Uniqlo sees U.S. as land of retailing opportunity
Uniqlo, the Japanese fashion retailer known for on-trend clothing at moderate prices, continues to succeed with its slow, but seeming inexorable, expansion across North America.
The chain currently has 39 stores in the U.S, primarily on the coasts, with plans to open new locations in Denver, Seattle and Tysons Corner, VA. Previously, Uniqlo announced plans to open new stores in Boston and Chicago as well as its first two Canadian stores in the Toronto area. The chain, which first opened a store in New York’s Soho neighborhood in 2006, also has an online presence at www.uniqlo.com/us.
"Having established a foothold in a number of key locations along the East and West Coasts, we are very pleased to announce our plans to continue to expand our national presence further in these new markets," said Larry Meyer, CEO of Uniqlo USA. "Our LifeWear is versatile, functional and stylish, and I’m confident it will continue to appeal to both an urban environment and an outdoor lifestyle. We have something for everyone to enjoy and feel comfortable wearing, regardless of season or personal style."
The new store in downtown Denver at 22,000 square feet is expected to be the largest of the three newest locations the chain has said it will open.
"It’s a big deal," Mary Beth Jenkins, a retail broker at The Laramie Co., told The Denver Post. "Any developer in Denver would want Uniqlo. They’re known for doing extraordinary sales per square foot."
Uniqlo’s parent company, Fast Retailing, reported the chain has exceed expectations in foreign markers, particularly in China and South Korea, although its U.S. performance, via The Seattle Times, "fell short of plan" in the most recent quarter with higher revenues, but lower profits than expected.
Discussion Questions
Do you expect Uniqlo to be a major force in apparel retailing in the U.S.? If so, how long will it take? What are the keys to the chain’s future success or failure in the U.S.?
Uniqlo is being very deliberate, although any acceleration of J.C. Penney or Sears vacancies in malls might speed up the process. Otherwise this will take as long as Forever 21 or H&M needed for a national foothold.
The key will be to maintain the brand position on dominance in casual/basics in smaller mall locations vs. the massive presentation in its flagship stores.
I’m a Uniqlo enthusiast and I was surprised to read that their profit fell short of expectations. On a recent visit to the NYC 53rd Street location I noticed that only about 20 percent of the cash registers were in operation. That says to me they were not expecting to see more people than those registers could accommodate. Of course at Christmas time it’s an entirely different picture. However, having the registers empty on off months may impact profitability, especially because the space those registers require must still be paid for. I wonder if their results are partly due to the real estate they’re leasing and the urban salaries they require in their current locations.
Uniqlo consistently offers attractive merchandising and good service. I’m speculating but I wonder if some of their unmet expectations are related to products not consistently fashioned or sized. Some items are on trend, others not so much. I expect them to appeal to a very young set, but visitors range across all ages. Their down-filled outer wear takes up a large portion of their store, but the need for outwear varies by location and season. Typically their clothing is cut for a smaller size. At the same time the same size fits differently across garments and fabrics. Now this may be true for other stores as well, for example H&M. But maybe the others have had a more accurate forecasting ability. If that’s the case Uniqlo may need to adjust its expectations rather than modify their marketing strategy.
A few years ago, Uniqlo was taking a measured approach to its U.S. expansion (Gap should be thanking its lucky stars). Now, it’s pedal to the metal, complete with fascinating where-are-they-now talent grabs (who remembers Walmart’s much-maligned marketing maven, John Fleming? Now heading up global e-com for Uniqlo).
Uniqlo’s success rests on it rocking its still-limited, flagship-forward physical retail presence and driving scale through digital. It’s not a bad strategy. Uniqlo drives awareness through its stores which are brimming with well-priced, better basics and a smattering of exclusive technical togs. These well-located brand beacons set the hook with shoppers, many of whom will hit uniqlo.com for future orders once they get back home.
The big question is whether Uniqlo will eschew small formats and stick with its flagship story. If so, digital has to pick up the slack and drive the scale. Look to Williams Sonoma to see how this can be done.