Target Canada offers lessons for Uniqlo's Canadian expansion

Japanese clothing company Uniqlo is opening stores in Canada starting next year, betting it can buck the trend of retailers going belly up in this country.

Experts say Uniqlo, whose brand ambassadors include athletes such as tennis star Novak Djokovic, can probably make a go of it in Canada if it learns from mistakes made by other failed retailers, including expanding too rapidly and denying Canadians many of the products sold in other countries.

Uniqlo, owned by multi-brand business Fast Retailing Co., said it plans to open two large stores in key Toronto shopping centres next fall, which will include its full range of men’s, women’s and children’s items.

The company said it then plans to expand in the “lovely” city of Vancouver after that.

"Entering the Canadian market is a milestone for the company and a significant step in our growth strategy," stated Uniqlo Canada and U.S. CEO Larry Meyer.

Uniqlo has more than 1,500 stores in 16 markets today, including 39 in the U.S.

Meyer told the Canadian Press in a phone interview from Hong Kong that the company is working on setting up an e-commerce business for Canadian shoppers.

The announcement comes just days after Target said it was pulling out of Canada after less than two years. Target was losing money in Canada, which analysts say was because of poor store execution and an overzealous expansion plan. A handful of women’s fashion retailers are also closing their doors, such as Boutique Jacob and SmartSet, due to increased competition across the retail landscape in Canada.

Doug Stephens, a retail consultant and founder of Retail Prophet, says he’s a fan of Uniqlo’s brand and its stores. He has some advice for Uniqlo on how not to flub its foray into Canada:

5 Tips on how not to be the next Target:

1. Respect your own mythology: “Any Canadian who’s shopped Uniqlo stores in New York or elsewhere will be expecting an identical store experience here,” says Stephens. “Don’t compromise or bring less than your ‘A’ game.”

2. Hit the ground running: “You will not get a second chance to make a first impression with Canadians,” says Stephens. Canadians also know now that their complaining about empty store shelves and unfair pricing can have an impact. We won’t settle. “Make sure your stores are stocked and your supply chain is fully prepared to serve 100 per cent from day one,” Stephens says.

3. Serve Online: Uniqlo says it’s working on online shopping for Canadians. That’s a good move. “Canadians need and want more online shopping options,” says Stephens. “Set up to serve Canadians online with Canadian pricing and shipping terms.” (Hint: Canadians like free shipping).

4. Launch and Learn: Call it the Target mistake: “Don’t open too fast and build continual learning about the market into each opening,” says Stephens.

5. Price with respect: Stephens says this doesn’t mean you have to operate with prices at par with your U.S. business, especially as the Canadian dollar continues to slide. “But don’t attempt to gouge Canadians or sell for a lot more than they can buy your products online for,” Stephens cautions. “Be sensibly respectful.”