Uniqlo May Explore U.S. Growth Online
We’ve seen it with American companies looking to expand overseas. Open a website to gain some understanding of a market before rapidly rolling out stores. The situation, of course, may also work in reverse as may be the case with the Japanese retailer Uniqlo, which according to an Advertising Age report, is looking for "partners" to help it build and launch an e-commerce site, a "digital flagship," in the U.S. by October.
The company’s overall goals include achieving sales of $20 billion by 2020 with 20 percent of that being conducted online. The company is also looking to open at least 200 stores in the U.S. by that time.
Currently, Uniqlo has opened two new flagship stores in New York over the past year but has no e-commerce presence. It does operate shopping sites in other countries including its native Japan and the U.K.
Uniqlo company spokesperson Mary Lawton downplayed the Ad Age report.
"We continue to explore the possibility of launching e-commerce. However, at this time, we are a long way away from confirming when specifically this will happen in the U.S.," said Ms. Lawton in a statement. "As we have said in the past, when we launch e-commerce in the U.S. we want to be sure it will benefit our customers, and currently we do not have a plan that meets that expectation."
Discussion Questions
Discussion Questions: Do you see a website first approach as the best way for companies such as Uniqlo to crack the American market or are physical stores a “requirement” for success in the U.S.? What foreign retailer would you point to as the model that others can learn from when it comes to making it in America?
The Uniqlo store on 5th Avenue and 53rd Street is a great consumer experience and tourist destination. While they must have a website to at least satisfy loyal customers, I don’t believe it’s the way to “crack” the market they serve. Uniqlo in the flesh embraces effectiveness of merchandising with the topping of great customer service. I don’t know that you can convey that on line where it’s mostly about products and prices. In the case of Uniqlo, I believe their ultimate online success will be from visitors are existing retail store loyalists.
A website can be a terrific way to gather information about preferences, shopping habits, key price points, and other merchandising information. It can also be extremely useful in siting stores and distribution points throughout this very large country. Two foreign based companies that have done a great job at this are Ikea and H&M.
Zara, H&M and even IKEA are great examples of foreign retailers (not necessarily apparel stores) who leveraged both e-commerce and bricks-and-mortar growth to build awareness and a strong U.S. presence. There is some natural synergy between channels that Uniqlo would be smart to learn from. Simply building a web business without opening some tangible “flagship” stores in key markets probably isn’t enough by itself to drive the brand.
I think there is a “middle way” for a retailer like Uniqlo. Seeding the market with flagship locations in major markets and then following up with an e-commerce offering to leverage customer interest makes sense. I believe that’s the logical step before proceeding with growth plan for physical stores.
“Website first” is a way to put a toe in the market. It is also important to note that today’s global logistics infrastructure allows a retail to plant single stores in key markets, allowing them to take the next, and more important, step of determining if their value proposition really resonates within a specific geographical market.
I find it most interesting that Uniqlo is of a mind set to ignore an ecommerce option. Yet this is how Japanese corporations have entered the US markets for more than 60 years. They simply select the best marketplace opportunities for success with the given product line. Knowing how Japan’s conglomerates will tirelessly fund a venture into success, it is no surprise that they stay with the tried and true. Is this a method for success? Of course it is, and the money they are willing to invest insures it to be so.
Japan’s market presence and growth has always been relatively stable with little to offer in innovation. Only in the United States do you see big corporations along with average and in many cases the poorest of its citizens find and follow legally legitimate ideas into a new market(s) or use new and untested tools to create a new way of doing business. When measuring success in business ventures, I am confident the US remains ahead of the rest. When analyzing how the USA is consistently ahead, you may find that using new and more modern tools is a constant part of the equation. Ecommerce is very new and much too risky for some of the most conservative of investors out there. But for the foreseeable future, it is where the new market growth and money is.
IKEA did a great job of bringing a foreign company and an uncommon approach to US retail. But, the nature of their stores requires a big physical presence to create the shopping experience for customers unfamiliar with them.
Uniqlo has the challenge of brand building, be it online or offline. Without knowing exactly how they operate, what their marketing consists of, and what kind of return customers they have, it’s hard to judge from the outside, where they should build presence.
As a strategist, it’s easy to develop general scenarios for either approach, but I believe the real question is a product-centric one. “How much of an investment will be required here to build substantial brand awareness and consumer interest in their products?” If they can commit the funds/resources to put their brand foremost in the minds of their target audience, venue will be less important.
There are 50 million visitors a year to New York City. Certainly, with all the hoopla about the Uniqlo store in Manhattan, many have discovered this unique and creative retailer.
Those who visit go home. If they are impressed and like the offering, they can wait until Uniqlo opens a store nearby or go online.
The answer is simple. Uniqlo should establish a significant online merchandising presence immediately. (And of course, tie it into their destination of a store.)
Physical stores aren’t a requirement, but they go a long way toward creating a customer’s brand experience and offering the ability to see and touch the product. Unless the store has a ‘no worries’ return policy, it will be a leap of faith for the consumer to try out items via web shopping.
H&M seems like a good example to follow of making it in American from a category likeness standpoint.
Physical stores are a requirement for success in the USA for foreign companies. IKEA as well as H&M already set the precedent and Uniqlo is set to bring the same level of B&M excitement for American consumers.
Uniqlo brings m-commerce and small-format design to the American physical retailing market. We Americans have to swallow our pride and accept the fact our homegrown physical retailing brands are languishing (Sears/Best Buy) while the foreign retailers are arriving with optimized processes and designs that are irresistible to say the least.
I look forward to their e-commerce (probably more m-commerce) arrival and to learn a thing or two on how they can plan to operate in the American retailing environment.
Uniqlo did the right thing … awesome flagship stores and great web site, because ‘both’ is ultimately the answer.
And PS: Uniqlo is going to really knock the socks off the casual apparel market in the U.S. Look out, Gap!