Our Uniqlo SWOT Analysis investigates the internal and external factors that impact the operations of Uniqlo, such as strengths, opportunities and threats.
Today's article is going to be a treat for casual clothes lovers. People who have a taste for casual, comfortable, and low-priced clothes will find this article very interesting since today, we are going to discuss their favorite brand Uniqlo!
Suppose you run away from dressing formally and prefer wearing comfortable jeans and a T-shirt. In that case, you must have heard about Uniqlo. In case you would have missed out on this amazing brand for casual clothing, after reading this article, you'll definitely head to the nearest branch of Uniqlo.
Uniqlo caters to men, women, and children who want to wear good quality casual clothes. In addition, the simplicity of the brand attracts people who don't like big names or logos on their clothes.
Since Uniqlo is one of the top casual clothes brands spread across the globe, today we have decided to conduct Uniqlo SWOT Analysis to see the internal and external factors that impact the operations of Uniqlo, a perfect companion to our PESTLE analysis of Uniqlo we conducted recently.
SWOT Analysis is a business tool used by different businesses to analyze the strengths, weaknesses, opportunities, and threats organizations face.
Before we proceed further to carry out the Uniqlo SWOT Analysis, let's have a look at the history of Uniqlo to get an insight into the brand and its operations.
Uniqlo is a Japanese clothing brand famous for offering casual clothing since 1984. The brand opened its first store in 1986. Uniqlo came into existence after a man named Tadashi Yanai decided to switch from his father's clothing business to opening an outlet for casual clothes in Japan.
The idea of casual clothing came to his head after he went to the US to study. From there, he got inspired by different casual clothing brands to start a similar brand in Japan to cater to the needs of his own people.
The first store of Uniqlo was opened in Hiroshima in 1984. After that, the brand kept growing. Today, almost 802 Uniqlo stores in Japan and 2,347 outlets are present worldwide.
Uniqlo has a high annual revenue turnover due to high demand. In 2021, Uniqlo managed to generate revenue of $19.4 billion, showing a 6.2% increase in its revenue compared to 2020.
Uniqlo also manages to earn vast sums of revenue through selling online. In 2021, clothing brands' revenue from online sales grew by 13.5% to reach more than $1,500 million.
The famous clothing brand is also responsible for providing employment to 55,500 employees worldwide.
Uniqlo is ranked among the top clothing brands in Japan due to its unique and good-quality products.
Now that we have discussed Uniqlo's history and current situation, let's proceed further and carry out its SWOT Analysis. We will be able to analyze the internal and external factors affecting the operations of Uniqlo by constructing a SWOT template.
Before we start the SWOT analysis, I would recommend all of you looking at some examples of SWOT analysis to get an idea of what SWOT analysis is.
Uniqlo's Strengths
The strengths of an organization mark the strong points of an organization that helps it grow. Every organization is looking for ways to increase the strength of its organization. Strengths are considered internal factor that affects the operations of an organization.
Strong Demand Within Japan
Every renowned brand is first recognized locally, then it spreads its outlets to other parts of the world. High local demand for a brand's product supports the brand and helps it expand internationally.
The demand for Uniqlo's products is very high in Japan. Almost half of its total revenue is generated from the 809 Japanese outlets out of 2,347 total outlets.
High Sales Through E-Commerce
As the world is getting technologically advanced, along with physical stores, online stores are also responsible for selling products. For example, all big clothing brands have developed online stores. Through these stores, products are sold across the globe.
Uniqlo is among the few brands with high sales through e-commerce. In 2021 Uniqlo sold products online worth $1,500 million. Looking at the number of sales, we can say that Uniqlo has a strong online presence.
Low Prices
In a world of high prices, people always look for low-priced products. Therefore, if any brands offer good quality and low-priced products, consumers choose to substitute those brands with overpriced brands.
Uniqlo is known for its reasonable prices worldwide. Its intelligent operational strategies lower the cost of operations. As a result, lower-priced products are offered to consumers in the market.
Innovative Products
Consumers always expect brands to innovate to cater to their needs. However, very few brands, especially in the clothing industry, spend on R&D to provide innovative products in the market.
Uniqlo is among the few clothing brands that innovate to produce advanced clothes. For example, Uniqlo recently developed a Heattech clothing material that converts moisture into heat to keep people warm in winter.
Uniqlo's Weaknesses
Weaknesses are any organization's weak points that prevent an organization from achieving high goals. Every organization possesses weaknesses. However, only great organizations have the potential to convert their weaknesses into strengths.
Weak International Presence
Every brand plans to expand internationally to achieve growth and increase revenue. International expansion can really help brands to increase their customer base and help them get financially strong.
Although Uniqlo has a significant presence in Japan. Every other road has a Uniqlo outlet. However, there is a relatively low international presence of Uniqlo. Only 1,545 Uniqlo branches are present internationally.
Controversies
Controversies cause significant damage to a brand. Brands not only lose customers due to the bad name earned through controversies, but they also suffer financially in the form of lawsuits.
Uniqlo has been a part of some of the controversies that have damaged its public image and caused financial losses.
For example, a few years back, Uniqlo's advertisement led to protests in South Korea since the ad was accused of mocking South Korean forced laborers. This caused Uniqlo to experience losses since South Koreans boycotted Uniqlo.
Poor Working Conditions
No matter how big a brand gets, it should never neglect the true heroes behind its success, its entire workforce.
Despite being such a famous brand, Uniqlo has unsafe working conditions and offers low wages to its workers. Such neglecting behavior causes disappointment in workers, and as a result, their performance declines.
Area Specific Products
Any brand that operates internationally should manufacture products that can be consumed all over the globe. Producing goods that are only consumable in a specific area can negatively impact the brand's sales.
Although Uniqlo operates in different countries across the globe, it is still considered that Uniqlo makes products only catering to the needs of Asians. For example, Uniqlo's famous heattech clothing, a big success in Asia, failed in the US since it was not made according to US weather.
Uniqlo's Opportunities
Opportunities are the potential chances available for organizations to increase their growth. Availing of these opportunities on time can really benefit the organizations.
Increase International Presence
Brands with low international presence are always looking for ways to increase their global presence since it results in high revenue.
Although Uniqlo has a low international presence at the moment, Uniqlo can increase its international presence by increasing its presence in countries where it is already operating. Moreover, it could also move its operations to newly developing countries in Asia and Africa.
Improved Advertisement
Advertisement plays a significant role in making a brand successful. Every successful brand has applied good advertisement policies to spread awareness among people about its products.
Uniqlo can improve its advertisement by sponsoring sports events so that the maximum number of people are aware of the brand globally. This can really increase the customer base of Uniqlo.
Portfolio Expansion
In business, it is essential to expand your portfolio to increase revenue streams. To increase revenue and obtain growth, brands need to expand their portfolio and start offering other products or services.
To expand its operations, Uniqlo can expand its portfolio by introducing a sports gadgets section in its outlets. Naturally, this will attract other customers besides the usual attire consumers.
Uniqlo's Threats
This section is the last section of the SWOT analysis. It analyses the threats faced by organizations through the external environment. So let's proceed further and see the threats Uniqlo faces.
Russia-Ukraine War
Geo-political tensions can affect business worldwide. Recently, the Russia-Ukraine war has affected the operations of thousands of brands, and Uniqlo is no exception.
Due to the war, Uniqlo decided to suspend its operations in Russia. This decision has caused a decline in the demand for Uniqlo products. Furthermore, if this war continues for a long time, Uniqlo won't be generating revenue from Russia. Hence, a decrease in revenue will be observed with time.
Pandemic
Covid-19 has adversely affected many businesses across the globe. The imposition of lockdowns has caused losses to many industries. For example, in 2020, Uniqlo's revenue dropped by 12.3% compared to 2019 due to lockdowns worldwide.
After the recent wave of Covid in China, Uniqlo is expecting a significant loss in profit in China due to strict lockdown policies of the Chinese government.
High Competition
For any company, high levels of competition always pose a threat since high competition causes division of market share. This division results in low revenues and profits, and none of this is acceptable to any company in the market.
Uniqlo also has to face a constant threat from its competitors since the level of competition in the clothing industry is very high. Uniqlo not only competes with local brands such as Junya Watanabe, Sacai, Yohji Yamamoto, etc. It also competes with international clothing brands such as Zara, Gucci, etc.
All this competition can cause a reduction in the profit margin of Uniqlo since people can easily switch from Uniqlo to any of these brands if Uniqlo doesn't offer the right quality or price.
Recession
A global recession is always considered a threat by businesses. Although recessions don't often occur, a global recession seems inevitable after the Russia-Ukraine war and post Covid-19 effects.
Like any other business, Uniqlo will also feel threatened by the recession since a recession lowers people's standard of living. As uncertainty increases, people tend to save more and consume less.
If a recession takes place, the demand for Uniqlo's products will decrease. As a result, the revenue of Uniqlo will also decrease.
Final Thoughts about the Uniqlo's SWOT Analysis
Now that we have reached the end of this article, let's summarise what we have done so far. We started off this article by discussing the history of Uniqlo. Next, we came to know how the brand came into being and what are its unique selling points.
After that, we analyzed the current performance of the clothing brand and shed light on its operations. For example, we learned that Uniqlo is also operating across the globe besides Japan. Then we discussed the revenue of Uniqlo and came to know how much employment it generates worldwide.
After getting insight about Uniqlo, we went further to carry out Uniqlo's SWOT analysis. Through SWOT analysis, we learned about the internal and external factors affecting the operations of Uniqlo.
We then individually discussed Uniqlo's strengths, weaknesses, opportunities, and threats.
This SWOT analysis was carried out in the form of an essay. However, the findings of the SWOT analysis can also be represented in the form of a SWOT Matrix. Representing the findings in the form of a SWOT Matrix, or a SWOT table, is considered more efficient.
In the end, we assume that you will find this article interesting, and after reading it, you guys will learn how to conduct a complete SWOT analysis.
