International Marketing Analysis For Uniqlo In India

Company Background

The purpose of the report is to analyse the international marketing based on macro and microenvironment of Uniqlo in a totally new international marketplace. This report is going to highlight the suitability of business environment of India for Uniqlo brand, famous fashion Retail Company. The scope of the report is to explain the market of India for Uniqlo brand and further recommendation is given for the brand. However, this report provides further opportunity to create a marketing plan for Uniqlo entering the Indian market.

Uniqlo is a wholly owned subsidiary of the parent company Fast Retailing. Uniqlo is in the fashion retail industry and this company was founded in the year 1949. Uniqlo has it headquarter in Midtown Tower, Tokyo, Japan. Uniqlo is a Japanese casual wear manufacturer, designer and retailer. Fast Retailing took the strategy of a retailer of private-label apparel which means Uniqlo sells the own clothing products and sell the products exclusively. Uniqlo has almost more than 830 stores in Japan and sales figure touched among the top five retailers across the globe. Uniqlo recently has 3290 stores worldwide (16 countries at present) (Uniqlo.com 2018).

Financial resources: In the year 2017, revenue of Uniqlo was $16,862,141 thousand and only Uniqlo Japan made the revenue of 810 billion Yen (Uniqlo.com 2018). Operating profit of Uniqlo Global was 340 billion Yen in the year 2017. Consolidated revenue increased by 4.2% from 2016 in the year 2017.

Human resources: Uniqlo had approximately 65,000 employees in the year 2017 (Uniqlo.com 2018). Most of the employees are from foreign countries in which countries Uniqlo has its stores.  

Technological resources: Uniqlo mainly focuses on transforming the production process through using technologies so that the brand can make six collections a year which keep up with the unpredictable trend. Uniqlo is offering same-day delivery for Tokyo based customers in e-commerce and Uniqlo is also using sophisticated AI algorithm to connect the customers’ needs with distributors and factories (Usui et al. 2017).

Visionary leader Tadashi Yanai took the business concept from international brands and Uniqlo’s branding allows the company to sell the clothing products in overseas market. Uniqlo focuses on the innovations including the heat tech fabric, air in clothing and technological development (Turker and Altuntas 2014). Supplies and value chain of Uniqlo is strong which help the organisation with streamlining the inventory. On the other side, Uniqlo faces the issue of selling the weather-sensitive apparel and the organisation has the inability to penetrate the foreign market successfully.

Outlining organizational resources

India has a three-tiered democratic system. In India, ruling party decided to provide special emphasis on ‘Make in India’ product and the government provides extra tax rebate on India made products. India provides average stability in political condition; however, corruption spreads almost every nook and corner of this country. India is a developing country and The World Bank provides a rating of -1.16 points average in political stability which is weak. Make In India initiative can provide benefit to Uniqlo if they think of manufacturing the clothing and apparel in India.

The World Bank is projecting that India will see the GDP growth of 7.3% during this ongoing fiscal deficiency, due to the demonetisation in 2016. Current GDP of India is $2.84 trillion and GDP rank is 6^th. GDP per capita income is $2,134 and inflation rate is 4.28% (Vaishnav 2017). The GDP per capita income in India is low which shows the lower disposable income of the people. However, the Human Development Index is increasing with a rating of 0.62. India is ranked 100 in ease-of-doing business and during the year 2016-17, India had the FDI inflow of $60 billion (Ganesan and Gajendranayagam 2017). Large FDI and growth of GDP in Indian economy can provide an advantage to Uniqlo, whereas, poor disposable income can be a hindrance for the business to have a large customer base. Fashion retail industry has witnessed an increase in investment in last five years and in the fashion industry FDI reached the figure $2.83 billion in the last ten years (En.portal.santandertrade.com 2018).

Table 1: FDI in figure (India)

(Source: En.portal.santandertrade.com 2018)

India provides an unparallel pool of educated, skilled workers and hard-working employees. India is the second largest populated country in the world. India can provide one of the largest markets of fashion retail products for the company. India is the best known for the traditional clothing; however, in an urban area, people wear westernised dresses. Indian culture comprises the values, customs and attributes along with habits, language and beliefs which are different from Japan. Indian culture is depended on family-oriented ad social structure is not rigid. Hofstede cultural dimension talks about the cross-cultural communication and it explains the society’s culture (Mazanec et al. 2015). Hofstede model describes individualism as the degree of independence a society has among the members and Japan scores 46, where India score 48; almost the same. Uncertainty avoidance is about people’s culture is threatened by unknown situations where India scores 40 and Japan scores 92. Steady fashion sense and the huge population will be beneficial for Uniqlo to have the large market in India.

Strengths and Weaknesses of Uniqlo

India is developed in scientific and technological factors and the skilled labours provide help in developing the technological sphere in the fashion industry. Indian technology in fashion retail is considered as a global powerhouse and India is advanced in AI using for designing in fashion. Indian fashion industry has already been using VR technology and the mobile sales through AI-powered message bots (Goswami 2015). Technological advancement will beneficial for Uniqlo to use in the manufacturing of the products and in the supply chain. In India, almost 500 million people use the internet using mobiles and desktops. Therefore, the fashion retailers can reach the customers using the social media and internet platforms. 3D printing is new in India and the fashion clothing manufacturers focus on 3D printing to attract the customers.   

Indian government provides 100% FDI in the fashion retail for the single brand retail trading entity. Foreign companies have to pay taxes of 42% if they earn more than 10 million Indian currencies. Numbers of paying taxes per year in India is 25.0 and total share if taxes (% of profit) in India is 60.5% (Das 2016). Different components of GST are applied in the sales and taxes. FDI policy framework is operated by India’s central bank which is Reserve Bank of India. Income Tax Act 1961 is followed while paying the tax and GST has been implemented in India reducing and eliminating the complexity in taxes.

Clothing manufacturing company can pollute water and they can use toxic chemicals which can increase the level of textile in waste. The fashion manufacturing companies can also use prints, colours and fabrics which are associated with the toxic chemicals. Environment Protection Act controls Indian environment under the corporate houses. Around 7% of the carbon emission results from the apparel and textile industry in India (Kumar and Sethi 2016).

Geographic segmentation is based on location and region of the area. In the fashion retail industry, the geographic target market is the areas near to the stores of the fashion company. Mostly, urban geographic areas are targeted by the marketers.  

Demographic segmentation is based on the age, gender and socio-economic group of the customers (Alt and Iversen 2017). In the fashion retail industry, the age of the customers is a priority as the fashion brand can target the young generation who have good fashion sense. If the fashion brand has the products for both genders, then, it can target both genders as potential customers.

Market selection

Behavioural segmentation of the fashion industry is the rate of usage, benefits sought, readiness to purchase and loyalty status. The customers of fashion companies want ‘value for money’ products and the companies can target the customers who purchase fashion clothes on a regular basis.  

Psychographic segmentation is making the segregation based on lifestyle, personality, class and attitude. Fashion retailers can target the customers based on the preferences of the fashion clothing. The personality of the person defines the fashion sense and fashion companies segment the market based on people’s fashion sense and trend.  

The primary target market of Uniqlo will be both the genders, Male and Female who belong to the upper middle and higher income group. The fashion market is price-conscious as well as highly sensitive to the upcoming fashion trends. The upper middle class can afford the fashion clothing offered by Uniqlo. Higher income group know about recent fashion trend and they are conscious about fashion sense.

Among the overall retail industries in India, fashion retail makes up the market size of 19% and Indian fashion industry values approximately USD 40 billion (Nagendra and Basu 2017).  Bargaining power of the customers is high in India as this factor depends on the demand in the market. Demand in fashion clothing in India is high as huge population and the choices of the customers vary in the Indian market. India is one of the largest producers of the cotton and India has a large area for cultivation. Therefore, the manufacturing of the fashion clothing has more options to switch their suppliers. Fabric cost is 30% and 13% is the garment cost in the fashion clothing industry (Khaire and Hall 2017). The threat of new entrant is always high in the fashion clothing industry in India as the small players flooding in the domestic market along with international companies with brands.

Competitive rivalry in Indian fashion retail industry is high and geographic location is a disadvantage for the logistics as the companies cannot open stores in all locations. Japan has a close vicinity to India and low cost of shipment will provide an advantage for Uniqlo. Uniqlo will face rivalry from Raymond, Reliance Retail, Aditya Birla Fashion retail, Future Retail and Tata Group.  

Table 2: Fashion retailers in India

(Source: Self-developed)

Conclusion 

Despite the presence of large fashion retailers in India, Indian customers always take a chance with the new fashion trend. Uniqlo can set a new fashion trend in India with their exclusive fashion. India is a large market and entering the Indian market means having a large customer base. Supply chain and technologies can help Uniqlo to flourish in the Indian market.

External environmental analysis

Uniqlo should take the strategy of foreign direct investment (FDI) in India as Uniqlo already has a large market value in the international market. FDI will provide a competitive advantage to Uniqlo as it will reduce the politics and cronyism.  

Uniqlo should take the strategy of product line stretching as it is the product line expansion where the company launches the same product line by adding additional features. Product line stretching will help Uniqlo to reach large numbers of the customers for both males and females.  

Uniqlo should take a competitive pricing strategy as there are many other fashion retailers in India. Competitive pricing will enable Uniqlo to fight against the competitors who already have a large market share in India.  

Promotional strategy of Uniqlo needs to be based on social media platform and online platforms (PCC and SEO). Uniqlo can start the loyalty programme where the customers can have the discount pricing if they have the membership cards. Uniqlo can start television advertising using the famous celebrity as brand ambassador.

Reference List 

Alt, J. and Iversen, T., 2017. Inequality, labour market segmentation, and preferences for redistribution. American Journal of Political Science, 61(1), pp.21-36.

Das, G., 2016. Linkages between self-congruity, brand familiarity, perceived quality and purchase intention: A study of fashion retail brands. Journal of Global Fashion Marketing, 6(3), pp.180-193.

En.portal.santandertrade.com. 2018. Indian tax system – Santandertrade.com. [online] Available at: https://en.portal.santandertrade.com/establish-overseas/india/tax-system [Accessed 14 Aug. 2018].

Ganesan, G. and Gajendranayagam, B., 2017. Impact of demonetization on Indian Economy. IJAR, 3(9), pp.433-436.

Goswami, S., 2015. A study on the online branding strategies of Indian fashion retail stores. IUP Journal of Brand Management, 12(1), p.45.

Hakansson, H., 2015. Industrial Technological Development (Routledge Revivals): A Network Approach. Abingdon: Routledge.

Khaire, M. and Hall, E.V., 2017. Medium and message: Globalization and innovation in the production field of Indian fashion. Organization Studies, 37(6), pp.845-865.

Kumar, R. and Sethi, A., 2016. Doing business in India. Berlin: Springer.

Mazanec, J.A., Crotts, J.C., Gursoy, D. and Lu, L., 2015. Homogeneity versus heterogeneity of cultural values: An item-response theoretical approach applying Hofstede’s cultural dimensions in a single nation. Tourism Management, 48, pp.299-304.

McAlexander, J.H., Koenig, H.F. and DuFault, B., 2016. Millennials and boomers: Increasing alumni affinity and intent to give my target market segmentation. International Journal of Nonprofit and Voluntary Sector Marketing, 21(2), pp.82-95.

Nagendra, N.P. and Basu, P., 2017. Demystifying space business in India and issues for the development of a globally competitive private space industry. Space Policy, 36, pp.1-11.

Turker, D. and Altuntas, C., 2014. Sustainable supply chain management in the fast fashion industry: An analysis of corporate reports. European Management Journal, 32(5), pp.837-849.

Uniqlo.com. 2018. Women’s, Men’s and Kids’ Clothing and Accessories | UNIQLO US. [online] Available at: https://www.uniqlo.com/us/en/home/ [Accessed 14 Aug. 2018].

Usui, T., Kotabe, M. and Murray, J.Y., 2017. A Dynamic Process of Building Global Supply Chain Competence by New Ventures: The Case of Uniqlo. Journal of International Marketing, 25(3), pp.1-20.

Vaishnav, M., 2017. When crime pays: Money and muscle in Indian politics. Yale University Press.

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