Uniqlo expansion plan: Raise its profile in US marketplace
The biggest challenge to Japanese fashion giant Uniqlo’s plan to take on the U.S.? Getting more Americans to know who they are.
The apparel maker, known for its affordable cashmere sweaters and solid basics, wants to go big in one of the world’s toughest consumer markets. Although Uniqlo is a fixture in shopping streets of the largest Midwest and coastal cities, parent Fast Retailing Co. is giving its flagship clothing brand a hefty marketing budget to ensure the brand can reach the same level of awareness in Iowa and Texas as it enjoys in Japan, Asia and parts of Europe.
Differing tastes in clothing, depending on local markets, makes expansion tough, according to Daisuke Tsukagoshi, Uniqlo’s chief executive officer for the U.S. and Canada.
“We are starting from people asking what Uniqlo is,” Tsukagoshi, 44, said. “Marketing is absolutely necessary, and without it there’ll be no growth.”
It’s a formidable task.
The clothing company only recently became profitable in North America and has 61 stores there right now, with less than 1% of the $291 billion retail clothing market.
Tsukagoshi’s mandate is to more than triple that in four years — to 200 stores — an achievement that could put the U.S. ahead of Europe, where it currently operates 112 outlets.
Fast Retailing is betting that Uniqlo North America will deliver annual revenue of $2.3 billion and an operating margin of 20% by 2027. That compares with yearly sales of $6 billion in Japan, a third of total revenue.
Known for its simple but fashionable takes on everything from office wear to pajamas, Uniqlo has become a marketing and apparel phenomenon in its home market of Japan. It’s been able to replicate some of that success in other parts of Asia, as well as in Europe, but the North American market has been a long-sought goal for Fast Retailing’s founder and CEO Tadashi Yanai, Japan’s richest man, according to the Bloomberg Billionaires Index.
Even though the first
Uniqlo store opened in New Jersey in 2005, the brand has struggled to reach the same scale of success seen in mainland China, where Tsukagoshi was the brand’s chief operating officer from 2017 to 2020. The country is one of Fast Retailing’s key markets, with around 900 stores generating $4 billion in annual sales.
Uniqlo plans to open 10 stores during the current fiscal year in North America, which ends in August, followed by 20 to 30 each year in order to reach Yanai’s goal of 200 stores. They’re going up against entrenched global clothing brands already in the market. By comparison, Hennes & Mauritz AB has 740 H&M stores in the Americas, while Gap Inc. counts more than 2,000.
Given that public awareness of the Uniqlo brand is so low in the U.S., Fast Retailing will have to keep spending on marketing to communicate the value of its clothing, and avoid the temptation to reduce prices in order to get customers.
“Up until now we used to discount a lot like other retailers, but we stopped doing that,” Tsukagoshi said.