Fast-fashion retailers are considered the bottom-feeders in the fashion world. They are widely credited – or discredited depending on which side of the cash register you are on – with copying designer-inspired trends, producing them in copious quantities and selling them for pennies on the dollar of the namesake brands.
Sweden’s H&M operating 5,000 stores worldwide, Zara with 2,200 locations, owned by Spain’s Inditex and Uniqlo with 2,300 stores, owned by Japan’s Fast Retailing, are the undisputed leaders in so-called fast fashion.
Fast fashion hit a speed bump in the Covid pandemic. Supply chains came to a stand still as manufacturing plants were closed and consumers under stay-at-home orders had no place to wear new outfits. Shoppers retreated from trendy styles to comfort selections.
All of the leaders had something to offer in the comfort-fashion realm, but Uniqlo had more, being lifestyle-oriented – or as the company calls it “LifeWear” – rather than fashion driven as H&M and Zara are.
Battle for fashion dominance
Strict line-by-line comparisons of the three fast-fashion market leaders is hard due to different financial calendars, but it is safe to say that the race is extremely tight between all three titans.
H&M Group just reported through November 30,2020, registering $22.4 billion in revenues (SEK 187.0 billion). Inditex’s latest covers nine-months through October 31, 2020, reporting a total of $17.8 billion (€14.1 billion), including all seven of its brands. In 2019, however, Zara generated about 70% of the company’s roughly $34 billion in total revenues.
And Fast Retailing did $22 billion in fiscal 2019 with 83% under Uniqlo (Yen 2,287.5 billion in total and Yen 1,898.9 billion for Uniqlo). Based upon first quarter 2021 results, it predicts total turnover of $21 billion this fiscal year ending August 2021 (Yen 2,220 billion).
That said, Uniqlo has its sights set on becoming the world’s number one fashion brand and it is well on its way to fashion dominance.
It just claimed the title of the number one fashion brand in China. And it has far more penetration in that market than its competitive peers – 800 stores in Mainland China compared with 500 H&M locations and about 200 Zara stores.
With China projected to overtake the U.S. as the world’s number one apparel market by 2023, Uniqlo has a head start in the race.
Here’s how Uniqlo will take the crown:
Quality over quantity
While Uniqlo shares the fast-fashion label with H&M and Zara, it takes a very different approach to these other retailers. Rather than simply pumping out masses of clothing for immediate consumption to be quickly discarded for next week’s or next season’s styles, Uniqlo specializes in the basics that have a season-less appeal.
“We don’t chase trends. People mistakenly say that Uniqlo is a fast-fashion brand. We’re not. We are about clothing that’s made for everyone,” CEO Tadashi Yanai explained.
It shows in the number of products offered on its website. Edited, which is a market intelligence platform that compiles data about products available on retailers’ websites, found that as of early February, Uniqlo listed 6,209 SKUs, as compared to Zara’s 9,198 and H&M’s 20,860.
“Zara and H&M bring in a lot and bring it in frequently,” explains Kayla Marci, Edited’s market analyst. “Uniqlo is quite calculated and very consistent in its more moderate cadence. Given their moderation, I’d call Uniqlo a ‘diet’ fast-fashion brand.”
This restraint lends a greater stability in the buying cycle, with about one-third of Uniqlo items available between six and nine months, where as 66% of Zara’s products are under three-months old.
And with its focus on quality over quantity and longevity instead of fast-fashion’s quick expiration dates, Uniqlo makes good on its sustainability promise.
Easy-to-wear and coordinate essentials jazzed up with collaborations
Comfortable and easy-to-wear basics is Uniqlo’s trump card and its gotten more mileage out of it because of the changes people have made in their clothing choices during the pandemic. Fast Retailing’s Yanai foresees consumers’ casual comfort styling to continue even after.
“The days of suits have come to an end and the days of everyday wear have begun,” he shared in an interview with Asia Nikkei. “People will select clothes that are comfortable to wear as working clothes, as well as in their homes. There will be no need for clothes that are worn for a year and then are discarded.”
However, for those male customers who still need classic business clothing, Uniqlo offers a customization service for blazers and shirts that promise a tailor-made feel for an off-the-rack price starting at $99.90 for a jacket and $9.90 for a shirt.
To make for easy mix-and-matching, nearly 90% of the items currently listed on Uniqlo’s websites are plain, with no pattern beyond a simple stripe. “Good everyday pieces is what Uniqlo is known for,” Edited’s Marci says. “Other retailers are just playing catch up now.”
But Uniqlo also spices up its plain-vanilla fashion through licensed collaborations, most recently featuring artwork by Andy Warhol, Disney, street artist Keith Haring and the Louvre. It also has been successful in the +J collaboration with fashion designer Jil Sander that keeps to Uniqlo’s classic everyday styling.
Fast Retailing’s Yanai described Uniqlo as a “digital consumer retail company,” which sums up how it leverages technology from its factories through its supply chain and to the consumer. Since 2016 Uniqlo has invested more on e-commerce than physical retail in its home market and has focused on expanding online shopping in Japan, across China and Southeast Asia and in the U.S.
That investment is paying off as the number of visits to Uniqlo’s website rose 30% year-over-year in 2020, far faster than that of H&M (.9%) and Zara (13%), reports Caroline Kim, lead retail industry consultant for SimilarWeb, a company that tracks online traffic.
It also boasts more high quality online traffic than its direct competitors.
“Of the three players, Uniqlo over-indexes on desktop traffic, which bodes well for sales because desktop shoppers are highly engaged and more likely to convert,” Kim asserts. “H&M and Zara, on the other hand, have a higher percentage of mobile web users who are less engaged, stay on the site for a shorter amount of time and are more likely to bounce off the site.”
Over half (56%) of Uniqlo’s site visitors originate on desktops, compared with 34% for H&M and 40% for Zara.
But Uniqlo also leverages technology into the design and construction of its clothing, similar to the approach of sports and activewear companies but to a lesser extent in traditional fashion.
“The technical attributes used within garments really differentiates their products from other fashion brands, especially at such low prices,” Edited’s Marci says, pointing to Uniqlo’s fabrications including HEATTECH to keep people warm and AIRism to keep wearers cool and dry.
“Technology is a big component that is at the core of Uniqlo. It’s used not to cut corners or speed up processes, but to improve the product for the customer,” she maintains.
With all these other factors going for it, Uniqlo’s dedication to the needs of its customers is on full display when it comes to price. It is highly leveraged in the $20 and under price range (59% of its current offerings) compared with 28% for H&M and 25% for Zara.
It gains advantage there with an emphasis on underwear, hosiery, accessories and wardrobe essentials that need replacing more often than outerwear and denim. The need to repeat such purchases drives traffic to the store and website where customers can discover its higher-priced offerings, like the +J women’s cashmere-blend jacket on sale for $179.90.
Given the financial hit consumers across the world experienced through the pandemic, Uniqlo’s Yanai firmly believes the brand is well positioned for what comes next.
“As people economize, the quality of brands and products will be more important,” he said. “Consumers will select reliable, truly good brands.”
Uniqlo is unique
Uniqlo’s stated mission is “unlocking the power of clothing,” by which it means “by designing, making and selling good clothing, we can make the world a better place.” It’s a lofty ideal for a fashion brand and one that sets it apart from other brands which simply want to make customer look stylish and fashionable.
It is right in keeping with the spirit of our times, as Yanai expressed in his latest CEO message:
“The meaning of clothes is also changing as we witness a strong shift away from clothes worn to beautify or emphasize the wearer’s social status to clothes designed to last and enhance comfortable everyday living. We continue to evolve clothes based on our LifeWear concept for simple, quality clothing carved from a quest to fully satisfy daily life needs and to enrich all people’s lives everywhere.”