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I did some strategy work for a very large UK fashion retailer who's at the complete opposite end of the "don't chase fashion" market. Everyone in that industry

I did some strategy work for a very large UK fashion retailer who's at the complete opposite end of the "don't chase fashion" market. Everyone in that industry is trying to emulate Uniqlo's margins and unit economics. This article talks about how they produce their fabric, but the thing they realised super early is how valuable _vertical integration_ can be in fashion retail. They own the end to end process, from raw material purchase upwards. They can do this BECAUSE of how limited their selection is, if you're a fast fashion retailer you always needs new materials and new patterns and new tooling so it's incredibly hard to chase vertical integration and strong unit economics. They get savings by pushing that risk and RnD onto dedicated manufacturers in places like Bangladesh. It's 'just in time' manufacturing in a pretty extreme sense. Because Uniqlo have so much less cardinality in their stock they can focus and optimise for it. It also enables them to control quality in a way few others can.

ksec 6y ago
Where I could read up more on it? Or are these sort of insider knowledge? ( If so, if you dont mind expand on it in a bit more detail )
- nindalf 6y ago
  The linked article is a good place to start. I thought it explained what makes Uniqlo tick pretty well.
- Joe8Bit 6y ago
  My knowledge is from consulting for fashion companies, so am not sure where to point you I'm afraid! Most fashion retailers work with contract factories. They design a garment (or line of garments) and then put out a tender to a set of factories in their approved supplier list. The factories then bid to manufacture those garments. The decision-making criteria for the fashion companies vary but are usually some combination of quality on offer, price and 'time to store'/turnaround time. This tender process can happen dozens or hundreds of times a year for big, high turnover fast fashion retailers. Some of these retailers do have their own factories, but most don't. The reason these retailers need to do this is because they're always trying to stay 'on trend' and have the latest, most fashionable items at the lowest cost. They're 'chasing the zeitgeist'. Uniqlo, on the other hand, doesn't chase fashion in the same way. They have a stable set of core garments they always sell in predictable (and VERY large) quantities. This means they can negotiate longer term, much larger scale deals with manufacturers that work out MUCH cheaper for them. It also means they can go 'up the value chain' and manufacture the fabrics and patterns and tooling themselves, reducing cost even further.
  - vorpalhex 6y ago
    You should write a longform on this.
ipnon 6y ago
In general, the less of a monopoly you have, i.e. the more competition you have, the greater the benefits of vertical integration.

ksec 6y ago

Where I could read up more on it? Or are these sort of insider knowledge? ( If so, if you dont mind expand on it in a bit more detail )

nindalf 6y ago
The linked article is a good place to start. I thought it explained what makes Uniqlo tick pretty well.
Joe8Bit 6y ago
My knowledge is from consulting for fashion companies, so am not sure where to point you I'm afraid! Most fashion retailers work with contract factories. They design a garment (or line of garments) and then put out a tender to a set of factories in their approved supplier list. The factories then bid to manufacture those garments. The decision-making criteria for the fashion companies vary but are usually some combination of quality on offer, price and 'time to store'/turnaround time. This tender process can happen dozens or hundreds of times a year for big, high turnover fast fashion retailers. Some of these retailers do have their own factories, but most don't. The reason these retailers need to do this is because they're always trying to stay 'on trend' and have the latest, most fashionable items at the lowest cost. They're 'chasing the zeitgeist'. Uniqlo, on the other hand, doesn't chase fashion in the same way. They have a stable set of core garments they always sell in predictable (and VERY large) quantities. This means they can negotiate longer term, much larger scale deals with manufacturers that work out MUCH cheaper for them. It also means they can go 'up the value chain' and manufacture the fabrics and patterns and tooling themselves, reducing cost even further.
- vorpalhex 6y ago
  You should write a longform on this.

ipnon 6y ago

In general, the less of a monopoly you have, i.e. the more competition you have, the greater the benefits of vertical integration.