Page 167 - Accelerating out of the Great Recession

ACCELERATING OUT OF THE GREAT RECESSION

Wal-Mart outperformed its rivals, recording EBIT growth of 7
percent in 2008 compared with the –5 percent average EBIT
growth of its 10 main national competitors.

How Uniqlo Established a Successful
Low-Priced Casual Wear Brand in Japan
Uniqlo, the Japanese casual apparel retailer, changed its business
model in order to thrive in a competitive and uncertain envi-
ronment. The Uniqlo brand, established in 1984, was originally
positioned as a low-cost retailer of casual wear. Uniqlo’s
founder, Tadashi Yanai, believed that the dominance of designer
and character brands would eventually falter and that casual
wear would become more popular, just as it had in the United
States. Inspired by the Gap and Limited chains, Yanai’s aim was
to create a brand with a similar universal appeal.
In the first half of the 1990s, Uniqlo’s business model was
focused on keeping prices low while supplying high-quality
products. This goal was achieved through offshore production in
China and Hong Kong and the adoption of low-cost warehouse-
style store formats in inexpensive suburban areas. Management
principles were borrowed primarily from the fast-food industry
and resulted in substantial standardization.
All Uniqlo stores were laid out identically, and inventories
were controlled though a central database. Store managers were
given very little autonomy and were expected to consult the store
manual on all aspects of day-to-day operations. The result was
indeed a replication of the fast-food industry—an efficient and
reliable supply chain of largely commoditized products.
This model proved to be successful. Store numbers increased
from 29 in 1991 to 300 by 1997, and market share grew from 1
percent in 1991 to 7.3 percent by 1996.

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