Eyebrows were raised when Japanese clothing retailer Fast Retailing Co made a $900m (€632m) bid for US department store Barneys in July. “People said we were just trying to raise our profile,” says Hideo Majima, director of public relations. “But it was a serious bid.” It raised its offer to $950m (€670m) but lost out to Dubai-based Istithmar. “We weren’t prepared to play a game of poker,” he says.
Looking at the facts, there’s no reason why anyone should have been surprised by Fast Retailing’s move. One of the world’s largest clothes retailers – seventh in a list headed by Gap – it operates 1,800 stores around the globe. Brands in the stable include Uniqlo – 750 stores in Japan, as well as shops in the US, UK, China, South Korea and Hong Kong – Theory and Comptoir des Cotonniers. Last year, Fast Retailing had net sales of ¥449bn (€2.7bn), which included four million pairs of Uniqlo skinny jeans.
CEO Tadashi Yanai wants to increase that figure to ¥1 trillion (€6.1bn) by 2010, and to achieve it he’ll be expanding the existing brands and spending heavily on mergers and acquisitions. The war chest is big: ¥300bn (€1.8bn) to ¥400bn (€2.4bn) over the next three years. “We want a global portfolio of brands,” says Majima. In his sights? A move into the US affordable luxury market and European brands with global potential.
Uniqlo, or Unique Clothing Warehouse, the low-cost basics brand for which Fast Retailing is best known, opened in 1984. A period of rocketing sales and worldwide expansion has been followed by one of consolidation. Poorly performing shops have been closed, new stores opened and, in Japan, the focus has switched to large scale stores and, even larger, the 3,300 sq m superstore.
Yanai also hired Kashiwa Sato – the young, brilliant creative director – to take control of a series of new flagship stores for New York, London and Paris. Sato hired his own dream team: Masamichi Katayama, Japan’s top store designer, Yugo Nakamura, the country’s top web designer, and award-winning art director Markus Kiersztan, who heads up the New York creative studio. It was out with the old fluorescent-lit interiors and in with a sleeker new image.
“My strategy was: ‘From Tokyo to the world’,” says Sato. “I wanted to emphasise the Japanese provenance of the brand.” He created a new logo – a design that works in Japanese and English – and a new typography. He also came up with the concept (and interior) for the UT store in Harajuku that opened in April and sells only T-shirts in plastic tubes from vending-machine-like shelving.
The New York flagship opened in SoHo last November; another opens in London’s Oxford Street this month (and a smaller one up the road). A concept store in La Défense in Paris opens in December and will be followed by another global flagship in the city. The year ahead looks busy in Asia too: 40 large-scale stores are to open in Japan as well as big branches in Beijing and Seoul.
Brands we’d buy
So what if Fast Retailing Co didn’t get its hands on Barneys? There are plenty of other international brands worth picking up. If we were advising them, here’s what we’d pay for.
The London flagship needs a bit of love and Japanese attention to detail. It could also use the parent company’s distribution network to explode the brand in Japan.
This Munich institution has the roots and brand name to become a German and Mitteleuropean department store force – it just needs the cash and management to make it happen.
03 A Sato-Katayama department store
Let the creative duo Kashiwa Sato and Masamichi Katayama loose and get them to develop a challenger chain to rival Barneys.