Comparison of Zara and Uniqlo Retailers - Paper Example

2021-08-27 19:37:21
4 pages
907 words
University/College: 
Harvey Mudd College
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Essay
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Zara and Uniqlo are both international fast-fashion retailers dealing in clothing- each having more than 1,000 stores worldwide. Zara was first launched in 1975 in Spain and is the younger of the two. It belongs to textile heavyweights Inditex. Uniqlo was founded in 1994 in Japan. In November 2005, the fast retailing company purchased Uniqlo. Zaras mission statement is to adapt to what the customers want as quickly as possible, offering them sustainable fashion while Uniqlos mission statement is created truly great clothing with new and unique value, and to enable people all over the world to experience the joy, happiness, and satisfaction of wearing such great clothes. Despite Zara and Uniqlo dealing in the same product line, they are very different as far as their business models and strategies are concerned.

Stores

Due to Inditex international expansion, by the end of 2016, it operated 7,013 stores in 89 markets all over the world. 87% of Zaras stores are owned by the Inditex Company whereas the 13% are franchised. The various stores have similar sales 85% for the company-owned stores and 15% for the franchised stores. Inditex main brand Zara has 2162 stores worldwide 21% of these stores located in Spain.

During 2015, Uniqlo Japan added 36 extra stores and 56 stores were closed or were converted to employee-owned stores, therefore making the total number of Uniqlo's stores 811 worldwide. Uniqlo international added extra 165 stores are making a final of 798 stores. This represented a net addition of 93 stores in China, 22 in South Korea, 23 for Asia 5 for Europe and 17 for the United States. 90% of the total Uniqlos stores are owned by the company while the remaining 10% are franchised to the employees.

Business model

Zaras business model is peculiar in terms of flexibility, adaptability, customer orientation and continuity in the innovation field allowing them to respond to the market demands quickly. Zaras flexibility is ensured by the strong vertical integration owning the company, enshrining all phases of fast fashion venture such as the design, logistics, manufacturing, and sale in own stores. The customers are the center point of all phases, and the business model focusses on them with priority. The stores are characterized to consider the customer as the main asset. This is achieved by locating the stores at privileged points in the big cities, well-planned show windows, unique architectural design both inside and outside and exemplary customer services. Products are transported from logistic centers in Spain twice a week using trucks and airplanes. Zara keeps almost half of their products in-house at the disposal of 22 Spanish factories. The almost 50% remaining products are produced from 400 outside suppliers.

On the other hand, Uniqlo work on the basis of specialty store retailer of private label apparel (SPA) business model which takes into account the whole clothes-making process right from obtaining materials, product planning, design, manufacture and development through distribution management. The SPA model allows Uniqlo to develop peculiar in-house products, control the various procurement costs and flexibly adjusting the products to sit demand. Uniqlos R $ D centers always research on the latest fashions and lifestyle worldwide and also looking into new and changes in materials. They have fashion designers in the major cities of countries where their stores are located such as Tokyo, New York, Milan, and Paris. As far as material procurement is concerned, Uniqlo can secure stable, high-volume supplies of quality material at a low price by directly negotiating with the manufactures and ordering in volumes. Despite being a Japanese company, 70% of Uniqlos products are manufactured in China and control the production process; it deploys about 400 staff textile skilled artisans to production offices located in Shanghai, Ho Chi Minh City, Dhaka, and Istanbul. Uniqloss customers can buy products through both online and in-stores.

Marketing mix strategy

Product

Zaras products are designed in such a way that it attracts different categories of customers with different styles. Its collections are categorized into three main groups which include Women, Men, and Kids. All these clothing lines are complemented by other accessories such as bags, shoes, scarfs, jewelry, and perfumes.

Uniqlos main aim is to offer a mixed variety of affordable, innovative, stylish and high-quality garments thus, it provides clothes for men, women, and kids complemented with accessories.

Price

Zaras sets their product prices based on the market instead of basing it on production costs. The marketing branch set the prices of various garments based on information about what customers are willing to spend on clothes or accessories and then calculate whether the production costs requirements allow them to reach their targets.

For Uniqlo, the garments are cheap, and the prices are aimed at being affordable to each customer. Some garments such as UT t-shirts are priced higher. When introducing their products into a new country, Uniqlo uses penetration pricing strategy.

Promotion

Zara uses a pricing strategy called pull-type strategy to attract the various customers to the company whereby customers demand the products themselves. Zara achieves this by making sure it gets accurate and quick information on actual demand to minimize the time between design, production, and supply.

Uniqlo usually carries out promotional campaigns for their core products each season. In the campaigns, Uniqlo advertises the unique qualities of their products and even extend their advertisement on TV and in the other media.

Place

Zara is vertically integrated meaning the firm owns and effectively operates organization at distribution level of the distribution channel.

Uniqlo utilizes a one-level marketing system, whereby goods travel directly from manufacturers to retail stores. Their SPA model allows them to vertically integrate all the stages from design and production to the retail level.

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