Why US is key to Uniqlo's global aspirations

by John Biers, Agence France-Presse

Posted at Jun 21 2014 06:31 PM | Updated as of Jun 22 2014 02:31 AM

NEW YORK - Many of the details of Uniqlo's aggressive US expansion still need to be worked out, but at least one thing is clear: the campaign will start on the coasts.

The Japanese apparel chain, known in its home market for its cheap chic clothing basics, has so far confined its US adventure to cities like Boston, San Francisco and Los Angeles.

But a broader US presence will be inevitable as the company blankets the country as part of its ambition to become the world's biggest specialty apparel retailer. Uniqlo will grow from fewer than 10 US stores last year, to about 40 by the end of 2014, to 200 by 2020.

"We will have a much larger footprint, which has to include the middle of the country," said Larry Meyer, chief executive of Uniqlo USA.

So far, Uniqlo's brand recognition is strong in the Northeast, where consumers know its flagship US stores in New York City, and in the West Coast, where a large Asian population already recognizes the company.

Uniqlo, a unit of Fast Retailing Co., is part of a wave of giants remaking global apparel. This group includes Spain's Grupo Inditex, parent of Zara; Sweden's Hennes & Mauritz (H&M); and US chain Gap, all of which have greater sales than Uniqlo. For now.

The United States, along with China and Southeast Asia, are the key growth markets identified by founder and chief executive Tadashi Yanai, ranked Japan's second-richest man by Forbes.

Top player in industry segment?

Yanai aims to increase global sales to five trillion yen (nearly $50 billion) by 2020, about a five-fold increase from 2013 sales and a sum that would make it the biggest player in this segment.

Yanai's philosophy "and my philosophy is, 'If you think small, you get no higher. So you might as well think big,'" said Meyer, a retail industry veteran who joined Uniqlo in January 2013.

Uniqlo is especially known for basics like t-shirts that may fetch $12 and undergarments that cost less than half of what they would garner at department stores.

The company also prides itself on innovations like "heattech," a thin fabric that keeps heat from escaping the body, and "performance wear," athletic gear donned by tennis star Novak Djokovic that is sweat and odor-resistant.

Morningstar analyst Jaime Katz said Uniqlo's challenges include attracting enough customers at especially pricey locations like Fifth Avenue in Manhattan. She also cites the difficulty of breaking into a new market where companies like Gap and H&M are already established.

But Katz sees an appeal in Uniqlo.

"It's more a color schematic than anything else," Katz said. "It's the same thing offered in 100 different colors."

"Everybody needs the basics, everybody needs consistent product, and that's what they tend to offer."

Meyer said its US stores are "on the road to profitability" while the company is in expansion mode.

The company's items will be manufactured at the same China sites and moved through the company's global supply chain. The designs will be identical to those in Japan, although Uniqlo plans sizing specifications for the US market.

"There's more than just size in size," Meyer said. "It's a question of how wide are the shoulders, how wide is the rear."

"Clothing sizing is shockingly complex."

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