Fast Retailing, the world’s third largest apparel company behind the brand Uniqlo, threw down the gauntlet against world number two Hennes & Mauritz, opening its first store in H&M’s home market of Sweden, as it makes further inroads in Europe.
“This is a big step toward becoming a global brand,” Chairman and CEO Tadashi Yanai said. He usually spends his summer in Hawaii through the end of August but this year he has been in Stockholm to prepare for the store opening.
More than 1,000 people lined up at the store in Sweden’s capital. “I was impressed with the variety of items anyone can wear regardless of age,” said a 20-year old college student who bought a sweater.
The store highlights Fast Retailing’s clear focus on Europe of late. The company last fall opened its first store in Spain, the home of world number one clothier Inditex, known for its Zara brand.
Uniqlo generates only 4% of its global sales in Europe. And Fast Retailing has had a bitter experience in the region. It opened its first overseas store in the U.K. back in 2001 riding a boom for fleece clothing and quickly increased the U.K. store count to over 20, only to shutter 16 locations in 2003 due to continued losses.
“We were arrogant and took the challenge lightly,” Yanai said in retrospect.
Fast Retailing has since cultivated its European presence steadily, making its debut in Germany in 2014. But the store count in Europe was a mere 75 at the end of July.
Three quarters of the 2,057 Uniqlo stores are in Japan and China. And 186 are in South Korea.
Given the similar body types and climates in the neighboring markets, it is more efficient for Fast Retailing to put in resources there than in Europe.
But establishing a solid presence in Europe, the fashion capital of the world, is a vital step for Fast Retailing to enter a new stage of growth.
Fast Retailing is confident of its offerings, including the quick dry and heat retention features. But the challenge is to have people in Europe exposed to Uniqlo clothes so they can pick up and feel the clothes in person.
The business landscape presents an opportunity for Fast Retailing to make it big in Europe. Although Inditex has performed well, H&M’s sales have declined as consumers increasingly feel that the design and quality do not measure up to the price.