We are very interested in the business expansion strategy in Australia which UNIQLO, a leading Japanese retailer, has.
According to The Australian Financial Review today, Japanese retailer Fast Retailing may have to inject new capital into UNIQLO Australia to fund the next phase of growth as the casual clothing chain expands into new states and suburban markets.
UNIQLO, which opened its first store in Australia a year ago, wants to become the market leader in casual wear by 2020 to become the world's leading clothing company.
UNIQLO's founder, Fast Retailing president Tadashi Yanai, plans to open 200 new stores worldwide this year and Australia figures prominently in his growth ambitions.
"Mr Yanai really believes in the Australian market – his expansion plans internationally have been very aggressive and Australia will be no different to that," UNIQLO Australia's chief development officer, Matt Parker, told Fairfax Media.
"We want to reach out to as many consumers as we can – that means opening [stores] in different states sooner rather than later," Mr Parker said.
UNIQLO Australia generated sales of $33 million in the five months after opening its first store in Melbourne's Emporium last April, according to ASIC filings.
UNIQLO has since opened another three stores in Sydney and in Melbourne, and two more stores are due to open in Sydney next month.
"The stores we've opened since [April] have been very positive," said Mr Parker. "At the moment we're looking in all different states and territories – we don't have a set timetable but it shouldn't be too long."
Fast Retailing injected $15 million into its local subsidiary a year ago to fund the store rollout, lifting paid-up capital to $21 million, but may need to provide more capital to fund the next stage of growth until UNIQLO Australia starts generating free cash.
"Obviously, we had to spend quite a lot of money setting up the stores and we'll continue to do that as we expand," Mr Parker said.
UNIQLO's sales per square metre are higher in Australia than UNIQLO's global average but rent and labour costs are also higher, forcing the company to adjust its operating model. Prices in Australia are slightly higher than global prices and apparel sizes are larger than those in Asia.
"We've worked very hard to make sure the product range is appropriate for the market," said Mr Parker.
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