4)

MKT 652

Japanese Marketing Systems AND PRACTICES

Instructor: Masaaki Kotabe

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Students: Yafit Segal, Jon Brewster, Ngo Truong Da
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On a beautiful morning in April, 2011, Tadashi Yanai, the founder and CEO of Fast Retailing Co., the holding company of UNIQLO, is walking to his office. The “sakura blossoms” are in bloom, but Mr. Yanai doesn’t pay attention to the lovely flowers. He is too concerned about the meeting that is to start in 5 hours, with all of UNIQLO’s board members, regarding UNIQLO’s next strategic move. Mr. Yanai remembers his promise in 2009 to the board that UNIQLO would reach a goal of 5 trillion yen ( $60 billion ) in sales by 2020 (Fujimura & Firn). He knows that in order to achieve this goal, the company needs to expand, primarily in growing economies where UNIQLO can sell in high volume. Getting closer to his office, Mr. Yanai contemplates that UNIQLO is already well established in the Japanese market, with little room for expansion. Currently, outside Japan, UNIQLO operates 149 stores in China, Britain, France, Singapore, Russia, Taiwan, Malaysia, and South Korea, plus a lone U.S. outlet (Ozasa). Mr. Yanai has just been informed that UNIQLO will grow by opening more foreign stores, especially across China and fast-growing Southeast Asia (Sanchanta). India’s population is projected to overtake China in 2050, and its economy is growing faster than China’s (BBC). This meeting will determine whether UNIQLO should enter the Indian market, and if so – what is the best strategy be to assure economic success? UNIQLO has three different options – to establish small retail stores in India (like its stores in Japan and China), establish flagship stores (like its stores in London and NYC), or propose an “outlet” format (like its store in Malaysia). Mr. Yanai knows that the board members are counting on his decision. Still, he debates within himself as to the best strategy. What should he decide? //A very intriguing intro//

UNIQLO Background
The first incarnation of UNIQLO was a regular, local clothier called “Men’s Shop Ogori Shoji” in Ube City (Yamaguchi Prefecture). This shop expanded and by 1963, was a very successful chain of stores owned by “Ogori Shoji Co., Ltd.,” with 6 million yen in capital. The store that the company opened in Hiroshima in 1984 bore the name “Unique Clothing Warehouse,” and this is where the moniker “UNIQLO” came from. In 1985, the first UNIQLO “roadside store” was opened, and this “format” is soon adopted as the standard by the industry (Fast Retailing) .

In 1997, UNIQLO borrowed a strategy from its competitor “The Gap” called “Specialty-Store/Retailer of Private-Label Apparel” – or “SPA” for short. This strategy entailed UNIQLO to manufacture and sell its own, proprietary clothing. Outsourcing of this manufacturing took place in China, where labor came at a very low price – UNIQLO passed on these savings to their customers, which was very advantageous because Japan was, at that time, in a very bad recession and thus cheap, well-made clothing was in high demand (Nagagata). Even today, 90% of UNIQLO clothing is made in China (The Economist ). 1998 saw UNIQLO’s first “urban” store open in trendy Harajuku, and UNIQLO stock was first listed on the Tokyo Stock Exchange in 1999 (Fast Retailing). The company continued its meteoric rise in the Japanese fashion world and increased their store number to 500 by 2001, their success emboldening...
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