Uniqlo operates some 2,400 stores around the world, but its presence in the North American market is still relatively miniscule.
That’s about to change.
The vertical retailer, which is a division of Tokyo-based Fast Retailing, currently operates 46 stores in the U.S. and 16 in Canada. Over the next four years the company aims to have that number jump to 200, according to Daisuke Tsukagoshi, chief executive officer of Uniqlo North America.
This isn’t the first time the company has identified North America as a key focus — Fast Retailing’s chief Tadashi Yanai has ambitions to be the largest apparel retailer in the world — but the openings in the region have become more frequent.
The first store in America opened 16 years ago in New York’s SoHo neighborhood, but Tsukagoshi admitted the brand struggled to gain a foothold here. “It’s a very competitive market,” he said.
Because Uniqlo sells its own brand, it took a while for customers in North America to discover the company. So the company invested in brand marketing to introduce itself to U.S. consumers.
It also offered hefty promotional pricing to lure shoppers. But that too is being changed. “We used to chase discounts and promotions,” Tsukagoshi said, pointing to the 60 to 70 percent off that was offered on Black Friday and other traditionally promotional periods. “But we’ve stopped that and are now focusing on the quality of the clothes.”
With all these growing pains at Uniqlo, Fast Retailing could have easily cut its losses and exited the market. But the company decided instead to open stores in other key locations, including New York’s Fifth Avenue and Boston on the East Coast and Seattle and Los Angeles on the West Coast.
That perseverance has finally begun to pay off. Tsukagoshi said the North American division made a profit last year for the first time, giving the company the incentive it needed to expand its reach.
In its first-quarter earnings report on Jan. 12, Fast Retailing said that outside of Greater China and Japan, Uniqlo reported record results in its other regions including North America with sales increasing in the double digits in both the U.S. and Canada.
While sales were good, profit margins were impacted by the more aggressive use of air transportation to “satisfy customer demand as much as possible and stay abreast of strong sales,” the parent company said.
Top sellers in the U.S. included seasonal launches of HeatTech and down outerwear, along with year-round products such as Airism cotton oversize T-shirts, rayon blouses and wireless bras. In Canada, HeatTech, Ultralight down, fleece and other core winter merchandise performed the best.
As a result of this performance, the decision was made to “speed up new store openings,” Fast said.
Tsukagoshi said the plan is to open around 20 stores a year in the U.S. A store just reopened in King of Prussia, Pennsylvania, last week, and on Friday, a 7,800-square-foot store will open at Newport Centre in Jersey City, New Jersey — Uniqlo’s fourth store in the state.
The Newport Centre store will offer the full assortment of men’s, women’s and children’s LifeWear everyday apparel along with some HeatTech product and the new spring collection of 100% linen; Blue Cycle Jeans, which are produced using 99 percent less water than traditional jeans, and the Airism innerwear collection.
Tsukagoshi said the plan is to add stores in existing markets where Uniqlo has built a base. That includes New York City; Philadelphia; Washington, D.C.; Seattle; San Francisco; Los Angeles and Vancouver. The company will also expand its presence in Hawaii, where it only operates one store, he said. And this spring, Uniqlo will open its first store in Ottawa at Rideau Centre.
Tsukagoshi said that while Uniqlo operates two global flagships in New York, in SoHo and Fifth Avenue, most of the other units are smaller. But he’s searching for a larger location on the West Coast in either San Francisco or Los Angeles for a flagship on that coast, he said.
In five of its U.S. stores — SoHo and Fifth Avenue as well as Beverly Center in Los Angeles, State Street in Chicago and Disney Springs in Lake Buena Vista, Florida — Uniqlo last week launched Re.Uniqlo Studio to repair, reuse, recycle and remake its products. The service had already been offered in SoHo, but that was expanded.
It’s here that buttons can be replaced, seams mended and holes patched for $5 each. In addition, all stores have drop boxes where customers can donate items they no longer need or want. The items are either sent to communities in need or recycled. The Fifth Avenue store offers some of these upcycled pieces for purchase.
“Uniqlo’s philosophy to clothing, which we call LifeWear, is rooted in our Japanese values of quality, longevity, and practicality, with the customer’s daily needs at the heart of everything we do,” Tsukagoshi said. “For many years we have been proud to extend the life of Uniqlo clothing through donations supporting refugees around the world, victims of natural disasters, and our local communities. Now, as we continue to build upon our Re.Uniqlo initiatives for a more circular future, we are proud to offer more customers the opportunity to give their treasured LifeWear pieces a new chapter.”
In addition to brick-and-mortar, Uniqlo is working to increase its online reach in North America. The e-commerce site offers the full assortment of product as well as more detailed information about the assortment and the company. And the Uniqlo app allows shoppers to search and order online and have their purchases either shipped directly to them or can pick them up at the local store in as little as two hours. Styling tips, new styles and deals are also offered to members and customers shopping in the stores can scan their purchases so they can check out more quickly.
“We have long lines in our stores all the time,” Tsukagoshi said. “This new experience offers quick checkout.”
Until recently, the biggest focus within the company was on East Asia, where it operates more than 800 stores, and China, where there are some 900 units, Tsukagoshi said. But it’s now North America where the focus has shifted. “We’re very fast-paced and we keep growing,” he said.
On Thursday in London, Kazumi Yanai and other principals from Fast Retailing talked about some of the company’s strides in sustainability during a round table discussion at Uniqlo’s Regent Street flagship.
The discussion took place in a special area of the store dedicated to creative repairs. For a small fee, customers can have special Japanese “sashiko” stitching, or bits of colorful, patterned fabric applied to their old or used clothing.
Uniqlo has rolled out the repair spaces worldwide in stores large and small.
Yanai, a director and group senior executive officer at Fast Retailing and the chairman of Theory, said the company is determined to make changes to the way it works, by offering repair services, but also by improving its supply chain.
Yanai said Fast Retailing is focusing increasingly on forward planning, shortening lead times, limiting the number of factories it uses, and treating its manufacturers and suppliers more like partners.
He said that Fast Retailing wants to deliver “truly good product with trustworthy partners in the supply chain. We want to have fewer factories and work more closely with them. It’s about us taking charge of the end-to-end business, and knowing that our responsibilities do not end when we sell our clothing to customers.”
Eventually, Yanai added, he’d like to see Fast Retailing behave like supermarkets which tout the provenance of products such as carrots and milk, advertising the name of the farmer who produced them.
“Our ultimate goal is to have farm-level traceability,” he said.
That will take a while, he admitted, but in the meantime, Fast Retailing has whittled down the number of factories it is working with to around 700 in various regions such as China, Bangladesh, Vietnam and Indonesia.
Fast Retailing has also put systems in place to monitor those factories. Yanai added that Fast Retailing also conducts surprise spot checks to keep manufacturing partners on their toes. It has also hired a third-party auditor to check its oversight of the factories.
Another goal at Fast Retailing is to work with 50 percent recycled materials by 2030. The company has been taking steps in that direction by asking customers to return certain clothing, such as used down jackets, and by creating polyester fabrics from plastic bottles.
The company has also been making a virtue of returns, flawed or out-of-season products by embellishing them with “sashiko” stitching or adding bits of patterned fabric here and there.
“Repair has to be fun,” he said. “We can’t always be so serious.”
— With contributions from Samantha Conti, London