Uniqlo is an apparel brand of Japanese global retailing company. The first Uniqlo store was opened in 1984. Uniqlo’s first entry into international market was in 2001. The company is now operating in more than 12 countries including the UK, US, China, Hong Kong, South Korea, France, Singapore and Russia. Today the fast retailing and their number of stores including Uniqlo and familiar brand is approximately 2,449 worldwide with 23982 full time employees (Woo & Jin, 2014). Uniqlo is the new growing player in the casual wear fashion industry and its retailing stores are popularly increasing especially in Asian countries. Uniqlo is famous for their friendly affordable low prices with high quality basic casual wear while generating high profits (SACOM, 2015). Within a Decade Uniqlo growth has been admired and it is not only popular in Japan but also in East Asia Countries; and now the company’s aim is for global expansion of their business model on a global scale (Choi & Eugene, 2011).
From the beginning growing relationships with the foreign companies was an important aspect in order to achieve low priced merchandise than their competitors for Uniqlo (Yamaguchi & Yoshida, 2002). According to (Kotabe & Helsen, 2014) India’s nominal GDP stands at US$1.53 trillion, making it the tenth-largest economy in the world. Any outsider investment company in the single brand product retailing market can have a maximum FDI of 51 percent equity in India. For a fast retailing like Uniqlo would have to partner with a local firm or individual that would own at least 49 percent of the company in India. India’s demo-graphs of population and size pose a great opportunity for fast retailing. India’s retail industry consists of supermarkets, department stores, retail-branded stores, and specialty chains) was valued at about $300 trillion in 2011 and is expected to grow $637 billion in 2015. Uniqlo’s current strategy is targeting the age group of 18-30 years because young customers adopt the new fashions faster. Country like India with such divergent population can be a hazard when building Uniqlos strategy. In the Country different religion also demand different dress codes and its not common for Indian women to wear western clothing, Women in India tends to prefer usually a Sari and Salwar Kameez both clothing styles are not currently being sold by Uniqlo. Fast retailing might have to apply a new strategy according to Indian clothing trend and which gender to focus more.
One of the key interests for fast retailing is a large consumer market of goods and services. The availability of skilled labor has also attracted retailing companies to expand their business in India. India has one of the youngest populations among the emerging market. Furthermore increasing level of education, companies find it cost effective to set up base in India for tapping this skilled labor force. An additional attraction is India’s strategic location therefore Companies find it cost-effective to not only produce over there but also export from the India (IBEF, 2013). Country like India cannot be ignored size of the country and the high growth level shows a very strong opportunity for Uniqlo in expanding their business plans in India. (Kotabe & Helsen, 2014)
This paper will focuses on Uniqlo’s Arguments for and against market entry into India and how to enter the Indian market and which kind of stores will be suitable regular store, flagship or huge outlets and which location Uniqlo can prefer. Furthermore which focus on Uniqlo clothing style which they could provide according to Indian taste and religion and moreover which gender to emphasis more.
2 Literature Review
Different literature and publications have been analyzed on Uniqlos and Indian retailing industry by different authors and organizations. Some of the key findings on Uniqlo India have been highlighted here to have overall idea:
2.1 Arguments for and against market into India
2.1.1 Challenges
According to (Chari & Raghvan, 2012) one of the challenges comes from unorganized sector due to low cost base, more proximity to the consumer, negligible real estate a challenge. Traditional retailing has been established in India from more than centuries ago and is characterized by small, family owned operation therefore these business are usually vey low margin and are owner-operated and have most minimal real estate and labor costs. Taxation in India is very complex due to different kinds of taxation and inconsistent taxation between states. However government is planning to implement a common taxation procedure by making the system more transparent and easier for both domestic and foreign retailers. Another Hurdle for foreign retailers is poor supply chain infrastructure which leads to lack of storage and transport logistics mostly to huge wastage, In addition to this government has been improving the situation by collaborating with private companies to build new highways, metros and airports.
2.2 Opportunities
2.2.1 Target Consumer market apparel in India: Uniqlos customer is both females and males and it targets the age group from 18-30 year old. India has been always connected to Culture and tradition, and women’s clothing of India bears a symbol of its culture. Changing demographics, increase in education and globalization has created self-awareness consumers. The increase trend in the number of women in the workforce had social and economic importance. Women have been becoming more conscious about their self-image and social identity and that affect purchasing behavior in India. The dress preferences in the country are associated with the lifestyle and age. Family is important for Indians. Trends in India reveals that clothing is associated to caste, level of education and urbanization. Changing pattern in clothing and apparel preference of women had also changed (National Institute of Fashion Technology, 2014, pp. 543-544). Indian women tend to prefer traditional outfits such as sari or salwar kameez reducing the demand for western apparel in this segment. India’s consumption pattern of clothing shows a major difference by gender. Although the western clothing is not that big enough compared to men’s market in India still it has the potential as working women is rising, increase in demand for western clothing as women’s changing social roles and increased income. Men’s clothing sector has experienced a rapid growth because Indian men’s tends to prefer Western style in their everyday lives. Since the trade liberalization, the increased scope of foreign brands and different retail scope has affected Indian consumer’s preference value perception and purchase behavior. The market value of this middle class is growing immensely as the Indian economy purchasing power parity index increases. This segment of young adults with a strong demand for mainstream fashion and a positive attitude toward western clothing styles allows foreign retailers to enter the Indian market(Mann & Byun, 2011).
2.2.2 Platforms for entry: For Foreign retailers establish a base in shopping malls to access a large number of India consumers could be a great opportunity. Malls in the organized sector have created a shopping environment that provides both shopping and entertainment, for middle class and upper class Indian consumers furthermore giving emerging Indian consumers the increasing importance of service and store environment in store (Mann & Byun, 2011). Liberalization of the FDI policy in retail sector could further provide eased for large International retailing companies. The Government of India has permitted 100 percent FDI in single retail and 51 percent FDI in multi-brand retail with a vision to attract more foreign investment. Franchising could be attractive mode of entry for international retailers. (KPMG, 2014)
2.2.3 Expand sportswear and men’s wear market: For sportswear and men’s clothing high level of willingness could be seen to adopt branded western style. Cultural preference in product design or merchandising assortment should be taken into consideration for successful market expansion and positioning in the women’s apparel market.
2.2.4 Penetrate under served market through value creation: Despite the increasing foreign competition and retail development in India, only 5 percent of Indian retail sales are still generated in the unorganized retail sectors, Despite their limited merchandise assortment, poor service and shopping environment.
2.2.5 Utilize local production and sourcing opportunities: To fulfill the demand of
Indian consumers, foreign apparel retailers should use local production and sourcing opportunities In particular, the textile industry is one of the biggest industries in Indian economy, indicating its strength and capability in serving the needs of foreign retailers alongside better factor conditions (e.g. availability of large labor force, low cost, uniqueness in design, embroideries, beading and details). The Indian Government introduced new development schemes to improve infrastructure and technology of the retail industry are the competitive advantage of the local production and sourcing in the country (Mann & Byun, 2011).
2.3 Uniqlos Target Location
India’s retail clusters are based on the presence of large consumer base. The top ten markets consist of metro cities like Mumbai, Delhi-NCR, Bengaluru and Hyderabad, including leading tier-I cities such as Surat, Ahmedabad and Jaipur. These areas offer the advantage for better-planned development, Lower rental and large spaces in need of retailers. (KPMG, 2014). Due to influencing western culture, the population of big cities and metropolitans such as Delhi and Bangalore shows higher willingness to accept western clothing than the population of small towns and rural areas. Building flagship in major cities around the globe has become highly important for Uniqlo as part of their strategy(Mann & Byun, 2011).
2.4 Uniqlo Business Model
SPA is an abbreviation of ‘specialty store retailer of private label apparel’. This new Business model enhances whole management, which includes Research and Development, Inventory and Sales based on Supply chain management. SPA allows fast retailing to improve the old Marketing concepts and production in the Japanese clothing industry. Overseas production enabled the company to reduce prices and to remain competitive in the business (Iida, 2005). Uniqlo is typical brand that uses the SPA mode and its business mode mainly includes: 1. Reflect the range of product; 2. Standardization of shop, depends on management guidelines to achieve store layout, merchandise, the price is the same; 3. Reduce the number of style, to enhance a single style sales quantity to reduce the cost of goods, for better price; 4.Warehouse sales, reduces storage costs and labor costs. (Du, Huang, & Liu, 2015)
3. Conclusion
In conclusion, recent relaxation on single and multi retail brand are contemplating foreign retailers to invest in India. According to new market studies Indian retail is like to evolve as a mature and larger market moreover competitors like H.M, Zara and GAP had already entered the market. The main target market should be the urban middle class and young customer of between 18 and 30 years. According to (KPMG, 2014) India’s ” of the population is under the age of 25. Though every customer should e treated equally with respect so as to create value. Uniqlo expanding to India could be an excellent idea.
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