Uniqlo’s beloved sister brand GU expands into the US with SoHo pop-up

American customers are about to get a taste of a beloved Japanese fashion retailer—and for a discount.

Last week, GU, the discount store retailer owned by Fast Retailing (aka Uniqlo’s parent company), announced it is looking to debut in the US, starting with a location in New York’s SoHo neighborhood.

• GU already boasts ~450 stores across Japan and raked in ¥249 billion (~$1.9 billion)—about 12% of Fast Retailing’s revenue—during the last fiscal year.

Per Michael Prendergast, managing director at Alvarez & Marsal’s Consumer Retail Group, consumers are “trading down” while looking for value, more than ever. 

“We’re seeing a trade down in the marketplace by consumers, so I’m sure the value proposition of their pricing and the product that they’re offering seems very attractive to them to capitalize on the market opportunities that exist,” he said.

Discount store transactions were up 65% between March and November of last year, compared to pre-Covid transactions, according to Facteus, which tracks credit-card and debit-card transaction data.

Bargaining chip

If this is the first time you’re hearing about GU, you’re not alone. The fashion-basics brand, founded in 2006 as a sister brand to Uniqlo, is known for its trendy apparel that otherwise attracts younger consumers. The average cost for a pair of women’s pants at GU comes to around ~$20, compared to Uniqlo, where women’s bottoms retail for ~$40.

Moreover, since GU’s designs are based on a fast-fashion model, they can offer a variety of items that are both cheap and trendy.

• “Even if that inflationary pressure change, they’re probably feeling very confident about their business model and their ability to deliver trends to their customers very quickly, because of all of the fast-fashion attributes…they’ve done a really good job with, whether that’s shortening the calendar or things of that nature,” Prendergast said.

Not so fast: While the timing might be prime as consumer buying habits change and lower cost products take off, discount retailers still need to provide value to compete with the likes of Amazon, Target, and Walmart, Tyler Higgins, retail practice lead and managing director at global consulting firm AArete, told Retail Brew. “Consumers have options today, more so than ever before,” he said. “Consumers also have access to information, and retailers are able to apply competitive pressure almost instantly through digital channels. With the amount of choice consumers have today, GU’s products will still have to be a standout in terms of quality and value to compete.”—JS