A Uniqlo Case Study: Delivering Best-in-Class Basics for the Masses

Fast Retailing, the Japanese retail holding company, knows a thing or two about many managing a diverse cohort of fashion labels. From Theory, a workwear brand for the professional up-and-comer, to J Brand, a premium denim brand, the Group plays at many price points and in numerous categories.

Uniqlo is, however, Fast Retailing's biggest and globally best-known brand, yet it's not a brand whose products you can always put your finger on. Rather, the company is known for its quality basics whose best features meld function and fashion. In fact, their material innovations like Airism and Heattech have set fashion industry standards in performance technology.

At the same time, Uniqlo has become a machine for interesting collaborations with designers, celebrities, artists, and licensed brands. In 2020 alone, they've released collections by and/or featuring JW Anderson, Marimekko, Jil Sander, Basquiat, Billie Eilish, and quite a few more. Just when you think you've figured out Uniqlo's angle, they surprise you with a new collab.

But of course, Uniqlo has more competitors than ever, many of whom also stock high-quality basics at affordable prices. We wanted to take a closer look at how Uniqlo compares to a few of those competitors, as well as examine some of their unique product drop strategies. --->

Competitive Positioning

Starting from the top, we've chosen Gap and H&M for benchmarking purposes. These are definitely not Uniqlo's only competitors, but they are several of its most sizable and significant ones.

We can see straight out of the gate that Uniqlo has a significantly lower product count than H&M and Gap. (We've included Men's, Women's, and Kid's for the purposes of this analysis.) Their product count has averaged roughly half of H&M's and Gap's, within the last six months. Moreover, you can see that the product count looks to be more stable compared with the others, indicating a steady hand at the helm of Uniqlo's assortment strategy.

We also benchmarked the three competitors in terms of discounting strategy, which netted some interesting insights. First, Uniqlo (in yellow) has seen its average discounts rising since April, since the onset of the pandemic. Those discounts mean that Uniqlo has neither the highest nor the lowest discounts, higher than H&M and lower than Gap (except for a period in November).

To get a better sense of Uniqlo's pricing strategy, we drilled down into a few of their best-selling product types to understand how they stack up to competitors. What we saw was that Uniqlo was the cheapest in both the cashmere sweater and fleece categories, and most expensive in the puffer/down jacket category. Uniqlo's cashmere sweaters were 18% cheaper than the next closest brand (Gap), and for fleece, Uniqlo rang up 14% less expensive (than H&M). These are notably lower price points in fashion categories, where we know margins are already very thin. One way we know they are able to offer these competitive prices is because of volume. Using our volume filter, we can see that forty-five percent of Uniqlo's unique styles are available in five or more different colorways (data not shown). So where Uniqlo's assortment might not be as wide as some competitors, they go deep in style options.

Innovative Product Lines: Heattech

So now that we've established some of the ways in which Uniqlo differs from its competitors, we wanted to dig into one of its star product lines, Heattech. Heattech is a wicking, lightweight material that's made from a blend of acrylic, polyester, and rayon. The high-tech part is that it takes your body's moisture and then turns that into warming goodness. Pretty groovy science!

We know Heattech's a bestseller for Uniqlo, but what's their assortment strategy for it? Well, we see that nearly half of products are tops (42%), the next largest proportion of Heattech belongs to intimates and underwear (26%), followed by bottoms like pants and leggings (14%).

We also can see exactly when they drop these products into the assortment and how long it takes for products to begin selling out at a decent clip. In the US market, we see that they begin adding Heattech to their assortment in the July-August timeframe (blue line), quite early relative to the season. However, they don't begin to see momentum towards selling out until winter has properly commenced during late December and into January and February (red line).

The Collaboration Machine

As we mentioned earlier in this piece, the clip of new collaborations at Uniqlo is second to none. Some of them are one-offs and others are recurring deals. (Did you know that Roger Federer has a $300 million, 10-year deal with the brand?)

Anyhow, one of their ongoing collaborations is with Northern Irish designer JW Anderson, whose namesake label, as well as creative direction for luxury label Loewe, have made him an increasingly recognizable figure in fashion. His collaboration with Uniqlo began in Fall/Winter 2017, and has evolved and grown over the ensuing years. Let's take a look at where it stands.

We can see a timeline of when the bi-annual collections have released in the past, one for Spring and another for the Fall season. Another theme you can see here is that dating back to the beginning of the collaboration in 2017, the amount of products released in each collection has grown (blue line). However, you can see a slight decrease in the number of products introduced in the Fall 2020 collection compared with the Spring 2020 one.

You can also see above that sell-out numbers (in red) have steadily increased as the collaboration has gone on, yet it would seem that not all of the products are selling out immediately.

Last but not least, this chart shows you just how diverse an array of products the collaboration has offered up to its shoppers. While shirts and tops are a large percentage of the offering (37%), there's everything from winter accessories to socks in the mix. Another third of the assortment also includes dresses, skirts, and outerwear.

So there you've got it, that's our case study on a brand that has carved out a place in global wardrobes. Check here for StyleSage's other brand case studies.