Our CEO Sam Cinquegrani was quoted in this article on the selling of Kenmore appliances to Amazon.
Article by Alexa D’Angelo published in LA Times
Japanese retailer changes its U.S. strategy after stores fall short of sales forecasts
Your flight is boarding soon, but you forgot to pack warm clothes. What to do? Uniqlo is betting that you might consider a lightweight down jacket from a vending machine. The Fast Retailing Co. FRCOY -0.36% -owned retailer plans to roll out 10 of them this month and next in airports and shopping malls near New York, Houston, Oakland, Calif., and other U.S. cities.
The machines are part of the company’s retooled expansion plans after a more-ambitious effort to increase Uniqlo’s U.S. presence fell short of expectations. Vending machines are cheaper to operate than physical stores and are a convenient way of selling basic, travel-friendly clothes to harried consumers, said Marisol Tamaro, Uniqlo’s U.S. marketing chief. “At the airport, you don’t have a lot of time to wait in line and explore a store,” she added.
Best Buy Co. operates 183 machines, most of them at airports, and has said in filings that they generate millions in revenue. Other brands, including Benefit Cosmetics LLC, also have tried airport vending machines as a way to tap a captive preboarding audience. Uniqlo has used similar machines as a marketing tool in Singapore and other countries. After opening 45 stores in the U.S., Uniqlo is now using vending machines, temporary stores and a few flagship locations to expand its physical footprint. It has two new locations planned for Washington this fall, including a store in Union Station and a pop-up shop. “We’re trying to understand where we can be more successful without making a big commitment,” said Ms. Tamaro, calling the vending machines a “learning lab.”
Selling fashion through a kiosk can be tricky, said Sam Cinquegrani, founder of ObjectWave Corp., a digital services firm. “The more emotional the purchase, the less likely that technology like a vending machine would work,” he said. “Those kind of items become very difficult when there isn’t a personal touch.” Fast Retailing, based in Japan, operates more than 1,700 Uniqlo stores in Asia and once planned to add hundreds more in the U.S. But it slowed down in 2015 after sales at the American stores it initially opened missed forecasts, particularly locations in suburban areas. The company considered buying J. Crew Group Inc. in 2014 but talks eventually broke down.Apparel chains across the U.S. are struggling with years of overbuilding and consumers’ shift to e-commerce. Even online brands are treading more carefully when it comes to storefronts, using short-term leases to test foot traffic.
Uniqlo is now focusing on developing its e-commerce capabilities and stores in big U.S. cities, where executives believe customers are more interested in its emphasis on functional design. The six-feet-high vending machines will sell heat-retaining shirts and lightweight down jackets. The limited selection allows Uniqlo to offer a range of sizes and colors. Items will be dispensed in boxes and cans and can be returned in a store or via mail.
As more shopping moves online, expect to see consumers become more comfortable with experiments like Uniqlo’s, said Marshal Cohen, retail industry analyst at NPD Group. “Nowadays, convenience trumps touch and feel,” he said. “Sure, you don’t have the same interaction with the consumer, but in reality that interaction isn’t as big of a deal anymore.”
Uniqlo hopes to raise its profile in more parts of the country. After studying online sales trends in the U.S., executives learned that some top-selling markets, such as Texas, didn’t have any Uniqlo stores. “They are coming across the product in some way, shape or form,” said Ms. Tamaro. “It gave us the confidence that we don’t need to have a store in every city.”