Uniqlo's World's Largest Flagship Store Opens in Shanghai

In mid-April, the UNIQLO brand under Fast Retailing Co., Asia's largest apparel retail chain, will open its newest flagship store in the world to Shanghai. Fast Retailing Company stated that this is the beginning of its new expansion strategy in China.

However, this "beginning" will not only be as simple as for fast-selling companies. For the "fast-fashion" retail chain market that has just emerged in China, for the domestic and foreign chain brands such as Zara, H&M, Metersbonwe and Other companies that are seeking the dominance of this billion-dollar market, the fierce fighting moment has officially arrived.

Extraordinary expansion

“The Chinese market will be another important growth fulcrum for the Uniqlo brand. In the next few years, it will even surpass the Japanese market as a key area to support the development of the company.” On April 6, Fast Retailing’s propaganda department responded to this report.

The Uniqlo Shanghai West Nanjing Road Store, to be opened in the middle of next month, will have an investment of US$30 million. According to the Fast Retailing Company, this is the fourth and largest flagship store of its UNIQLO brand, with a business area of ​​approximately 3,500 square meters.

The industry interpreted the fast-selling company’s move as the full launch of a new strategy for expansion in China. Fast Retailing Company stated that it will open 100 stores with an average area of ​​more than 750 square meters in the Chinese market in the short term, and this number may exceed 300 in the next five years.

At the same time, the UNIQLO brand also plans to expand production in China. According to public information, at present, 85% of Uniqlo's merchandise is produced in China. Compared with its competitors, there are hundreds of cooperative factories in China, and there are only 70 partners in China.

Like Zara and H&M from Europe, the fast-selling company's UNIQLO brand adopts a similarly-priced and big-name model, focusing on the “fast-fashion” retail market for domestic freshmen.

However, Fast Retailing's entry into the Chinese market is not smooth. In 2001, Fast Retailing Company established Fast Retailing (Jiangsu) Fashion Co., Ltd. in the form of a Sino-Japanese joint venture. Three years later, Fast Retailing (China) Trading Co., Ltd. was established solely. In 2008, there were only 11 Uniqlo stores in Huamen.

This is already a consensus within the fast-selling company. Fast Retailing Company stated that since 2006, Uniqlo's brand began to re-examine the Chinese market and made adjustments to various issues.

It is understood that during the new Chinese market expansion plan, Uniqlo will cover Beijing in the future as the center of North China, including the Northeast, Shandong, Hebei and Tianjin; stores in the southwest and south China will prepare for the layout of the country.

In the concept of fast-selling company chairman and chief executive officer, Mr. Yanai Yan, by 2020, Fast Retailing Co., Ltd. will be the first place in the global apparel retail market, entering the leading position in China’s “fast fashion” market, and its Uniqlo brand will be There are 4,000 stores worldwide.

"Growth will mainly come from Asia, especially China," Yanai Yan said in an interview with the media.

However, such an expansionary dream may be wishful thinking of Yanai. "I have to say that this is a very, very high goal. This goal has very strict requirements on manpower and the number of stores." On the 7th, Japan's Commons Asset Management analyst Einosuke Yoshino said in a telephone interview with this newspaper.

As of February, Uniqlo opened 59 stores in 14 cities including Beijing, Shanghai, Guangzhou, and Chongqing, and had nearly 900 stores in the global market. In addition to opening new flagship stores in Shanghai and Moscow in the first half of this year, it will also enter the Brazilian market.

"Fast fashion" channel battle

Analysts are cautious about Fast Retailing, not only considering their own strength, but also in view of the degree of competition in their target markets.

As fast-selling companies increasingly value the Chinese market, its rivals Zara and H&M in the European and American markets are also expanding their Asian territory, especially the Chinese market.

In the past two years, European chain brands such as Zara and H&M, which once absolutely relied on European and American markets, have gradually shifted their focus eastward under the pressure of the economic crisis.

In H&M's global 240 new store plans this year, China is the focus. At the same time, Zara, which already has 65 stores in China, also stated that it will continue to expand its efforts in the Chinese market. According to sources, Zara has planned to go beyond the model of leasing in shopping centers and intends to enter department stores.

"If compared with Zara and H&M, Fast Retailing's UNIQLO needs to be more popular, then compared with the local 'fast-fashion' chain brand, Uniqlo also needs to have more channels than others," said industry insiders.

It is understood that as of the end of October 2009, Meters & Bentley's Me&City brand has 68 direct sales stores throughout the country, and most of the stores are over 1,000 square meters of large stores. Relying on the original channel advantages of the Metersbonwe brand, Me&City has already penetrated into small and medium-sized cities such as Baise, Guangxi to prepare for the franchisee strategy launched in other regions in the country 1-2 years later.

At the same time, the rise of the so-called “golden generation” of Vero Moda, Jack Jones, Esprit, etc., which had risen around the year 2005, also pursued “fast-on-shelf”, “parity”, and “fashion” apparel chain brands, and they also ate “fast”. Fashion" clothing market.

Faced with the status quo of such a tussle, the fast-selling company relied too much on the Chinese market, causing investors' doubts.

In response, Fast Retailing stated that since the positioning of the Uniqlo brand in the Chinese market began to adjust, its sales have increased substantially in the past two years, and profits have begun to multiply. According to the 2009 financial report, UNIQLO's sales in overseas markets accounted for 5.5% of the sales of fast-selling companies last year.

However, Yoshino believes that the fast-selling company's emphasis on emerging markets in Asia, including China, is based on the prevention of growth stagnation in the Japanese market.

On April 5th, Fast Retailing Company announced the sales performance of Uniqlo in Japan in March. Sales volume decreased by 16.4% year-on-year, terminating the growth trend since 2008, and immediately causing Fast Retailing's stock price to suffer a nearly 10% drop. It is understood that this is the largest decline in sales of Uniqlo brand in Japan in the past seven years.
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