Japanese clothing giant Uniqlo has an ambitious plan: to take over as the world’s largest apparel maker.This will require bypassing Gap Inc. and Zara’s, and opening upwards of 300 stores globally in the next three years, which it plans to do, reports the WSJ, starting with two New York City Flagship stores next month.
Uniqlo, short for “unique clothing,” has been around since 1984 (though it started as a much smaller venture), and really expanded in 2005.
It’s focused heavily on the Asian mainland, where markets are growing rapidly, but Uniqlo parent company Fast Retailing Co. knows that in order to dominate worldwide, it needs to have a significant presence in the U.S. and Europe.
Chief Executive Tadashi Yanai summarized the company’s current strategy: “We have to become the No. 1 in Asia to eventually become the global No. 1.”
By 1994, the company went public on the Hiroshima Stock Exchange. In 1999, it was listed on the Tokyo Stock Exchange -- by then, it had 357 stores throughout Japan.
Around that time, Uniqlo pushed into popularity through its fleece wear, which it offered in a mix of vibrant colour options (51 shades by 2000) and creative marketing, including a store in the trendy Harajuku district of Japan.
In the early 2000s, Uniqlo hit a wall when it couldn't differentiate itself in the oversaturated Japanese market and from other retailers in the UK
In 2002 and 2003, Uniqlo saw the market become saturated with fleece products, which up until then were the brand's calling card.
This didn't help its entry into the European market. Uniqlo had to close 16 out of 21 new British stores -- which it blamed on the high rent and staffing costs of running a UK store, but also tepid interest from British consumers, who couldn't see how Uniqlo differentiated itself from other products on the market.
But by 2004, Fast Retailing's sales rebounded 50%, thanks to tighter inventory control and a retrained focus on women's clothing
Uniqlo rolled out its overseas expansion plan in 2005 -- and opened its first American store in New Jersey
Even then, the company talked of becoming the world's #1 clothing retailer.
Rather than start by opening an American flagship, the New Jersey Uniqlos were designed to 'to be your neighbour, where you go regularly for your everyday fashion basics.'
The Uniqlos launched in the middle of a European casual-wear explosion in the U.S., with H&M and Zara's also making heavy investments in the American market. H&M currently has 200 U.S. stores to Uniqlo's one, but the two chains have undertaken incredibly different strategies. H&M's saturation has made it far less of a trendy, exciting concept than Uniqlo.
It abandoned its 'neighbourhood' concept. Instead, it would go big.
In October 2005 came the Tokyo flagship, then a 37,000-square foot 'Global Flagship' in the SoHo district of New York City in November 2006, and a European flagship in Paris in October 2009.
The Soho store is the highest-grossing Uniqlo store worldwide and the company's only American presence (the New Jersey branches closed in 2007).
Uniqlo produces its few different products in a kaleidoscopic array of colours, which also keeps costs down. Polo shirts are available in as many as 80 colours.
This breaks down to approximately 840 in Japan and 140 elsewhere in the world -- though about 95 of those are in China and South Korea. Sales are estimated at $13 billion (one trillion yen) for the current fiscal year.
But, if all goes according to plan, these numbers will increase very soon.
The lease for its Fifth Avenue flagship store alone is $300 million over fifteen years -- making it the largest retail lease in the history of New York City.
Combined, the Fifth Avenue and 34th Street flagship branches cover 159,000 total square feet. (For comparison, the SoHo 'Global Flagship' is only 37,000 feet.)
Fast Retailing Co. also says the two locations will create 1,100 jobs for New York -- though Crain's New York Business says these jobs will be almost entirely part-time positions, which inflate employment numbers and don't allow benefits or overtime.
The goal for Fast Retailing's total sales in the fiscal year ending August 2015 is $22 billion, spread among 4,000 Uniqlo stores worldwide, as well as from the company's other assets (which include Theory, Comptoir des Cotonniers, and g.u.).
Yanai is also in the process of building a Uniqlo University in Tokyo, with the goal of training 1,500 new store managers a year.
As lofty as this all might seem, the only two-decade-old Uniqlo's rapid growth in the past means that, as long as Americans outside of New York City take to the brand, it could very well be truly dominant by 2020.
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