Will Uniqlo beat Zara with speed and customer focus?

Discussion
Photo: RetailWire
Mar 17, 2017
George Anderson

Fast Retailing Co., the owner of Uniqlo, is counting on a new design and delivery center to help it outrace Inditex, the world’s largest clothing retailer and owner of Zara, for share in markets around the globe.

The new center will help Uniqlo shorten the time from design to delivery to about 13 days, roughly equal to Zara, Tadashi Yanai, the owner of Fast Retailing, told Bloomberg. The facility will also help Uniqlo expand its consumer direct business and custom clothing sales. Improving the efficiency of the company’s same-day delivery service in the Tokyo area is also expected to be a benefit.

While speed is critical to Fast Retailing’s strategy for overtaking Inditex, Mr. Yanai believes Uniqlo has other advantages when compared to Zara.

“Zara sells fashion rather than catering to customers’ needs,” Mr. Yanai told Bloomberg. “We will sell products that are rooted in people’s day-to-day lives, and we do so based on what we hear from customers.”

Uniqlo has had some difficulty rooting itself in the daily lives of American consumers. Chelsey Tam, a Morningstar analyst, said the chain has stocked the wrong styles and sizes in its U.S. stores. In a reset, the chain is shuttering stores in less desirable malls and moving into more premium locations.

Zara is not standing pat as rivals such as Uniqlo adjust their strategies. While smaller stores are increasingly popular in retailing circles, Zara’s new flagship in the chain’s hometown of La Coruna, Spain has gone big. The store, which covers 54,000-square-feet over five stories, will serve as the model for Zara flagships around the globe. It will replace four smaller locations around La Coruna when it opens.

The new flagship, according to a Wall Street Journal report, is intended to carry a full range of Zara products. The chain is also pursuing an aggressive omnichannel strategy. The company’s goal, according to Inditex CEO Pablo Isla, is to achieve “full integration of the brick-and-mortar stores and online businesses.”

DISCUSSION QUESTIONS: Which fast-fashion chain — Uniqlo or Zara — is more likely to prevail in a head-to-head competition in the U.S. over the next decade? Are there other current retailers that you think are just as likely or more likely to disrupt the apparel market over that time?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"I think there’s room in the market for both. Uniqlo is focused on basics and comfort while Zara is more focused on keeping up with the latest trends."
"Zara has a big head start over Uniqlo in the U.S. retail market although it has plenty of room to grow vs. other fast-fashion competitors..."
"Bottom-line, they both know the value and speed gains of end-to-end, vertical integration."

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11 Comments on "Will Uniqlo beat Zara with speed and customer focus?"


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Anna Tolmach
Guest

I think there’s room in the market for both solutions. Uniqlo is very focused on basics and comfort while Zara is more focused on keeping up with the latest trends. There’s demand for both in the market, but in recent years, Americans have come to see the value of comfy basics — think of brands like Everlane as well as the recent rise of the athleisure category more broadly. It’s important to note that Uniqlo did not begin selling online in the U.S. until 2012, significantly lagging the industry. Notorious for having completely disconnected systems on the e-commerce vs. physical retail side, this puts Uniqlo at a relative near-term disadvantage.

Dick Seesel
BrainTrust

Zara has a big head start over Uniqlo in the U.S. retail market although it has plenty of room to grow vs. other fast-fashion competitors like Forever 21 and H&M. More importantly, speed-to-market is in Zara’s DNA. And they offer a modified “treasure hunt” approach to the merchandise, compared to Uniqlo’s approach of key items in lots of colors. Unless Uniqlo is prepared to change its philosophy, Zara has the edge.

It’s understandable that Uniqlo would want to benefit from what Zara already knows about fast turnaround of product development — supported by great logistics management — but it may not be as easy to imitate. Think of how many e-commerce sites aspire to the level of Amazon’s execution but can’t quite get it done.

Lee Peterson
BrainTrust

Uniqlo looks too much like Gap to me from every angle and, in case we all forgot, we already have one of those. Zara is better at fashion as well, and their verticality will go a long way to keeping them on top of that element. So all-in-all, I give it to the Spaniards.

Having said that, either one would be foolish to open a lot of stores and expand too quickly in the U.S. market. The American consumer is showing a burgeoning love affair with online shopping, and it’s not going to slow down any time soon. Au contraire.

Camille P. Schuster, PhD.
BrainTrust

Zara has a place in the consumer’s mind as a fast moving source of fashion. If Uniqlo plans to focus on day-to-day fashions is speed necessary or even a competitive advantage? Uniqlo is not yet fixed in the consumer’s mind as anything so they have a long way to go.

Scott Magids
Guest
2 years 4 months ago
The integrated approach of Zara and Uniqlo gives both retailers a powerful edge. While from a purely logistics and fulfillment point of view they may find more efficiencies in a more decentralized strategy more common in the fashion industry, the integration of everything from design to sales allows the retailers to gather more data and granular information on what customers really want. They may be on to something in getting a better 360 degree picture, and with greater access to big data tools this is a model other retailers in this industry will quickly emulate — if not actually owning the entire value chain, at least paying more attention to unifying the data that comes from each source and making sense out of it. More fashion houses are trying to innovate — for example, Burberry started selling collections directly from the catwalk, dramatically reducing the often six-month-long gap between fashion show and retail. Prada, Michael Kors and Coach are starting to follow the same model. The industry as a whole should take a lesson from… Read more »
Ryan Mathews
BrainTrust

Zara clearly has prime mover advantage and Uniglo has already made some serious missteps so I guess I’d have to give the nod to Zara. But, that said, they are pitching toward very different markets so there is no reason to believe that — if Uniqlo can actually course correct — there isn’t room for both of them.

Tom Redd
Guest

Bottom-line, they both know the value and speed gains of end-to-end, vertical integration. One has been doing it for years and fully drives from stores/online back to raw materials. Both are amazing operations and have plenty of speed — now it is about getting the right designs in place across each market that they serve.

Ken Morris
BrainTrust

I don’t think it is a case of one or the other: Uniqlo or Zara. Fast-fashion is a hot area and there is room for several retailers in this category. H&M and Primark are also thriving in this space and it appears like all of these companies are well positioned for success as long as they continue to respond to consumers’ evolving tastes and keep up with the latest trends.

Zara’s process, which includes a daily feedback loop directly to co-located design and manufacturing teams, is a best practice model. They are not just fashion, but translate the voice of the customer daily … they will be hard to beat but as started above, there is room for more than one winner in this space.

Craig Sundstrom
Guest

Is this really a contest, or more to the point — is retailing now such a desperate, winner-take-all battle that we need to pair up competitors and see who’s going to “beat” the other? Can’t they both exist … to the benefit of everyone?

Gary White
Guest
2 years 4 months ago

There is room for both and it’s not only speed, but speed with the correct product. Zara has speed with a spirit of in tune fashion. Uniqlo is less fashion oriented and more “preppy,” look-alike styled. Preppy nor look-alike style are in the trend cycle at the moment.

Fashion first, then the speed.

Ricardo Belmar
BrainTrust

As others have said here, there is definitely room for both. They are not necessarily targeting the same customer with the same type of product. Each of these retailers has a formula that seems to work for their customers. Key for each is to build on that base, and not try to be all things to all customers.

wpDiscuz
Braintrust
"I think there’s room in the market for both. Uniqlo is focused on basics and comfort while Zara is more focused on keeping up with the latest trends."
"Zara has a big head start over Uniqlo in the U.S. retail market although it has plenty of room to grow vs. other fast-fashion competitors..."
"Bottom-line, they both know the value and speed gains of end-to-end, vertical integration."

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