Last Friday, the line outside the massive new Fifth Avenue Uniqlo store stretched all the way down West 53rd Street. Closely monitored by black-clad staffers, it went past MoMA, past the halal carts, past the women selling jewelry on sidewalk tables, to Sixth Avenue.
Inside the store, which is roughly the size of two football fields, frenzied clerks were restocking the $9.90 jeans, but not as quickly as customers could grab them off the tables. People were trying on outerwear in the aisles. When The Observer left 45 minutes later, it was raining gently, and the line was down to Broadway, its inhabitants undaunted. Their hopeful eyes directed toward the 89,000-square-foot apparel Valhalla, now the largest nondepartment store on the avenue.
The night before, hundreds of guests gathered for Uniqlo’s opening party. Company founder Tadashi Yanai, U.S. COO Kenny Kyogoku, and U.S. CEO Shin Odake, along with the actress Susan Sarandon, donned red-and-white Uniqlo-branded Japanese-style coats and smiled as they hammered open barrels of sake. There were hors d’oeuvres and vodka martinis, and the whole, vast space to explore.
After sake was served, the soul singer Sharon Jones took to a makeshift stage to perform an energetic set with the Vanguard Jazz Orchestra. Afterward, Ms. Jones confessed she hadn’t heard of Uniqlo before she was approached to do the party. “But it’s great,” she said, gesturing at a wall of $49.90 cashmere sweaters grouped by color. “I’m hoping to pick out something that’ll fit me.”
Stage left, Robert Tagliapietra, the more talkative half of the fashion house Costello Tagliapietra, was standing next to his husband, Jeffrey Costello. For the past two years, they have produced a few summer dresses for Uniqlo’s series of limited-duration designer collaborations. (The last batch retailed for $29.99.)
“They’re an incredible company to work with,” said Mr. Tagliapietra. “They’re so meticulous. It’s pretty incredible that they’re able to do what they do at their price point.”
As he was talking about meticulousness, a large nail fell out of an exposed ceiling duct and onto Mr. Costello’s shoulder. Mr. Costello picked it up and inspected it. Mr. Tagliapietra glanced at the nail, and decided to continue. “They really respect design.”
Talking about the host’s finances even as one is enjoying his hospitality being the cheerful blood sport of New York City parties, near the bar we spoke to an employee of Citigroup, which in 2008 declined to renew one floor of its lease at 666 Fifth (which is owned by Kushner Companies, a principal of whom is Jared Kushner, the owner of The Observer).
“Firstly, I’m so impressed by how big is the store,” said the young designer Carlos Campos. “And as a designer, I’m thinking, how did they arrive with the perfect price points?”
“Well, they definitely overpaid for the space,” said a real estate analyst. He was lingering near a rack of blazers while onstage Santigold launched into her 2008 hit “L.E.S. Artistes.” In addition to its $300 million 15-year lease, Women’s Wear Daily put the flagship’s construction costs at $20-$25 million. (The company will not confirm that number, however.) “They’ll have to sell a lot of $40 sweaters,” continued the analyst. “You know, most of the stores on Fifth Avenue are loss-makers, so they could have looked at it that way, too.”
The Fifth Avenue store has 100 fitting rooms. “I don’t want my customers to wait in line,” smiled Mr. Odake. These and various other concessions to usability— he 50 cash registers, the 300 mannequins, the concierge desk for shoppers in need of directions, the three-story atrium that Mr. Kyogoku says lends the store a “Cathedral-like experience”—together shrink the flagship’s selling space to 64,000 square feet. That’s still nearly twice the size of the Soho store that was until this week Uniqlo’s only U.S. location (36,000 square feet), not to mention the largest of its 800-plus Japanese stores (42,300 square feet).
Uniqlo’s two new Manhattan stores (a 64,000-square-foot West 34th Street store opens Friday) are not just the world’s largest and second-largest showcases for the chain’s reasonably priced fashion. These are oak-floored, plate-glassed and L.C.D.-screen-bedecked visions of what might just be Manhattan’s retail future. Uniqlo has a CEO who wants to run the biggest apparel company in the world. It has capital. And it wants to have 20 stores in the New York City area within the next three years.
Uniqlo is a study in the branding of having no visible brand—which, done well, can be the most effective label of all (just ask Martin Margiela). Though a Japanese company, Uniqlo has consciously shed any geographic markers that could be seen as limiting; its clothing has a studied generic quality. Uniqlo would never presume to tell its customers how to dress, like some overstyled mannequin at Zara or H&M. Uniqlo proudly sells basics—basics in smart cuts. It doesn’t insult its customers’ intelligence by charging them $100 for a shirt, or mock them by making them vectors of its marketing. (As Mr. Kyogoku put it on a walk-through two days before the opening, “Your clothing shouldn’t be the brand. You should be the brand. You shouldn’t have to look like someone else’s billboard.”)
And, oh, the thoughtfulness of these clothes: slim-fitting long-sleeved T-shirts have underarm gussets for ease of movement, and the pocket bags in the down jackets have a length of grosgrain ribbon sewn alongside the zipper, to prevent the teeth from rending the nylon shell. Uniqlo is like what Gap could be (if Gap had a design team that could tell a thimble from a tailor’s ham) and what American Apparel would be (if American Apparel had an accountant, and a CEO who wore pants).
Uniqlo doesn’t believe it needs to alter its business to find traction in the U.S. “You know, our best-sellers in Paris, London, New York and Tokyo are the same,” said Mr. Kyogoku. “We find these days there’s less and less national taste, and more global taste.” Although perhaps that fact speaks more to the tastes of that class for which travel between Paris, London, New York and Tokyo is a commonplace than to the realities of retail in Albuquerque or Minneapolis, the chain has built its business on simultaneously getting the same collection, in the same palette, to virtually every store in its network. It’s partly how it’s able to keep its prices so low: Uniqlo doesn’t offer 15 cuts of jeans in 10 different washes. It makes some more reasonable number of jeans, like five, each in enormous production runs.
The other way that Uniqlo profits is, like all fast-fashion companies, by manufacturing in lower-wage economies—in its case, primarily China. “We want to go wherever the labor cost is lower,” shrugged Mr. Yanai. “Vietnam, Cambodia, Indonesia or Bangladesh.” (Earlier this year, the company sued a Japanese magazine over a story that alleged some of its Chinese workers were forced to toil for long hours for little pay. The defamation suit is pending.)
In the 53rd Street subway station, every available square inch of advertising space is claimed by Uniqlo and its two red squares. The billboards on the E/M platforms are Uniqlo billboards. The prongs of every turnstile are sheathed in Uniqlo logos. Coming up the long stairway tunnel, faces of prominent New Yorkers from Uniqlo’s current ad campaign—the jazz singer Esperanza Spalding, John Leguizamo and Ms. Sarandon, and hey, isn’t that David Karp?—appear one by one, shot against neutral backgrounds. The world as Uniqlo sees it is, like its clothing, strangely affectless, multiethnic but flat. An emblem and a symptom of global taste.
Mr. Yanai’s vision is simple: he wants to turn a very large apparel retailer into the biggest the world has ever seen. His goal is to realize $50 billion in annual revenue by 2020, counting U.S. revenue of $10 billion. His executives echo that message. To get there, Uniqlo would have to quintuple in size over the next nine years. That’s why Mr. Yanai says he’s opening 150 stores this year.
“Our first priority is Asia,” explained Mr. Yanai via a translator, as he sat on a couch at the St. Regis Hotel, wearing a navy-blue suit, a spread-collar shirt and rimless glasses. “Especially China and India. We want to become the overwhelmingly strong, number one apparel specialty store there.” There are 149 Uniqlos in China.
And although U.S. consumers hardly present the growth potential of China’s burgeoning middle class, Uniqlo wants stores in San Francisco, Chicago and Los Angeles. Which is probably good news, not least because the company says it has hired 1,100 new employees for the Manhattan stores. In New York, Uniqlo plans to construct another couple large-format stores and to salt the metropolitan area with 15 smaller outposts. Mr. Odake says, “Eventually, we want to open stores in every major city in the U.S.”
In contrast, most of Uniqlo’s competitors are in a period of retrenchment. The most troubled is world number two apparel retailer Gap Inc., which just announced plans to close more than a quarter of its 889 U.S. Gap stores. (The company nonetheless called a recent Observer report that it planned to close a quarter of its New York stores “extremely exaggerated.”) Gap has been expanding overseas, including in China, but it’s in an opposite position to Uniqlo, which is seeing its highest rates of growth offshore: while Gap Inc.’s U.S. sales have been poor, its international sales are actually declining even more rapidly. The world’s third-largest apparel retailer, H&M, has weathered inconsistent sales even as it has continued opening stores, 252 in the past 12 months.
Alone in the fast-fashion field, Spain’s Inditex, Zara’s parent company, appears truly healthy. In fiscal 2010, its sales grew 13 percent, to $16.54 billion. (Uniqlo most recently reported annual revenues of just over $10 billion.) Uniqlo’s new West 34th Street store has a Zara for a next-door neighbor. Uniqlo’s Fifth Avenue store soon will, too: in March, Inditex paid $324 million to buy 39,000 square feet of 666 Fifth.
Why the big push to open, at such extraordinary cost—that $300 million lease is one of the costliest in Manhattan retail history—new stores now, when the U.S. is in a recovery that still feels like a recession? “Because New York is the commercial capital of the whole U.S.,” says Mr. Yanai. “In the largest cities in the world, the economy isn’t actually doing that badly. I think that the retail industry is doing quite well in New York.” E-commerce would be one way for the chain to increase U.S. sales without such outlays, but the company has “no immediate plans to launch e-commerce,” said Mr. Kyogoku, a little stiffly. “We’re studying it,” said Mr. Yanai.
Back at the opening, stylist Robert Verdi was marveling at the economics of Uniqlo’s model. “When I saw the $9.90 jeans, I mean, I was like, what one-handed children … who is making this stuff?”
With that, Mr. Verdi was pulled away by one of Uniqlo’s official photographers.