Global competition is defined as service and products offered by the competitors of the business organization which serves in the international market. While operating its business in international market, organization face number of operational issues and it is necessary for the organization to pay attention to these issues. Because of the easy accessibility of guidance and resources, there is high competition in international market also, and it becomes necessary for the management to monitor the competition on continuous basis and take relevant actions in this context (Wolf, 2017).
The main aim of this assignment is to discuss the operational issue faced by Uniqlo while expanding its business in North America and how this issue affects the performance of the organization. Further, this assignment discusses the strategies and procedures required by organization to deal with this issue.
Uniqlo Co. Ltd. is the Japanese organization of casual wear designer, manufacturer, and retailer. Currently, this organization is wholly owned subsidiary of Fast Retailing Co. Ltd. and present this organization conducts its business operations in Japan and other parts of the world (Uniqlo, 2018). Structure of this assignment includes the section of discussion which covers both the above stated points, and this is followed by brief conclusion in terms of concluding this report.
Market of US apparel is considered as largest apparel market across the globe, and in 2016 store based retailing of this market was almost 292 billion US dollars (Statista, 2017). The dynamics of the apparel industry in North America are changing dramatically, and in terms of succeeding, it becomes necessary for the organizations to frame the required strategies. At the initial level, there is the culture of changing fashion trends. It becomes important for the organizations to adopt these changes on continuous basis.
Weak conditions of retail sector and high cost make it difficult for the organizations to survive in the apparel retail market of North America in recent years. These situations impose pressure on number of famous brands to reframe their strategies in terms of dealing with the high competition. There are number of competitors in apparel retail sector of North America and these competitors mainly includes the international brands of fashion, online retailers, and also the local shops. All these things completely changed the way through which customers spend on the retail purchases. In terms of clearing the excess stock and attracting the demand of customers, retailers have given the heavy discounts and other offers to the customers and because of this consumer have become accustomed to buying the items on sale. At the similar time, weak consumer sentiments encouraged the bargain hunting and because of this price become the most important variable of competitions.
Online retailers become well positioned in terms of getting the advantages of these trends, and this happen because online stores low overheads in comparison of the retailers operating the stores in market. This is the reason because of which online retailers offer more competitive prices to the customers in international markets.
Easy and accessed technology normalized the online transactions, and it becomes easy for the customers to reach the online retailers and purchase. This facility is accompanied with the tablets and smartphones which help the online retailers to grab the large portion of market in comparison of traditional retailers. Traditional retailers and store holders struggled to compete in the US market for consumers, and this happen because consumers quickly compare the price of online goods.
The head of Uniqlo stated in the year 2016 that organization is trying to restore their position in the U.S. market, and the operations of the U.S, market was on their top priority. In other words, organization is struggling to revamp their casual clothing brand in the market of U.S. Market of North America is important for this organization and because of the high competition, it becomes difficult for the organization to retain their market share (Reuters, 2016).
This brand is recognized in New York, but not in other areas of North America. In terms of dealing with this issue and enhancing the brand awareness, required strategies are framed by the organization which help the organization in competing with the fast fashion brands such as Zara, H&M, Inditex’s, etc. However, the main target of this organization is the local shoppers in the major metropolitan areas.
Uniqlo not always shows the profit data related to its U.S. business operations, but still this organization lost money on constant basis after the business drive it conducted before five years. Strategy of the organization to expand its business in the shopping malls of sub-urban areas fails to work well for the organization. This mainly happen because this organization struggled very hard to compete with the local shoppers with its simple and cheap items.
Another issue because of which Uniqlo failed to conquer the U.S. market non-acceptance of Asian brands, as consumers of U.S. less preferred the Asian brands in their markets.
High competition in international market affects the organization in adverse manner, and some of these effects on Uniqlo are defined below:
As stated above, high competition is the biggest threat which is currently faced by the Uniqlo while expensing its business operations in the North America. Local shoppers, online retailers, and international fashion brands are the most important aspects of competition which required the focus of Uniqlo experts in terms of ensuring their success in the apparel retail industry of USA. It is necessary for the organizations to deal with the challenge of high competition in terms of capturing the market of USA. Following are the important strategies which are recommended to the Uniqlo in terms of dealing with the operational issue-
Brand positioning- Positioning mainly refers to the place where brand occupies the mind of customers, and how their product is different from the product of competitors. In other words, brand positioning is the concept through which organization focus how brand occupies the mind of target audience. Positioning is deemed as effective marketing strategy which helps the users in gaining the market share. Uniqlo face the issue of less brand recognition in the market of North America, and because of this it is easy for competitors to break down the market of Uniqlo (Fuchs and Diamantopoulos, 2010).
In the environment of high competition, it is necessary for Uniqlo to acquire the strong brand position and also the clear defined product against the online retailers and international fashion brands. Consumers are expecting number of these things from the apparel retail industry, because of this it is necessary for the Uniqlo to focus on the target market and identify the factors which drive the purchase decision of consumers. This can be understood with the help of example, Zara adopt the usage based positioning strategies in terms of capturing the market of USA, and these strategies of Zara clearly highlights the customers centric approach of the organization (Sengupta, 2005).
Differentiation Strategy: Unique products and services are the most important features which can be adopted by the organization in terms of increasing their sales volume. Differentiation products are the drivers which help the organizations in attracting the customers and capture the large market share (Rothaermel, 2015). It becomes difficult for the competitors to replicate the differentiation products of the organization. This strategy promotes the special features which automatically helps the organization in brand positioning and brand awareness among the customers. However, adoption of this strategy involves the high cost but through this strategy organization can gain the higher profits. It further helps the organization in gaining the competitive advantage over is competitors and capture big portion of market. This can be understood with the example of H&M, as this organization adopts the differentiation strategy in terms of its customer services which automatically helps the organization in attracting the customers (Zott and Amit, 2008).
Niche Marketing Strategy: This is another strategy which can be used by the Uniqlo in terms of dealing with the high competition and ensures its growth in the market of North America. Niche market is the customer oriented strategy which focuses on the accessible segments of the market by conducted survey in the market and determine the needs of customers and their preferences. This strategy helps the Uniqlo to deal with the competition given by local shopkeepers by developing such feature in their products and services which match the requirements of particular segment of Niche. The effectiveness of this strategy mainly deals with the fact how organization identifies the needs of the customers and the manner in which products of the organization satisfy those needs (Toften and Hammervoll, 2009)
Conclusion:
After considering the facts of this report, it can be said that high competition and lack of brand recognition are the biggest operational issues faced by the Uniqlo while expanding its business activities in the market of North America. Weak conditions of retail sector and high cost make it difficult for the organizations to survive in the apparel retail market of North America in recent years. These situations impose pressure on number of famous brands to reframe their strategies in terms of dealing with the high competition. Uniqlo is struggling to revamp their casual clothing brand in the market of U.S. Market of North America is important for this organization and because of the high competition, it becomes difficult for the organization to retain their market share.
Local shoppers, online retailers, and international fashion brands are the most important aspects of competition which required the focus of Uniqlo experts in terms of ensuring their success in the apparel retail industry of USA. In terms of dealing with the issue, few strategies are recommended for the organization such as Niche marketing, differentiation strategy, and brand positioning. It must be noted that, Positioning is deemed as most effective marketing strategy which helps the users in gaining the market share. Uniqlo face the issue of less brand recognition in the market of North America, and because of this it is easy for competitors to break down the market of Uniqlo.
References:
Fuchs, C. and Diamantopoulos, A., 2010. Evaluating the effectiveness of brand-positioning strategies from a consumer perspective. European Journal of Marketing, 44(11/12), pp.1763-1786.
Li, X. (2017). Why UNIQLO failed to dominate US market?. Available at: https://medium.com/@avex1994/why-uniqlo-failed-to-dominate-us-market-e7f3d4d6ecc1. Accessed on 06th December 2018.
Reuters, (2016). Uniqlo’s Yanai says revamping U.S. operations a top priority. Available at: https://www.reuters.com/article/us-uniqlo-ceo-idUSKCN0YG1A0. Accessed on 06th December 2018.
Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education,.
Sengupta, S., 2005. Brand positioning: Strategies for competitive advantage. Tata McGraw-Hill Education.
Statista, (2017). Statistics & Facts on the U.S. Apparel Industry. Available at: https://www.statista.com/topics/965/apparel-market-in-the-us/. Accessed on 6th December 2018.
Toften, K. and Hammervoll, T., 2009. Niche firms and marketing strategy: An exploratory study of internationally oriented niche firms. European Journal of Marketing, 43(11/12), pp.1378-1391.
Uniqlo, (2018). About Us. Available at: https://www.uniqlo.com/us/en/company/about-uniqlo-us.html. Accessed on 06th December 2018.
Wolf, (2017). Uniqlo Wants to Be America’s Perfect Fit. Available at: https://www.racked.com/2017/4/11/14962056/uniqlo-wants-to-be-americas-perfect-fit. Accessed on 06th December 2018.
Zott, C. and Amit, R., 2008. The fit between product market strategy and business model: implications for firm performance. Strategic management journal, 29(1), pp.1-26.
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