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United States market is key to Uniqlo's global aspirations

NEW YORK--Many of the details of Uniqlo's aggressive U.S. expansion still need to be worked out, but at least one thing is clear: the campaign will start on the coasts.

The Japanese apparel chain, known in its home market for its cheap chic clothing basics, has so far confined its U.S. adventure to cities like Boston, San Francisco and Los Angeles.

But a broader U.S. presence will be inevitable as the company blankets the country as part of its ambition to become the world's biggest specialty apparel retailer. Uniqlo will grow from fewer than 10 U.S. stores last year, to about 40 by the end of 2014, to 200 by 2020.

“We will have a much larger footprint, which has to include the middle of the country,” said Larry Meyer, chief executive of Uniqlo USA.

So far, Uniqlo's brand recognition is strong in the Northeast, where consumers know its flagship U.S. stores in New York City, and in the West Coast, where a large Asian population already recognizes the company.

Uniqlo, a unit of Fast Retailing Co., is part of a wave of giants remaking global apparel. This group includes Spain's Grupo Inditex, parent of Zara; Sweden's Hennes & Mauritz (H&M); and U.S. chain Gap, all of which have greater sales than Uniqlo. For now.

The United States, along with China and Southeast Asia, are the key growth markets identified by founder and chief executive Tadashi Yanai, ranked Japan's second-richest man by Forbes.

Top Player in Industry Segment?

Yanai aims to increase global sales to five trillion yen (nearly US$50 billion) by 2020, about a five-fold increase from 2013 sales and a sum that would make it the biggest player in this segment.

Yanai's philosophy “and my philosophy is, 'If you think small, you get no higher. So you might as well think big,'” said Meyer, a retail industry veteran who joined Uniqlo in January 2013.

Uniqlo is especially known for basics like t-shirts that may fetch US$12 and undergarments that cost less than half of what they would garner at department stores.

The company also prides itself on innovations like “heattech,” a thin fabric that keeps heat from escaping the body, and “performance wear,” athletic gear donned by tennis star Novak Djokovic that is sweat and odor-resistant.

Morningstar analyst Jaime Katz said Uniqlo's challenges include attracting enough customers at especially pricey locations like Fifth Avenue in Manhattan. She also cites the difficulty of breaking into a new market where companies like Gap and H&M are already established.

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