The Story of Uniqlo — The Japanese Clothing Chain That's Taking Over The World

UNIQLO SoHo

Japanese clothing chain Uniqlo has become the envy of retailers worldwide.

The company has exploded in  the past decade, becoming Asia’s biggest clothing retailer. And Uniqlo’s leaders have ambitious goals to make the brand the leader in retail worldwide, according to The Wall Street Journal.

Uniqlo, which focuses mass-producing affordable basics in dozens of colours, got its start in the Japanese suburbs. Less than 20 years later, it’s laid its stake along swanky shopping streets in major global cities.

What’s the story behind the company’s success?

The first Uniqlo opened its doors in Hiroshima, Japan in 1984.

The company is a division of Japanese retail holding company Fast Retailing, with Tadashi Yanai at the helm.

The name is pronounced 'YOU-nee-klo' in English.

In the early 1990s, the Japanese economy hit a major slump. And Uniqlo's cheap clothes got popular fast.

The Japanese economic downturn is often called 'The Great Recession' and lasted for an entire decade. It was bad news for the country as a whole, but Uniqlo reaped major benefits by catering to citizens who were trying to cut back on spending.

By 1994, 10 years after the first store opened, 100 Uniqlos were in operation.

Most of the original growth was centered in the Japanese suburbs with roadside stores.

The company saw a rise in popularity after the launch of a fleece apparel campaign in 1998, according to its website.

But soon after, Uniqlo hit a rut -- with profits and sales dropping. The company reorganized and grew its women line, seeing recovery afterward. It also began focusing on larger stores.

Uniqlo's faced some bumps along the way. When first expanding overseas, it opened too many stores too quickly — and had to close many of them.

The company opened 21 stores in the United Kingdom by 2002, but only eight remained open in 2006. Fast Retailing executives said they didn't do a good job of establishing a 'brand identity' before setting up shop and were learning from their mistake.

Although Uniqlo started as a suburban chain, it now has more than 800 stores worldwide, many in urban centres around the globe.

Most of Uniqlo's stores are in Japan, but it also has locations in the U.S., France, Singapore, Malaysia, the Philippines, China and Taiwan, among other countries.

Prime locations include major shopping streets in New York, London and Paris.

In late 2012, the company was the fourth-largest retailer behind Gap, H&M and Zara-owner Inditex, according to Forbes.

So far, there are only seven stores in the U.S. But there plans to open 1,000 Uniqlos in America, according to Forbes.

So far, there are four locations in New York, two in New Jersey and one in San Francisco. The SoHo store was the first to open in 2006.

Most of its clothing is mass produced in every colour a shopper might want. Some people have called the chain 'Japan's answer to Gap.'

The clothes are cheap and aim to be affordable for every consumer.

Right now, a woman's short sleeve tunic is $13, a men's long-sleeve button-up is $30 and girl's leggings are just under $10.

The stores are often hard to miss. The Fifth Avenue store is gigantic, at 89,000 square feet.

Uniqlo has plans to open its largest store in Shanghai later in 2013.

Despite being a Japanese company, about 70% of its clothes are manufactured in China.

That's caused some problems recently because of China's anti-Japanese protests. But Yanai has no plans to move, and told Forbes he wants to open hundreds more stores in China.

It also keeps prices low by buying products directly from suppliers. And it can buy in mass since it focuses on clothing that doesn't go out of style and pumps each item out in an array of colours.

Facts and Details reports that Uniqlo admits to keeping clothes on the shelves larger than most rivals, and will sometimes make one item in up to 50 colours.

Yanai, Uniqlo's founder, is one of the richest people in Japan. His net worth is estimated at $15.5 billion.

In the latest Forbes rankings, he's listed as the Japan's richest man and No. 66 on the worldwide billionaire list. Yanai is married and has two children.

He is said to have intensely studied Gap and used the American company as a basis for its business model.

According to the Wall Street Journal, Yanai called former Gap CEO Mickey Dressler 'professor' when the pair first met because he held him in such high esteem.

In late 2011, the company was valued at 1.4 trillion yen ($14 billion), according to Bloomberg.

And Yanai wants to increase that to 5 trillion yen (around $65 billion) by 2020, according to Bloomberg.

Some features of Uniqlo's business stand out among other retailers. For example, Yanai has proposed a global pay system in which managers worldwide would receive the same wage.

He believes 'an equal amount of work deserves an equal wage.'

And Yanai told Forbes that Uniqlo sets itself apart by not chasing trends. Instead, they focus on basics, like Oxfords and polos, and make them affordable.

Blouses, slim-fitting bottoms and lightweight outerwear also are Uniqlo staples.

He's currently 63, according to WWD. Some employees have said he isn't very good at delegating and can be a micro-manager. But his business mind is a big part of what's led the company to success.

The store was virtually untouched during the recession and saw profits climb 17% between 2009 and 2010.

They may have benefited from the world's drop in spending power, since they capitalise on consumers looking for cheap clothing.

And it hasn't stopped yet. Profits jumped 13% in the past six months, according to the Wall Street Journal, and its overseas sales continue to come in strong.

The company's sales are still only half as big as Zara's parent company, but it continues to make gains.

If Uniqlo's rapid growth continues, its ambitious plans to be the leader of retail in the U.S. and worldwide could become a reality.

'If it wins decisively in Asia, the world's growth driver, it is not inconceivable that it could become No. 1 without a big acquisition and without becoming No. 1 in the U.S.,' an analyst told the Wall Street Journal.

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