Uniqlo’s plan to dominate global fashion

When Yukihiro Katsuta joined Uniqlo in 2005, the clothing retailer’s founder Tadashi Yanai confided that the chances of successfully taking his brand global were perhaps “0.5 or 1 per cent”.

Today, Yanai is Japan’s second-richest person and Katsuta is the company’s research and development head. As Uniqlo sets its sights on conquering North America and Europe, Katsuta believes “the dream is coming true”. Sales in both territories have more than tripled since 2021.

Uniqlo accounts for over 85 per cent of sales at Fast Retailing, Asia’s biggest fashion retailer. If the forecast for 2026 for total revenue of 3.9 trillion yen (S$31 billion) is achieved, the group will be within touching distance of H&M – and it is already setting its sights on Zara owner Inditex, currently the world’s largest store-based fashion retailer.

Some question whether a clothing brand born in the post-bubble era of Japan and anchored by a relatively narrow range of simple and affordable T-shirts, knitwear, jackets and underwear can make the leap.

It will need to execute an ambitious expansion while also holding off online players such as Shein, the Chinese fast-fashion website whose annual revenue was US$40 billion (S$51.8 billion) in 2025, according to financial data website PitchBook.

“Are they really able to crack the US and Europe,” wonders Achim Berg, founder and chief executive of FashionSights, an industry think-tank. “And how much value can they create before fashion makes an inevitable comeback from the current market environment of modesty and ‘silent luxury’?”

But John Jay, president of global creative at Uniqlo, believes the group’s time has come as consumers grow disillusioned with the social media “algorithms of mediocrity” pushing cheap throwaway clothing made from poor-quality fabrics.

“We’re perfectly positioned for the zeitgeist,” he says. “Because quality is non-negotiable for us. It’s a lot easier to make a high-quality cashmere sweater at US$900. It’s another thing at US$100, and to continually improve that product over time.”

Sho Kawano, an analyst at Goldman Sachs, agrees that the company’s defensive moats, including its leading position in advanced fabrics and its finely tuned supply chain, are formidable.

“Over the past decade, much of the industry gravitated towards fast fashion, which ultimately strengthened Uniqlo’s position,” he says. “Its dominance in basics is clear – and catching up at that scale would likely entail significant losses for competitors.”

Still, success is far from assured. Replicating its growth in Asia – it operates more stores in China than H&M and Zara combined – will be challenging, especially in North America. “The US, in particular, is a graveyard for so many international brands that have tried to conquer it,” says Berg.

Fast Retailing’s ambitious expansion plans will also have to be executed just as questions mount over when and how its visionary founder, now 77, might hand over control.

“The biggest risk is internal,” says Genichi Tamatsuka, Fast Retailing’s president between 2002 and 2005. “The turbulence of the leadership (transition) and losing the clear vision.”

Deflation’s poster child

Not until after the cataclysm of World War II did Western-style clothing decisively supplant the kimono as the norm for everyday wear in Japan.

Executives say this starting point has allowed them to approach apparel design with fewer fixed preconceptions. They view casual clothing as a toolbox of components that mix and match easily with other items, rather than being fashion or statement pieces in their own right.

The result is a relatively small range of what the company terms LifeWear: simple but well-designed essentials, prioritising function over form rather than fast fashion’s model of producing small batches of on-trend clothing at high frequency.

Uniqlo releases only 800 new designs a year, and only about half of those are changed in its six-monthly renewal cycles.

By contrast, Zara, a fast fashion pioneer, churns out thousands of designs every year, with new iterations arriving every fortnight. At Shein, thousands are released each day.

Smaller ranges mean Uniqlo might end up selling a million units of a single T-shirt design versus, say, less than 100,000 at fast fashion houses, generating scale and cost advantages when it comes to raw materials, sewing and dyeing.

The resulting high-quality products at reasonable prices were a winning model in the deflationary market of post-bubble Japan. Some analysts believe its lower gross profit margin relative to Inditex indicated how Uniqlo passed the price and quality benefit onto its cost-conscious consumers.

“Uniqlo was born in deflation and thrived in deflation. Post-bubble, people were looking for value rather than the show-off type of excess that had characterised all those exciting times,” says Oliver Matthew, an analyst at Citic CLSA. “Uniqlo arrived at the right time and helped the household budget.”

Its first big breakthrough came in 1998 as shoppers thronged to get their hands on US$15 fleeces in 50 vibrant colours at Uniqlo’s new Harajuku store in Tokyo on a cold November morning.

It was the start of Japan’s “fleece boom”, during which the company sold 36 million jackets in three years, enough for one in every four Japanese to own one.

As it expanded elsewhere in Asia, its simple designs and quality fabrics exuded affordable middle-class cachet, driving sales in China, Taiwan, South Korea and South-east Asia.

The use of thin layers, born out of Japan’s cold winters and humid summers, proved ideal for the region’s diverse weather.

Uniqlo also sent dozens of Japan’s takumi textile, sewing and dyeing artisans to China in the 2000s to share know-how and control quality discipline at factories there, building up a dependable supply chain.

Tamatsuka, the former Uniqlo president, recalls consolidating from 300 to just 50 manufacturers. “We started realising that if we give bigger volume, they will commit, they will really focus and they will improve in terms of quality,” he says.

Naveen Jha, who runs a textile and garment sourcing business in China’s Jiangsu province, says “everyone wants to work with them because they take your output from good to perfect”.

Uniqlo’s success in the region has spawned imitators, notably China’s Bananain.

But British designer Clare Waight Keller, who designed Meghan Markle’s wedding dress while at Givenchy and is now creative director at Uniqlo, says few will be able to sustain the Japanese company’s single-minded focus on functionality.

“Is that pocket really necessary? Is that the perfectly placed zip or is that neckline the one that will work with everything?” she says. “There’s no room for superfluous design.”

Fabrics for life

In April 2000, Yanai paid a visit to the offices of Toray, a Tokyo-based chemicals and materials conglomerate he had read about in a magazine. It marked the start of a strategic collaboration that provided Uniqlo with arguably its most important advantage over rivals: access to high-tech, specialised fabrics.

After testing 10,000 prototypes, Toray invented a material combining four types of synthetic yarn that absorbs moisture from the body and converts it to heat. Uniqlo branded it Heattech and, since 2003, has sold 1.5 billion garments made from or containing it.

Toray also helped develop the fabrics behind Airism, used as a breathable base layer, and the Ultra Light Down ranges of packable jackets insulated with bird plumage.

Tomohisa Okawa, who manages the Uniqlo partnership at the chemicals group, shows a yarn invisible to the naked eye under a microscope that reveals the cross-section of dozens of fibres on which the Uniqlo logo is etched.

Such control over fibre shape and fineness, dubbed nanodesign, has helped to make highly water-repellent and durable US$50 lightweight parkas, creating a far cheaper alternative to specialist outdoor brands such as Patagonia.

The two sides are entering a fifth phase of collaboration that aims to combine synthetic fabrics with natural ones, such as introducing cashmere into Heattech products to make them softer.

Okawa believes few other retailers have such deep relationships with their key suppliers. “The perspectives of supply chain manufacturers and the ones selling things are very different,” he says. “Building that mutual understanding is extremely hard. It’s not something that can be achieved simply by shaking hands once.”

Uniqlo’s development of technical clothing with Toray was in its early stages when the retailer opened its first stores in London and New York in the 2000s.

After an initial burst, sales were disappointing.

“I think they approached the US market without much tailoring to the American consumer,” says Neil Saunders, managing director at GlobalData Retail. “They basically took what they did overseas and just dumped it in the US.” 

Uniqlo responded by releasing popular designer collections, starting in 2009 with one by the “queen of minimalism” Jil Sander. Sizing was adjusted and regional research and development centres generated hit products such as the Jersey barrel-leg trousers that its New York designers proposed.

It also ventured into sports partnerships, recruiting Swiss tennis star Roger Federer as a brand ambassador in 2018 and sponsoring the field of the LA Dodgers’ baseball stadium.

The ratio of repeat customers in Europe and North America has risen from 40 per cent to 60 per cent in the past four years. Brand loyalty is especially strong in Europe, where consumers value quality, and its success there could pave the way into the Middle East, Latin America and Africa.

Uniqlo wants each territory to contribute revenues of 1 trillion yen – roughly what it achieves in its home market now – in around five years.

Taku Morikawa, chief executive of Uniqlo Europe, says: “If we get good trust and respect from European customers, it has a strong meaning for global markets.”

But the expansion carries significant risks. Uniqlo plans to open 40 stores a year across North America and Europe, which will mean entering regional cities such as Leeds and Oberhausen in Europe and Annapolis in the US, in addition to top-tier locations such as London, New York and Los Angeles.

Saunders believes the company may come to regret its slow, cautious start in the US market. “They almost have too much to do... They want to grow a lot, but they’re still quite conservative about that push,” he adds.

Just 15 per cent of sales are currently made online, compared with 26 per cent at Zara and 30 per cent at H&M. “They have to connect the retail platform with the online platform,” says Hirotaka Takeuchi, a Harvard Business School professor who has studied and advised Uniqlo.

Like many rivals, it has faced questions over sourcing cotton from the Xinjiang region of China, where human rights groups allege that forced labour is used. Uniqlo denied using Xinjiang cotton in 2024, but then faced a consumer backlash in China itself, where it has a big presence.

A potentially bigger challenge is keeping fans of the brand coming back, especially if consumer tastes shift away from the no-frills casual wear that is Uniqlo’s stock in trade.

“The problem with this business model is that I’m buying my white T-shirt, then I may buy one in black, then I’ll buy linen,” says Pau Almar, who worked for Zara and Mango before founding the Very Good Retail consultancy. After two or three years, he adds, “you don’t see much opportunity as it’s (all) the same and becomes dull”.

“It’s going to be difficult to get hooked on Uniqlo,” he concludes. “Can you be hooked on a commodity? Probably not.”

Only one Yanai

Uniqlo may have been built on distinctly Japanese strengths such as advanced materials, minimalist design and skill at adapting products or trends from abroad. But its global success also hinged on a break from Japanese tradition in the form of Yanai, its founder and driving force.

This much was evident back in 1991, when Yanai had just 23 Uniqlo stores. He told employees gathered in Yamaguchi that the Uniqlo brand would become the McDonald’s of apparel, focused on a limited menu of bestsellers and with a supply chain highly responsive to consumer demand, according to a corporate history written by a Japanese journalist.

The parent group would henceforth be called Fast Retailing, Yanai declared.

He also challenged the received wisdom that clothing needed to be sold by attentive sales staff in department stores, instead creating rows of neatly folded T-shirts, trousers and socks for shoppers to browse like a bookshop.

“Yanai hates bureaucracy or big company things,” says Junsuke Usami, a former Uniqlo executive who has written a book about the company. He has also changed senior management “without notice” as part of his “change or die” philosophy to constantly evolve, Usami adds.

Tamatsuka says Yanai is “clearly the one creating tension – very high tension – that they must achieve the goal and vision and must maintain the discipline”.

But whether Fast Retailing can become the No. 1 in world clothing will hinge on how much of Yanai’s burning ambition and contrarian instincts are instilled in the next crop of leaders.

Yanai has tasked his sons Kazumi and Koji with ensuring solid corporate governance and handed the presidency of Uniqlo to Daisuke Tsukagoshi in 2023.

But he has not anointed a successor and has ruled out his sons taking over. Yanai has tried to cultivate a deep bench of potential successors and people close to Uniqlo’s management point to a circle of five proteges.

A former Fast Retailing executive says that the biggest dilemma for whoever succeeds Yanai will be what comes next for growth, after Europe and the US. “There’s a question of what else they should do beyond fashion, apparel and clothing,” the former executive adds, suggesting skincare and homeware as options.

Katsuta, the global R&D head, says Uniqlo will push ahead on many fronts: selling more of its core LifeWear, diversifying into accessories such as sunglasses, and starting to expand GU, an ultra-affordable, trend-conscious brand for younger buyers that currently accounts for about 11 per cent of group sales.

But he doubts that the group’s founder could ever be replaced. “It’s impossible to find another Mr Yanai,” he says. “Forget about it. Nobody expects that.” Financial Times