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Uniqlo’s Mall Play

Japanese retailer opens first suburban store as it looks to expand to U.S. shopping centers
Uniqlo’s mall prototype, in Westfield Garden State Plaza, Paramus, N.J., features the retailer’s full assortment of products, including the U.S. debut of its kids and baby collections.

Uniqlo has made its first move in an ambitious plan to become a major presence in shopping malls throughout the nation. The company, Japan’s largest retailer and a division of Fast Retailing Co., has jump-started its U.S. expansion with the opening of a 43,000-sq.-ft. store in Westfield Garden State Plaza, Paramus, N.J.

The two-level location is Uniqlo’s largest mall store in the world and will serve as the prototype for the retailer’s U.S. mall expansion. This is not, however, the chain’s first foray into the suburbs. In 2005, Uniqlo crept in under the radar and opened three New Jersey mall locations. In 2006, it opened a much larger store, in Manhattan’s SoHo area. The SoHo location flourished; the mall stores did not.

“Following the immense success of the first New York location, we revised our strategy for the U.S. market and decided to close the three small New Jersey locations to launch large-scale flagships in targeted areas of Manhattan,” explained Shin Odake, CEO, Uniqlo USA.

Following a pattern set by such other successful retail imports as H&M, Uniqlo has used its three New York City flagships to build brand awareness, venturing out into the mall only after it created a stir — and a name for itself — in the big city. Savvy marketing, pop-up stores and buzz-generating advertising over the past couple of years have upped its profile — and cool quotient — substantially. So has its high-tech, ultra-modern store design (by Wonderwall, a cutting-edge, Tokyo-based firm).

Indeed, the new Paramus location has little in common with the bland, vanilla boxes the company opened in 2005. Similar to Uniqlo’s Manhattan locations, it is sleek and streamlined, with a clean, modern aesthetic and a high-tech vibe. It also has the same variety of product, with basic items stacked in precise rows according to color.

The new Uniqlo also has lots of visual excitement, with 38 LCD/LED monitors and 200 mannequins. The store, which replaced an Old Navy, has a separate street entrance in addition to a mall entry. The facade — set off with dramatically lit signage and illuminated glass display windows featuring mannequins outfitted in the latest fashions — stands out like a beacon.

The mall entry boasts an interactive LCD display, imported from Japan, that plays games and other activities.

“It’s a fun element,” Odake said. “Customers can play games on it.”

Uniqlo’s overall feel is in sync with the clothing (men’s, women’s and children’s) on display. With its “Made for All” mantra, the brand is known for affordable threads that combine basic styling with high-tech fabrics, such as its heat-retaining and moisture-resistant Heattech line. (A series of recent designer collaborations have added more fashion-forward items to the mix.)

“Everyone focuses on trend,” Odake said. “But our focus is how to bring innovation to core basics. Another focus is product quality.”

While the Paramus store is billed as the brand’s mall prototype, the look is likely to evolve over time, according to Odake. Not all stores, for example, will be as large as 40,000 sq. ft.

“In some areas, the stores will be smaller,” he said. “It will really depend on the real estate and be a case-by-case situation.”

Uniqlo, which operates some 1,100 locations in 13 countries, has set itself an ambitious goal of ringing up $50 billion in global sales by 2020. With its growth cooling in Japan, overseas expansion is crucial to its plans. It is targeting $10 billion in revenue in the United States by 2020.

“We will open more than 10 stores here in 2013,” Odake said. Most of those stores will be in the New York City and San Francisco metro areas (see story, below).

But physical stores are only part of Uniqlo’s strategy. At press time, the company was set to launch an American e-commerce site. (It already operates e-commerce businesses in several countries, including Japan, China and the United Kingdom). The site, designed with Razorfish and Digitas, will reportedly offer everything the stores do, but with an expanded lineup of sizes and colors. In addition to bringing in revenue, the site will allow Uniqlo to judge potential areas for new stores going forward.

LEARNINGS: While the vastness of the U.S. market and the nation’s passion for shopping make it attractive to foreign retailers, they also face a big learning curve, Odake said.

“There is so much diversity here in terms of what sells from store to store,” he explained. “By contrast, Japan is a very homogenous society.”

There are other differences as well. “Dresses, for example, are more important to the women’s product line here than in Japan,” Odake said.

There are also operational challenges. Customer service is a top priority at Uniqlo. In Japan, be it in an upscale boutique or discount chain, Odake explained, customers automatically expect good service. Uniqlo wants to upgrade U.S. shoppers’ expectations here also. Key to that is duplicating the company’s store-centric philosophy, which has been integral to its success in Japan.

“It involves everyone having a store owner’s mind-set, including the sales associates,” Odake said. “Creating that culture here is a big challenge. We believe we need to hire American managers who understand the concept.” (The Paramus store is Uniqlo’s first ever with an American general manager.)

Rather than hire from other retailers, Uniqlo has established relationships with different U.S. colleges and is recruiting on their campuses.

“We found it’s much quicker to train them on our own,” Odake said.

Uniqlo believes in giving store associates a lot of responsibility.

“If you give them more responsibility, they are more motivated,” Odake said. “We promote from within in Japan, and with store associates moving up to store managers and corporate. We hope to do that here too.”

The Japanese executive noted that the United States is very open to all retailers but that competition is fierce.

“U.S. consumers are very honest,” Odake said. “They don’t care whether you are from here or not. They want great merchandise at a great price. In some other countries, heritage matters more than the concept. The competition here has made us realize our strengths and weaknesses. We are learning every day.”

mwilson@chainstoreage.com

© 2014