Uniqlo Starts U.S. Expansion, Eyes 200 Stores

Teni Sow | October 15, 2011 | 0 Comments

Fast Retailing Co Ltd’s (9983.T) Uniqlo is launching its U.S. expansion this week with the opening of a flagship store in Manhattan that will anchor a global push to rely less on its home market of Japan.

In addition to the Fifth Avenue location, opening on Friday, Uniqlo is also opening a store in New York’s Herald Square next week, bringing its U.S. total to three locations. The new stores will be the chain’s two biggest.

The retailer’s goal is to eventually have 200 stores in the United States and U.S. sales of $10 billion by 2020.

Uniqlo, run by Japanese billionaire Tadashi Yanai, is directly challenging rivals such as Spain’s Inditex SA (ITX.MC), Sweden’s Hennes & Mauritz AB (HMb.ST) and U.S.-based Gap Inc (GPS.N) with stores a stone’s throw away from theirs on Manhattan’s major shopping strips.

All these chains are trying to tap the growing market for fashionable clothes, such as cashmere sweaters and lightweight down jackets, at lower prices among U.S. consumers who are likely to have a reduced purchasing power for some time.

“Even people who don’t have much money have the same desire to wear something nice,” Yanai told Reuters on Thursday through an interpreter.

Its rivals are well established in the United States. H&M opened its first U.S. location in 2000 and now has more than 100. In 2010, it had U.S. sales of some $1.3 billion. Zara has 49 stores here, including seven in New York. Uniqlo has had a single U.S. store, in New York’s SoHo district, since 2006.

But H&M appeals to younger shoppers who change their wardrobe more quickly, while Zara’s shoppers are a bit older, leaving room for Uniqlo, an industry analyst said.

“Uniqlo brings in a broader customer base and is a bit more classic and tailored,” said NPD Group Chief Industry Analyst Marshal Cohen. “They will appeal to a slightly more affluent shopper.”

But the U.S. expansion is modest compared with Uniqlo’s plans for Asia, especially China, Southeast Asia and South Korea. Of the 4,000 stores it hopes to operate by 2020, up from 1,000 now, some 70 percent will be in those countries.

Sales in Japan, which account for three quarters of Fast Retailing’s sales, fell 6 percent in the last business year. Uniqlo has 843 stores in Japan.

“The (Asian) middle class will grow,” Yanai said. “It’s a gold rush.”

The New York stores, which will attract U.S. and foreign tourists, as well as taste-makers, are central to its global strategy.

“This is our showcase for the world,” Yanai added.

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