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Gap-like Japanese Retailer Plans Hundreds of US Stores

The success of its first New York store has prompted Japanese retailer, Uniqlo, to move forward with plans to open hundreds of US outlets.

Uniqlo's New York outlet is company's most successful worldwide

As the U.S. economy continues to struggle, Gap, one of the largest U.S. clothing retailers, will soon close 20 percent of its stores. Meanwhile, a major Japanese clothing retailer - with merchandise very similar to Gap's - is heading in the opposite direction. Instead of being deterred by the grim economic outlook, Uniqlo plans to open hundreds of stores in the United States.

Uniqlo has been selling reasonably priced, casual clothing in Japan since the 1980s, but sales have been flat recently. So the company is looking overseas for growth. Most of its new stores are opening in Asia, but the United States plays a big role in its expansion strategy.

Uniqlo opened its first U.S. stores in New Jersey shopping malls in 2005, but they didn’t do well and closed within a year. The CEO of Uniqlo USA says the company moved too fast and that Americans were unfamiliar with their brands then.

Uniqlo now has three stores in New York.
Uniqlo now has three stores in New York.

Shin Odake believes the company's vast new flagship store on New York City’s fashionable 5th Avenue should change that. "If you are to be recognized as a global brand, we need to have a huge store in the center of New York City."

Uniqlo has had a store in Manhattan for several years and it is now the company’s most successful outlet. Anxious to build on that success, the company just opened a third store on 34th Street, down the block from Macy's department store.

Both new Uniqlo outlets are three stories high. They're crowded with stacks of jeans at 80 percent off the usual price. Piles of cashmere sweaters in virtually every imaginable color - three shades of green, and blues from navy to periwinkle - are on sale for $50 and $60. Most cashmere sweaters sell for at least $100 and, often, far more.

Experts believe the range of colors lures consumers into buying more than one item.

"Especially when the value is good, they think, ‘O.K., I’ll buy two for me, but you know I think I’d like to get this new color for my husband,’" says Roseanne Morrison, a fashion consultant with The Doneger Group, a fashion industry consulting firm. "And that’s really the secret."

Just before opening day in late October, hundreds of employees scurried about the 34th Street store setting up displays while the checkout staff lined up behind their cash registers, practicing their friendliness and timeliness.

Cashmere sweaters - usually priced at over $100 - selling for about $60 at Uniqlo in New York.
Cashmere sweaters - usually priced at over $100 - selling for about $60 at Uniqlo in New York.

Attention to detail is one of the things the company hopes will differentiate Uniqlo from rivals like H&M, Zara and Gap.

Odake believes innovation is another advantage. He says the company studies its clothing with the eyes of an engineer.

"We approach the basic product and then we try to improve it every year, similar to the car manufacturer trying to improve the make of the car. So that’s the approach that we have, which is quite different from, I think, the other brands."

That Japanese engineering is what brought shopper Irme Chan to Uniqlo. She purchased one of the company’s signature products; its "Heattech" thermal underwear.

"Owned it for years. Have to keep buying it because my sister or my family will steal it," says Chan, who likes the quality and value here compared to similar stores.

That combination could give Uniqlo an edge in a slow economy, according to retail sales consultant Patricia Pao.

"Fundamentally, we are a nation that is born to shop," says Pao. "You can only restrain yourself for so long. People are going to buy things that are of good value. They’re not going to buy things just because they’re cheap."

Uniqlo USA CEO Odake wants to eventually open 1,600 stores in the United States, almost twice the number of Uniqlo outlets in Japan.