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Fast Retailing Looks West to Expand Low-Price GU Brand

Japan’s Fast Retailing Co., Ltd. is looking to up expansion of its GU apparel brand overseas with plans to launch stores in Hong Kong, South Korea and Southeast Asia next year, and more in Western markets over the next few years, according to the brand’s chief executive.

The GU brand, considered Uniqlo’s low-priced cousin, is known for understated, but on-trend designs at prices often below 1,000 yen, or roughly $10. The Asian clothier has more than 250 stores in Japan, and so far, only one overseas opened last September in the basement of the Uniqlo Shanghai flagship store.

Fast Retailing intends to open two stores in Tokyo this fall, and if the Asian expansion goes well, GU’s chief executive, Osamu Yunoki told Reuters the company plans to enter Europe and the United States within several years.

GU currently accounts for just 7 percent of Fast Retailing’s overall revenue, and in fiscal 2013 the brand brought in 83.7 billion yen ($822 million) in sales. For fiscal 2014, expansion plans include 70 additional stores, and sales are projected to reach 100 billion yen ($981 million).

If GU’s growth maintains, the brand is expected to boost Fast Retailing’s revenue considerably and help the group on its way to its goal of quintupling annual sales to 5 trillion yen ($49 billion) by 2020 to overtake Inditex’s Zara, Hennes & Mauritz (H&M) and Gap Inc. as the world’s top apparel maker, according to Reuters.

In order to captivate consumers with its “more freedom with fashion” concept, some GU stores offer in-store stylists and fitting rooms decorated with imagery of cities like London and Paris to encourage shoppers to shoot selfies in the clothing to post on social media channels.

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But if Fast Retailing plans to bring its brand West where fast fashion competition is fierce and Inditex and H&M lead the charge, they will have to first firmly establish the brand’s identity and ensure it’s a winner in the Asian markets.

Roy Larke, editor of industry researcher Japan Consuming told ABS-CBN News, “It’s a very crowded market. They should take it slowly overseas.” He added, “The segment that Uniqlo is going for in the United States – even that is extremely competitive. Uniqlo should be (Fast Retailing’s) first priority.”

Yunoki said he sees a bigger role for GU in the Fast Retailing group. The company started to open GU and Uniqlo brands in the same stores, and that effort has boosted sales in both markets.

“A lot of people need both – Uniqlo for the long-lasting, basic stuff and GU for cheaper, trendy items. More and more, there’s no split in the target audience,” he told ABS-CBN News.