Uniqlo Marketing

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1. Distributors in the apparel industry are required to perform three marketing distribution functions: transactional, logistical, and facilitating functions. Firstly, apparel distributors perform transactional functions mainly through selling (e.g. promoting products), and also risk taking in terms of ownership of inventory, as companies such as Ann Taylor “are forced to mark down unsold inventory towards the end of each season.” Secondly, apparel distributors perform logistical functions in terms of assorting (creating product assortments) following the production stage and also in storing products, as they “often carry high inventory”. Thirdly, apparel distributors perform facilitating functions in two ways: firstly providing marketing information and research, and secondly performing grading functions. In the first way, information regarding competitive conditions and trends are communicated to suppliers from “feedback from customers at the stores and data from points of sales (POS)” (which are “used to adjust further product quantities”), and also from “in-house designers who constantly monitor trends to anticipate what consumers want”. In the second way, grading (assigning quality grades to products) is performed, such as within main distribution centres (Zara) or production centres (H&M).

Uniqlo itself performs several transactional, logistical, and facilitating functions, while its partners perform mainly logistical and transactional functions. Uniqlo’s transactional functions include firstly selling, as they promote their products, collect payments and seek orders from consumers, and secondly, carrying out risk taking functions in terms in of ownership of inventory that may become obsolete. Uniqlo’s own inventory controllers help to carry out logistical functions by issuing “special delivery instructions to logistics companies to assure that stores were never out of best-selling items,” which directs the assorting and storing functions (which in turn is done by Uniqlo’s partners). Uniqlo’s facilitating functions include carrying out its own quality control of their products produced from external partner factories, as Uniqlo’s “International Production Management Section” deploys personnel to Product Management Offices where they “monitor product quality through weekly visits to our contract factories”. Uniqlo’s Takumi team also aids with quality grading as the team transfers expertise in production processes in order to reduce production defects in partner factories and thus takes on a supervisory role. In addition, another facilitating function Uniqlo carries out by itself is finding marketing information and research regarding consumer trends, as it relies on its own “POS data to shortlist best sellers and develop similar designs”, and it also carries out “forecasting of future production volumes based on early sales data”. Also, Uniqlo’s own employees in their retail outlets help to provide information to customers, as they “could redirect customers to nearby stores in case stock in a store ran out”.

Uniqlo’s partners of third-party logistics (3PL) providers perform the logistical function of managing inbound store logistics. They are in charge of the storing and the transportation of the inventory, including “moving slow selling items at one store to locations where demand for the same item was strong”. Their warehouses are external and managed by their partners while receiving order guidance from Uniqlo’s inventory control team. Globally, Uniqlo’s joint-venture partners also aid in transactional functions in helping to sell and promote its products in their retail outlets such as in department stores (in Taiwan and South Korea).

2. In some countries, Uniqlo uses a direct channel (Case 1), while in others, Uniqlo uses an indirect channel (Case 2). The channel lengths can be seen below:

Case 1: Producer (Uniqlo) → Consumer (direct channel)

Case 2: Producer (Uniqlo) → Retailer → Consumer (indirect channel).

A direct distribution channel is defined as “a company that produces its own products and sells them directly to the consumer in its own retail stores.“^[1] Uniqlo is a manufacturer of its own products^[2] as its production departments work directly with its partner factories^[3] to produce Uniqlo products. For the most part, such as in Japan, Uniqlo does not employ any marketing intermediary (defined as a third-party that helps “a firm to promote, sell, and make-available a good or service through contractual arrangements or purchase and resale of the item”^[4]) as it sells finished Uniqlo products straight to Uniqlo retail outlets (in the case of own-store outlets). This means that Uniqlo is its own retailer, and thus follows Case 1. This direct channel helps Uniqlo undergo disintermediation.