Why I Am Aglow With UNIQLO

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\"RRI first heard of Uniqlo several years ago when the company opened a pop-up store in Rockefeller Center. People were raving about the inexpensive cashmere sweaters. Always interested in a bargain, I checked it out. I was underwhelmed. Not enough sizes, a real mish-mash as I recall. It was dark and dreary. A dull basement space that was completely unexciting.

I returned to Uniqlo from a neutral point of view. However, this time around, the energy in the store, the sharp pricing the great overall merchandising and promotion, plus the fiber/product exclusivity, was so pro positive, that I have gone to the cheerleading side.

Over the last two years I received a couple of Uniqlo turtleneck ‘HEATTECH’ tops as gifts. These are made of a proprietary fabric that keeps you warm in winter by generating and retaining heat. The items can be worn as an under-layer or just alone. The fabric is kind of stretchy, “highly resilient and durable,” anti-static, odor resistant and designed to maintain its shape after repeated washings. And it does.


A couple of my friends, the gifters of HEATTECH tops, are Uniqlo devotees. There has been a free-standing Uniqlo store in Soho for the last five years and now, for nearly a year, there is flagship store at 53rd and Fifth Avenue. There is also a Uniglo store on 34th Street. These account for the sum total of three Uniqlo stores in the United States. A California store will open in San Francisco this year as will a New York metro suburban location.

As of February, 2012, Uniqlo International had 849 stores in Japan and 234 stores outside Japan. Typical store size is 1600 square meters, roughly, 16,160 square feet. Flagship stores are larger and these are located in key urban locations. The Fifth Avenue store is 89,000 square feet. One of the company’s key strategies is to open larger urban anchor stores to showcase the brand concept of offering ‘high quality basic clothing to the world.’ In the last few years, since the opening of the Soho store in New York, global, urban, flagship stores have opened in London, Paris, Shanghai, Osaka, Seoul and in the Ginza.

Uniqlo’s first store opened in Japan in 1984. At the end of FY2011, Uniqlo had sales of 600.1 billion Yen in Japan, which translated to a 5.5 percent share of the total Japanese apparel market. By 2020 the company’s goal is to reach $50 billion in global sales and $10 billion in operating profit. In Japan, Uniqlo estimates that 48 percent of its sales are in women’s; 42.5 percent men’s; and 16 percent kids and babies. The percentage mix seems to hold true worldwide. Uniqlo has a significant proportion of sales in men’s apparel even though women’s clothing typically dominates apparel category sales. Uniqlo’s merchandise
mix is primarily basics; T-shirts, jeans, and a good assortment of underwear and socks for men, women and children. Promotions are rational and regular with deep discounts on key items, are advertised heavily in New York, and well executed at store level. Brand positioning, “Clothing for All,” is clear, distinct and well articulated at all points of customer contact. The tone of the brand is fun, relevant and uplifting. Prices are low and extremely competitive offering exceptional value.

Uniqlo is owned by Fast Retailing, Co., Ltd., a Japanese holding company founded in 1963. Uniqlo is Fast Retailing’s primary business although it also owns Theory, Comptoir des Cotonniers and Princess Tam Tam. The business model is SPA — specialty store retailer of private label apparel — which controls all stages of the business from design and production to final sale. Uniqlo has established a virtuous cycle of end-to-end control of the entire business process from planning and design of the product to final sale including the development of unique and proprietary fabrics. Continuous consumer and sales feedback allows the company to maintain quality and minimize cost. HEATTECH, one of Uniqlo’s proprietary fabrics, has been refined every year based on consumer requests for more softness, warmth and color. To maintain quality control across the production cycle Uniqlo has a team of technical specialists, known as the Takumi Team. These textile specialists are sent directly to partner factories in China to offer technical instruction and supervision throughout the manufacturing process.

Uniqlo reports that its United States business is expanding favorably with the Soho flagship store continuing to generate double-digit growth in same-store sales. The Soho store serves 24,000 customers on a typical Saturday. The opening of the ‘global flagship’ Fifth Avenue store was highly successful paving the way for additional U.S. expansion. Uniqlo considers the Fifth Avenue store an opportunity to communicate the Uniqlo brand and ‘what we stand for’: “UNIQLO clothes are MADE FOR ALL– highly-finished elements of style in clothes that suit your values wherever you happen to live in the world.” Uniqlo considers its brand proposition a concept that “sets us apart from apparel companies whose sole purpose is the pursuit of fashion trends.”

The founder and Chairman of Uniqlo, Tadash Yanai, and the richest man in Japan, understands that “we can not win a dominant position in global markets simply by imitating other companies. Instead, true to our unique clothing concept, we seek to create clothes of the future with the potential to change the world.” This outsized philosophy is echoed in the company’s mission statement: \”To create truly great clothing with new and unique value, and to enable people all over the world to experience the joy, happiness and satisfaction of wearing such great clothes. ”The first time I visited the Fifth Avenue store a live band was playing. The atmosphere is exciting. Technical and graphic visual displays are colorful and informative. The energy in the store is high. The store is alive with brightness, color and excitement. It is clean and crisp, although a bit cavernous; 89,000 square feet is a lot of space to fill with T-shirts and jeans, socks and underwear. The entrance features a multi-storied double escalator in a vaulted space. Not exactly Steve Job’s floating staircase, but, extremely effective. One associate told me that people come just to see the escalator. Actually, I think they come for the overall experience, for something new and cutting edge, for the international flavor, the hipness of the scene, the energy, and for a good buy.

I conducted an informal survey and several in-depth one-on-one interviews to try to understand what was so compelling about the store, the brand, the product and the experience — and whether Uniqlo was delivering its brand promise. I spoke to both men and women, from early twenties to early eighty’s. Some shoppers did not know or shop Uniqlo, largely because it is not in a location convenient to them. But those who shop Uniqlo regularly love it. One slim figured, twenty-something young man, confident in his personal style, loves Uniqlo for the fit. “It fits me, there are no fat people in Japan,” he explained.

He was dressed in a Uniqlo shirt, undershirt and cotton whale chinos paired with a Hermes belt, Hermes watch and his signature Belgian loafers. Another man I spoke with regularly mixes his $5,000 Ralph Lauren and Tom Ford suits with Uniqlo shirts. “Most clothes at this price point are ill fitting, but these fit.” Some of these customers have traded Uniqlo for Gap. Many shop Uniglo monthly and “haven’t been to Gap for years.” Gap is “much more for middle America dressing. Uniqlo is an urban, cool look.” Another man who buys shirts regularly at Uniqlo describes it as “a newer, more interesting version of H&M and a death penalty for the Gap.” He finds it “cool, new and a remarkable value with heating shirts that seemed like nothing I had ever seen.” This customer liked the store so much he decided to buy the company stock in addition to the “great warm 100 percent down jacket for $50 that can fit in a small bag…an obscene value.” Another man bought three Uniqlo down jackets in Japan, “one in each of the weights they make.”

Some customers like the store experience. “Uniqlo is a fun store to walk around. The customers are interesting to look at.” “I like the concept of the store. Lots of color, lots of basics, but with a twist.” “The stores are very organized and easy to shop in. Great customer service. Great prices.” Other customers echoed the sentiment: “Fun to pop in there and see what’s new.” “Attentive service…help in finding sizes…got a navy linen blazer there this season…nice fabric, style that I’m so happy with for about $100.”

A young woman, and recent college graduate told me that although she doesn’t like to shop, Uniqlo is her favorite store. “I love that their clothes are simple, look interesting, seem to be good quality, fit me well and most of all are very inexpensive.” Another customer, old enough to be her grandmother, does like to shop and she is a Uniqlo afficiando. “The products are shelved in a most eye catching way…makes you want to refold everything in your closet…the cashmeres are sized for easy access and the temptation to throw a few at once into the mesh bag is great….as the seasons turn, the products change, but they always seem to be exactly what I need.”

Clearly Uniqlo has found favor with these customers. Part of the appeal certainly is newness. Retail has always been a game of new. But, I am convinced that Uniqlo’s appeal is greater than its newness factor. The brand positioning is distinct and very 21st century. The brand values are ageless and gender neutral. The product quality, overall shopping experience, pricing, presentation and promotion support a strong value proposition.

Gap had one store in 1969. It now has 3,000 company-owned and 200 franchised stores with FY2011 net sales of $14.5 billion. Gap appealed distinctly to Baby Boomers with product and lifestyle that defined a generation’s dressing. Uniqlo is a brand positioned for a new age, a new century. With new, and more global values, a distinctive point of view and an ability to execute it successfully.

Going forward, can Uniqlo open enough stores to become the dominant casual apparel retailer in the United States soon enough to capitalize on its momentum and keep its brand relevant? Will more mainstream, middle American shoppers embrace the global, new age values inherent in Uniqlo’s brand proposition? Has Uniqlo built a culture that is sustainable when its visionary leader retires or steps down?

Will Uniqlo push Gap aside as it enables Americans to experience “the joy, happiness and satisfaction of wearing such great clothes?” Time is of the essence and only time will tell. Gap, put your house in order!



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