Uniqlo Could Become What Gap Used To Be

Japanese fast-fashion retailer Uniqlo wants to become a more familiar fixture throughout the U.S.

Uniqlo’s parent company Fast Retailing is expanding its North American store count by 10 percent as part of a plan to reach 200 stores on the continent by 2027, Reuters reported. The chain intends to open 20 to 30 new stores per year in the service of that goal. Its expansion plans for this summer include opening six U.S. locations in California, Maryland and New Jersey, where Uniqlo has already established a footprint and two locations in entirely new markets in Canada. Uniqlo’s current U.S. store count is 47 stores and its current Canadian store count is 16.

In an online discussion about Uniqlo’s expansion plans last week on RetailWire, a number of industry experts on the RetailWire BrainTrust saw the U.S. apparel market having some serious competition in the offing.

“Durable fast-fashion is an oxymoron, but Uniqlo has found a way to make it work,” wrote Ken Morris, managing partner at Cambridge Retail Advisors. “I think that getting the logistics right was possibly even more important for Uniqlo’s bottom line than eliminating discounts. They are a leader in RFID technology and have truly embraced the model. They understand their inventory to the last item. They have fast checkout, security, inventory accuracy, can find product on the floor, ease of markdowns, fast and accurate receiving, and low prices. What more could a customer or an associate want or need? For a successful expansion, they just need to stick to their strengths–their products, brand, and tech.”

“Uniqlo is a great retailer,” wrote Neil Saunders, managing partner at GlobalData. “It has good quality products at excellent price points. And most of what it sells appeals to a fairly wide audience because of the mix of apparel staples and more fashionable products.”

Moving forward with plans for more Uniqlo stores in the U.S. and Canada is not the only recent move that Fast Retailing has made to increase its North American presence.

The company last year announced the opening of a GU store in New York’s Soho neighborhood. GU is Fast Retailing’s more trend-focused, youth-targeted brand. It represents GU’s first appearance outside of Asia. It is one of Fast Retailing’s few attempts to launch it outside of Japan (a handful of GU stores opened in South Korea and were closed during the novel coronavirus pandemic).

Reuters reported late last year that Uniqlo emerged as a standout among apparel retailers in an otherwise suffering vertical during the pandemic. Fast Retailing said then that Uniqlo was on its way to showing a profit in the U.S. for the first time in its 17 years of doing business in the country. It attributed the results to a logistics revamp and a new pricing strategy that ended discounting.

“Yes, 17 years is a long ramp-up to profitability, but entering the U.S. market is never easy,” wrote Mr. Morris.

Some of the members of the BrainTrust saw a space in the U.S. market ready-made for Uniqlo to fill—one that it may be starting to fill already.

“I’ve always viewed Uniqlo as a direct head-to-head competitor with Gap
GPS
,” wrote Jeff Sward, founding partner at Merchandising Metrics. “Gap’s descent into bland and ordinary over the years has left a gaping void for Uniqlo to fill. Both brands offer very straightforward everyday apparel, but if Uniqlo is saying they can do it with less discounting while Gap becomes more and more promotional, that’s a pretty big statement.”

“I’ve always thought that Uniqlo was just a better Gap,” wrote Lee Peterson, EVP of thought leadership, marketing at WD Partners. “So if there’s any appetite left for the look that Gap exploded on America, to me, it’ll be Uniqlo that’ll revives it. Gap can’t seem to figure out how to be themselves anymore so, I certainly wouldn’t count on them to re-create demand any time soon.”

Uniqlo is not the only international fast-fashion brand whose slow, deliberate stateside expansion is picking up speed.

This year Irish fast-fashion retailer Primark has continued with plans to open more stores in the U.S., some in entirely new markets, aiming for a store count of 60 by 2027, Business Insider reported. Primark currently has 17 stores in the U.S., and the next phase of its expansion will consist of establishing “a significant presence” in southern states.

“Primark’s role in value-priced everyday wear should not be minimized,” wrote Mr. Sward. “More Primark stores means more headaches for everybody.”

Some BrainTrust members saw a bigger presence, for both retailers, as the path to a new look for U.S. fast-fashion.

“The issue for Uniqlo – and indeed for Primark – is that the brands are niche in the U.S. because they have a limited number of stores,” wrote Mr. Saunders. “As both ramp up openings they should see strong growth and that will come at the expense of existing players. However becoming a dominant force will take time for both players: the U.S. is enormous and not easily conquered.”

“This is easy — just open more stores!” wrote Mark Self, CEO of Vector Textiles. “…I believe Uniqlo will become a force here in the states. Add in some more U.S.-specific promotion strategies and they will win here in a big way.”

Source: https://www.forbes.com/sites/retailwire/2023/05/04/uniqlo-could-become-what-gap-used-to-be/