Does America Need Another Fast-Fashion Brand? Uniqlo Thinks So

Quick Retailing is making a counterintuitive wager in vogue — that customers need much less selection, no more.

Uniqlo’s dad or mum is launching its GU model — pronounced ji-yu, which sounds just like the Japanese phrase for freedom — within the US this 12 months, focusing on youthful customers with decrease costs than its largest model. It’ll additionally supply the same old assortment of classy staples, like wide-leg cargo pants and sheer tops, however fewer of them; the corporate says GU’s choice might be one-tenth is rivals.

The model, which operates over 400 shops in Japan, at the moment operates a pop-up in New York’s SoHo. It plans to improve to a everlasting, 10,000-square-foot flagship within the neighbourhood this fall, and can launch e-commerce within the US as effectively, Quick Retailing introduced Monday. The enlargement of GU is a part of a wider push for the Japanese attire big to develop outdoors of its dwelling market, the place an ageing inhabitants will seemingly hamper progress prospects. In Japan, Uniqlo posted a 2 p.c dip in gross sales within the six months ending February 2024, the corporate reported final month, whereas Uniqlo worldwide rose 17 p.c to ¥884 billion ($5.65 billion) in the identical interval.

Quick Retailing is rolling out its sub-brand within the US at a very difficult time, analysts say, as customers proceed to pull back from spending on discretionary classes. The Nationwide Retail Federation predicts shopper spending to develop at a slower tempo this 12 months than final, forecasting between a 2.5 and three.5 p.c uptick.

Younger American customers even have extra decisions than ever for inexpensive vogue. From mall staples like Abercrombie & Fitch and H&M to newcomers Primark and Temu, there’s no scarcity of mesh tops, low-waist denim and different trend-driven items.

“GU might be one other model in a sea of attire manufacturers,” stated Jessica Ramirez, senior analyst at Hali & Associates. “It’s not a class that’s performing effectively. The cash-strapped shopper is choosy with the place they’re spending cash and for probably the most half, it’s not in attire.”

Even so, Uniqlo is ready of power to seize some momentum for its sister model, specialists say. Although it took the model years to win over the US shopper — the primary US Uniqlo retailer opened in 2005 — it has aggressively grown its market share lately. By 2027, the retailer desires to have 200 places in North America, up from about 70 within the US and Canada in 2023.

Uniqlo is already popular with western Gen-Z customers; as GU units out to seek out its place in a aggressive panorama, it can profit from the market information of its sister model, in addition to preliminary findings from its New York pop-up retailer that opened in 2022. “We’ve utilized what we realized from the pop-up retailer to ascertain a framework for product improvement and enterprise operations at a worldwide degree,” GU CEO Osamu Yunoki stated in an announcement.

Past infrastructure, Uniqlo has current buyer information to leverage into gross sales for GU, in response to Brian Ehrig, associate within the shopper observe at Kearney.

“There are occasional Uniqlo prospects who might be simply transformed to GU with its decrease costs,” he stated.

Final September, the corporate additionally opened a brand new product headquarters in New York to raised serve the native buyer.

“We established this headquarters to develop a company construction that may create mass-trend merchandise that might be embraced globally,” the corporate stated in an announcement.

The GU Attraction

Whereas Uniqlo is focussed on “high-quality, purposeful fundamental attire,” GU goals to “seize the mass developments of the occasions,” Quick Retailing informed BoF.

What that appears like is $40 parachute pants — about $10 cheaper than Uniqlo’s model — and $10 sheer shirts. Gadgets from the present summer season choice principally fall under $50 and are usually cheaper than H&M, Zara and Hole.

Whereas it could actually’t compete with the affordability of Shein and Temu, GU’s easy choice appears to be larger high quality and doesn’t lend itself to the disposable nature of in a single day developments, the sector dominated by the Chinese language behemoths, in response to Ramirez.

“It’s at a candy spot when it comes to worth and what you have got are items that comply with developments in design and silhouette, but it surely’s not excessive vogue that you simply put on as soon as and throw away,” she stated. Fewer merchandise additionally makes for a neater purchasing expertise, particularly in bodily retail.

GU is already extremely popular with college students, the corporate stated, and sees its perspective and curation on developments as a key differentiating issue subsequent to rivals. Within the six months ending February, GU generated about $1 billion in gross sales, largely in its dwelling market, the place it has greater than 400 shops.

As for the US shopper, a brand new choice is at all times thrilling, Ehrig stated, particularly when it’s a value-driven participant.

“There’s at all times room for brand spanking new gamers,” he stated. “That’s the essence of quick vogue.”