Can Uniqlo's Clever Clothes Refashion the U.S. Retail Market?Uniqlo has a simple plan.

The Japanese retailer wants to make utilitarian clothing -- with features like milk protein softening fibers -- sexy, whether you're 16 or 60.

Showcasing affordable basics in a sleek, modernist, setting is also part of its plan to seduce American shoppers. (Think the Apple Store, but for fashion.)

It's how Uniqlo hopes to "revolutionize" mass retailing in the U.S., said Shin Odake, CEO of Uniqlo USA, during a tour of its new 64,000-square foot outlet in New York City.

Can Uniqlo's clever clothes refashion the U.S. retail market?"Everyone is selling clothes. Apple is selling cell phones and computers, but they've revolutionized people's lives," Odake said. "We want to revolutionize how people wear clothes."

"If you walk down Fifth Avenue in New York City, most people are wearing basic items," he said. "They're not wearing the super-designed clothes that you see on the runway. We want to make a perfect T-shirt, sweater and jeans that can be worn by everyone."

First American Invasion Fell Flat


Uniqlo, a subsidiary of Japanese retail holding firm Fast Retailing Co., operates 1,041 stores in 12 countries, including Japan, China, France and the United Kingdom.

Now, it has set its sights on opening 200 stores in the U.S. by 2020. The retailer hopes the second time's a charm. Uniqlo's first attempt to conquer the U.S. market failed: It opened three mall stores in 2005, only to close them by year's end.

Opening stores in malls when few Americans had heard of the chain was an ill-fated strategy, Odake said. "It's difficult to differentiate yourself in a mall environment. The strategy now is to open flagship stores on prominent shopping streets," and expand to malls later.

This time around, Uniqlo picked fashion capital New York City to initiate its bold expansion plans. The two flagship stores launched this month in the Big Apple are its largest anywhere. Up to this point, the retailer has operated just a single store in the U.S., in Manhattan's Soho neighborhood.

To whip up consumer excitement, Uniqlo started spreading its minimalist gospel in July with a marketing blitz that plastered buses and subway cars with celebrity-driven ads espousing its "made for all" philosophy, with phrases like, "Uniqlo is beauty in hyper practicality." At the same time, Uniqlo pop-up stores dotted high traffic areas around the city, while mobile Uniqlo Cubes rolled up at summer events and street festivals.

The Next Gap?

Marketing hype aside, success stateside will come down to blowing away shoppers, one item at a time, Odake said.

And if Uniqlo plays its cards right, it could fill the void left by the struggling Gap, which will close 21% of its stores by 2013, Susan Scafidi, professor of the Fashion Law Institute of Fordham University, told DailyFinance.

Gap lost its way when it became too trendy and "abandoned its strengths of core basic apparel," she said. Uniqlo can take market share with its formula of "fitting the hole in shoppers' wardrobes for completer pieces -- that T-shirt, V-neck sweater." And their focus on "quality, materials and technology" gives then a fresh edge, Scafidi said.

Can Uniqlo's clever clothes refashion the U.S. retail market?

Odake pointed to a $12.90 camisole featuring Heattech, its exclusive heat-retaining and moisture-resistant technology, which incorporates that milk protein. Uniqlo is on track to sell 100 million pieces of Heattech this year globally.

"This type of product didn't exist before at this price range," Odake said. A similar item from North Face, for example, would cost about $80, he said, holding up the whisper-thin undershirt. "And it would be very heavy and thick."

To keep prices low, Uniqlo places orders with its Chinese factories in the off-season for products that will sell year-round, like cashmere sweaters and jeans, so it locks in lower rates when factories are short on work.

It also marks up its products less than other merchants, sacrificing fatter product margins for higher sales volumes -- a strategy that's a hallmark of Walmart's model.

"The best item for us is something that sells 100 million pieces," Odake said. "It's almost like a social movement: It means that people like it and we're changing how people dress."

In the outerwear department, Uniqlo's new, $59.99 Premium Down Ultra Light coat -- so light that it effortlessly folds into a pouch -- is turning out to be one of its best-sellers. Demand has outpaced the company's manufacturing capacity, Odake said.

In addition to performance features like Heattech, Uniqlo likes to play up the quality of its merchandise as a selling point. Odake noted a table display of jeans for $9.99, marked, "Japanese engineered denim."

The jeans reflect the touch of Japanese takumi masters. Work dried up for those textile artisans when the industry relocated to China. So Uniqlo enlisted the craftsmen to improve its product quality and ensure a consistent standard when it comes to tasks like fabric dyeing and crafting the silhouette of a pair of jeans, for example.

The Medium is the Message

En route to the outerwear area, Odake noted the stainless steel, custom-made spinning mannequins, which fly up and down between the store's three floors.

They're one feature of Uniqlo's futuristic store design, characterized by a sparse, airy layout, an abundance of white glass and steel, and 150 LED and LCD screens. Uniqlo stores cultivate a high-tech vibe to reflect the company's "technology, innovation and newness" branding message, Odake said. "People are looking for something new."

Can Uniqlo's clever clothes refashion the U.S. retail market?

But new doesn't mean chasing fashion trends, he said.

Uniqlo is the antithesis of the fast-fashion merchants that spit out clothing in a New York minute to jump on runway looks, Odake said.

"You have to understand trends and what's going on with color, fabric and fit," he noted, pointing out a wool coat in camel, the hot color this season, and denim leggings, which are also on-trend this season. But following fashion trends is not what will make Uniqlo a household name, Odake said.

The idea is to "create a business that's innovative and sustainable," he said. For Uniqlo, that means it's only as good as its next hit high-tech product, he said. So the question is always: "What is the next Heattech? What's the next Light Down?"

The Service Factor

Just as Uniqlo hopes to reshape how Americans dress, it's also working to upgrade shoppers' customer service expectations from a U.S. mass retailer.

"Japan is a very homogeneous society. Everyone is very middle class," Odake said. Unlike the U.S., "Everywhere you go in Japan, the service level is the same" -- be it a discount chain or an upscale store, he said. So everyone expects good service.

And in Uniqlo's U.S. stores, "just because the price points are low, doesn't mean the service level can't be as good as a high-end store," he said.

To that end, the 64,000 square foot 34th Street store boasts 500 store associates, as well as 83 fitting rooms and 36 cash registers so that shoppers don't have to suffer those dreaded long lines. At a similarly sized H&M store, for example, "you might have 45 to 70 people waiting on line," he said.

It's also big on staff training. In preparation for the opening of the two Manhattan stores, Uniqlo sent U.S. college graduates to Japan for six months to groom them for store manager positions.

Store manager is a vaunted role at the chain, Odake said.

That's because, unlike at many U.S. retailers, local Uniqlo managers are charged with driving the business strategy at their individual store, rather than carrying out dictates from a corporate office, he said.

Odake is bullish on just how big an impact Uniqlo's customer service can have on the American retail market. "The type of service we offer can revolutionize the retail landscape in the U.S.," he said.

Expansion During a Downturn?

Uniqlo is plotting to rack up $10 billion in U.S. sales by 2020. "We want to grow a very rapid pace, like Apple and Google," Odake said.

But the U.S. economy is in a prolonged funk: Is now the time to attempt to expand here?

The retailer has little choice, Odake said. Company founder Tadashi Yanai wants Uniqlo to be the biggest clothing retailer in the world. The company can't get there without tackling the U.S. market.

"The U.S. is the biggest economy in the world, the country is a big opportunity," he said. "We want to bring Heattech to Chicago ... It's up for us to come up with new concepts and innovative merchandise so that the customer will want to spend."

Increase your money and finance knowledge from home

Reading a Stock Quote

Learn to read the ingredients of a stock.

View Course »

Basics of Diversification

Learn one of the fundamental concepts of building a portfolio.

View Course »

Add a Comment

*0 / 3000 Character Maximum

14 Comments

Filter by:
scruffy1113

"HEAT GENERATING - The highly absorbent rayon mix fabric absorbs the
moisture generated by the body and converts it into heat." If this is true, it defies all laws of science!! I've not worn these clothes and probably will not based on the JUNK science in their advertisements.

November 04 2011 at 6:02 PM Report abuse rate up rate down Reply
scruffy1113

"HEAT GENERATING - The highly absorbent rayon mix fabric absorbs the
moisture generated by the body and converts it into heat." If this is true, it defies all laws of science!! I've not worn these clothes and probably will not based on the JUNK science in their advertisements.

November 04 2011 at 6:02 PM Report abuse rate up rate down Reply
mfernbacher

Uniqlo has quality fabrication and remember, the iphone, a highly sophisticated design, is made in China. Having lived in China, I have seen beautiful, well crafted items made there, for a fraction of a US cost. It is up to individual companies who drive prices and quality down. Uniqlo benefits from a Japanese mindset for quality control and it shows in the garments.

The majority of goods we consume in America (at prices we prefer) are made in Asia, one always has the option of buying local. I believe Uniqlo can be successful because they focus on basic needs and do it with style, color, and integrity. And for anyone who has enjoyed the consistent high level of costumer service in Japan, you should welcome the attempt to bring that to American stores, where so much of what you find (below the level of luxury stores) is a largely apathy.

November 01 2011 at 9:20 PM Report abuse rate up rate down Reply
SPQR

Americans sit around and watch illegals works while we stuff beer and burgers in our mouths. Have fun while it lasts

October 31 2011 at 9:17 AM Report abuse rate up rate down Reply
SPQR

Occupy chinese product stores !!!

October 31 2011 at 9:16 AM Report abuse rate up rate down Reply
SPQR

"The U.S. is the biggest economy in the world, the country is a big opportunity," he said. "We want to bring Heattech to Chicago ... It's up for us to come up with new concepts and innovative merchandise so that the customer will want to spend."

They will take the rest of our money!!

October 31 2011 at 9:14 AM Report abuse rate up rate down Reply
gbotcmarketalerts@gmail.com

great awesome tips.

http://www.otcmarketalerts.com/

October 31 2011 at 4:57 AM Report abuse rate up rate down Reply
Fishgirl

It's too bad, for the US, this is not an American company. The concept is great; basic/classic pieces, good quality, affordable and good service. I may have to see the quality to believe it is good. It seems like everything that comes out of China is only fairly made and sometimes worse than poor. While it is no secret labor is cheap in China, I wonder if the workers are paid more to make a better product than the 'normal'. I suppose, good for them; I just wish America produced more.

October 30 2011 at 12:32 PM Report abuse rate up rate down Reply
kv37

Kid today are already wearing those skin tight clothes.

October 29 2011 at 3:10 PM Report abuse rate up rate down Reply
poopersnip

First of all you do not show cloth that would fit over 180 pounds,look at them skinny models
second the colors,It looks like to me they are in uniform ,looking all the same ,
and the other thing ,another product from CHINA we do not need

October 29 2011 at 12:29 PM Report abuse rate up rate down Reply
1 reply to poopersnip's comment
Fishgirl

Agree with made in China. The models? Most every company, save Lane Bryant uses 'skinny' models. Perhaps our country should not be looking for 180 pound models. It simply is not healthy. It is a no-win. The fast food & junk food industry is now being blamed for "making" people fat and the fashion industry is looked down on because they use skinny models.

October 30 2011 at 12:39 PM Report abuse rate up rate down Reply