Japan’s largest apparel company continues to grow and capture global market share by elevating the in-store experience and driving consumer-focused innovations powered by big data.

Analysis

Amid pressures from the pandemic, the Japanese fashion giant has continued to grow by providing new touchpoints to merge online and offline retail, and by tailoring services to meet the demand for convenience and engaging experiences.

Despite facing some of the most challenging years for retailers since the pandemic, Japan’s biggest fashion retailer Fast Retailing Co., which owns Uniqlo, GU and Helmut Lang under its umbrella, has posted record YoY growth in annual profit, reaching JPY297.3bn (US$2.02bn) in the 12 months to August 2022 (up from JPY249bn a year earlier).

The boost in profits has been largely driven by Uniqlo, its flagship brand, with strong performances in North America and Europe powered by strong cultural collaborations, as well as revamped logistics and new pricing strategies that were introduced during the pandemic.

Uniqlo has focused on making its merchandise appealing to a wide range of customers by designing essential wear with quality materials, such as its LifeWear line. The brand looks to design and produce clothing that stays in fashion longer than trend-led styles, and has recently ventured into repairing and extending the lifespan of its products to further connect with conscious consumers.

In light of new digital shifts and changing consumer priorities, the company is also reimagining store formats and the in-store experience by strengthening local ties, building human connections, and creating new experiences that foster creativity and community.

Adapting omnichannel customer journeys

Fast Retailing is pioneering an innovative blend of online and physical retail that offers a streamlined omnichannel experience, tapping into the growing desire for product immediacy and seamless customer services.

Fast Retailing has been looking to drive digital transformation across the company under its Ariake Project since 2017. This has been accelerated since the pandemic, as consumers who are now used to the convenience of online shopping expect a frictionless experience at every part of the retail journey, even as they return to physical stores.

Uniqlo’s e-commerce platform now works to complement its global network of offline stores, with the company having invested in merging physical and e-commerce operations to ensure customers can conveniently shop any time and anywhere. This helps to build omnichannel customers who are more loyal than single-channel ones. By unifying both its in-store and e-commerce inventories, Uniqlo launched its same-day Click & Collect services in 2022, which allows customers to place their orders by 12pm and have their parcel delivered on the same day. This has helped boost click-and-collect shopping to make up over 40% of online purchases for 2022.

Digital tools are utilised to provide customer service and support across both online and offline channels, ensuring a seamless shopping experience. On Uniqlo’s website and in its app, in-depth and comprehensive online guides have been updated to inform consumers about how to measure clothing and body dimensions to ensure a good fit. Chatbots are also available 24/7 to complement Live Chat (9am–6pm daily), in order to shrink waiting times for customer service queries, and encourage conversions. Alteration services online are also offered for selected items, and a complimentary recycled paper measuring tape is also available to help shoppers with measurements in-store before ordering online.

Building precise supply chains

AI-powered algorithms that leverage key consumer data for more precise planning and manufacturing are now helping Fast Retailing make to sell, rather than to stock.
As consumers shifted online amid the pandemic, AI has become even more important as a tool for brands and businesses to understand their customers and develop stronger relationships, with the global market for AI in retail expected to reach $23.3bn by 2027. This, along with the global supply chain disruptions sparked by geopolitical tensions, has also accelerated the need to retool the traditional manufacturing process into a “consumer-to-manufacturer” model, making it more agile and responsive to consumer needs.
Fast Retailing has tapped Google’s artificial intelligence prowess since 2018 to better spot product trends and predict demand. The company has announced further AI-driven retail and production initiatives to innovate supply chain solutions. The aim is to improve the accuracy of sales planning on a daily basis by fine-tuning demand forecasts with real-time global data, and applying algorithms to those sales plans to then create optimal production and inventory plans. Based on these AI-driven forecasts, the company is also working to strengthen partnerships with factories and stockpiling key raw materials to reduce production lead times.
According to Fast Retailing Group Executive Officer Dai Tanaka in 2021, the company has made progress in planning precise deliveries to individual stores, taking into account each store’s recent sales performance by building automated warehouses in each country and region the company operates in, and managing distribution routes in-house.

Enhancing customer-centricity

Fast Retailing has embraced a customer-centric approach that focuses on engaging with customers and responding to their needs throughout the product development process.
While the concept of brands reaching out to shoppers for idea generation and co-creation is not new, social media along with new digital tools and features are creating new opportunities for brands and retailers to invite and engage their customers in a beneficial conversation.
Fast Retailing launched its sampling programme for the Uniqlo brand through its mobile app in 2020, which encourages consumers to sign up as Uniqlo app members for a chance to receive free product samples and share what they think. At the same time, data-driven feedback from customer participation also allows Fast Retailing to quickly revise, iterate and create new products – something that new flexibility and agility within the supply chain now allows for at scale. The company has set up a product development process that incorporates analysing user ratings and reviews across its e-commerce platforms and social media channels, and has developed new products based on consumer feedback under its Uniqlo Update line since 2021, which is highlighted and launched through its dedicated website.
According to Fast Retailing, the number of products developed and iterated based on customer opinions has increased year on year, and by encouraging customer participation, the company is creating a sense of belonging and deepening loyalty, while also ensuring fast-evolving consumer demands are being met.

Driving circular commerce

Fast Retailing is spearheading an in-house resale and repair service to encourage shoppers to visit physical outlets and further drive its reputation as an eco-conscious company.
While Uniqlo has long offered free alterations on selected bottoms, the brand has launched a global rollout of its RE.UNIQLO repair studio across its global flagships, starting from Berlin in August 2021, as it steps up efforts to turn mending clothes into a viable part of its sustainability plans. Describing it as a “dedicated space for pursuing a new future for clothes,” Uniqlo’s aim is to encourage repair, reuse and recycling among its customers as the company seeks to shift 50% of production to recycled materials by 2030.
The repair and upcycling service has proved to be popular among the growing cohort of sustainably minded consumers, and London’s RE.UNIQLO repair studio, located in the recently opened Regent Street store this April, has since expanded. “We struggled to keep up with demand,” said Alessandro Dudech, Chief Operating Officer for Uniqlo Europe. “Customers were asking for more services, such as patches and embroidery, so we have grown the team.”
In addition to basic repair services such as mending holes and fixing buttons, the RE.UNIQLO repair studio also offers an elevated service turning worn Uniqlo clothes into fresh new apparel items with a range of repair and customisation offerings, including the Japanese sashiko stitching technique.

Creating hyperlocal synergies

To engage with consumers and create deeper connections with them, Fast Retailing has highlighted community-centric experiences, and aims to support local businesses, residents and artisans in the areas where it operates.
With shopping online now easier than ever, it has now become key for brick-and-mortar retailers to find an engaging and authentic voice, and cut through the noise by adding value to the physical store through experiences and events that lean into local culture.
Uniqlo’s Orchard Central flagship store in Singapore features a Spotlight Corner where it showcases products from various local businesses. The store also collaborates with local artists to create custom T-shirts for an exclusive range. Uniqlo also partnered with travel platform Klook for its Explore a Life Unordinary campaign in 2021, which looked to boost the profiles of local businesses that have been impacted by the pandemic.
In India, Uniqlo has run the annual Good Neighbourhood Guide since 2020, which highlights hidden gems in neighbourhoods where Uniqlo stores are located, and taps into the opportunity to leverage rediscovered enthusiasm for in-person and offline retail experiences that are reflective of local values. The initiative also positively contributes to communities economically and culturally amid the post-pandemic recovery.
As consumers increasingly express a desire to make purchases that actively support their local economy, there is added value in becoming part of the fabric of the community, particularly for global brands.

Art-tainment store experiences

Fast Retailing has been making moves to differentiate and elevate its physical outlets, using materials, design, and sensory stimuli to attract footfall post-pandemic.
Through art- and culture-focused in-store experiences, Uniqlo’s physical stores are looking to deliver an enriched shopping journey that reimagines the shop floor as a place for discovery and entertainment.
Located in an Art Deco building at the landmark Rue de Rivoli, Uniqlo’s latest Paris flagship, which opened in September 2021, brings together historic features such as its metallic structure and mosaic frieze with LED screens and plaster reproductions of sculptures from the Louvre museum – a nod to their four-year partnership signed in 2021.
In the basement of the first joint Uniqlo and Theory flagship on London’s Regent Street, shoppers can browse the brands’ clothing on display in what was a 1920s barbershop, featuring original equipment and bright Art Deco artefacts.
And as our increasingly digital lifestyles now leave little room for tangible interactions and accidental moments of pleasure, retail environments are also offering a sensorial reset to the experience of consuming. Uniqlo has been adding flower shops to its flagship stores worldwide, starting from its Tokyo flagship in 2020, stating: “Flowers and clothing have a lot in common. They add colour to our lives and make them richer.” The brand works with independent florists at each of its locations to bring in a variety of locally grown fresh blooms.

WGSN | Athena Chen

10.19.22 – 10 minutes