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Fast Retailing Applies Unique SPA Business Model to Help Forge Brighter Future in Bangladesh

Image Credit: Graeem UNIQLO

Bangladesh is no longer one of the world’s poorest nations. Today, this emerging nation is steadily growing as one of the world’s leading apparel manufacturers. However, the country’s economic structure remains fragile due to its heavy dependence on textile exports and overseas remittances from emigrant workers, and the country’s manufacturing base and infrastructure require urgent improvement.

Against this backdrop, in 2010 Fast Retailing Co., Ltd, Japan’s largest casualwear retailer and operator of the UNIQLO brand, established the UNIQLO Social Business Bangladesh Ltd. In 2011, Fast Retailing joined forces with renowned local social business proponent Grameen Bank Group to launch Grameen UNIQLO Ltd. The joint venture company has drawn on UNIQLO's unique specialty store retailer of private retail apparel (SPA) business model, which spans the entire clothes-making process from materials procurement through planning, design, manufacture and retail, to develop a social business and a more robust clothing manufacturing base in Bangladesh.

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Fast Retailing is adamant that all clothing design, manufacture and retail are conducted entirely within Bangladesh, and all profits reinvested. The apparel giant has actively channeled its resources as a global company - from manufacturing to store management and personal training - into building a successful business, and carving new markets for Bangladesh’s nascent retail industry. The joint venture is a powerful example of Fast Retailing’s drive to help eradicate poverty, encourage industry, expand employment opportunities, and nurture independence through business.

Six years on, the joint venture has overcome many difficult challenges, including ensuring high-quality procurement standards while respecting local business practices, culture, laws and the social nature of local factories. Learning from each experience, the venture continues to steadfastly pursue business expansion, cultivating factories that share its social business ideals, developing traditional dress and other products to meet local needs, and reviewing store development strategies.

Turning social business into a truly sustainable operation

Appointed COO of Grameen UNIQLO in 2015, Najmul Huq laid out three clear business missions, moving the company into a new stage of development.

  1. Offer all Bangladeshi people the joy and satisfaction of wearing truly good clothes: Draw on UNIQLO’s global expertise to plan, produce and sell products entirely in Bangladesh, and create affordable. high-quality, comfortable clothing that meets local needs.
  2. Solve local social issues through business: Draw on UNIQLO's expertise to train world-standard business leaders. Ensure discrimination-free workplaces and build safe, secure working environments for business partners and factories that fulfill strict compliance criteria.
  3. Reinvest all profits to promote social business: Reinvest all profits into business and manufacturing expansion to enhance efficacy as a social business.

Grameen UNIQLO currently operates nine stores. It plans to open more, and is considering online sales. Grameen UNIQLO’s reputation is growing and more people want to join the company. However, to firmly establish a sustainable business, Huq believes it is vital to cultivate a solid manufacturing base and expand store numbers. Nurturing quality factories is difficult given that few plants fulfill Grameen UNIQLO’s strict social responsibility standards. Even ensuring a quality production framework to meet current customer needs can be a challenge.

Maintaining integrity at scale: ongoing challenges

“Grameen UNIQLO clothes are made by partner factories that meet our strict criteria on proper working conditions, etc. However, very few factories manufacturing clothes for the domestic market meet those criteria. The production base is struggling to keep up with growing demand, especially for women’s clothing,” Huq explains. “So, in addition to our existing partner factories, we are building new factories in cooperation with partner companies that share our passion for social business. Recently, we completed a new collaborative factory building that we had been involved in right from site purchase. The equipment and instruments are now being installed and closely checked to ensure they meet our SR standards before the factory starts operating.”

On the store front, the venture often discovers compliance infringements at potential store locations, hindering new store plans.

“When deciding a new store location, we check carefully for any compliance issues with the site. The number of potential store sites shrinks dramatically when, for instance, we discover a developer has not applied for the right government licenses, or a five-floor building has been built where a three-floor building was permissioned,” Huq says. “The number of potential locations for our new stores dwindled from 200 to a mere 10 after eliminating sites with compliance issues, and we then chose the most appropriate. We want to start opening large-format stores in Dhaka and to expand beyond the capital, but we must ensure these new stores are a success first. We have a clear idea of how to resolve these store expansion and manufacturing issues and are steadily implementing those solutions.”

Grameen UNIQLO is committed to turning its social business into a truly sustainable operation. The key challenge is introducing forward-thinking good practice in seeking to foster rapid industrial development.


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