DOI: 10.1002/joe.

21805

F E AT U R E

Zara vs. Uniqlo: Leadership strategies in the competitive

textile and apparel industry

Syed Tariq Anwar

Zara from Spain and Uniqlo of Japan are leading firms in the fast fashion sector
of the textile and apparel industry. An analysis of their corporate history and op-
erational strategies explains their success in a highly competitive global environ-
ment. Maintaining distinct competitive advantages in brand visibility and quality,
they continue to prosper through their ability to respond to consumer tastes, seek
economies of scale through their global value chains, cultivate supplier networks
that contain prices, and keep pace with Web-based marketing platforms and online
retailing trends. Their experiences offer valuable lessons in growth and international
expansion.

1  |   IN T RO D U C T ION Forbes magazine ranked Ortega the second richest person in

the world, with a net worth of $67 billion. Headquartered in
Characterized by a variety of business models, competitive Tokyo, Uniqlo’s history goes back to 1949. It is a subsidiary
supply chains, and niche endeavors, fast fashion firms make of Fast Retailing, which was founded by Tadashi Yanai. With
up a major sector in the global textile and apparel industry. a net worth of $14.6 billion, he is ranked the richest person in
Two of these firms, Zara and Uniqlo, have capitalized on Japan (Forbes, 2016). Both companies have achieved remark-
their ability to quickly manufacture clothing that reflect the able success and visibility in an industry with complex global
latest trends at an affordable price to become major players in value chains (GVCs) and diverse markets, and they continue
their field. Articles about each of the companies in The Wall to grow globally. Exhibit 2 and Exhibit 3 (page 28) outline
Street Journal, published 10 months apart, attest to the firms’ the firms’ development since their founding.
quick internationalization, sustained competitive advantages,
and well-formulated global strategies (Negishi, Mattioli, &
2.1  |  Zara: Quick to go global
Dezember, 2013; Roman & Kemble-Diaz, 2012).
Along with their competitors in the fast fashion sector, such as Throughout its expansion, Zara has remained competitive
H&M, Gap, and Benetton, (see Exhibit 1) Zara and Uniqlo have thanks to its fast-paced internationalization and niche-based
made significant strides in promptly responding to consumer supply chains, which include specialized and well-established
needs and fashion movements. These include a new “paradigm suppliers in the textile and apparel industry (Gallien et al.,
change” in the apparel industry (Choi, 2011, p. 85) and efficient 2015; García-Álvarez, 2015; Martinez, Errasti, & Rudberg,
distribution systems (Gallien, Mersereau, Garro, Mora, & Vidal, 2015; Tokatli, 2014; Zara, 2013−2017).
2015). Both Zara and Uniqlo employ business models that are In 1963, Amancio Ortega Gaona (founder and chairman of
staunchly competitive and oriented toward global growth. Inditex) entered the clothing business and grew his firm into a
major brand in Europe. Zara’s first store was opened in 1974 in
2  |   T WO CO MP E T ITO R S F ROM A Coruña, Spain. Between 1976 and 1984, Zara opened addi-
DI F F ER E N T PA RTS OF T H E G LOBE tional stores in various major cities throughout Spain. In 1985,
Inditex took the form of an apparel industry holding company
Founded by Amancio Ortega Gaona in Arteixo, Spain, in and from 1986 to 1987, the group focused on its Zara brand,
1974, Zara is part of Inditex, a Spanish multinational. In 2016 developing an extensive distribution system aimed at efficient

26 © 2017 Wiley Periodicals, Inc. wileyonlinelibrary.com/journal/joe Global Business and Organizational Excellence. 2017;36(5):26–35.
ANWAR 27

EXH IB IT 1   Fast fashion and related brands in the global textile and apparel industry (2014–2017)
*American Apparel (US) *Benetton (Italy) *Bershka (Spain)
*Bestseller (Denmark) *C&A (Belgium/Germany) *Charles & Keith (Singapore)
*Charlotte Russe (US) *Cotton On (Australia) *8seconds (South Korea)
*Esprit (Germany) *Comme ça ism (Japan) *Forever 21 (US)
*Gap (US) *Giordano (Hong Kong) *H&M (Sweden)
*H: Connect (Japan) *Kiabi (France) *Lolly Wolly Doodle (US)
*Mango (Spain) *Metersbonwe (China) *Miss Selfridge (UK)
*Mixxo (South Korea) *New Look (UK) *NewYorker (Germany)
*Next (UK) *Peacocks (UK) *Primark (Ireland)
*Pull & Bear (Spain) *Rainbow Shops (US) *Renner (Brazil)
*Riachuelo (Brazil) *River Island (UK) *rue21 (US)
*Shasa (US) *Teddy (Italy) *Topshop (UK)
*Urban Outfitters (US) *Wet Seal (US) *Uniqlo (Japan)
*Zara (Spain) *Zalando (Germany)
Source: Caro and Martínez-de-Albéniz (2014), company websites, Financial Times (various issues), Ranker (2017); The Wall Street Journal (various issues).

EXH IB IT 2   Zara vs. Uniqlo: Corporate and financial data In 1998, Zara launched Bershka, another clothing brand for
(2015–2016) young women and teenage girls. Additional Zara stores were
Zara subsequently opened in the United Kingdom, Turkey, Argentina,
Name Zara Expaña S.A.
Venezuela, United Arab Emirates, Japan, Kuwait, Lebanon,
and elsewhere (Zara, 2013−2017).
Parent company Industria de Diseño Textil (Inditex, Arteixo,
Spain)
In 2007, Zara established an online store and opened two
distribution centers: one in Hubsin Meco outside Madrid and
Country of origin/ Arteixo, Spain
headquarters
one in Onzonilla in the province of León, Spain. Zara’s new
stores locations included Croatia, Colombia, Guatemala, and
Year founded 1974
Oman. In 2010, the Zara Group operated in 77 countries with
Founders Amancio Ortega Gaona; Rosalía Mera
5,000 stores and introduced a new strategic environmental
Revenue $9.37 billion (Inditex: $22.09 billion)
plan, “Sustainable Inditex 2011-2015,” which was aimed at
Number of stores 2,169 (Inditex: 7,084) sustainable development, eco-friendly environmental prac-
Major competitors Benetton (Italy); Gap (US); H&M (Sweden); tices, and related areas of sustainability and awareness.
El Corte Inglés (Spain); Uniqlo (Japan) Zara went on to launch Uterqüe, a retailer of fashion acces-
Uniqlo sories, and to open a new distribution center in Palafolls in
Name Uniqlo Company Limited the province of Barcelona. In 2013, Zara recreated and repo-
Parent company Fast Retailing Company (Tokyo, Japan) sitioned its image based on four principles: beauty, clar-
Country of origin/ Tokyo, Japan ity, functionality, and sustainability. Additional stores were
headquarters opened in Armenia, Bosnia-Herzegovina, Ecuador, Georgia,
Year founded 1949 and Macedonia. In 2013, the total number of stores worldwide
Founders Tadashi Yanai reached 6,000. Zara has been ranked among the top 40 brands
Revenue $4.20 billion
in the world (Interbrand, 2016; MillwardBrown, 2016), and
as of 2017, the company continues to expand in global markets
Number of stores 958
and remains a successful fast fashion brand (Bonnin, 2002).
Major competitors Benetton (Italy); Gap (US); H&M (Sweden);
El Corte Inglés (Spain); Zara (Spain)
2.2  |  A more cautious approach at Uniqlo
Source: Uniqlo (2013−2017), Zara (2013−2017), Financial Times (various
issues), The Wall Street Journal (various issues). Uniqlo’s roots go back to 1949 with the founding of Ogori
Shoji in Ube City in Japan’s Yamaguchi Prefecture. In 1963,
operations. Additional stores were opened in Porto, Portugal; Ogori Shoji Co., Ltd., had a capital of 6 million yen. An off-
Paris; and New York. Between 1991 and 1997, the company shoot of Ogori Shoji, Uniqlo opened its first store in 1984, in
acquired Pull & Bear (formerly New Wear, S.A.) and the Hiroshima. The following year, the Uniqlo store in Yamagu-
Massimo Dutti Group, another apparel company from Spain. chi Prefecture was opened with great success and publicity.
28 ANWAR

EXH IB IT 3   Timeline and selected corporate developments: Zara vs. Uniqlo

Year Major Milestones and Developments
Zara (1963–2017)
1963–1974 Amancio Ortega Gaona (chairman/founder of Inditex, Spain) entered into the business of clothing industry. Inditex gradu-
ally grew into manufacturing and distribution in Europe.
1975–1984 Zara opened its first store in Coruña, Spain. Zara’s opened additional stores in major cities in Spain.
1986–1987 The Group put emphasis on its brand Zara; a well-planned distribution system was created.
1991–1997 Introduced Pull & Bear brand; acquired 100% of Massimo Dutti Group in 1995.
1999–2000 Inditex moved to Arteixo, Spain. Acquired the Stradivarius brand in the apparel industry.
2007 Zara opened online stores and two additional distribution Hubs in Meco (Madrid) and Onzonilla (León). The Group oper-
ated in 77 countries with 5,000 stores and implemented Strategic Environmental Plan (“Sustainable Inditex 2011–2015”).
2011 The Group created its multichannel retail strategy that aimed at online stores (including all brands).
2013 Zara recreated its image based on four principles: beauty, clarity, functionality and sustainability. Total stores reached
6,000 in global markets.
2016–2017 Zara continues to grow and expand in global markets.
Uniqlo (1949–2017)
1949 Ogori Shoji started a men’s store in Ube City, Yamaguchi Prefecture.
1963 Ogori Shoji Co., Ltd. was established and had a capital of 6 million yen.
1984 Uniqlo opened its first store in Hiroshima.
1991 Ogori Shoji Co., Ltd. changed its name to Fast Retailing Co., Ltd.
2001 Uniqlo opened its first store in London, UK.
2004 Uniqlo opened its first large-format store in Shinsaibashi, Osaka that provided 1,600 square meters of floor space to con-
sumers (store closed in 2010).
2006–2010 Uniqlo’s New York Soho store opened its doors and became the company’s first global flagship store. Uniqlo Oxford Street
Store in London (UK) opened its operations and was designated the second global flagship store.
2016–2017 The company continues to seek expansion in global markets.
Source: The Economist (various issues); Financial Times (various issues); Uniqlo (2013-2017); The Wall Street Journal (various issues); Zara (2013−2017).

In 1991, Ogori Shoji Co., Ltd. changed its name to Fast additional stores in the Philippines. As of 2017, the com-
Retailing Co., Ltd. In 1999, Fast Retailing listed its shares pany continues to expand, and it is considered one of the
on the first section (for large companies) of the Tokyo Stock world’s major fast fashion brands (Choi, 2011; Heffer-
Exchange. In response to its growth and in search of long- nan, 2011; Huang, Kobayashi, & Isomura, 2014; Uniqlo,
term opportunities, the company moved its headquarters to 2013−2017). Throughout its growth, Uniqlo has been
Tokyo in 2000. During the same year, Uniqlo started to sell selective in seeking its international outposts. This cautious
its products online. Three years later, the company opened approach in global expansion aims at reducing risks and
its first large-format store in Shinsaibashi, Osaka, with 1,600 failure (see Exhibits 4 and 5).
square meters of floor space (Fujimura & Ozasa, 2011;
Uniqlo, 2013−2017). Located in spacious facilities, such
stores typically generate sizable sales. 3  |   CHANGES IN A GLOBAL
In 2006, Uniqlo opened a shop in New York’s Soho. and in INDUSTRY
2007, Uniqlo’s Oxford Street Store in London was designated
the first global flagship store. Between 2009 and 2010, Uniqlo Ranging from small cotton growers to multinational manu-
opened stores in Singapore, France, Malaysia, and Russia. In facturers, firms in the global textile and apparel industry have
2011, the company embarked on a global alliance with the become heavily intertwined. The industry has been described
United Nations High Commissioner for Refugees (UNHCR), as “a matrix of interconnected structures and activities that
which established an “All-Product Recycling Initiative.” As provide multiple venues for marketing, merchandising,
part of this undertaking, Uniqlo recycled and donated cloth- designing, producing, and distributing textiles and apparel”
ing to refugees and displaced citizens throughout the world. (Kunz and Garner, 2007, p. 35). The most pervasive form of
In 2012, Fast Retailing acquired J. Brand Holdings, commerce in the world, “this business provides employment
LLC, a major fashion brand from Los Angeles and opened for more people than any other business segment, directly
ANWAR 29

EXH IB IT 4   Internationalization and global operations of Zara and Uniqlo (2017)

Africa: Egypt, Morocco, South Africa, Algeria

Asia-Pacific: Indonesia, Macau, South Korea, Thailand,

Kazakhstan, China, Taiwan, Japan, Hong Kong

Oceania: Australia

Americas Brazil, Canada, Chile, Colombia, Costa Rica,

Guatemala, Honduras, Mexico, Panama,
Paraguay, Peru, Dominican Republic, USA,
Uruguay
ZARA
Europe: Andorra, Denmark, Spain, Estonia, Croatia, Ireland,
Latvia, Luxemburg, Monaco, Norway, Portugal,
Switzerland, Slovenia, Finland, Turkey, Austria,
Greece, Bulgaria, Belgium, Germany, Canary
Islands, France, Hungary, Italy, Lithuania, Malta,
Netherlands, Poland, Romania, Serbia, Slovakia,
Sweden, UK, Czech Republic, Cyprus, Russia

Middle East: Bahrain, Jordan, Kuwait, Lebanon, Oman, Qatar,

Saudi Arabia, UAE

Asia-Pacific: Japan, China, Hong Kong, Taiwan, South Korea,

Singapore, Malaysia, Thailand, Philippines,
Indonesia

UNIQLO Oceania: Australia

Europe: France, UK, Germany, Belgium, Spain, Russia

North America: USA, Canada

Source: Uniqlo (2013−2017); Zara (2013−2017).

EXH IB IT 5   Sales of selected firms in the fast fashion sector (2015–2016)

25

20
Sales (in US $ billion)

15

10

0
Inditex (Zara) H&M Gap Uniqlo Beneon
(Color figure can be viewed at wileyonlinelibrary.com.)

Source: The Economist, Financial Times, The Wall Street Journal (various issues).

affording a livelihood to many people in every country in the Guilhon, & Roux, 2015; Kapelko & Lansink, 2015a, 2015b;
world” (Kunz, Karpova, & Garner, 2016, p. 2). Rivoli, 2009; Seyoum, 2007; The Economist, 2012, 2016). In
The members of this industry are diverse in size, value- 2015, the $3 trillion global textile and apparel industry accounted
added activities, and GVCs, which affect other business sec- for 2% of global GDP (Business2Community.com, 2015).
tors and entire countries worldwide (Browne, 2016; Gimet, Massive in reach and impact, the industry is strongly influenced
30 ANWAR

by its complex supplier networks and regulatory standards • Apparel manufacturers. These include apparel knitting
(Amador & Cabral, 2016; Gereffi & Luo, 2015; Gereffi & Lee, mills; facilities that design, cut and sew apparel; and
2016; Los, Timmer, & de Vries, 2015; Mudambi & Puck, 2016; those that manufacture accessories.
Timmer, Erumban, Los, Stehrer, & de Vries, 2014). Histori- • Retail outlets and marketing firms. These include depart-
cally, the global textile and apparel industry has been affected ment stores, specialty stores, mass merchandisers, dis-
by various countries’ labor and other regulatory policies and count stores, off-price retailers, and miscellaneous
multilateral agreements from the European Union, the World retailers (Oyson, 2011).
Trade Organization, the World Bank, and other organizations
(Ahmed & Peerlings, 2009; Saliola & Zanfei, 2009). Because of the involvement of a wide variety of firms in
Divided into men’s wear, women’s wear, and children’s the manufacturing process and retail operations, supply and
wear sectors, the apparel industry’s sales are based on the value chains in the apparel industry can be complicated and
retail selling price of the manufactured garments. With total interrelated. This affects pricing, delivery procedures, qual-
revenues of $633.9 billion, the women’s wear segment is the ity standards, and country-specific policies and regulations
most profitable—in large measure because of ever changing (Hassler, 2003, 2004; Kadarusman & Nadvi, 2013; Kaplin-
fashions and aggressive marketing worldwide (Kunz, Kar- sky & Farooqi, 2010; Kunz & Garner, 2007; Kunz, et al.,
pova, & Garner, 2016; MarketResearch.com, 2013). 2016; Su, 2013; Wenting & Freken, 2011).
Suppliers’ resources, locations, infrastructure, and net-
works are critical to the industry. Exhibit 6 provides an over-
4  |  INTERNATIONALIZATION
view of the textile and apparel industry’s GVCs. There are
STRATEGIES AT ZARA AND
four key players in the supply chain.
UNIQLO
• Textile mills. These include fiber, yarn, and thread mills,
as well as fabric manufacturers. There are also fabric fin- The literature of global strategy reveals that the internation-
ishing and fabric coating mills. alization process is dynamic because of multinational firms’
• Textile product mills. These encompass designers, fin- diverse markets and businesses (Anwar, 2015, 2016). Lead-
ishing mills, and product mills (for nonapparel textile ing to new markets and further opportunities for growth,
products, such as towels, sheets, and related items). global strategies, and orientation are essential to long-term

EXH IB IT 6   Global value chains in the textile and apparel industry

I. Textile Mills

*Fiber, Yarn & Thread Mills *Yarn Spinning Mills

*Yarn Thread Mills

*Fabric Mills *Broad Woven Fabric

*Narrow Fabric Mills
*Nonwoven Fabric Mills
*Knit Fabric Mills

*Textile & Fabric Finishing & Fabric Coating Mills

II. Textile Product Mills

*Textile Furnishing Mills *Carpet & Rug Mills

*Curtain & Linen Mills

*Other Textile Product Mills

III. Apparel Manufacturers

*Apparel Knitting Mills *Hosiery & Sock Mills *Sheer Hosiery Mills
*Other Apparel Knitting Mills *Outwear Knitting Mills
*Underwear/Nightwear Knitting Mills
*Cut & Sew Apparel Manufacturing *Cut & Sew Apparel Contractors
*Men’s and Boy’s Cut Sew Apparel Manufacturers
*Women’s & Girls Cut & Sew Apparel Manufacturers

*Other Cut & Sew Apparel Manufacturing *Infants’ Cut & Sew Apparel Manufacturers
*Fur & Leather Apparel Manufacturers
*Apparel Accessories & Other Manufacturing

IV. Retail Outlets & Marketing Firms Department stores; specialty stores; mass merchandisers; discount stores; off-price retailers; online retailers

Source: Adapted from Kunz and Garner (2007, p. 38); Kunz, Karpova and Garner (2016, p. 68). Also see Fernandez-Stark, Frederick and Gereffi (2011,
pp. 1–18); Gereffi and Memedovic (2003, p. 5).
ANWAR 31

success (Li, Qian, & Qian, 2015; Peng, 2013; Swoboda & In terms of firm-specific weaknesses, online sales and
Hirschmanna, 2016; Talay, Townsend, & Yeniyurt, 2015; Web-related companies are a major threat to both Zara and
Tallman, 2009; Yi, Batra, & Siqing, 2015; Yip & Hult, Uniqlo. Zara’s global presence is a major asset to the company
2011). A comparison of Zara and Uniqlo shows that these and its brand identity. Uniqlo has a weaker position, since the
apparel manufacturers maintain well-established operations company has no stores in Africa, Central America, or South
in their home countries as well as in global markets. Both America. Unlike Zara, Uniqlo also has limited operations in
firms enjoy excellent brand reputation and are headed by Europe and North America. Zara’s vast network of store loca-
experienced leaders. tions in Europe is a significant competitive advantage.
An analysis of the strengths, weaknesses, opportunities, Worldwide, Zara and Uniqlo have taken their own paths
and threats (SWOT) facing Zara and Uniqlo is presented in to growth in both emerging markets and developed coun-
Exhibit 7. In terms of firm-specific strengths, Zara is clearly tries. Zara remains ahead of Uniqlo in many markets because
ahead of Uniqlo because of its global presence, manufactur- of its size, sales, and supplier networks. Exhibit 4 shows
ing networks, and efficient supply chains, which enable the that in terms of global expansion, Zara is definitely ahead
company to offer 2,000 to 4,000 clothing items in its stores of Uniqlo because of the sheer number of its retail outlets.
(Parietti, 2015). Zara’s efficient supply chains and its busi- Uniqlo’s presence beyond the Asia-Pacific region is limited.
ness model remain an industry standard. Looking ahead, both companies will have to face threats

EXH IB IT 7   Zara vs. Uniqlo: SWOT analysis; growth and global expansion (2016–2017)
Zara Uniqlo
Firm-Specific Strengths: Firm-Specific Strengths:
*Founder (Amancio Ortega Gaona) is well known in the industry. *Tadashi Yanai’s leadership is well known in the industry.
*The largest apparel company in the world from Spain. *Fast-growing apparel company from Japan.
*Maintains excellent supply chains and technology network in global *Brand reputation is improving in emerging markets and North America.
markets.
*Fast-growing brand in emerging markets; seeking online retailing.
*Excellent brand reputation in Europe and North America. *Heritage is a big asset; familiar with the industry.
*Main suppliers are located in 50 countries; 60% of production *Main suppliers are mostly in Asia.
facilities are close to Spain.
*Quality control standards are superior.
Firm-Specific Weaknesses: Firm-Specific Weaknesses:
*Online retailers and Web sales are major threats. *Uniqlo as a brand is still unknown and untested in many global markets.
*Competition in emerging markets is growing. *Competition in emerging markets is tough.
*Fast supply chains are becoming available to competitors. *Fast supply chains are becoming available to competitors.
*Fast supply chain formula is not successful everywhere. *Costs are going up; difficult to target developed countries.
*Costs are going up; difficult to target developed countries. *Quality control and product standards can pose problems.
*Quality control and labor practices can be challenging. *Labor practices in developing countries can be challenging.
*Senior management is mostly from Spain; it can be a negative PR problem. *Senior management is from Japan; limited opportunities for growth.
*No locations in Africa, Central America, and South America.
*Limited visibility in Africa. *Fewer stores in Europe and the US.
Opportunities in Global Markets: Opportunities in Global Markets:
*Emerging markets carry good prospects for expansion. *Emerging markets can carry good prospects for expansion.
*Developed countries can provide good opportunities for growth. *Developed countries can provide good opportunities for growth.
Major Threats from Competitors: Major Threats from Competitors:
*Strategies have been copied by competitors. *Competitive advantage has been copied by competitors.
*New trends and fashion markets are becoming complex. *New trends and fashion segments are becoming complex.
Issues in Growth and Expansion: Issues in Growth and Expansion:
*2008 global financial crisis affected company sales. *2008 global financial crisis affected company sales.
*Online retailing is complex and competitive. *Online retailing is complex and competitive.
Source: Bloomberg Businessweek; The Economist; Financial Times; Fortune; The Wall Street Journal (various issues).
32 ANWAR

from competitors that imitate their operational and market- Uniqlo is comparatively new to global markets and remains a
ing strategies. In the fast fashion sector, technology and the low-profile player in North America and emerging markets.
growth of niche companies have made it easier for competi- Supplier networks are critical to internationalization and
tors to copy new trends. This is particularly a problem in the long-term growth. Whereas Zara announced a major initia-
Asian and South American markets, where small and mid- tive regarding internationalization and expansion (Mulligan
size firms have proven to be agile and resilient. Growth in the 2010), Uniqlo has often sought organic growth based on high
fast fashion sector has been spurred by online retailing, which traffic areas and regional markets. Although the company
has become a major competitive tool. Web-based business wants to expand in Asia and North America in order to take
models are complex, however, and can present technological advantage of consumer demand and growth opportunities
and logistical obstacles. Both Zara and Uniqlo have taken on there (Negishi, Mattioli, & Dezember, 2013), Uniqlo remains
these challenges with their Web-based businesses and plan wary of its competitors in those regions. It will likely take
on becoming ever more active players in this area. Uniqlo several years before it can be the size of Zara.
Both companies have encountered a variety of problems in
emerging as well as developed markets (Dudley, Devnath, &
4.1  |  Future prospects for Zara and Uniqlo
Townsend, 2013) and face a host of industry-specific trends
As of 2017, Zara and Uniqlo remain major global brands in (see Exhibit 8). Competition for young consumers around
the fast fashion industry and appeal to diverse markets and the world has intensified. At the same time, it is difficult to
niche segments. Valued at more than $1.24 trillion, the global expand operations in countries whose markets are dominated
apparel industry touches every corner of the world. Offer- by local brands. Zara and Uniqlo often have to contend with
ing iconic products and brand innovation, Zara and Uniqlo fast emerging firms that imitate their business models and
are noted for their unique designs and profitable customer organizational systems. In emerging markets they also often
loyalty (Hubert et al., 2017; Jindal, Sarangee, Echambadi, & have to deal with consumers’ tendency to favor native busi-
Sangwon, 2016; Kumar, Bezawada, Rishika, Janakiraman, nesses, as well as with protectionist government regulations
& Kannan, 2016). As shown in Exhibits 4 and 7, both have and local textile monopolies. Textile-related environmental
the extensive sales networks and organizational capabilities regulations are another concern, demanding bold initiatives,
needed to operate globally. new strategies, and financial resources. The companies’ pre-
Regarding corporate-specific resources, capabilities, and vious experiences in this area can be important in developing
brand identity (von Wallpach, Hemetsberger, & Espersen, timely and appropriate responses in this regard.
2017; Zollo, Bettinazzi, Neumann, & Snoeren, 2016), Zara is Sourcing has become a particularly critical issue in the
much stronger than Uniqlo, particularly in Europe. The com- textile industry (Puranam, Gulati, & Bhattacharya, 2013).
pany has become adept at producing fast fashion aligned with The global textile and apparel industry depends heavily on
local tastes. This capability is a major asset that likely will cotton as a raw material. In recent years, cotton prices have
lead to further growth and internationalization for Zara. The gone up because of supply shortages, weather-related disrup-
company’s brands are also well known in emerging markets. tions, competition, and government policies. As a result, raw

EXH IB IT 8   Global textile and apparel industry: Changing business environment and industry-specific trends (2016–2017)
Major Issues and Variables Business Environment and Industry Trends
Company-specific issues: Size of the global apparel industry and its retail sectors surpass $1.24 trillion.
Industry-specific issues: The apparel industry is a global industry that provides millions of jobs and business opportunities to large and
small firms. Transaction costs have gone up because of rising prices of raw material (cotton) and other inputs.
Technology-specific issues: New innovations and technologies are critical in the apparel industry. These require financial capital and
established networks.
Cost-specific issues: Cost of raw material (cotton) has gone up. Only well established companies with infrastructure have the
financial resources to get into new markets and expand globally.
Competition in global markets: Industry competitors are many and competition is intense, creating diverse markets and complex segments.
Global value chains: Global value chains are dynamic, complex and mostly buyer-driven. Supplier networks often change and can
be costly for new entrants as well as established manufacturers.
Future trends: Demand in emerging markets and developed countries is expected to grow. Globalization and craving for
efficient supply chains have been heightened. Internationalization and growth are available to cash-rich
manufacturers that plan on expanding in global markets.
Source: Bloomberg Businessweek, The Economist, Financial Times, The Wall Street Journal (various issues). Also see Fernandez-Stark, Frederick & Gereffi (2011,
pp. 1–18); Gereffi and Memedovic (2003, pp. 1–25).
ANWAR 33

material costs for Zara, Uniqlo, and other fast fashion firms • Stable organizational structures contribute to consistent
have increased. growth in domestic and global markets. Both Zara and
The GVCs that these fashion houses depend on are taking Uniqlo have capitalized on their operational efficiencies
new forms and becoming more complex because of emerging and brand identity in their markets at home and abroad.
technologies, limitations on the availability of raw materi- • Industry practitioners need to monitor global trends in
als, and changes in manufacturing (The Economist, 2016). the niche segments that are critical in the fast fashion
Traditionally operating in China, Pakistan, India, and Turkey, sector, such as fashion consciousness, prestige sensitiv-
GVCs have emerged in the new textile centers of Bangladesh, ity, and brand appeal (Casidy, 2012). Consumer attitudes
Vietnam, and Cambodia. In fact, Bangladesh has become the regarding such topics are particularly important when
world’s second largest exporter of apparel, after China (Vara, dealing with millennials in the global textile and apparel
2016). Although traditional manufacturing centers will con- industry.
tinue to be part of the global textile and apparel industry,
fashion houses will continue to look for low transaction cost While serving their various stakeholders, Zara and Uniqlo
networks and operational efficiencies available in developing have focused on customer-centric growth (Simon, van den
countries. Driest, & Wilms, 2016). From a marketing perspective, the
Every business is heavily influenced by the Internet, Web- two companies engender loyalty and psychological owner-
based business models, social media, and supplier networks ship among their consumers because of good quality and
(Felix, Rauschnabel, & Hinsch, 2017; Kumar et al., 2016). reasonable prices (Sinclair & Tinson, 2017). Thanks to their
Zara and Uniqlo have pursued global strategies that are efficient GVCs, well-tested business models, and distinct
informed by the Web and social media as well (Gamboa & core competencies (which include company- and product-
Gonçalves, 2014). Tapping into the trend of offering custom- specific knowledge and R&D) and competitive advantages,
ers both value and a “journey” that encourages interaction Zara and Uniqlo have shown themselves to be indefatigable
and identification with a product (Kumar & Reinartz, 2016; in their quest to remain at the top of the global textile and
Lemon & Verhoef, 2016), Zara and Uniqlo use social media apparel industry’s fast fashion segment.
and Web-based models to target their diverse markets and
niche segments.
ACKNOWLEDGEM ENT

5  |   L E S S O N S L E A R N E D ON T HE An earlier version of this article was presented at the 2014

PATH TO S U C C E S S Southwest Case Research Association (SWCRA) Conference
in Dallas, Texas, March 12–13, 2014, where it received the
The experiences of Zara and Uniqlo show that firm-specific 2014 McGraw-Hill Education Distinguished Paper Award.
strategies are critical when seeking global expansion (Pari- The author thank two anonymous reviewers as well as con-
etti, 2015). Zara from Spain remains a first-mover global ference session presenters Lawrence Silver, Steve Vitucci,
brand when dealing with internationalization and long-term Rodney C. Vandeveer, Michael Menefee, and John K. Mas-
growth. Japan’s Uniqlo, on the other hand, is a low-profile ters for their helpful comments and suggestions.
player that remains cautious in its global expansion. From
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Syed Tariq Anwar, DBA, MBA, is a professor of marketing
ment in the U.S, textiles and clothing industry. International Busi-
and international business in the Department of Management,
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Simon, M., van den Driest, F., & Wilms, T. (2016). Driving customer- Marketing & General Business at the College of Business,
centric growth: A practical roadmap. Journal of Advertising West Texas A&M University in Canyon, Texas. He received
Research, 56(2), 159–168. his MA in public administration from University of the Punjab
Sinclair, G., & Tinson, J. (2017). Psychological ownership and music in Lahore, Pakistan, and his DBA and MBA degrees from U.S.
streaming consumption. Journal of Business Research, 71, 1–9. International University. Dr. Anwar’s research interests are
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Industrial Management & Data Systems, 113(1), 23–38.
ing markets, international joint ventures, and mergers and
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pay off? An analysis of leading foreign and domestic multinational
acquisitions. He can be reached at sanwar@mail.wtamu.edu.
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