UNIQLO, the world’s third-largest fast-fashion retailer after Zara and H&M, will open its first store in Delhi's Ambience Mall on 4 October.

New Delhi: India is reeling under an economic slowdown, and reports suggest that foreign investment is the lowest it has been in a decade. But that doesn’t seem to have deterred Japanese clothing giant UNIQLO, which is set to open its first store at the Ambience Mall in the capital’s Vasant Kunj on 4 October.

Sports fans may recall UNIQLO as the brand that tennis icon Roger Federer ditched his long-term sponsor Nike for.

Ranked third in the list of global fast-fashion retailers after Spain’s Zara and Sweden’s H&M, UNIQLO had global sales of approximately US $19.17 billion in 2018, and currently has more than 2,000 stores in over 22 markets, including Japan. The company now has its eyes on India’s $70 billion retail market.

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An iconic Japanese brand

UNIQLO, initially called Unique Clothing Warehouse, was launched by Tadashi Yanai in 1984 in Hiroshima, Japan. Yanai successfully transformed the humble men’s tailoring shop he inherited from his father into the global casual-wear company known as UNIQLO. Fast Retailing, the parent company of UNIQLO owned by Yanai and his family, is one of the world’s largest retail companies and is targeting sales of $28 billion by 2020.

Known for its timeless basics and innerwear, UNIQLO’s USP is its lightweight jackets, solid-coloured basics and penchant for developing advanced fabrics, including ‘AIRism’, a breathable textile, ‘Blocktech’, a textile that blocks UV radiation, and ‘HeatTech’, the famous thermal innerwear line that has sold more than a billion products the world over.

Ahead of opening its doors in India, UNIQLO carried out a long marketing campaign, which included cube installations featuring phrases like ‘Cherry Blossom to Bougainvillea’ and ‘Kimono to Kurta’, the #FedererXUniqloIndia social media competition, and a photo campaign shot in quintessential New Delhi locales like Humayun’s Tomb.

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India the focal point of fashion, despite slowdown

The State of Fashion 2019 report by the British publication Business of Fashion and management consultancy McKinsey, declared 2019 as the year in which India will take centre stage.

With more than 300 international fashion brands expected to open shop in India over the next two years, analysts feel the country is all set to evolve from an important sourcing hub to an attractive global consumer market.

“India is increasingly a focal point for the fashion industry, reflecting a rapidly growing middle-class and increasingly powerful manufacturing sector. These, together with strong economic fundamentals and growing tech-savvy, make India too important for international brands to ignore,” the report said.

Despite India’s current economic slump, experts insist that now is as good a time as ever for companies like UNIQLO to launch in India.

“None of these companies think in terms of a slowdown, they come in with the intention of wanting to be here for 20-30 years,” Arvind Singhal, chairman of management consulting firm Technopak, told ThePrint. “They don’t think about one or two-quarters of economic performance. What they take into account more is the long-term potential of the country, the size of the market, the suitability of products and the supply chain. UNIQLO will specifically take into account the real estate market because their stores will be important.”

The spate of recent announcements by Finance Minister Nirmala Sitharaman suggests that things might improve for companies looking to invest in India.

The government’s decision to cut corporate tax rates from 30 per cent to 22 per cent, followed by the relaxation of the 30 per cent local sourcing norms for single-brand retailers, has been welcomed as an incentive for foreign investors.

At the Howdy, Modi! event in Houston, last Sunday, Prime Minister Narendra Modi proudly projected India as an investment-friendly destination, pointing to the lower corporate tax rates and easing of foreign direct investment (FDI) rules.

UNIQLO also welcomed the developments, as it told ThePrint: “We are very pleased with the government’s decision [about FDI]. We look forward to a long and fruitful presence in India to lead more local sourcing opportunities.”

Abneesh Roy, senior vice-president at Edelweiss Financial Services, echoed the idea that a company’s launch doesn’t necessarily need to align with a country’s economic growth.

“Last Friday’s announcement for a corporate tax cut was a big event which will attract investors and drive up consumer sentiment,” he said. “The gloom and doom from the past few months will subside. FDI for single-brand has been further liberalised, this will also contribute to things.”

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Understanding the Indian customer

UNIQLO will launch its first three stores in the National Capital Region — at Vasant Kunj, Saket and Gurugram’s Cyber Hub — with more brick-and-mortar stores to follow in other metropolitan cities. But the brand has not yet announced any plans for e-commerce, which will be an important step in taking into account the demands of modern consumers, apart from specific customer-targeting in flagship stores.

Singhal is certain UNIQLO would have done its homework on the Indian market, including a competitor analysis, looking at local brands like Aditya Birla Fashion and department stores like Westside and Shoppers Stop. But he feels its primary competition will be international fast-fashion brands H&M and Zara.

UNIQLO has a strong presence in South-east Asia, and will attract globally well-travelled and upper-middle class Indians. But it will need to differentiate from brands like Forever 21, H&M and Zara in order to cater to Indian demand, said Edelweiss’ Roy.

“India is a highly competitive market, and a lot of global brands are already here, along with many successful home-grown brands. UNIQLO is definitely entering late, and it will not be easy,” he said.

He recalled that Zara had to slash prices once H&M entered the market, and with UNIQLO’s entry, the pricing competition will change among the top players.

“Pricing will largely depend on market dynamics. South-east Asia pricing can’t be converted into Indian prices, it will have to be India-specific,” Roy said.

Understanding the Indian consumer will also be part of the challenge. As Sanjay Kapoor of Genesis Luxury, an Indian luxury retail conglomerate, explained in the State of Fashion 2019 report, successful brands in India learn to discern what colours, designs and details work for India, as opposed to for customers living in New York or Hong Kong.

“Indian women have kept a lot of their traditional sensibilities alive, and you see a beautiful mix of both Indian and Western sensibilities across the spectrum,” he wrote.

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Partnership with Rina Singh

To counter some of these challenges, UNIQLO has teamed up with New Delhi-based designer Rina Singh to launch a kurta collection as part its 2019 Fall/Winter line.

Even though Singh’s own clothing label Eka caters to niche customers who love handmade artisanal products, she jumped at the chance to work with UNIQLO because of its huge global resonance. She was first approached by UNIQLO executives during a trade show in Paris in 2017, and eventually proposed to them that the kurta be the central theme of their collaboration.

Singh told ThePrint that the kurta has the most “democratic” appeal. “India has such a complex demographic from north to south that there is no uniform size for any garment except for the kurta and the saree. With a kurta, there are no constraints of age, size or fit. With just an adjustment of a few inches up and down, you can fit up to six different sizes.”

The collection, consisting of tunics, dresses, pants and stoles, has used fabrics like linen and cotton that are suited to Indian weather, as well as a special kind of rayon fabric jointly developed by UNIQLO and Toray Industries meant to make daily care easy.

With prices ranging from Rs 1,290 to Rs 3,990, the line will also be available in other countries like Japan, Singapore and Malaysia.

Roy said the inclusion of an ethnic-inspired collection could be a positive differentiating factor for UNIQLO. “We are seeing a general trend of Indian fashion coming back, people trying to connect to their roots. Companies like Manyavar and Patanjali are all doing very well,” he said.

On the other hand, Singhal said customers are unlikely to turn to global brands for Indian wear. “They may add some products, but you don’t see an H&M looking like a Fabindia store,” he said, adding that UNIQLO’s core range will remain the same. “Global brands are successful because they offer similar global look and feel across countries. When UNIQLO

goes to America, it will not try to become an American company, it will remain UNIQLO.”

But Singh, who is slated to work on a few more collections with UNIQLO, feels that India has seen a big jump from Indian wear to Western wear, and a garment like the kurta is perfectly suited to bridge the gap. “It can be unisex, one size fits all, modern, stylised and even androgynous, all at once,” she said.

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