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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: It's a Wednesday afternoon and the Dallas Galleria shopping mall

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Speaker 2: is kind of a ghost town. A few shoppers drift

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Speaker 2: in and out of stores. Then there's Uniclo.

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Speaker 1: It was obviously busy. There were people in the dressing rooms,

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Speaker 1: people asking questions of the store staff and really filling

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Speaker 1: the place, which was in contrast to the rest of.

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Speaker 2: Them all Read Stevenson is a Bloomberg senior editor based

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Speaker 2: in Tokyo. He visited Dallas late last year for a

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Speaker 2: feature on the company. Reid covers Japanese businesses and knows

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Speaker 2: the Uniclo ran well. There are a hundred stores in

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Speaker 2: Tokyo alone and many more across Asia, but the Dallas

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Speaker 2: Uniclo took him by surprise. For a Japanese retailer, it felt.

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Speaker 1: Very well Texan. They have, for example, embroidery stations where

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Speaker 1: you can stitch on little logos the loans Star of Texas.

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Speaker 1: They also feature T shirts with designs from local artists.

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Speaker 2: Uniclosed Texas Bent isn't an accident. The local designs and

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Speaker 2: customized logos are part of a concerted effort by the

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Speaker 2: company to crack the largest apparel market in the world

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Speaker 2: the United States. It's an ambitious plan, one that the

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Speaker 2: company CEO and founder Tadashi yen I sat down with

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Speaker 2: reed to talk about.

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Speaker 3: Okay, I'm going to tell.

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Speaker 1: So Jani himself believes that they can reach three trillion,

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Speaker 1: or roughly nineteen billion dollars in North American sales, and

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Speaker 1: he thinks that the company can get there. That would

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Speaker 1: mean it's it's way bigger. And you know, Texas is

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Speaker 1: where you see the signs that they're finally kind of

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Speaker 1: figuring out this formula, this approach that they think they're

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Speaker 1: going to be able to deploy across the rest of

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Speaker 1: the US.

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Speaker 2: This isn't the first time Uniclo has tried to win

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Speaker 2: over American consumers. The company has had store in the

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Speaker 2: US since two thousand and five, mainly in coastal metro

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Speaker 2: areas like New York and San Francisco. But Rid says

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Speaker 2: to hit that nineteen billion dollar goal, Uniclo will need

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Speaker 2: to break through in America's heartland.

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Speaker 1: If you think about the Japanese brands that are instantly recognizable,

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Speaker 1: for example, Toyota, Sony, Nintendo, I think it's fair to

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Speaker 1: say that Uniclo isn't quite there yet. So getting to

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Speaker 1: the point where Uniclo is just as recognizable as those

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Speaker 1: famous Japanese companies is I think very important for Tadashianai,

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Speaker 1: the founder of Uniclo, he built this company over forty years,

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Speaker 1: first in Japan and then into Asia, found great success

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Speaker 1: in China and then expanded into Southeast Asia. They've gotten

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Speaker 1: very good traction in Europe, They've had the presence on

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Speaker 1: the US coasts, and really the last piece of the

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Speaker 1: jigsaw puzzle is America.

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Speaker 2: This is the big Take Asia from Bloomberg News. I'm Wanha.

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Speaker 2: Every week we take you inside some of the world's

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Speaker 2: biggest and most powerful economies and the markets, tycoons and

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Speaker 2: businesses that drive this ever shifting region. Today on the show,

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Speaker 2: uniclothes pushed to become a household brand in the US,

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Speaker 2: how it tried and failed to win over American shoppers

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Speaker 2: in the past, and why the company's founder is willing

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Speaker 2: to risk hundreds of millions of dollars to make it

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Speaker 2: happen this time around. Uniclow is, by any measure, a

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Speaker 2: massive and successful brand. Last year, its parent company Fast

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Speaker 2: Retailing generated almost twenty three billion dollars in sales. To

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Speaker 2: put that into perspective that makes it the third largest

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Speaker 2: clothing retailer in the world after Zara and H and M.

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Speaker 2: Across Asia, Uniclo is a household name depending on where

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Speaker 2: you live in the US, though you'd be hard pressed

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Speaker 2: to find one if you live in Asia.

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Speaker 1: Everyone knows what you're talking about when you mentioned Uniclo.

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Speaker 1: But when I spoke to my aunt in Michigan, as

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Speaker 1: I was sort of visiting these stores, she had no

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Speaker 1: clue what Uniclo was. She was interested, but there was

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Speaker 1: no store near her. She had never seen anyone wearing

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Speaker 1: Unico clothes.

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Speaker 2: Reads and lives in Plymouth, Michigan, just outside of Detroit.

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Speaker 2: The closest Uniclo is in Chicago, about two hundred and

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Speaker 2: fifty miles away. Across the US, the franchise has roughly

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Speaker 2: eighty locations. Now globally, it's a different story. Uniclo operates

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Speaker 2: more than twenty five hundred stores worldwide. Its parent company

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Speaker 2: Fast Retailing has a market cap of more than one

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Speaker 2: hundred and twenty billion dollars. That's larger than Nintendo and

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Speaker 2: not far behind giants like Mitsubishi, SoftBank and Sony. And

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Speaker 2: there of course, there's that old adage that you're not

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Speaker 2: truly a global brand until you cracked the US market.

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Speaker 1: I think to a large extent that is true.

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Speaker 2: Uniclo has tried to crack the American market several times.

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Speaker 2: The company opened its first stores in malls in New

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Speaker 2: Jersey in two thousand and five, only to begin closing

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Speaker 2: them down the following year. It found more success in

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Speaker 2: New York City's Soho neighborhood in two thousand and six,

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Speaker 2: and then in twenty eleven, Uniclo doubled down on the coasts.

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Speaker 2: It opened a splashy flagship store on New York's Fifth

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Speaker 2: Avenue and followed a year later with one in San Francisco.

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Speaker 2: From there, the rollout accelerated. Dozens of locations popped up

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Speaker 2: across the country, from big coastal cities to suburban shopping malls.

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Speaker 2: As a brand pushed to scale fast, but the momentum

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Speaker 2: didn't last. Uniclosed mall based stores, struggled with weak foot

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Speaker 2: traffic and disappointing sales, and then the pandemic hit, forcing

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Speaker 2: uniclob to scale back operations in the US.

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Speaker 1: They kind of expanded a bit too fast without the

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Speaker 1: name recognition and then had to retreat, And then during

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Speaker 1: the pandemic, was when they realized, you know, they had

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Speaker 1: to sort of really get serious about really being deliberate

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Speaker 1: and strategic about breaking into the US market.

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Speaker 2: Now, Unicloe plans to double the number stores in North

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Speaker 2: America to almost two hundred over the next couple of years.

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Speaker 1: They have this concept called the flagship store. So it's

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Speaker 1: usually one big store in a city that carries all

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Speaker 1: of the products, and when you walk into one of these,

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Speaker 1: there are a lot of displays explaining how heat tech

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Speaker 1: the thermal fabric works, or there's a display explaining how

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Speaker 1: something is made and how it's crafted, and so it's

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Speaker 1: almost like a sort of an education center for the customers,

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Speaker 1: especially customers who are stepping into the store for the

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Speaker 1: first time and learning about the brand for the first time.

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Speaker 1: And that flagship store is meant to support other stores

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Speaker 1: that will open up in the area. They're going to

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Speaker 1: be smaller, they're going to be either standalone or situated

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Speaker 1: in malls, but essentially they kind of expand from this flagship.

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Speaker 1: It's not that different from a navy flotilla, for example,

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Speaker 1: right where you have the main ship and then you

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Speaker 1: have a bunch of support ships.

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Speaker 2: But Reid says, to become a household name in the US,

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Speaker 2: Unicloe will have to overcome several barriers. For starters, it

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Speaker 2: has to compete with everyone.

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Speaker 1: And by that I mean Zara h and m Mango,

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Speaker 1: even the Gap J Crew. Those are sort of the

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Speaker 1: conventional competitors. But at the same time they're also going

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Speaker 1: up against Walmart and Target because people know that they

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Speaker 1: can walk into those big box retailers and get decent

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Speaker 1: clothes at a price that they're not going to balk at.

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Speaker 2: Then there's the brand itself. Uniclo is associated with uniformity

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Speaker 2: across Asia, but in the US blending in with clothing

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Speaker 2: basics is not as big of a selling point.

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Speaker 1: So breaking into Middle America is easier said than done

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Speaker 1: because it's vast, it's fragmented. There aren't any kind of

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Speaker 1: single cultural anchors. What the consumers kind of value in

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Speaker 1: Texas is going to be hugely different from what somebody

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Speaker 1: in Illinois or Michigan values, and not just in terms

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Speaker 1: of climate, but in terms of how they present themselves.

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Speaker 1: Keep in mind in North America is that, you know,

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Speaker 1: it is a melting pot. There are many body types

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Speaker 1: in the US, and so generally speaking, it's just going

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Speaker 1: to be much more challenging to cater to that wide

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Speaker 1: array of customers. One executive mentioned hips that it was

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Speaker 1: hard to, you know, design clothing to fit hips in

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Speaker 1: the US, But they are spending a lot of time

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Speaker 1: and money in terms of coming up with the right cuts,

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Speaker 1: the right silhouettes, the right designs. What uniclo is trying

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Speaker 1: to do is like thread a very fine needle. No

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Speaker 1: pun intended to get clothes that will work everywhere. It's

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Speaker 1: much harder than it sounds. And part of the reason

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Speaker 1: for that is obviously they want to keep costs under control.

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Speaker 1: You get too many product types, the cost of producing

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Speaker 1: them and wastage goes up, and so they're really trying

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Speaker 1: to make sure that they can walk that fine line.

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Speaker 2: Perhaps the biggest hurdle vall US trade policy. In February,

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Speaker 2: the Supreme Court ruled the President Trump's signature triff policy

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Speaker 2: was illegal, but the President responded with the workaround and

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Speaker 2: imposed a fresh ten percent tariff on trading partners around

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Speaker 2: the world, with threats of more to come. All of

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Speaker 2: this is causing more uncertainty for brands like Uniclobe that

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Speaker 2: manufacture them products across Asia.

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Speaker 1: It has spent literally four decades building a very deep

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Speaker 1: and efficient supply chain where the clothes are made in

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Speaker 1: Vietnam and Bangladesh and China and then brought into other markets.

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Speaker 2: Average tariffs on goods from China now stand at about

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Speaker 2: twenty four percent, significantly higher than the rates applied to

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Speaker 2: most other countries. Uniclow has been moving manufacturing away from China,

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Speaker 2: but the vast majority of its goods are still made there.

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Speaker 1: And so the CFO of Uniclo last year already kind

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Speaker 1: of told investors, look, we can absorb the tariffs, we

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Speaker 1: can deal with it, and we can still maintain our

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Speaker 1: price points. They're not going to have to pass that

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Speaker 1: cost on to customers. Now. Part of that comes to

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Speaker 1: the fact that their sales are relatively small there. If

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Speaker 1: a vast majority of their sales and profit came from

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Speaker 1: the US, the tariffs would be a much tougher challenge.

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Speaker 2: Since twenty twenty one, inflation in the US has consistently

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Speaker 2: been higher than the Federal Reserves two percent target, but

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Speaker 2: Uniclose founder Tanashi Yeni told read that he thinks the

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Speaker 2: current economic environment could actually work in uniclose favor.

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Speaker 1: So inflation people are in fact feeling the pain of inflation,

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Speaker 1: you know, the wages aren't going up as fast enough

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Speaker 1: to keep up with it, particularly you know, in the

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Speaker 1: lower income and even middle income brackets. So people just

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Speaker 1: don't have as much money to spend on clothes, which

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Speaker 1: means that, you know, if you're buying an article of clothing,

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Speaker 1: you're going to want it to last longer, both in

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Speaker 1: terms of durability and also fashion right. And that's kind

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Speaker 1: of the proposition that Unicloe has.

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Speaker 2: After the break, will join Uniclose founder on a store

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Speaker 2: visit and find out why he's obsessed with America and

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Speaker 2: what do you think it could take for Uniclo to

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Speaker 2: become a household name in the States. On a Sunday afternoon,

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Speaker 2: this three floor Uniclose store in Tokyo is packed the shoppers.

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Speaker 2: Among them is a man who founded the brand, Tadashi Ynai.

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Speaker 2: He's here to give Bloomberg's read Stevenson a tour of

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Speaker 2: the store. The first thing he points out is a

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Speaker 2: Uniclo flower stall. It's located just outside the main store entrance.

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Speaker 1: He'll tell you that the colors of the flowers match

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Speaker 1: the colors of some of the knitwear that are just

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Speaker 1: inside the entrance. And I asked him why, and he says, Look,

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Speaker 1: when people shop for clothes, they start with color, right,

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Speaker 1: and so's he's making that connection even before somebody steps

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Speaker 1: into the store, and even capturing people who are walking

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Speaker 1: by the store.

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Speaker 2: Yeni opened his first uniclosed store in Tokyo in nineteen

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Speaker 2: ninety eight, but he started his business a long way

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Speaker 2: from the capitol.

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Speaker 1: Tadashiani comes from Ubei. It's a small former coal mining

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Speaker 1: town way on the western end of Honshu, Japan's main island.

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Speaker 1: His father owned a men'swar shop. Essentially, they made suits.

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Speaker 2: Yeni took over his father's company in the nineteen seventies,

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Speaker 2: but he decided that the soup making business was far

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Speaker 2: too labor intensive to make a profit. Instead, he wanted

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Speaker 2: to sell casual clothing. He started looking for inspiration and

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Speaker 2: ideas outside of Japan, including America, a place that had

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Speaker 2: always fascinated him.

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Speaker 1: It was on a trip to California he walked into

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Speaker 1: a university bookstore. And if you think of a university bookstore,

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Speaker 1: it's quite different from other retail experiences because the products

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Speaker 1: essentially sell themselves. For students, you buy textbooks, you know

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Speaker 1: exactly what you're looking for. You buy maybe some sweatshirts

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Speaker 1: with the school logo on it. That's exactly what you're

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Speaker 1: looking for, and he thought, I would like to make

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Speaker 1: a store where the products essentially sell themselves. That you

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Speaker 1: don't need a lot of staff, you don't need a

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Speaker 1: lot of adornment to sell clothes, And so he wrote

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Speaker 1: a few notes to himself back then.

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Speaker 2: Yahni's long term fixation with American culture plays a big

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Speaker 2: part in his ambitious plans today with Uniclo. He's been

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Speaker 2: looking for a way into the American market for years.

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Speaker 4: Failure is something that happens, but when people fail, most

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Speaker 4: of them dwell on it. What matters is identifying the

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Speaker 4: true cause of the failure and thinking about what you

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Speaker 4: need to do differently to succeed next time. I think

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Speaker 4: it's essential that we keep changing ourselves, and because our

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Speaker 4: current positioning isn't the same as where American c clothing

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Speaker 4: brands are positioned today, I believe people there will be

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Speaker 4: able to understand and accept us. I got up to you.

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Speaker 2: Yeni is confident about his ability to make it big

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Speaker 2: in the American market. In January, Fast Retailing reported strong results,

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Speaker 2: posting double digit growth in both revenue and profit in

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Speaker 2: the latest quarter across all international markets. That momentum is

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Speaker 2: showing up in the US too. Fast Retailing says Uniclosed.

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Speaker 2: North American business has done well thanks to hugely successful

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Speaker 2: news store openings. It's a sign that the brand might

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Speaker 2: be finally gaining traction with American customers. En I think

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Speaker 2: part of that success comes from their decades of experience

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Speaker 2: expanding in overseas markets.

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Speaker 3: As you guys said, we started in Asia, East Asia first,

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Speaker 3: then Southeast Asia, while at the same time continuing to

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Speaker 3: spend in Europe.

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Speaker 4: We learned a great deal in Europe, and by combining

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Speaker 4: Asia's production capabilities with European creators, we took a truly

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Speaker 4: global approach before moving into the US. In that sense,

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Speaker 4: I think we actually have broader global insights than many

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Speaker 4: American companies. I want to keep adjusting our strategy, adapting

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Speaker 4: to the American market and build it into a one trillion,

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Speaker 4: two trillion and even three trillion yen business.

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Speaker 2: As CEO of Fast Retailing, y and I is responsible

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Speaker 2: for charting the company's global strategy, but the way he

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Speaker 2: sees it, his most important role hasn't changed. He's still

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Speaker 2: a customer. Back at the Uniclose store, in Tokyo, at

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Speaker 2: the end of his tour with reed Yan, I decided

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Speaker 2: to do a little shopping for himself. He picks up

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Speaker 2: a knitted jacket and two pairs of casual slacks and

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Speaker 2: makes his way to the checkout.

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Speaker 1: Yeah, we went over to the cash registers, which have

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Speaker 1: this technology that tallies up everything automatically using the rfidpad,

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Speaker 1: so there are no barcodes or anything. You just place

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Speaker 1: the basket in it calculates everything automatically.

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Speaker 2: All together his clothing hall comes to a total of

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Speaker 2: one hundred and fifteen dollars.

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Speaker 1: And as he's going up to the machine, he's like, oh,

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Speaker 1: can I do the employee discount with this machine? And

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Speaker 1: then there's sort of this very nervous staffer standing nearby

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Speaker 1: who rushes over to help and says, yes, you can.

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Speaker 1: You can get the employee discount with the machine. Mind you,

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Speaker 1: we're talking to Japan's richest menu, right, a billionaire exactly.

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Speaker 1: And so the employee says, I'll help you with that.

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Speaker 1: What's your employee number? And then you know, the amazing

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Speaker 1: response is one, of course, he's employee number one.

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Speaker 2: You know I have done you, and I may not

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Speaker 2: be a big spender when he's shopping for clothes. But

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Speaker 2: here's willing to bet pretty big on uniclose ability to

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Speaker 2: dominate the US retail market. Growing the company's North American

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Speaker 2: store count to nearly two hundred by twenty twenty seven

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Speaker 2: could amount to a wager of hundreds of millions of

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Speaker 2: dollars in one of the most competitive markets in the world.

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Speaker 2: You and I's already rolled the dice on America twice.

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Speaker 2: No doubt he'll be hoping the third times the charm.

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Speaker 2: This is The Big Take Asia from Bloomberg News.

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Speaker 1: I'm one high.

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Speaker 2: To get more from The Big Take and unlimited access

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Speaker 2: to all of Bloomberg dot Com, subscribe today at Bloomberg

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Speaker 2: dot com slash podcast offer. If you liked the episode,

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Speaker 2: make sure to subscribe and review The Big Take Asia

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Speaker 2: wherever you listen to podcasts. It really helps people find

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Speaker 2: the show. And we've got a special treat for Japanese listeners.

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Speaker 2: A version of this episode will be available in Japanese

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Speaker 2: on the Big Take Asia feed. Stay tuned for that.

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Speaker 2: Thanks for listening. To see you next time

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Speaker 3: He spay a par