When Japanese retailer Uniqlo decided to open up a New York flagship, it went for the aircraft carrier size.
In May, the casual-wear giant, which some have dubbed Japan’s answer to the Gap, committed to a 52,500-square-foot, three-level space at 546 Broadway.
The new store, between Prince and Spring streets, is expected to open next month. It will house retail space on the basement and ground levels, while a showroom and offices will occupy the second floor. All floors are about 17,000 square feet.
Japan’s most popular clothing company, which opened its first shop in Hiroshima in 1984, Uniqlo made a name for itself by introducing reasonably-priced fleeces to the mass market at a time when fleece was usually equipment for serious mountain climbers. These days, both male and female shoppers will find jeans for $40 and tank tops for $10 (unless of course you hit a sale, where you can often score jeans for just $10).
It’s also a place to pick up camisoles, simple briefs, a couple of T-shirts and a pair of flat sandals. Yet Uniqlo has managed to resist the forays into trendier clothing that some say have doomed the Gap. Search for formal wear at uniqlo.co.uk, and you will find nothing fancier than chinos and polo shirts.
The retailer will need to emphasize its strengths in New York, where it enters a crowded market, competing with the likes of the Gap, Old Navy, Abercrombie & Fitch and American Eagle. Other foreign entrants into the local market — like H & M and Zara — up the ante even further.
While Uniqlo and their brokers at Lansco declined to comment on what they had paid for the Broadway site, a few brokers estimated it at $3 million per year.
Rents for smaller, ground-floor spaces in that neighborhood are generally $250 to $300 per square foot, according to Amira Yunis, senior managing director at Newmark Retail. And most stores in that neighborhood would fall into the 3,000 to 10,000 square-foot range. “It’s very hard to get such a large space,” Yunis explained.
Some brokers interviewed thought that Uniqlo’s deal might be discounted since they are leasing such a significant amount of space, essentially buying in bulk.
In February, the company also signed a lease for 3,400 square feet at 155 Spring Street to hold a design studio andécorporate offices.
Still, the size of the Broadway lease shouldn’t fool observers into thinking that Uniqlo is engaging in an overly ambitious venture. The company (whose name is a Japanized version of “unique clothing”) has been quietly testing the American market for its products for some time now. Last summer the retailer opened three stores in three different New Jersey malls.
At the time, the company said they had decided on that strategy because they wanted Americans to become familiar with their brand in the places they shopped most often.
Those stores were “well received,” according to Mike Kiser, who handles marketing for Uniqlo USA. “We thought there was a demand for the clothing.”
So, this year, Uniqlo began testing the New York market, with two different temporary stores, slowly edging toward the neighborhood that will become home to the company’s American flagship.
A Greene Street store, which opened in November, will close at the end of July. A Broome Street store, opened about a month ago, will operate until the flagship opens its doors.
Gary Trock, senior vice president of the retail group at CBRE, noted that many non-local companies initially set up shop outside of Manhattan because going to the suburbs is a cheaper way of testing the market. “If it works, then they come into the city,” he said, pointing to Forever 21 as another example of this approach.
The California chain moved into Manhattan, and leased big space there, only after success in the outer boroughs.
Foreign clothing chains are well-advised to move cautiously when they go to another county, since they have to work out kinks like adjusting sizes and adapting to local preferences.
Kiser said that Uniqlo’s emphasis on the basics and its presence in Britain had helped it make the shift to the American market.
“It’s a learning curve,” he said, noting that “there are certain things we learned in the U.K.” that eased the transition to the United States.
Kiser said, though, that the company had not “tailored the collection too much. As a company, we believe that casual clothing is for everyone.”
Trock sees the company’s Broadway choice as part and parcel of both its cautious business model and its casual brand. Though it’s on the eastern edge of Soho, Trock is careful to explain that Broadway is an entity all its own, and a safer bet for a retailer. “Broadway has evolved into its own shopping mall,” he said.
“Every upper mid-level tenant — Gap, American Eagle, Armani AX — comes in because that’s touching on Soho,” Trock said of the Broadway stretch. Uniqlo’s aesthetic fits right in with this group of stores, which are often geared toward young people and are less expensive than the designer boutiques seen elsewhere in the area.
Kiser noted that the size of the flagship store is simply another step toward the company’s larger sales ambitions.
“As a company we have a goal of doing $1 billion in U.S. sales by 2010. We need the stores to support that,” he said.
Uniqlo USA, a subsidiary of Fast Retailing, is currently a $30 million business, and is dwarfed by the global company. Of the more than 700 Uniqlo stores worldwide, 95 percent are in Japan, with outposts in Britain, China and South Korea. Fast Retailing, which owns other big clothing retailers, such as Theory and Comptoir des Cotonniers, is a $3 billion business.