Uniqlo means business with ambitious global plans
Uniqlo owner Fast Retailing is planning global growth
Fast Retailing, owner of the Uniqlo casual clothing chain, thinks big, talks big and has big ambitions - and analysts believe the company does indeed have what it takes to become the biggest clothing retailer in the world within the next decade.
It will clearly face a series of obstacles on its way to that title. Its public relations output has been described as "naive" and it reported a 0.8% decline in its profits for the third quarter after a tricky few months over the summer.
But the feeling is that the firm's announcement last week that it will ramp up production to 5bn items a year; open as many as 300 new stores globally every year; and record net sales of JPY5 trillion (USD65bn) a year by 2020; shows that it means business.
And while analysts point out that the likes of Gap, Zara and other companies competing in the same sector do not make such bold predictions for dates so distant in the future, Fast Retailing cannot be accused of being an ordinary company. Ditto Tadashi Yanai, its chairman and CEO.
"Uniqlo is the only Japanese retailer that is aggressively internationalising and I can clearly see it as a world leader in sales in the future," says Roy Larke, a professor of international marketing and Japanese business at Tokyo's Rikkyo University.
"This is the first Japanese retailer to turn its stores into its brand, in the same way as Benetton and Gap have done, and it does that better than any other Japanese retailer," he adds. "Its marketing is, frankly, superb."
Domestic market saturation
The Uniqlo model is based on outsourcing the manufacturing of clothing lines to factories in China.
Its first urban store opened as recently as November 1998, but within three years, the company was operating 500 domestic stores and was expanding to China and Britain.
Stores have subsequently opened in the United States, France, Singapore, South Korea, Malaysia, Taiwan and Thailand, with the most recent new flagship stores scheduled to open at prime spots in New York in October.
With the domestic market approaching saturation point, Yanai is clearly looking to tap into the rest of the world.
"When Yanai announced that Fast Retailing executives were being asked to conduct meetings and write documents in English a year ago, the corporate world was stunned because one the biggest problems with Japanese business is its lack of English speaking executives and global outlook," points out Nicole Fall, founder and trend director at Five by Fifty, an Asian consumer trend and strategic research agency.
"Yanai is serious about turning Uniqlo into the world's biggest fashion company and has clearly looked at strategies that will take the company to a global level," she says. "If Toyota can become a household name, then why not Uniqlo?"
It has got this far whilst retaining a strong Japanese ethos throughout the company, she adds.
"Every day, no matter your seniority, everyone stops what they are doing to clean their desks and their environment," she explains. "On top of this, senior executives routinely work on the shop floor to see first-hand what customers are buying, so that staff always connect what they are doing back to what the company is, an apparel chain store.
"Can you imagine well-paid Gap executives being asked to clean their own desks and pick clothes off the floor on a Saturday? This 'can-do' attitude could take the company to the top."
There are other differences from Gap, the company that Uniqlo once modelled itself on, Larke points out.
While the US clothing giant may order 50,000 pieces for its stores, Uniqlo orders millions. This year, for example, it has set a sales target of 100m pieces of its hugely popular HeatTech clothing, a range of around 30 items.
Larke says people thought the sales target of 80m units the company set last year was ambitious, but it surpassed that comfortably.
Yet both Fall and Larke say there are issues that need to be addressed before Uniqlo can lay claim to the title of the largest clothing retailer in the world.
Fall says that many of the smaller stores are "dreadful" places to shop, with poor merchandising, long lines to pay and a lack of fitting rooms.
"There's little pizzazz and excitement in the store environments, and I can't see many young women turning their backs on Forever 21 and H&M to make Uniqlo their shopping destinations unless the clothes become more fashionable, there's better market segmentation and environments become more appealing."
Potentially a larger problem on the horizon according to Larke, is the requirement to open "an incredible number of stores every year."
Stock market investors are not likely to take kindly to reports that fewer stores are opening, or even that there are closures, he says, although there will have to come a point where the company reaches critical mass.
"The question is when that particular bubble bursts, whether they will be able to manage it well," he adds. "Hopefully they will, but it will be a dangerous time for Uniqlo."
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The following is a round-up of apparel and footwear news from the world's local media. just-style has not checked these stories so cannot guarantee their accuracy....
Japanese retailer Fast Retailing Co (today (2 March) said same-store sales at its domestic Uniqlo casual clothing chain were 1.2% higher than the same month last year....
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