TOKYO : Just as inflation ravages the big guns of U.S. apparel retail, awash in high inventory and deep discounts to lure shoppers back to stores, Japan's Uniqlo is set for its best year ever in North America after a COVID-imposed revolution in its business model. Retailers from Gap to Kohl's are warning
TOKYO : Just as inflation ravages the big guns of U.S. apparel retail, awash in high inventory and deep discounts to lure shoppers back to stores, Japan's Uniqlo is set for its best year ever in North America after a COVID-imposed revolution in its business model.
But its customer base is declining in ageing Japan, and concerns are increasing about how much it can rely on China as a growth engine. Analysts say whether Fast Retailing can sustain progress in North America will be a key gauge of how close it can get to its lofty goal of overtaking Spain's Inditex as the world's leading apparel retailer, set by founder and chief executive Tadashi Yanai.
"Our competitors offer discounts of 50 per cent or 60 per cent, but we have basically stopped that," Tsukagoshi said. It's not clear how much the company's operations have benefited from the yen trading at its lowest level in decades. U.S. revenue is worth much more translated into the Japanese currency, but the cost of buying materials in yen is now much higher.
The company estimates the region will produce 300 billion yen in annual sales by 2027, and aims to raise operating profit margins to 20 per cent from more than 5 per cent now. Regional chief Tsukagoshi said that will be possible by reducing logistics and marketing costs, and also via lower rents beyond large cities.
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