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Uniqlo To Consider Opening Stores In India
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The ambitious plan to soar past Gap and H&M will not come easily, as the Japanese retailer saw sales and profits decline last year.
Still, the company's CEO and founder, Tadashi Yanai, named by Forbes in 2010 as Japan's richest man, threw the gauntlet down on Wednesday to bigger foreign rivals such as Inditex, owner of the Zara brand.
"I want us to become the brand that represents Japan globally, the brand that represents what clothing is," Yanai said at a press briefing in Tokyo.
His company is betting on the burgeoning Asian market to expand its flagship Uniqlo stores in hopes of offsetting slow growth in a home market hammered by a declining population, persistent deflation and fierce competition.
Fast Retailing, also Asia's largest clothing retailer, is looking to generate sales of 5 trillion yen ($65 billion) by 2020, over two-thirds of which Yanai expects from Asia where markets are less concentrated and have high growth potential. The company projects 1 trillion yen in sales in 2012.
"Their plans are characteristically aggressive. They are always attempting to push the envelope," said Toby Williams, consumer analyst at Macquarie Capital Securities in Tokyo.
Fast Retailing, whose rivals include Spain's Inditex, Sweden's Hennes & Mauritz (H&M), and U.S.-based Gap, said it now plans to generate 100 billion yen in annual revenue from each of its China and South Korea businesses in two to three years.
The company, which aims to open 4,000 Uniqlo outlets by 2020, with 1,000 each in China and Southeast Asia, also said it will consider opening stores in India, Australia and New Zealand, and set up large production bases outside of China as it expands.
Yanai told reporters at a briefing on the company's business strategy he wants to use funds on hand for future investment including mergers and acquisitions, and it is not looking to buy back shares.
"This marks the true start of our global expansion and to me it resembles the beginning of our domestic expansion of the (Uniqlo) chain, except now it is not across Japan, but across the world," Yanai told reporters after the briefing.
In Japan Yanai won over shoppers with high-quality basic clothes, chic store interiors and innovations including moisturizing thermal underwear made of fabric infused with milk protein.
Fast Retailing, which Yanai started from a pair of haberdasheries inherited from his father, had only around 180 stores outside Japan by the end of August.
Uniqlo, known for its relatively inexpensive clothing such as fleece jackets, T-shirts and its Heat Tech line of thermal underwear, has over 850 outlets in Japan and about 180 overseas.
As part of its global push Yanai, who last year picked up the International Retailer of the Year award in the U.S., recently made English the company's official language. He also now requires employees at its head office start work at 7 a.m.
Sales at Japan outlets of Uniqlo, which account for nearly three-quarters of Fast Retailing' s consolidated sales, fell 6 per cent for its business year that ended last month. The company expects profit to have dropped 8.2 per cent for the same period.
Shares of Fast Retailing settled 0.4 per cent higher on Wednesday at 13,630 yen after rising as high as 13,850 yen, against a 1.1 per cent fall in the benchmark Nikkei.