Uniqlo's Secret to Success (Hint: It's in the Numbers)

Uniqlo

Photo: Getty Images

A look inside the Uniqlo Flagship store on Fifth Avenue in New York City.

When the going gets tough, the conventional wisdom is that belt-tightening works: cut head count, maximize profits. But anyone who's ever wandered a near-empty store, unassisted, trying to find jeans in their size, would tell you otherwise.

Uniqlo is one store that has defied this conventional wisdom. The New Yorker's James Surowiecki has an interesting case study of the Japanese fast-fashion giant in the magazine's new Style Issue.

As he summarizes it, the retailer has a simple strategy: it "hires a lot of people, and spends a lot of time training them." For example, a whopping 400 people are working at the 85,000-square-foot Fifth Avenue store at any given time. The company also invests a lot of energy into employee satisfaction. Those who are content stay with the company—which equals less turnover, ultimately reducing hiring expenses.

Surowiecki contrasts Uniqlo with businesses like Home Depot and Circuit City, which have cut swaths of their staffs at a cost to their profits. In 2000, the former slashed their roster and transformed many full-time workers into part-timers, which ended up hurting sales. Circuit City made a similar blunder in 2007, eventually going bankrupt.

So the secret to Uniqlo's success may just be employing more people, not less. The article cites a Wharton business school study which found that every dollar added to payroll corresponds with between $4 and $28 in new sales. So much for what you learned in Economics 101!


YOU MAY ALSO LIKE: