Porter's 5 Forces - Model & Analysis for All Industries

Porter’s 5 Five Forces Analysis of Uniqlo Key Facts Name Uniqlo,A Subsidiary of Fast Retailing Co.,Ltd Industry Clothing Apparel , Retail Founded June, 1949 Headquarters Tokyo,Japan CEOs Tadashi Yanai Revenues US $19.3billion,2022,Forbes Profit US$ 1.9 billion ,2022,Forbes Competitors Zara ,GAP, Adidas , Nike , H & M, Company Overview Headquartered in Tokyo, Japan Uniqlo is operating in 25 countries& regionswith over 2000 stores, having 810 stores only in Japan. Its reported revenues are US$ 19.3 billion with net assets US$ 22.9 billion reaching 499th place in Global 2000 Companies by Forbes,in Year 2022.Its brand value is estimated at US$ 9.6 billion in 2022, an increase from US$ 8.1 billion, which is 18.5% compared to 2018.It also ranked 84th by Forbes in the category of “World’s Most Valuable Brands (2020)”. Porter’s Five Forces Analysis Porter’s Five Forces Analysis is a widely used business model use as reference to strategies business decision reference to its industry for better profits and less exposure to competition, defined by Professor Micheal E. Porter in 1979, at Harvard Business School. Uniqlo Rivalry among Existing Competitors Uniqlo Global Operations Region wise: Uniqlo is operating in 25 countries& regionswith following geographical reporting division as Japan with 810 stores, China with 932 stores , South Korea with 134 stores,South Asia (Southeast Asia & Oceania) with 270 stores, North America with 57 stores and Europe 109 stores. Uniqlo Stores: Uniqlohas 2,312 stores globally in 25 countries,out of 1,502 stores are international which is 65% of it’s total stores.Almost 810 stores are in Japan only,mentioned by Uniqlo in their Annual Report,2021.Uniqlo deals in daily Lifewears with casual style and design combination including Uniqlo Sales & E-Commerce : With the increasing trend of online and webstores sales Uniqlo generated of approximately 18% from it’s online sales of total sales,with a target to reach 30% mentioned by Masanobu Kusaka, Head of Group Digital Commerce Group Executive Officer ,Fast Retailing Co.,Ltd, in FY 2021.The E-Commerce platforms is launched in 21 countries. The geographical division of online sales is China’s online sales is comprised of 20% of total sales in China with a record sales of 530 billion Japanese Yen,10% of South Asia (Southeast Asia, Oceania) with a record sales of 150 billion Japanese Yen ,30% Europe with a sales of 110 billion Japanese Yen and 40% North America with a sales of 80 billion Japanese Yen. Uniqlo Brands: Uniqlo offer different brands including Theory (focus on innovative and stylish), PLST (focus on top quality and comfortable clothing), Princess tam.tam (PTT is a French ladies lingerie brand including loungewear and swimwear) and Comptoir des Cotonniers (CDC French originated. Battle of the Brands: Uniqlo mentioned Zara and GAP as their direct competitors in it’s Annual Report ,Zara is the second most valuable brand globally with a record value of US$ 25.4 billion and generated a record revenue of under 20 billion euros, in FY 2021, which is very close to Uniqlo’s revenue, with over 3000 stores globally. While GAPgave a record sales of U.S.$16.67 billion in FY 2021,which is an increase of U.S.$2.5 billion having 2,835 globally and being an American company quite established in USA,where Uniqlo is facing competition in establishing itself. Uniqlo Threat of New Entrants Global Apparel Industry generated a record revenue of 1.5 trillion US dollars in Year 2021 with the projected revenue of 2 trillion U.S. dollars by 2026.The two largest markets for apparels are United States and China, while China is largest exporting economy while USA is the largest importing economy for apparels .The major players leading the market are Nike, LMVH and OVS. Product Differentiation: The products of Uniqlo are differentiatedas they are comfortable, casual and trendy with an affordable price offer. As mentioned by Osamu Yunoki “Great Advances in Low-priced Fashion, Fun for every one”. Niche Market & Established Brand: Uniqlo attracted a set of customers who are looking fashion with comfort and affordability, managing all these required an extensive efficient supply chain ,successful economies of scale, best fabric, special designs,substantial investment of resources and capital in research and development for understanding customer’s requirements, changing trends and innovation. In a survey conducted in USA 75% of the Uniqlo customers show loyalty to the brand,while 4% of the total customers of fashion stores in USA are Uniqlo customers declared by Statista. Uniqlo Bargaining Power of Suppliers New In-house Fabrics & Technologies: There are various new types of Fabrics invented by Uniqlo including HeatTech (special thermal wear) and AIRism (light weight, quick drying ability) which further decrease the high dependability on suppliers. Also this created a technological edge over suppliers as well. HeatTech first launched in 2003 and till now more than 1 billion pieces of HeatTech are sold off with that can be stretch to 700,000 km. Established Brand: Being an established brand and bulk purchase, suppliers are under influence and keep attracted towards Uniqlo. Uniqlo Bargaining Power of Buyers Excessive Information and Options: In a survey conducted in USA,29% of the people are aware of the Uniqlo brand, while out of 29% people 21% people said they like the brand. As there is excessive information and substitutes are available so buyers possess some bargain power. Specific Niche: As the brand attracted a middle class group of people which are not very brand loyal in general and those incomes are also keep fluctuating so any macro-economic conditions can affect their purchase decision substantially which will impact the sales directly. Uniqlo experienced a 6.2% increase in its sales and 66.7% increase in net operating segment, due to a recover bounce back after COVID-19,in Year 2021.While in Year 2020 Uniqlo experienced a drop in net income to 149 Japanese Yen from 257 million Japanese Yen compared to 2019 due to mainly restrictions in China. Uniqlo Threat of Substitute Products or Services Eco-Friendly Options: As with the changing trend of environmental friendly practices in apparel industry also there are eco-friendly, animal friendly and organic clothing trends are getting popularity which will definitely play a role of substitution and affects the established technological advance products of Uniqlo. Macro-Economic – General Conditions: Any changes in Marco-Economic environment or general global changes in the business trending will also substitute the purchase and consumption patterns. References Uniqlo, History. Available at Forbes, Profile Fast Retailing. Available at Forbes. Forbes, Profile Uniqlo. Available at Forbes Statista, (November 24, 2022) Global apparel market – statistics &facts.Available at Statista, (December 7, 2022) Sales revenue of the Japanese apparel retailer Uniqlo Co.,Ltd. from fiscal year 2012 to 2020 (in billion Japanese yen) Available at Statista. Statista, (October 10, 2022) Brand value of the leading 10 apparel brands worldwide in 2022 (in million U.S. dollars).Available atStatista FAST RETAILING FY 2021(ended August 31, 2021) Integrated Report/Annual Report Statista,(September 28, 2022) Uniqlo’s brand value worldwide from 2016 to 2022 (in million U.S. dollars).Available at Statista Statista,(May 18,2022),UNIQLO’s contribution to group sales of Fast Retailing worldwide in fiscal year 201 (in million U.S. dollars).Available atStatista Statista,(December 7,2022) ,Sales revenue of the Japanese apparel retailer Uniqlo Co.,Ltd from fiscal year 2012 to 2020 (in billion Japanese yen) Available at Statitsa Statista (December 13,2022) Uniqlo brand awareness,usage,popularity,loyalty,and buzz among fashion store customers in the United States in 2022.Available at Statista The Guardian,(October 2022) How much ‘tech’ is actually in Uniqlo’s HeatTech? Available at The Guardian Statista (October 26,2022) Net Sales of the Inditex Group worldwide from 2013 to 2021,by brand (in million euros) .Available atStatista Statista (April 25,2022) Net sales of The Gap, Inc. worldwide from 2007 to 2021 (in million U.S. dollars) .Available atStatista Forbes,ProfileZara,Available at Forbes

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