Uniqlo Challenges H&M in New York as It Revs Up U.S., Global Expansion

Fast Retailing Co., which plans to become the world’s biggest apparel retailer, will open a Uniqlo flagship store in New York tomorrow.

Fast Retailing’s Uniqlo brand is accelerating its U.S. expansion, with plans to open 20 locations a year for the next few years. The new store on boutique-lined Fifth Avenue is across the street from Salvatore Ferragamo and Cartier.

Uniqlo plans to boost global revenue fivefold to $50 billion by 2020 and “to do that we need to gain market share in the U.S.,” Shin Odake, chief executive officer of Uniqlo’s U.S. operations, said yesterday in a phone interview.

Uniqlo’s U.S. expansion comes as consumer spending remains restrained amid market volatility and a 9.1 percent unemployment rate. Consumer spending slowed in August as incomes dropped for the first time in almost two years. Purchases rose 0.2 percent after a 0.7 percent increase the prior month, Commerce Department figures showed Sept. 30.

Uniqlo aims to steal customers from the likes of Zara, owned by Spain’s Inditex SA (ITX), and Stockholm-based Hennes & Mauritz AB (HMB), said Robin Lewis, chief executive officer of the New York-based Robin Report retail newsletter.

“Zara and H&M are pretty well advanced in New York, and I think it’s going to be very tough for Uniqlo to cut into their business,” Lewis said in a phone interview. “And it’s going to be very tough to gain new business because those markets are so over-saturated.”

To win over New York shoppers, Uniqlo, which has another location in SoHo and is opening one more on 34th Street, plastered much of the city with ads. Some feature portraits of New York celebrities -- including actresses Laura Linney and Susan Sarandon -- dressed in Uniqlo clothes.

Unisex Casual

Uniqlo was founded in 1984 in Hiroshima as a unisex casual wear store under the name “Unique Clothing Warehouse.” In 1997, the chain began making its own clothing and selling it exclusively. After Uniqlo’s affordable, everyday wear caught on in Japan, the company began expanding overseas.

The chain opened stores in New Jersey malls in 2005 and a flagship the next year in SoHo. Sales were weak at the mall locations and by early 2007 the New Jersey stores were gone.

“Our brand was not recognized, and it’s very difficult to differentiate oneself in a shopping mall,” said CEO Odake. “That was our lesson, and we opened a flagship in Soho. It was quite a risk at the time and the Soho store was quite an investment. People started coming in and business was good.”

Fast Retailing, which also owns the Theory and Comptoir des Cotonniers brands, announced this week that it expects double- digit profit and revenue gains this fiscal year, as it continues its global expansion.

Fast Retailing, which has a market valuation of 1.39 trillion yen ($18.1 billion), operated 843 Uniqlo stores in Japan and 181 abroad as of Aug. 31. The shares fell 1.4 percent to 13,080 yen in Tokyo today.

To contact the reporter on this story: Ksenia Galouchko in New York at kgalouchko1@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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