Uniqlo, the $16-billion global retail major with 958 stores worldwide, is now in the process of obtaining the requisite permissions to operate as a single brand retailer in the country.
Japanese fashion retail company Uniqlo has started doing the rounds of leading malls in Delhi and Mumbai, scouting for a suitable space to house its flagship store in India. The company, which expects to commence its India operations in the beginning of 2019, is believed to be looking for a 30,000-35,000 sq ft shop, people in the know told FE. Its other stores will be of a similar size as large “vanilla” brands, between 10,000 and 20,000 sq ft, these people added.
Uniqlo, the $16-billion global retail major with 958 stores worldwide, is now in the process of obtaining the requisite permissions to operate as a single brand retailer in the country. The company could not be reached for a comment.
In the domestic market, Uniqlo is expected to compete with European brands, mainly Zara and Hennes & Mauritz (H&M), although being a fast fashion brand, some experts feel its main competitor will be Forever21. “Going by Uniqlo’s selection abroad, its merchandise is as durable as Zara’s and its price points are somewhere in between that of Zara and H&M,” said Mukesh Kumar, vice-president at Mumbai’s Infiniti Mall. What might work well for the brand is its particular focus on cotton-based clothing, apt for the Indian weather, Kumar added.
But an international brand must also tailor its offerings to suit local needs. “Uniqlo’s store assortment in the UK and in Tokyo are quite different. In India, for instance, the focus on women’s fashion might be a lot more because that is the fastest moving segment,” said Arvind Singhal, chairman of Technopak Advisors. Globally, Uniqlo has an equally significant men’s range, Singhal added.
First stores often double up as a smart marketing tool. “In a flagship, Uniqlo has to display all its merchandise as well as create an impression because people who are not avid international travellers are not aware of the brand,” said Singhal.
And this might be more important for Uniqlo as its rivals, Zara and Forever21, have almost a 10-year head start. H&M launched in India in late 2015, while Zara launched in 2009. Both H&M and Zara have anchor stores measuring over 20,000 sq ft, while Forever21 has always operated smaller 10,000-15,000 sq ft stores.
Sales from flagship stores in the past have made headlines and created buzz for brands. But often, the excitement tempers, both in numbers and size of stores. For instance, when Zara launched, its first month sales were more than double of its current average annual store sales. “Store size is also a function of catchment as well as availability,” said Kumar. Ultimately, every brand has to have a profitable trading density, he added. Trading density refers to sales on a per square foot basis.
Competition is rife in the top malls, which have less than 5% vacancy levels and where international brands want to be seen. Often, as has been seen in the case of H&M, mall developers have had to jostle less productive brands in order to make space, and that increases the pressure on the brand to perform and deliver returns to all stakeholders.
To be sure, Uniqlo’s India entry has been a talking point for the past about three years. After H&M, Gap and Aeropostale launched almost within the same year between 2015 and 2016, the time gap for the next large international retail brand launch has been long.
At first, there were market rumours that Uniqlo will be signed up by Arvind Brands, but talks apparently fell through and the company will launch and run its operations independently now. “Brands take time to survey the market and make an airtight strategy — research is important. H&M also took almost two to three years before launching its first store,” said Kumar.