Uniqlo Opens Massive Manhattan Flagship, Plots Global Domination

Japanese giant on a quest to clothe the world

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.

editorial@observer.com

Uniqlo Opens Massive Manhattan Flagship, Plots Global Domination