[LINK] The Economist on the struggles of Uniqlo

[rfmcdonald]

The Economist describes Uniqlo's American struggles. For the record, I'll be looking forward to the chain's new Toronto store.

When a globally successful fashion-store chain opens up for the first time in a big city’s most prominent shopping district, it might reasonably expect a rush of excited consumers. But when Uniqlo of Japan opened its first midwestern outlet last month, on Chicago’s Magnificent Mile, the reaction was restrained. In its first week of trading, “Some days were busy, others not so much,” says a saleswoman. Many who did turn up were from out of town, she reckons.

Uniqlo did its best to arrive in Chicago with a splash. It took over an “El” (elevated light-rail) train, decorated it with Japanese lanterns and brought over a DJ to pump out Japanese pop as the train travelled round the Loop, the central business district. Chicagoan chefs, cheerleaders, rappers and other “tastemakers” were hired to model Uniqlo’s clothes on its website.

The retailer is performing well at home in Japan, thriving in China, South Korea and Taiwan, and doing not so badly in Europe (though it did close some of its British branches). But America, where it has more than 40 shops, is a different story. Uniqlo has been in the country for ten years, but its presence is still much smaller than that of its main global rivals, Zara and H&M, respectively a Spanish and a Swedish retailer of fast fashion. It is also smaller than two local casual-clothing chains, Gap and Forever 21, and than “off-price” sellers of designer labels such as Ross and T.J. Maxx. Last month Fast Retailing, Uniqlo’s owner, reported losses for the fourth fiscal quarter, mainly because of the dismal performance of its outlets in America and of J Brand, its ailing American denim chain.

Succeeding in America’s fiercely competitive retail market is never easy, for local and foreign firms alike. American Apparel declared bankruptcy in October. Gap is closing a quarter of its 675 shops in the country. J. Crew, an American brand that Fast Retailing considered buying last year, is reporting slumping sales. Abercrombie & Fitch, until recently a rising star, has been struggling. Among the foreign retailers, Mango, of Spain, is shutting all its 450 concession outlets in J.C. Penney department stores in America. United Colours of Benetton, an Italian retailer, shut its last American shop in September. (In the same month Primark, a super-cheap Irish retailer, opened its first American shop in Boston: if it proves as successful as it has elsewhere, it could make life even more brutal for the established chains.)