Japanese fashion powerhouse Uniqlo’s biggest challenge in realizing its ambitious plans for the US market is building brand awareness. In New York and other major cities, Uniqlo is well-known for their cashmere sweaters and daily wardrobe essentials.
However, parent company Fast Retailing Co. is giving Uniqlo a sizable marketing budget. This is an effort to give it the same recognition it presently enjoys in Japan, Asia, Europe, and smaller US cities.
The CEO of Uniqlo in the US and Canada, Daisuke Tsukagoshi, claims that it will be difficult to grow given the wide range of clothing preferences in local markets. He said in an interview at Uniqlo’s enormous headquarters, which is located on a man-made island in Tokyo Bay, “Many people still don’t know what Uniqlo is, so it is crucial to implement marketing to reach our growth goals.”
Challenge Ahead
A tremendous endeavor lies ahead of the clothing company. They recently attained success in North America with 61 stores, representing only a minuscule portion of the massive $291 billion clothing retail industry. CEO Tsukagoshi is striving for a 300% increase in store locations over the next four years, bringing the US up to par with Europe’s current 112 store locations.
If they succeed, Fast Retailing expects Uniqlo North America to yield a revenue of ¥300 billion (approximately $2.3 billion) with a 20% operating margin by 2027. In comparison, the company generates yearly sales of ¥810 billion in Japan, representing approximately one-third of total revenue.
Wide Product Range
Uniqlo has made its mark with fashionable yet basic attire – from work attire to nightwear. It has seen great success in Japan and has since made strides in other Asian and European markets. North America, however, has long been a target for Fast Retailing CEO Tadashi Yanai, who, according to the Bloomberg Billionaires Index, is Japan’s wealthiest individual.
In 2005, the first Uniqlo store was opened in New Jersey. Despite this, the brand has yet to achieve the same success that it has in China, where Tsukagoshi was COO between 2017 and 2020. Uniqlo boasts approximately 900 stores in this key market, resulting in ¥538.5 billion in annual sales.
During the worldwide peak of the coronavirus pandemic, Yanai chose Tsukagoshi to completely revamp Uniqlo’s operations in North America. This relocation would mark his 18th one since joining Fast Retailing eight years prior. As a result, unprofitable outlets were shut down, the stock was minimized, and he took charge of the company’s human resources.
For the fiscal year concluding in August, Uniqlo intends to establish ten stores in North America and afterward establish twenty to thirty each year until Yanai’s ambition of two-hundred stores is achieved.
Takahiro Kazahaya of Credit Suisse Securities (Japan) Ltd. warned of the risk of over-expansion when entering new markets, using Uniqlo’s ill-fated attempt to enter the UK market in 2001 as an example. He suggested taking a slow approach to guarantee a “smooth” process.
Because Uniqlo has yet to become widely recognizable in the United States, Fast Retailing must remain devoted to marketing efforts to express the value of its apparel. Even so, it is necessary to withstand the allure of dropping prices to acquire customers.
