Wednesday, 22 May 2013

* Uniqlo's Lifewear revolution to take over the world

Japanese clothing chain Uniqlo has become the envy of retailers worldwide.
The company has exploded in  the past decade, becoming Asia's biggest clothing retailer. And Uniqlo's leaders have ambitious goals to make the brand the leader in retail worldwide, according to The Wall Street Journal. Uniqlo, which focuses on mass-producing affordable basics in dozens of colors, got its start in the Japanese suburbs. Less than 20 years later, it's laid its stake along swanky shopping streets in major global cities.

What's the story behind the company's success? 

The first Uniqlo opened its doors in Hiroshima, Japan in 1984.

The first Uniqlo opened its doors in Hiroshima, Japan in 1984.
The company is a division of Japanese retail holding company Fast Retailing, with Tadashi Yanai at the helm. The company originally called itself "Unique Clothing Warehouse." By joining those words together, Uniqlo was born. Although Uniqlo started as a suburban chain, it now has more than 800 stores worldwide, many in urban centers around the globe. 

Most of Uniqlo's stores are in Japan, but it also has locations in the U.S., France, Singapore, Malaysia, the Philippines, China and Taiwan, among other countries. Prime locations include major shopping streets in New York, London, and Paris. Uniqlo has become the biggest apparel chain in Asia. 

But company executives have said they want Uniqlo to be "the world's No. 1 casual brand." In late 2012, the company was the fourth-largest retailer behind Gap, H&M and Zara-owner Inditex, according to Forbes. So far, there are only seven stores in the U.S. But there plans to open 1,000 Uniqlos in America, according to Forbes. 

So far, there are four locations in New York, two in New Jersey and one in San Francisco. The SoHo store was the first to open in 2006. Uniqlo's slogan is "made for all," and the store is known for its rainbow-colored casual wear for men, women and kids.

Most of its clothing is mass produced in every color a shopper might want. Some people have called the chain "Japan's answer to Gap." The clothes are cheap and aim to be affordable for every consumer. Despite being a Japanese company, about 70% of its clothes are manufactured in China. 

That's caused some problems recently because of China's anti-Japanese protests. But Yanai has no plans to move, and told Forbes he wants to open hundreds more stores in China. It also keeps prices low by buying products directly from suppliers. And it can buy in mass since it focuses on clothing that doesn't go out of style and pumps each item out in an array of colors.Facts and Details reports that Uniqlo admits to keeping clothes on the shelves longer than most rivals, and will sometimes make one item in up to 50 colors.

Yanai, Uniqlo's founder, is one of the richest people in Japan. His net worth is estimated at $15.5 billion.In the latest Forbes rankings, he's listed as Japan's richest man and No. 66 on the worldwide billionaire list. Yanai is married and has two children. He is said to have intensely studied Gap and used the American company as a basis for its business model.

According to the Wall Street Journal, Yanai called former Gap CEO Mickey Dressler "professor" when the pair first met because he held him in such high esteem.In late 2011, the company was valued at 1.4 trillion yen ($14 billion), according to Bloomberg. And Yanai wants to increase that to 5 trillion yen  (around $65 billion) by 2020, according to Bloomberg. 

Some features of Uniqlo's business stand out among other retailers. For example, Yanai has proposed a global pay system in which managers worldwide would receive the same wage. And Yanai told Forbes that Uniqlo sets itself apart by not chasing trends. Instead, they focus on basics, like Oxfords and polos, and make them affordable.

Blouses, slim-fitting bottoms and lightweight outerwear also are Uniqlo staples. In March, Yanai told Women's Wear Daily that he "might not be able to retire" because there is no one who yet meets his expectations as a successor. 

He's currently 63, according to WWD. Some employees have said he isn't very good at delegating and can be a micro-manager. But his business mind is a big part of what's led the company to success. The store was virtually untouched during the recession and saw profits climb 17% between 2009 and 2010.

They may have benefited from the world's drop in spending power, since they capitalize on consumers looking for cheap clothing. And it hasn't stopped yet. Profits jumped 13% in the past six months, according to the Wall Street Journal, and its overseas sales continue to come in strong.

The company's sales are still only half as big as Zara's parent company, but it continues to make gains. If Uniqlo's rapid growth continues, its ambitious plans to be the leader of retail in the U.S. and worldwide could become a reality.

"If it wins decisively in Asia, the world's growth driver, it is not inconceivable that it could become No. 1 without a big acquisition and without becoming No. 1 in the U.S.," an analyst told the Wall Street Journal.

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