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Uniqlo to double online sales ratio with help from real stores

CEO Yanai wants more locations in Asia and Europe as virtual boundary 'vanishes'

Real-world Uniqlo locations offer services that drive online sales, like in-store pickup.   © Reuters

TOKYO -- Uniqlo operator Fast Retailing is launching a counteroffensive against Amazon.com and other rivals in the online fashion market, using its vast network of real-world stores to differentiate itself.  

One goal is to more than double the casualwear chain's global online sales ratio to 20% over the next two years or so, Chairman and CEO Tadashi Yanai told Nikkei in an interview on Monday. His strategy includes an enhanced line of products sold only over the internet.

"We are renewing our online shopping sites, their systems and distribution around the world," Yanai said.

At the same time, Fast Retailing intends to accelerate new store openings outside Japan, mostly elsewhere in Asia. Management believes physical stores give the company an edge over rapidly growing online-only rivals like Amazon and Zozotown, a Japanese online fashion mall. 

Brick-and-mortar locations make it possible to offer conveniences like in-store pickup. Fast Retailing provides this click-and-collect service in Japan, the European Union and China, among other locations.

Fast Retailing CEO Tadashi Yanai says the company's "overseas business growth is swinging into full gear." (Photo by Maho Obata)

Uniqlo's annual online sales now come to about 140 billion yen ($1.28 billion), accounting for 9% of the total. Simple math suggests the figure would rise to about 300 billion yen in a couple of years, if the 20% goal is reached. For comparison, Spanish fashion retailer Inditex, known for the Zara brand, rings up the equivalent of 330 billion yen online.

Fast Retailing's consolidated sales for the year ending August 2018 are forecast to surpass 2 trillion yen for the first time, driven mainly by overseas Uniqlo operations. It currently runs nearly 2,000 stores in 19 countries and regions. The foreign store count exceeds the number in Japan, and sales for the six months through February surpassed those at home.

"Our semi-bespoke sales are brisk and we will take the service to wider parts of the world," Yanai said. This involves making shirts and suits based on measurements taken by sales clerks at stores, though the actual orders can be placed online. 

When it comes to store openings, the group intends to continue adding overseas locations at a faster pace than in Japan in the current fiscal year. It plans to add 20 stores in Europe, 40 in Southeast Asia and 100 across greater China.

"Opportunities are spreading worldwide, including openings in major European countries, so our overseas business growth is swinging into full gear," Yanai said. 

The CEO, however, believes the industry is reaching a point where the "boundary between real and virtual worlds will vanish."

Yanai believes that higher online sales -- which are largely driven by young consumers and still have growth potential -- are crucial for staying competitive, as are beefed-up physical stores.

Yanai again dismissed the prospect of partnering with Amazon.

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