By  on March 30, 2012

TOKYO — Fast Retailing Co. Ltd.'s g.u. brand, a cheaper companion label to Uniqlo, has set up shop in Ginza, becoming the latest budget-conscious fashion player to move into the luxury-dominated neighborhood.

The chain opened its first central Tokyo location Friday in the same building that used to house a Uniqlo store, which has now moved down the block to much larger premises, linked to Comme des Garçons' new Dover Street Market. Also in the area are Hennes & Maurtiz, Forever 21 and Abercrombie & Fitch, alongside upscale department stores and designer boutiques like Lanvin, Hermès and Armani.

The company set about converting the former Uniqlo space, a total of approximately 16,000 square feet on five floors, to house its even lower priced brand. Until now, g.u.'s image in Japan has been one of shopping malls and roadside stores in suburban and rural areas, and even its 17-odd locations within Tokyo have been on the outskirts of the city. The chain had some 166 locations around Japan as of the end of November.

"There are two reasons [we decided to open the Ginza store now]," said Osamu Yunoki, chief executive of g.u. Co., Ltd. "First, we want to really push the fashion. Until now, we've survived on the profits of low-priced, standard things, so we were in the suburbs, where the rent is cheaper. But I want all people, not just young people, to be able to buy fashion. And I think the place in Japan where all people gather is Ginza. The other reason is that I want to try [to enter] the international market, and in Ginza there are not only Japanese people, but customers from other countries come as well, so the familiarity [with the brand] will increase."

Yunoki also mentioned that he feels it's important to compete with international fast-fashion players by opening more stores in central locations in Japan's cities. He said he hopes to open g.u. branches in places such as the Tokyo neighborhoods of Shinjuku and Shibuya as soon as the company is able to find suitable space, hopefully within the next couple of years. And by 2014 he hopes to open the brand's first international store, although he's unsure about the location.

"In the future I want to enter Asia, America and Europe, but it's undecided which one will come first," Yunoki said.

Despite facing a crowded market, Yunoki is confident that g.u. has something unique to offer customers. "First, we design with a Japanese touch. I call it 'glopanese' because we take in global trends but design products with a Japanese touch. Also, everything is cheap--I think we're the cheapest [fast-fashion brand]." He went on to say that g.u. is different from sister brand Uniqlo not only in price, but also in that it sells more trend-driven fashion items, whereas Uniqlo tends to focus more on basics.

About 400 people lined up outside the store before its 10 a.m. opening time, eager to take advantage of the especially low prices being offered during a grand opening sale. Hooded sweatshirts, chino pants and button-down shirts were selling for 990 yen, or $12, tote bags and backpacks were 490 yen, or $5.94, and socks went for just 50 yen, or 60 cents, a pair.

But according to Yunoki, the quality of g.u.'s products is better than customers might expect at such prices. "We're particular about quality," he said. "We look for cheap fabrics and make our products at the cheapest factories we can, but our production team is the same as Uniqlo's, so we make use of Uniqlo's know how and dispatch their engineers to our factories in order to maintain quality across our production runs."

Yunoki declined to give a sales target for the Ginza store, but said that g.u.'s overall forecast for the 2012 fiscal year is 50 billion yen, or $606.09 million at current exchange rates.

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