California Apparel News

Tadashi Yanai, founder, chairman, president and CEO of Japan’s Fast Retailing Co. and its powerhouse basics retail chain, Uniqlo—and the richest man in Japan—has never been one to think small. Uniqlo’s nearly 1,000 stores, located in 12 countries around the world, are piled ceiling high with product arranged in a color-wheel explosion, with customers similarly jammed as they jostle for shopping space.

Yanai’s vision has always been grand, but recently he caught the apparel industry’s attention with some very big talk. Despite the sluggish global economy and questions about the strength of the international apparel market, Yanai announced he is positioning his company to become the world’s top apparel manufacturer and retailer and plans to launch 200 to 300 new stores worldwide each year to that end. Indeed, two are set to launch in New York this month. The goal is to raise revenue from $6.5 billion annually to reach $65 billion in sales by the year 2020—numbers that would, in fact, outpace its rivals Gap and Spain’s Inditex, which owns Zara.

From its birth in 1984 as the Unique Clothing Warehouse—soon shortened to Uniqlo—the company has forged upward in fits and starts. The opening of its first urban store in Tokyo’s trendy Harajuku district in the late 1990s triggered a surge in demand in Japan, which peaked around 2000. Yanai began exploring possibilities outside Japan’s borders, first moving into the English suburbs and then New Jersey malls, a strategy that largely failed. Then came the new plan: Open big, splashy stores in a country’s biggest, splashiest cities—Paris, New York, London, Hong Kong, Seoul and Moscow among them, with plans for Los Angeles reportedly in the works for 2012.

With 70 percent of Uniqlo International’s sales coming from its Asia-based business, the company, through its endearingly loquacious website, is candid about its strategy. A strong Asia market is critical, yes, but “[t]he reason why other competing brands such as H&M and Zara grew so rapidly over the past 10 years is because they looked beyond their domestic borders and expanded into international markets,” it says. “We are also looking to generate similar growth by opening stores across the globe. ... Uniqlo is seeking to build its brand through its network of global flagship stores.” Yanai would have international sales, which currently generate only about 11 percent of Uniqlo’s sales from 136 stores, ultimately surpass the company’s Japanese revenues from its 793 domestic shops.

The Uniqlo product, 85 percent of which is produced inexpensively but with high-end quality in China, is all about basics—jeans, jackets, sweaters, shirts, Ts, even underwear and socks in a Pantone spread of colors for amazingly low prices. While unisex is the underlying product theme, the key to Uniqlo’s future growth is “developing more women’s products,” the website explains. “Uniqlo believes that it can firmly capture the hearts and minds of women with clothes that offer the triple benefits of price, quality and style. Uniqlo aims to win female customers of all ages by offering a reasonably priced, quality-finish garment range so attractive that no other competing brand can match it.”

Whether Uniqlo’s decidedly minimalist aesthetic can beat out the of-the-moment flashiness of TopShop, H&M and Forever 21 is still to be determined. Certainly Uniqlo’s price points are attractive, and long ties to solid Chinese production houses have delivered good quality for an even better price. However, with production prices rising in China, despite Uniqlo’s unique ability to completely dominate a factory and its production with its multi-million-piece orders, the company must look to cheaper and less familiar sourcing in Bangladesh, Vietnam and other southeast Asian locations.

With the classic silhouettes that are Uniqlo’s stock in trade, there is a sense that there is much more market to plumb, especially in the United States. If Yanai’s vision holds true, the “U” in Uniqlo may well end up standing for “ubiquitous.” —Carol A. Crotta