Tech and TikTokenomics - How Uniqlo's Digital Strategy Won Over Gen Z
In part 1, we covered Uniqlo’s history and the strategies that catapulted the brand from mom and pop store to global phenomenon. In this article, we focus on the business strategy and technology behind its contemporary success.
In 2023, a major upset rocked the fashion landscape.
The renowned Lyst Index, which analyzes fashion trends based on their user behavior, released the list of the world’s hottest fashion products. At the top of the list was not the $350 MSCHF Big Red Boots, the $625 Rick Owens Kriester Sunglasses, nor the $1000 Bottega Veneta Drop Earrings.
The list had crowned the Uniqlo Round Mini Shoulder Bag as 1st place. At a retail price of $19.90, the “Moon Bag” was the cheapest product ever featured in the luxury index and for good reason - over the past year it had gone viral on TikTok with over 100 million views, sold out numerous times, and earned the title of "the Gen Z Birkin" spotted on grocery runs and high-profile fashion week events alike.
So how has a brand which doesn’t even consider itself a fashion company repeatedly launched mainstream fashion hits? And how has Uniqlo become so beloved compared to other fast fashion giants like Zara and H&M? The answer lies in two key focii of the company: product development and consumer-facing technology.
World Class Product Development
Uniqlo's product development process is built on three core pillars:
Customer Feedback
Supply Chain Optimization
Manufactured Virality
First, the Uniqlo team places great emphasis on customer feedback, gathering hundreds of thousands of comments annually through various channels like call centers, chatbot queries, and TikTok. This feedback, combined with insights from focus groups, is directly fed to the product development team to inform their efforts to enhance Uniqlo’s garments. Rereleases are then formally announced via Uniqlo Update.
Next, Uniqlo has made substantial investments in its supply chain, particularly in procurement and quality control.
On the former, Uniqlo has incorporated premium materials like Supima cotton, Merino wool, and proprietary HeatTech and Airism fabrics into their clothing at prices far below industry average by leveraging bulk purchasing power and investing in R&D.
On the latter, a combination of man (i.e. Takumi, teams of skilled artisans) and machine (almost complete automation of certain factories with robotics companies Mujin and Exotec) has reduced costs while maintaining product excellence.
Finally, Uniqlo’s digital savvy is unparalleled among its rivals. While Shein, Zara, and H&M are regularly lambasted, Uniqlo has honed its viral playbook to become a online darling. Nowhere is this more apparent than TikTok.
One way Uniqlo stands out on TikTok is its segmented approach with separate accounts based on geographical locations. This allows them to deliver tailored content to audiences in different countries, enhancing engagement and relevance.
Furthermore, Uniqlo has adopted an alternative approach to influencer marketing. Instead of relying heavily on influencers, they focus on fostering organic user-generated content (UGC) by creating quality garments that will naturally go viral. Case in point: everyday user Caitlin Phillimore-Price single-handedly triggered the frenzy around the aforementioned Moon Bag with only a few hundred followers at the time.
This consistent product virality is partially due to collaborations with culturally resonant designers (e.g. Jil Sander) and brands (like Pokemon). These partnerships tap into hype culture and facilitate market expansion preserving the brand's signature minimalist aesthetic of its core products.
But even more crucial to Uniqlo’s online triumph is their ability to capitalize on Gen Z’s penchant for dupe culture. While dupes, or knock-offs, have always existed in the fashion industry (with even luxury brands ripping off indie designers), Uniqlo stands out by delivering quality, gender-neutral designs that are strikingly similar to the original and appeal to a broad audience.
Take the Pleated Straight Pants for example - the brainchild of Naoki Takizawa, who spent 2 decades at Issey Miyake and leads Uniqlo’s special projects team. Other notable dupes include the Faux-Leather One Handle Bag (inspired by the Polène Numéro Dix) and the Utility Work Pants (a replica of the Carhartt Double Knees).
By involving the customer in product development, investing in supply chain optimization, and leveraging a deep understanding of Gen Z’s style to become a tastemaker itself, Uniqlo has become one of the most dominant clothing brands of the 21st century. In the next section, we explore how external-facing technology investments complement viral products with viral experiences.
Consumer-Delighting Technology
While the pandemic led to a step-change in ecommerce adoption, brick and mortar remains the primary mode of shopping and an essential way consumers are introduced to a brand through immersive experiential environments. Uniqlo is no stranger to this fact, launching global flagships and various external-facing innovations to create delightful consumer experiences.
For example, in 2012 Uniqlo rolled out a magic mirror at their SF flagship to allow consumers to virtually “try on” 120 coats in 60 seconds using AR technology, which has since been used to create moving “Uniqlo” garments and murals. Even more interactive is the UTme app, where customers can draw and print their own designs on t-shirts and tote bags at certain stores.
Uniqlo has also explored “decentralizing” stores by placing best-selling items such as Ultra Light down jackets and Heattech tops in vending machines. Dubbed “Uniqlo To Go”, these machines are strategically placed at train stations and airports, catering to travelers who need essential pieces on the go.
Uniqlo’s chatbot and mobile app also help facilitate purchases and the physical store experience. The AI chatbot (named “IQ” after the middle letters of Uniqlo) and was developed using Google Cloud’s Dialogflow to help customers in find items online or in store, provide post-purchase support, and even create style recommendations based on horoscope signs. Their mobile app offers even more comprehensive features including an AI-assisted camera scan to provide exact measurements, which customers can then use for complimentary alterations in store.
But nothing shows Uniqlo’s advanced digital literacy quite like RFID chips. Embedded in garment price tags, these chips power seemingly magical consumer experiences like instant checkout where customers need only drop their cart into the self-checkout bin without individually scanning each item.
Uniqlo introduced RFID chips in 2016, driven by the decreasing cost of RFID chips (60 cents to 4 cents a tag) and their improved range and accuracy. Self-checkout was subsequently rolled out in 2019 and is now available in all U.S. and Canadian stores, as well as in 14 of the 25 markets where Uniqlo operates.
Funnily enough, instant checkout was a byproduct of Uniqlo’s original intentions with RFID chips - namely, the tracking of individual items from factory to warehouse to store to enable supply chain optimization. Today, RFID chips combined with behind-the-scenes AI software like Stanford-founded Jetlore, allow for highly accurate in-store inventory management and have reduced customer checkout time by 50%.
Closing Thoughts
Uniqlo’s relentless pursuit to delight customers with advanced online and in-store technologies on a material, software, and hardware level has led to its dominance as a modern day clothing behemoth.
As Tadashi Yanai, Uniqlo’s CEO, has repeatedly said: “Uniqlo is not a fashion company, it's a technology company.” Indeed, the next generation of tech titans might not resemble the traditional Apple and Google, but rather vertical industry dominators akin to Uniqlo.
Fashion 2.0 is upon us, and in this world, any brand lacking robust digital literacy will not survive. To those company leaders: be sure to take several pages out of Uniqlo’s playbook.
Stay tuned for my next article on digital fashion and why you should care.
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