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September 25, 2024
Can GU Find Success in the US Fashion Retail Sector?
GU (pronounced as the letters G and U), a sister brand of UNIQLO under the Fast Retailing Group, has launched its U.S. e-commerce site and mobile app. To further make a brand statement, the retailer has also opened a flagship store in SoHo, New York City — its first permanent store beyond Asia.
The online platform features popular items such as Barrel Leg Pants and Jeans, with special discounts available for the first eight days. In the announcement, GU noted that the launch highlights the brand’s “MINI edit MAX” philosophy, which focuses on providing maximum style at minimal prices and streamlining product offerings to enhance efficiency and sustainability.
CEO Osamu Yunoki expressed excitement about expanding in the U.S., highlighting insights from previous pop-ups that informed their strategy.
“Since opening our first pop-up store in the U.S. in the fall of 2022, we’ve had the opportunity to introduce GU products to many customers, which has greatly fueled our expectations for business growth in the U.S. We’ve leveraged the insights gained to create a robust framework for global product development and business operations. We’re thrilled to announce the grand opening of our official store in the US alongside the launch of our US e-commerce site. We look forward to bringing GU fashion to an even broader audience.”
Osamu Yunoki, CEO of GU, via PR Newswire
As part of its U.S. launch, GU also unveiled a collaboration with fashion brand UNDERCOVER, showcasing 22 gender-inclusive styles, including exclusive pieces inspired by “The Wizard of Oz.”
According to Retail Insight Network, in line with GU’s commitment to minimizing waste, the brand’s stores worldwide, including the newly opened SoHo flagship, feature donation boxes where customers can drop off their unwanted clothing. These items are then distributed to individuals in need, including refugees and the homeless, through collaborations with local organizations.
The flagship store, located at 578 Broadway, spans two floors and 10,225 square feet of selling space, and it offers a wide selection of apparel and accessories. An interactive launch event ran from Sept. 19 to 22, featuring special promotions and giveaways.
However, GU faces overwhelming competition from SHEIN and other fast-fashion retailers flooding the market. Perhaps even from UNIQLO to those who are unaware of the relationship between the two brands.
As reported by MR Magazine, “GU differentiates itself from other global fashion brands in the same price range by offering less than one-tenth the number of items.” By limiting its offerings to only the most essential and in-demand items, GU optimizes every step of its supply chain, from sourcing and production to sales and distribution. This lean approach not only improves efficiency but also enables the brand to maintain low costs while still delivering high-quality products.
Angelica Wilson, a writer from BEAUTIFY.TIPS by KISS, had a chance to experience the new retailer’s flagship store. She shared that her tour guide emphasized the distinction between GU and UNIQLO, describing them as sisters rather than twins. While UNIQLO is centered around providing classic, everyday essentials, GU is more focused on spotlighting the latest trends and introducing styles that are poised to become fashionable soon.
Additionally, the GU brand representative highlighted the unique shopping situation in Japan, where GU and UNIQLO stores often operate in close proximity, some even “right next to each other.” This setup encourages customers to visit both locations during a single shopping trip. “That way, shoppers can grab their essentials from UNIQLO, then their stand-out pieces from GU,” Wilson wrote. This strategy caters to varying consumer needs, allowing for a seamless blend of practicality and style.
Discussion Questions
How could GU’s “MINI edit MAX” philosophy redefine consumer expectations in fast fashion, particularly regarding sustainability and product selection?
In what ways might the close proximity of GU and UNIQLO stores affect shopping behaviors and brand loyalty, and how can this model be adapted in other competitive markets?
Given the rise of fast-fashion competitors like SHEIN, what strategies should GU adopt to communicate its unique brand identity and sustain a competitive advantage in the U.S. retail sector?
Poll
Loading …BrainTrust
Jeff Sward
Founding Partner, Merchandising Metrics
Carol Spieckerman
President, Spieckerman Retail
Lucille DeHart
Principal, MKT Marketing Services/Columbus Consulting
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Given Uniqlo has been growing rapidly with its everyday basics offer, there is no reason why Gu – which is cheaper – cannot also drive growth. Arguably, Gu is in a slightly more challenging part of the market as it targets a younger consumer who is less loyal and who shops around more. Its more fashionable bent also means it will bump up against a more competitive part of the market, including online fast-fashion players. That said, Gu has a point of differentiation in that it has a curated offer and is focused more on elevated basics rather than trying to be at the cutting edge of fashion: that may well resonate with shoppers.
Consumers talk a good game about the detrimental effects of fast fashion–environmental impact like microplastics and carbon emissions (of which 10% globally is attributed to fast fashion), cheap goods/cheap labor, sustainability–the proof will be reflected in sales numbers. People like to pretend they’re altruistic, when in reality, consumers vote with their wallets when it’s crunch time. Good luck, Goo! I mean G-U.
GU can be seen as a physical manifestation of Shein’s floor-lowering price strategy and it just might work now that the die has been cast. If anyone can pull it off, Uniqlo can, and the proactive sustainability and social action elements are a nice touch. I was bummed not to have toured GU during my recent New York flagship crawl (it hadn’t opened yet). It will be interesting to see if Fast Retailing is going for major separation or strategic interplay between the two brands both from a visual merchandising and product standpoint.
We hear so often about “seamlessness” here on RW, this seems like a good chance to actually practice it on RW (by moving seamlessly from today’s other topic to this one): this “flagship”, quite candidly, strikes me as unremarkable…being little more than a moderate sized clothing store (of which there are thousands in this country); but it’s in a (presumably) high profile location, so seems like an excellent test of how important flagships are to brands.
I do think GU can be uniquely positioned to find a place in the US market. One key hinderance for sustainable products has been the cost of carbon reduction. Consumers say that it is important but have yet to spend accordingly. With the growth of digital product passport regulation/legislation, brands like GU will be paving the way for inexpensive, sustainable, core products.
To say that I love the business model being described here would be a significant understatement. Uniqlo focuses on everyday essentials and GU focuses on the latest trends. And they key ingredient…recognizing the very different demands on the supply chain that those two categories have and structuring the business accordingly. Data has a shelf life. Every essentials can indeed operate on a longer Time/Action calendar. The shelf life of the data allows it. Data on fashion product has a shorter shelf life and demands a much shorter Time/Action calendar. By offering so many less customer choices, GU is setting itself up to be a truly data driven fashion retailer versus guessing 6-9 months out. My hands hurt from applauding the business model. Can’t wait to see the store.
Regarding whether this foray into the American market will be a success, who knows? My view is the group should focus the budget on solidifying the UNIQLO brand in the states. GU and Uniqlo together potentially confuse the market and compete with each other. Potentially.
If a brand is serious about expanding in the US, and I’m looking at a lot of European, Canadian, and Asian fashion and lifestyle brands, then plopping down in Manhattan and later Los Angeles does nothing. If you don’t plan on getting into Houston, Chicago, Minneapolis, and Atlanta in the first 2 years, then just don’t bother; you’re putting a flagship up for brand ego. Still waiting for UNIQLO at the Mall of America!
The sustainable products grew approximately 2x faster than conventionally marketed products. This fact, coupled with the streamlined shopping experience offered by GU’s “MINI edit MAX” philosophy, has the potential to redefine consumer expectations.
The proximity of GU and UNIQLO stores only enhances shopping behaviors by creating a seamless experience where customers can easily transition between the two brands, fostering brand loyalty across the Fast Retailing Group.
To sustain a competitive edge against fast-fashion rivals like SHEIN, GU should emphasize its unique selling propositions, engage in strategic collaborations, and build a strong online community. By highlighting its commitment to sustainability and providing an inviting in-store experience, GU can attract consumers who prioritize trendiness and responsible/sustainable fashion choices.
GU’s “MINI edit MAX” philosophy can push fast fashion towards more thoughtful buying by offering fewer but more essential items, which could appeal to consumers tired of endless choices. Also, the close proximity of GU and UNIQLO stores could encourage shoppers to treat both brands as complementary and get a full wardrobe solution in one trip.
To differentiate themselves from brands like SHEIN, GU needs to lean into its sustainability efforts and emphasize quality over quantity, while also clearly separates its identity from UNIQLO for avoiding confusion in the U.S. market.