This Factory Anecdote Shows How Uniqlo Is Solving A Big Problem In Retail

Uniqlo is one of the fastest-growing retailers in the industry.

The brand, owned by Japan's Fast Retailing, is known for its colorful basics and scientific approach to clothing.

But an overlooked part of Uniqlo's success is how the company fosters relationships with suppliers, Sarah Labowitz and Dorothée Baumann-Pauly write in a report for New York University's Stern Center For Business and Human Rights.

Garment factories are notorious for low pay and unsafe working conditions. The researchers spent a year visiting factories around the world to see how various brands stack up.

Uniqlo "calls its suppliers 'partners,' and goes so far as to place technical experts in supplier facilities to act as trainers and coaches to improve production," Labowitz and Baumann-Pauly write.

This leads to added trust in the relationship, as evidenced by this anecdote.

"One Chinese supplier that works with a range of European and American buyers described how Uniqlo provided him with 18-month forecasts of order volume. If the company deviated by more than a certain percentage, Uniqlo would apologize and offer to compensate him for the lost production. Other buyers, in contrast, would simply cancel orders or reduce volumes with neither an apology nor the offer of compensation.

The supplier said he never accepted monetary compensation when Uniqlo deviated from its order projections. The respect the company showed him and the long-term nature of the relationship were worth more than the money."

Labowitz and Baumann-Pauly write that the relationship between Uniqlo and its suppliers is "mutually beneficial."

Because of the trust Uniqlo has fostered, the supplier is more likely to accomodate unforeseen changes in orders. The suppliers are happy to receive additional training and technical support.

The researchers write that other major corporations should consider trying Uniqlo's approach.

Read the full report here.