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Friday, February 13, 2015

Uniqlo – Two Reasons Why Success is Inevitable in the Canadian Market

It has been a hectic and disheartening month for retailers in Canada the past month. With retail giants such as Target, Sony, and other stores such as Mexx announcing their withdrawal from the Canadian market, one can take this as a warning and make assume that Canada has become a fruitless, no-go zone for retailers.


One store however, Japanese clothing giant Uniqlo has set their ambitious eyes on the Canadian market. They have recently just announced their plans to expand into Canada and plans of two flagship stores being opened in Toronto’s Eaton Centre and Yorkdale Centre. For Uniqlo, expansion into Canada should be a no-brainer as there are many convincing reasons why they would succeed in the Canadian market.    



Reason no.1 – Favorable consumer demographics

Uniqlo has had an explosion of growth in the past decade, quickly reaching the number one spot as the biggest clothing retailer in Asia. This is complimentary when looking at consumer demographics in Canada, as one out of every five people in Canada are foreign born. As well looking at immigration from 2006-2011, 59.6% of new immigrants came from Asia. These statistics can have huge implications for Uniqlo, as this means that they already have a huge number of consumers already familiar with the brand and have had contact with the brand. This is a rare competitive advantage that not many retailers have the luxury of being given when expanding into a new country.

Considering that Canada is one of the most multicultural countries in the world, and that spending by immigrants from Chinese and South Asian Canadians totaled 104.4$ billion in 2013, this is a huge opportunity for Uniqlo to capture.

Personally, I have visited Uniqlo when visiting relatives in China and love their colorful extensive products. With so many immigrants from Asia in Canada, shopping at Uniqlo would be a nostalgic and pleasing experience, an advantage handed to Uniqlo before they even set foot in Canada.

Uniqlo Store in Nanjing, China


Reason no.2 – Learning from Failure

Uniqlo has in the past expanded into countries outside of Asia. They currently have stores operating in the UK and US. Uniqlos’ expansion into the United States was generally quite successful; their expansion into the UK was a different story. Uniqlo had opened 21 stores in the UK in 2006, and by 2011 only eight remained. The reason the stores failed is because Uniqlo had expanded too quickly, and set for itself big hairy audacious goals, which were tantalizing to giant retailers such as Target.  In the end, the goals were not met as Uniqlo did not have a major brand identity in the UK. 
In Canada, rather than setting big hairy audacious goals, they have decided to expand progressively, starting with Toronto, then onto the mother major Canadian cities such as Vancouver, Montreal, Calgary and so on. This strategy, accompanied by the fact that Uniqlo already has a brand presence and identity here in Canada thanks in part to the consumer demographics, will inevitably help lead them to their success.

Uniqlo CEO Tadashi Yanai (2nd from right) at a store opening in Ginza, Tokyo

Sources:

http://www.biv.com/article/2015/1/japans-uniqlo-store-coming-toronto-and-vancouver-n/
http://www.retail-insider.com/retail-insider/2014/6/uniqlo
http://www12.statcan.gc.ca/nhs-enm/2011/as-sa/99-010-x/99-010-x2011001-eng.cfm#a2
http://monsooncommunications.ca/2015/01/27/immigrants-in-canada-just-how-big-is-their-spending-power/
http://www.businessinsider.com/the-story-of-uniqlo-2013-4?op=1


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