LONDON, United Kingdom — “Global is local, and local is global.” This was the slightly cryptic and curiously spelled mantra heading a New Year’s greeting from Tadashi Yanai — chairman, president and chief executive of Fast Retailing, parent company of Uniqlo — to employees at the start of 2014, a key year for the group’s global expansion. “As the world economy continues to merge into a single market, a problem that all companies are forced to think about is how to run a global business that is also localised,” continued the internal memo, which Fast Retailing shared with BoF.
Today’s world is unmistakably and increasingly interconnected, as growing Internet access, travel and trade accelerate the integration of global markets and the worldwide exchange of ideas, information, people and products. But with globalisation comes an opposite, if not equal, reaction. “In a globalised world, there will inevitably be many similar trends across the globe. And these, in turn, will generate opposition in the form of localisation, as people try to assert their own identity, which is only natural,” observed Mr Yanai. “In order to do business anywhere, we need to have a firm grasp of what it means to be global and what it means to be local.”
A Platform for Local Culture
This March, when Uniqlo unveiled its newly refurbished flagship store on London’s Oxford Street, a busy thoroughfare packed with global retailers whose stores look and feel much the same the world over, the Japanese brand dedicated the top two floors (and roof) of the six-storey megastore to showcasing local culture. Dubbed the Uniqlo WearHouse, the space features a selection of products made by local businesses, like vintage bicycle specialists Pedal Pedlar, and doubles as a stage for cultural events. On opening night, the WearHouse played host to Skepta, a London-based grime MC, and has since featured events including a talk by British Olympic gold medal-winner Victoria Pendleton, a yoga class with health coach Madeleine Shaw and a street food fair.
“The idea is to have a space devoted to culture that is unique and relevant and brings something back to the community,” said John C Jay, who was hired by Mr Yanai in October 2014 to bring new energy to the Uniqlo brand as president of global creative. “To be a good citizen, to be a good neighbour in the neighbourhood, I had to work with local talent and local businesses,” he continued. “The store is the beginning of a deeper focus on our flagships and how they express global ideas, but in a more local way.”
To be a great global company, you have to be a great local company, because you have to touch people where they live.
It’s a significant shift away from the single-minded strategies of standardisation long favoured at large global retailers, which traditionally focused on fine-tuning their store formats, merchandise mix, marketing and other elements of their formulas, before rolling them out across the world with rigorous consistency. “There was a period where retailers felt they wanted to create a universal experience and now they’re recognising that you don’t want to have a commodity business in every single location,” said Marshal Cohen, chief industry analyst at the NPD Group, a market research company. “What you need is to make it special and unique.”
To drive growth, Uniqlo must win over the world beyond its home country, where the company operates over 840 stores and has saturated the market. The brand has made considerable progress in Asia, but faces challenges in Europe and the United States. “The goal is to be relevant,” explained Jay. “We are a Japanese company trying to be relevant around the world and we’re going to do that by joining forces with many different cultures around the world. In order to be a great global company, you have to be a great local company, because you have to touch people where they live.”
Uniqlo’s London store opening was accompanied by partnerships with local cultural institutions like Tate Modern and NTS Radio, as well as a major advertising campaign casting the city as a “creative utopia” and featuring a group of local “cultural ambassadors” including BBC Radio 1 DJ Benji B, British-Japanese Muslim fashion designer Hana Tajima and Kiev-born model and photographer Cate Underwood.
Of course, in London, the world’s second most visited city, where a quarter of residents are foreign-born, local is very much global. “It’s this constant, cultural mix that’s so important to this city. In many ways, in light of what’s happening in the world, it’s a very important statement to be supportive of that diversity,” said Jay. “There’s such a refreshing note about being positive right now — just being positive.”
It’s a sentiment that reflects the company’s efforts to create deeper meaning around a brand that casts itself as an enabler of all people and lifestyles. As well as local hubs, Uniqlo aims to turn its largest flagships into portals from one culture to another. “In London there may be events and other things that originate from Tokyo or New York, and in Tokyo there may be things that originate from the London store,” explained Jay.
Success will come down to talent, he said. “We as a company need to be really good at understanding other cultures. It’s always about people. We have to hire the most curious and smart people who are multi-dimensional and multi-disciplined.”
Superheroes in Their Communities
For Lululemon Athletica, which has over 1,500 “ambassadors” who evangelise the brand in communities around the world, thinking locally has been part of the company’s strategy since day one. “It was linked to the brand’s vision to elevate the world’s greatness,” said Lululemon chief executive Laurent Potdevin, who joined the activewear retailer, best known for its yoga pants, in December 2013. “From the very beginning, it was really about building a relationship with the people who could have the most influence on the health and mindfulness of the community.” Many of them were local yoga teachers.
“You have everybody talking about the rise of globalisation — and I really do think that means people are more connected and more aware,” continued Potdevin. “But people still want to be incredibly connected at a local level. Our ambassadors, they are not the big athletes. They’re the local superheroes in their communities.”
Lululemon doesn’t pay its brand ambassadors, favouring a more subtle value exchange. “We have no contractual agreement, there is no financial transaction with our ambassadors. We drive traffic to their studios, we provide them with the tools of leadership and personal development,” said Potdevin.
“Becoming an ambassador offered a great platform for me as a teacher to share my most recent yoga discoveries and helps to promote myself to an audience that I wouldn’t meet in my normal circles,” said Molly Harragin, a yoga teacher and Lululemon brand ambassador based in London. “We also get to meet other ambassadors who are out there in the wellness industry and learn of each other,” she continued. “I have been assigned a mentor and we meet up to chat and she coaches me through my vision and goals for the future. Another benefit is that I have a Lululemon clothing allowance.”
In return, ambassadors teach free classes at Lululemon stores and events, and help the brand with grassroots marketing. “I help spread the news amongst the yoga community about any campaigns they have going on,” added Harragin. “I would say my role is to help bring Lululemon deeper into the yoga community.”
The ambassador programme really gives us the ability to listen locally and act globally. We describe it as decentralised leadership.
They are also the company’s eyes and ears, and play a critical role in providing feedback on products, which can help drive shorter and more efficient product development cycles. “We have 1,500 data points around the world, so we’ve got an ability to listen at a micro level and see trends really early,” explained Potdevin.
Lululemon’s grassroots community-led approach was conceived back in 1998 when the company was founded, during the early stages of the consumer Internet. But the strategy is even more powerful today, said Potdevin. “With the right globalisation and the exponential growth of access to technology, our model has become even more relevant,” he explained. “The ambassador program merely gives us the ability to listen locally and act globally. We describe it as decentralised leadership.”
These days, Lululemon is focused on much more than just yoga. The company now offers apparel for everything from CrossFit to barre classes (and its cadre of ambassadors includes personal trainers and freeride mountain bikers as well as yogis). “In stores around the world, which pick their own ambassadors, they know what sweaty endeavours are trending,” said Potdevin.
“Our store managers are entrepreneurial leaders who run their stores at the local level,” he continued. “We love to say we don’t have 363 stores, we have one store 363 times — that’s very different. Our store [managers] spend a lot of hours connecting with their community. We actually allocate time to have people go sweat in their communities.”
Among other things, the strategy — which combines sophisticated data analysis with a novel organisational model that blends the efficiencies of centralised management with the responsiveness of local autonomy — has enabled the company to take a ‘pull’ approach to expansion, launching in new markets with lean showrooms that only grow into fully-fledged retail stores if local demand signals are strong enough. “What happens is we open a small showroom that speaks to who we are and it’s open, say, three or four days a week and the rest of the time people are in the communities discovering the different studios and activities; then they connect with ambassadors and we usually have a really good indication by the traffic to the showrooms,” explained Potdevin.
“We are being pulled into communities as opposed to pushing onto communities,” he continued. “That’s why, out of 363 locations, we don’t have any bad locations. It’s because we really take the time to build relevance locally.”
Some have criticised the approach as slow, saying Lululemon isn’t tapping new markets fast enough. But Potdevin insisted the strategy wasn’t slow as much as “disciplined.” He added: “It’s not as much about expanding quickly as it is about expanding powerfully.” In 2015, Lululemon had a sales density — the ultimate retail metric — of $1,541 per square foot, putting it amongst the world’s top performing fashion and apparel retailers.
Come Run With Us
Global sportswear giant Nike has also invested significantly in connecting with local communities, most famously through its branded running clubs, which the company currently operates from local stores in 44 cities around the world and plans to bring to more markets in the coming year. Nike launched the programme, dubbed Nike+ Run Club, several years ago as simple weekly runs with peers, but has since enhanced the offering with expert guidance from professional “pacers” and “coaches” as well as a digital training app, all wrapped together under the invitation: “Come run with us.”
“It includes in-store services, digital tools, personal coaching and a motivating community. Consumers can go online to explore weekly sessions being offered at their local stores,” explained David Schriber, Nike’s vice president of marketing North America. “We’re making good on our commitment to the running community and provide runners of all levels with best-in-class services and experiences,” he added. “And of course, it gets people running.”
Indeed, the programme can turn occasional joggers into regular runners, who may ultimately become more frequent and valuable customers for Nike. The running clubs are also a powerful channel for marketing and gathering customer feedback on products. According to the company, “hundreds of thousands” of people regularly take part in Nike’s live running sessions, while “millions” regularly use the app.
“By engaging with the local community and being part of the lifestyle of the consumer, you’re creating a connection, you’re creating experience, you’re creating loyalty,” explained NPD’s Cohen. “And if I can connect with you as a lifestyle partner, I now have the opportunity to sell to you on impulse as well as necessity.”
“In today’s world everything happens through referral,” he continued. “So if I have a relationship with you, you’re going to have a relationship with your people, and you’re ultimately going to turn them onto a relationship with me. That’s the ultimate networking. This is a better form of marketing than traditional advertising.”
Local vs Global
But while local engagement strategies can certainly help to build businesses that are more deeply connected and responsive to consumers, too much localisation can dilute brand equity and undermine some of the traditional efficiencies of standardisation. “We certainly know localisation adds a nice touch, and more and more retailers are doing it. But in order to make money they need economies of scale, and economies of scale favour the global side of the equation,” said Cohen.
“Lululemon — the fact that they have yoga classes in the building — that’s taking it right to the consumer, connecting to the lifestyle of the consumer,” Cohen continued. But at the same time, the company’s stores also leverage re-useable formulas and managers are able to successfully balance localisation with a highly consistent brand experience.
“We have incredibly talented [store managers] running $20 million businesses and they’re in line on where we are going as a brand, but they really have a lot of autonomy in how they’re running it. And that’s why you see very consistent guest experiences around the world that come to life in very different ways,” said Potdevin.
The trick is striking the right balance: capturing the benefits of localisation, while protecting brand equity and economies of scale. “It depends,” said Cohen, “but as far as stores go, I would say the goal is probably to be at least 20 to 25 percent local to be able to provide enough profit margin — but eventually I see it growing even more.”
This article appears in BoF's latest print issue, A Connected World, a special briefing which examines how growing global interconnectivity is impacting the way we create, communicate and consume fashion. To order your copy for delivery anywhere in the world or locate a stockist, visit shop.businessoffashion.com.