Not content with trying to rule the world with one fast-fashion brand, ambitious Japanese apparel retailer, Fast Retailing is about to introduce a second label for the U.S. buying public this fall: GU.
GU’s motto for this year is “Go Global” as the first step towards turning GU into an international fashion brand. In other words, Fast Retailing is positioning GU on a global platform rather than a Japanese one, similar to its approach to one of its other brands, Theory.
GU — pronounced as the letters, ‘G’ and ‘U’ which sounds like the word jiyu, or ‘freedom’ in Japanese — is a sister brand to the group’s Uniqlo. It’s set to open its first permanent overseas flagship store at 578 Broadway in SoHo, New York, as well as an online store serving North America.
And there’s no limit to manifest destiny: “GU has the same potential as Uniqlo,” Fast Retailing Chief Financial Officer Takeshi Okazaki declared boldly in an interview. “We can generate as many GU stores as there are Uniqlo ones.” Actually, New York customers have been able to visit a GU pop-up store that opened in 2022, which is slated to close this summer to make way for the full-line store.
GU Targets the Trendy
GU has slightly lower prices than Uniqlo with the fashions generally aimed at a younger clientele. The pop-up store was as much to develop products for the local market as it was to introduce shoppers to the brand. “We want to make GU a store that’s overflowing with trendy products that are easily affordable, and make people feel like they want to enjoy fashion. To achieve this, we can’t just stay within Japan,” Okazaki said.
So how will GU debut? The new store will have two sales floors of about 10,225 square feet as a showcase for the GU concept, highlighting its latest fashions that will include women’s and men’s apparel, plus a selection of on-trend products including shoes, bags, and accessories. The online store will feature the same product line-up and will also launch at the same time, delivering GU products nationally.
“For about a year and a half since opening our first pop-up store in the U.S. in the Fall of 2022, we have been able to provide GU products to many customers, so we have great expectations for our business development in the U.S.,” GU CEO Osamu Yunoki said. “We have applied what we learned from the pop-up store to establish a framework for product development and business operations at a global level, and we are extremely pleased to be officially opening a store in the United States this Fall. We will also launch our online store at the same time and hope that even more customers will enjoy GU fashion.”
GU Goes Big in Japan
GU was established in 2006 and currently operates around 470 stores in Asia, mainly in its home market Japan. New York will represent the first official opening of a store outside of Asia and comes after some lengthy planning. In September 2023 the company established a division in New York to promote product development at a global level. Going forward, GU said that it will strengthen local recruitment of designers, pattern makers, and other positions to “establish the foundation of a product development base, aiming for further business expansion.” GU’s motto for this year is “Go Global” as the first step to turning GU into an international fashion brand. In other words, Fast Retailing is positioning GU on a global platform rather than a Japanese one, similar to its approach to one of its other brands, Theory.
GU opened 52 new stores in 2023, primarily in Japan, including the brand’s fourth global flagship store, GU Marronier Gate Ginza, in Tokyo; one of western Japan’s largest stores, GU Tennoji MIO; a joint-brand Fast Retailing Group store in Fukuoka, GU Tenjin, plus a number of other large format stores in a mix of major cities, suburban locations and malls.
And Fast Retailing has been quick to emphasize that “Japan still harbors plenty of opportunity,” but also believes that international growth is key to the next phase of its development.
Follow the Money
It’s not hard to see why Fast Retailing has high hopes for GU. The brand’s prospects were buoyed for the six months ended 29 February 2024, when Fast Retailing’s revenue rose nine percent year-on-year from $9.58 billion to $10.44 billion, with its GU operation proving to be the key driver of group expansion.
GU full-year 2023 revenue and profit increased considerably, with revenue totaling ¥295.2 billion (+20.0 percent) – a little shy of $1.9 billion – and operating profit reaching ¥26.1 billion (+56.8 percent), or about $164 million. The company said that it had reduced the number of products and bolstered volumes of key products, while GU’s performance was also supported by improvements to its organizational structures and product development frameworks.
Fast Retailing Group is the umbrella for a number of other brands, including Theory, PLST, and Comptoir des Cotonniers. But these have not enjoyed the same growth as Uniqlo. Of the latter pair, the company intends “to move swiftly into the black” by promoting structural reforms, closing unprofitable stores and opening more brand outlets within Uniqlo stores. However, for Theory, which has also had its own travails, its objective is to create a global brand platform from New York, mirroring its strategy for GU.
GU’s American Dream
Of course, it won’t be easy to introduce yet another international fast fashion, youth-focused fashion brand to the U.S. market. Compared with Uniqlo, which sells a roster of everyday wear to a wide age group, GU’s market is far more focused on next gens, a market that some might say is quite well served already.
But to reach the group’s mid-term goal of reaching $6.3 billion in GU sales, there is little choice other than to break into overseas markets, and that always comes with cultural and operational challenges.
That said, there is undoubtedly a synergy between GU and Uniqlo that should make it easier to introduce GU stores by leveraging what Fast Retailing has already achieved with Uniqlo and its worldwide network of stores. And the company is convinced to crack those international consumer group trends means that merchandise designs will have to be nuanced, rather than just adding swathes of new items.
New York consumers will be the first to see the fruits of the group’s work and the initial arbiters on whether there is enough space left in the sector to muscle in on the youth fashion market. Zara, H&M, Mango, Primark and, indeed, Uniqlo are among the international names already established there. We’ll see if Fast Retailing’s American Dream for GU will break free in Manhattan.
