Fast Retailing, owner of Japan's casual basics apparel powerhouse Uniqlo, expanded its brand portfolio on October 13th with the opening of the first "g.u." brand shop in Ichikawa City.
This is an interesting development, since Uniqlo previously held the crown as Japan's most accessible casual brand, and g.u. will also offer casual wear, but wear that is aimed at a different target, at about half the price.
Fast Retailing's original approach with Uniqlo was to "out-basic" and "out-value" the Gap by offering an narrower range of basics like t-shirts, jeans, jackets and socks, but in a wider array of colors, at much lower prices. The company also embarked on an aggressive channel strategy that led to the opening of some 800 Uniqlo locations in the first two or three years of operation. Needless to say, with its ability to offer decent-quality items at low prices, and greater store penetration throughout Japan, Uniqlo soon siphoned off much of the Gap's business.
Now, Fast Retailing is taking aim at the market from a completely different direction.
Apparently, faced with limited growth opportunities in basics, the company is going to try a Zara-like approach by quickly spotting trends and bringing products to market at a feverish pace. With g.u., prices will be about 30% lower than those at Uniqlo, but product selection will be about 1.5 times more, with the brand offering 800 s.k.u.s this season vs. just 500 for Uniqlo.
In other words, g.u. is going after Japan's fashion and trend-sensitive, early-adopting teens and twenty-somethings.
This is risky, since not only is g.u. targeting a very fickle consumer, it's doing so with razor-thin margins born of the need to carry so many s.k.u.s at such low prices.
In order to diminish risk and stay nimble, Fast Retailing has partnered with a number of wholesale clothing entities which will handle much of the product conception and design work—which will allow them to focus on store openings (with 50 shops slated for opening by spring '07) in order to reach critical mass as soon as possible.
Since Uniqlo does not have the ability to attract trendy consumers and no other company has sought to service these folks on such a scale, it would appear that there's an opportunity for a brand like g.u. in Japan. But with a business model that allows almost no funding to support broad communications programs, the brand needs to score big with trend leaders, hoping that they will pass the word on to all of their friends.
Otherwise, Fast Retailing may discover how fast some g.u.tsy moves can backfire.
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