Uniqlo's cheap shot at London

One of Japan's biggest retail success stories has trounced its domestic competitors and is now planning to set up a chain of trendy clothes stores across London.

One of Japan's biggest retail success stories has trounced its domestic competitors and is now planning to set up a chain of trendy clothes stores across London.

Started in 1997, Uniqlo has taken just a few years to convince Tokyo's fashion-hungry youth that cheap can be cool. Over that period, its network of discount shops has soared from five to 432, and it has snatched a large market share from brand-name rivals such as Gap and Benetton. The group now believes that it can repeat that success throughout Europe, and will be using London as its testing-ground.

The stores were among the first in Japan to realise the huge potential of cut-price retail. Despite the end of the economic bubble, Japanese consumers remained committed to designer labels and boutique-style shopping throughout the 1990s.

But as more and more families felt the pinch of tougher financial times, a market for cheaper goods emerged. Initially, many shoppers snubbed discount outfits, but soon decided that there was no point paying 4,900 yen (£32) for a denim jacket in Gap when a near-identical garment in Uniqlo cost only 1,900 yen (£14).

Uniqlo was boosted when high-school students across Tokyo declared that the discount clothes were more fashionable than the famous brands. Since then, business has boomed. The parent company, Fast Retailing, has repeatedly raised its profits forecasts, which now stand at 500bn yen for the coming year.

The group has said it will be raising the number of outlets in Japan to 600 by the end of 2002, and expanding the size of the shops to an average 1 sq km. Uniqlo has also said it wants to tap the lucrative European market for casual clothing and will start in London. The group is likely to mirror the strategy it used in Japan of opening the first shops in suburban areas, and gradually working inwards towards the centre of the city.