Supply Chain in the Global Market: Zara, H&M, and Uniqlo

Subject: Management
Pages: 2
Words: 677
Reading time:
3 min
Study level: Bachelor

Comparing and Contrasting Zara and H&M

Zara and H&M are clothes retailers that target a similar market both demographically and economically. The two target middle and high-class buyers distributed in urban and suburban areas. Zara and H&M enjoy broad market ranges in their respective countries, Spain and Sweden, respectively. Zara sells ‘fast fashion’ while H&M sells seasonal selections as their strategy to minimize marketing costs. Zara does not spend on advertisements because its customers are already aware of the production period. Similarly, customers for H&M are aware of their production season, reducing marketing costs. Being known for ‘fast fashion’ and seasonal, respectively, helps the customers distinguish between original and counterfeit products for the two companies.

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Despite sharing the above similarities, Zara and H&M are different in their operations and management control. For instance, Zara does not conduct advertisements for its products because customers know that their products are ‘fast fashion’ and are always available in the market. Instead, the company directs the funds intended for advertising toward opening new retail shops for the company. Conversely, H&M, as a seasonal seller, minimizes marketing costs because its customers are aware of their production period; hence only does minimal advertisements to differentiate its products from others. Its marketing cost is, therefore, higher than that of Zara. Zara also manufactures its brands to minimize manufacturing and advertisement costs. Contrastingly, H&M partners with other factories to manufacture the clothing. The two companies share some similarities but differ in their marketing costs and ability to differentiate product offerings.

Uniqlo’s Competitive Advantage

Uniqlo is a Japanese clothes-wear company that targets adults as its main customers. It has experienced growth world-widely attracting more customers due to its affordable pricing and high-quality products. Consumer satisfaction is their main drive-in business. It enjoys a competitive advantage because it has a vision that seeks to promote its sales and become the number one seller of retail clothes in the world. The company provides a wide range of clothes to its customers at relatively affordable prices and targets middle and high-income families as their customers. Uniqlo enjoys a competitive advantage because its customers receive products of the quality they desire, which is up to trend at fair costs.

Therefore, the business enjoys a large fan base compared to its rivals.

Uniqlo’s Techniques in Reducing Expenses

For Uniqlo to provide commodities at a low price, its management has engaged in various activities to help manage low costs. Maintaining low costs dictates a consistent profit that aids the company in availing its products cheaply. One of the techniques used by the management to reduce costs is directly negotiating with textile manufacturers. Engaging directly with textile manufacturers eliminates brokers who inflate material costs. In turn, the business enjoys low costs and economies of scale from the textile manufacturers. The business does not own manufacturing factories; instead, it mandates the work to other companies who make the products as directed, transferring the manufacturing costs to the other manufacturer and eliminating extra costs due to material wastage. Last, Uniqlo’s management has an active customer care service where customers air out their worries, to which the company responds instantly and prevents further customer dissatisfaction. An active customer care desk helps the business become aware of its weaknesses and prevents the costs of manufacturing products that dissatisfied customers cannot buy.

Uniqlo’s Strategies for the U.S and Europe Markets

To be successful in the U.S and Europe, Uniqlo needs to make a few changes in its strategy and approach to the market demands. The company should consider having a variety of products. They can increase varieties of products by scaling up the number of production cycles in a business year. Increasing the number of product cycles gives room for better ideas depending on the trending demands from customers. Uniqlo should have production seasons where they manufacture the products as per the demands of the customer. Fashion should be dynamic and not predictable or monotonous. The company should also embrace a more robust e-Commerce advertising strategy, sales, and customer care services approaching a larger market size and audience.