Friday, May 16, 2014

Does Uniqlo Have a New Formula for US Expansion Success?

The latest "trend" in shopping center fashion retail is international "fast fashion" which has a fast lead in, quick changeover, low prices, and foreign pedigree.  Sweden's H&M, English TopShop, and Spain's Zara are dotting the landscape with new stores across the US.  

But Japanese retailer Uniqlo is blazing its own path, and trying to double its presence in the US while remaining above the fray of "fast fashion", preferring to stress a higher quality and wider customer base than teenage mall and downtown shoppers. The formula has paid off so far, with its international sales rising 78 percent in the first half of fiscal 2014.  Its biggest challenge in expanding in the US is finding large enough spaces at top quality shopping centers, since the chain so far has been identified with its spacious flagship locations in urban shopping areas.

Hunter Communications Original News Source:
CNBC

Link to article:

Excerpt: "With retailers from Aeropostale to Sears looking to shutter a large number of stores—most recently with Sears' announcement on Wednesday morning that it may sell off its Canada business—Uniqlo is in a unique position, in that it has barely scratched the surface in the U.S. But those other retailers offer lessons both about expanding outside your home market and growing too fast within the U.S.

Larry Meyer, CEO of Uniqlo USA, called it 'coincidental' that the company is entering the market as a major shift is underway in terms of retailers closing stores to better balance their bricks-and-mortar and online portfolios. But Birnbrey said it also gives Uniqlo a leg up.

'It allows them to see the mistakes that other people have made as they've expanded into the United States,' he said. The shift also comes as Fast Retailing's sales have stalled in its native country but are gaining traction internationally, including in the United States. Although the company doesn't break out its U.S. sales figures, it said its international sales rose nearly 78 percent in the first half of fiscal 2014 helped by above-target results in the United States. Meanwhile, its sales in Japan rose less than 5 percent over the same period and were hurt by weak margins.

Meyer attributed the timing of the company's U.S. expansion to increased brand awareness in the country and an evolved product, which has significantly shifted from a decade ago. He pointed to the brand's HEATTECH line, which uses a fabric designed to keep the wearer warm, saying its clothes not only serve for fashion, but for function.

But despite the retailer's low prices on these items—made possible because of its massive scale of more than 1,300 stores worldwide—he also clarified that Uniqlo is not a fast-fashion retailer. Although people frequently make this mistake when describing the company, Meyer said Uniqlo works with longer lead times, and 'there's a key product consistency to who we are,' he said.

'We have good fashion but we're not about the latest fashion,' he said, adding that the company differs from fast-fashion competitors in that it doesn't edit its entire assortment to adhere to the latest trends. He also cited a broader customer base, saying it's not just teens who shop at the stores."

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