Uniqlo: "Becoming a real force on the European market by 2020"

Monday, 14 April 2014
FashionUnited talked to Berndt Hauptkorn, Fast Retailing group officer und CEO of Uniqlo Europe, about his expansion plans after the opening of the brand’s flagship stores in Berlin. The business card mentions head offices in London, Paris and Moscow. „The new ones will have Berlin too“, says Hauptkorn, meeting us to talk about the Uniqlo flagship store openings in Berlin. He calls this decentralized strategy „working within the matrix“. The Berlin store at Tauentzien in City West is spread out over 2,700 square meters and is apart from being the largest store in Europe, is the first in Germany.

This makes Germany the third European market where the Japanese brand is represented with its own stores. „On an international level, Uniqlo is a giant, but in Europe, we are still a challenger. Initially, we focused our presence on Paris, London and Moscow and despite the competetive environment, we are achieving attractive growth rates there“, says Hauptkorn. „The opening of our flagship stores in Berlin is a developmental leap for us.“

FashionUnited talked with Hauptkorn about the expansion strategy of Uniqlo, a brand that belongs to the Fast Retailig Group, and discussed the challenges and opportunities of fashion retailing today.

Mr. Hauptkorn, giant billboards have announced it for weeks but now the moment has come: the move „From Tokyo to Berlin“ has taken place. How long did it take to prepare?
The project has been completed in record time. We built Europe‘s largest flagship store very quickly and efficiently and have been able to open it now. That was a very speedy process.

Based on which criteria did you decide to build the largest store on the continent in Berlin? Was it because of the reasonable rents?
Berlin is not that reasonable after all. Berlin is one of the core cities in Europe and the world and thus has a certain signaling value – for the German market but also beyond its borders. It is a store with global visibility.

For your expansion strategy, are you banking on the big capitals or a you following a decentralized strategy?
To build the brand, we need to have a store in the brand building centers and the store has to be significant – through concept, product range and architecture. For the remaining rollout, we will stick with standard store models. These are a bit smaller and have been adjusted to the different customer frequencies of each location.

Especially big brands use the flagship store model as showroom and brand experience and less as merely a store where people make purchases. Consumers then buy their products online.
I keep hearing the argument that flagship stores should be operated without a profit but I don’t believe in it. I rather think that‘s an excuse. At the end of the day, a store has to be looked at according to economical aspects and to operate a loss-making flagship store wouldn’t be very satisfactory for me.

Let’s take the new store in Berlin for example: What goals do you have for the first year?
Our goal is always to be profitable as soon as possible. But we will not publish any data about it, especially not on a store level.

Are you planning more store openings in Germany soon?
We are very ambitious and regard Berlin as a cornerstone for the German market. Unfortunately, I can’t give any more information about new stores or other locations at this point but we will certainly continue expanding in Germany. At the moment, we are focusing on Berlin.

How important has the German market become for an international fashion brand? In the past, Germany wasn’t considered particularly fashion crazy and fashion retail used to stay away from the country.
Let’s not fool ourselves: Germany is currently the economically strongest area in Europa. In addition, many fashion retailers choose their location based on tourist flow, escpecially in the luxury market. The German tourism market is much more fragmented than the French or Italian one, for instance. Because here, the number of tourists is split by five, six cities, so not that much remains for individual locations. For us as a brand that offers quality at a fantastic price, it is important to settle in an enviroment whose mentality fits our products. And this is true for Germany and the German market, given that German customers prefer the casual look that we offer in our product range. This is no market for bells and whistles but customers who look for quality and who make conscious purchasing decisons. This is in tune with our philosophy.

Which country is next on the agenda when it comes to your expansion plans?
I can’t mention any particular order here but cities like Milan and Barcelona are indeed on our list. Overall, we pursue a European strategy that aims at significantly promoting the brand on the continent.

What time frame is the strategy aiming for?
There was a starting point but there’s no definite end point. Our vision is to be a real force on the European market by 2020. This is much more complex than in other regions of the world as city locations have important strategic relevance as well as shopping malls. Plus, rental agreements are very long-term. Based on those agreements, our growth strategie has to be long-term.

A shopping mall wouldn’t be a fitting location for Uniqlo?
Shopping malls are certainly relevant. We even have mall locations in France and Russia, which operate very successfully. However, in terms of brand building, city locations are extremely important.

When choosing a location, are you looking at the neighborhood as well? Is it important in which environment Uniqlo is established?
We always look at the neighborhood as well as the customer. We have to find the right customer who appreciates our product range. Luckily for us, we appeal to different target groups because our range is broad. Luxury customers buy our products as well as the general public.

How do you manage to keep quality standards high despite the low prices? Does this affect production conditions?
Our supplier relationships are very long-term and include close cooperation when developing and improving materials. Often, companies jump from one supplier to the next, according to who offers the best price. We profit long-term from the learning curve of our suppliers and can thus constantly offer quality at a reliable price. In addition, especially among the basics, we have products that we can produce in high quantaties and thus offer over a longer period of time. All this allows us to consistantly guarantee low prices.

Photos: FashionUnited

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