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Uniqlo to rev up U.S. expansion with online shopping

By Phil Wahba

(Reuters) - Japanese fashion retailer Uniqlo is turning to e-commerce in a bid to speed up its expansion in the United States and take on more established rivals like H&M and Zara in that market.

Uniqlo, a unit of Japan's Fast Retailing Co Ltd, will launch its U.S. online shopping site next week, as a key component of an effort to earn $10 billion in overall North American sales by 2020.

Uniqlo opened its first U.S. store in 2006, but still only has five locations, with recently opened shops in San Francisco and New Jersey, along with its other three in Manhattan.

But expansion is set to go full throttle, with 20 to 30 new U.S. stores opened annually over the next few years.

And the new e-commerce site is essential to widening its reach to potential customers, even as the new stores are set up.

"By opening this e-commerce site now, we are able to cater to customers across the United States," Uniqlo USA CEO Shin Odake told Reuters in an interview last week.

He declined to say what percentage of business the company hoped online sales would represent.

Fast Retailing Co's ambitious expansion plan for newer markets like the United States and China comes amid slower growth at home.

The retailer's ambition is to leapfrog Zara, H&M and Gap Inc as the world's top apparel retailer by 2020, and online shopping is at the center of that goal.

In the United States, H&M, a unit of Sweden's Hennes & Mauritz SA, has 250 stores, while Zara, a unit of Spanish company Inditex S.A. operates about 50.

H&M and Zara, known as "fast fashion" retailers, offer trendy clothes at low prices aimed at shoppers who want to frequently refresh their wardrobes.

ONLINE PUSH

An e-commerce site offers Uniqlo a way to catch up with H&M, which said recently it will launch its U.S. shopping site in mid-2013, delayed from an originally planned launch this fall. Zara launched its U.S. website in September 2011, while Gap's namesake brand began offering online shopping in 1997.

Uniqlo already has e-commerce sites in Britain, China and Japan and will use a similar format for its U.S. site.

Launching a successful site, especially one catering to a younger, tech-savvy clientele, can be daunting and involved. Add to that the challenges of shorter lead times between ordering and receiving merchandise than for traditional retailers, and the result is a costly and complex endeavor for fashion chains.

"You need to have photographs of everything. You need to be able to zoom in and zoom out, turn the image 360 degrees," said Retail Systems Research analyst Paula Rosenblum. "When you're turning merchandise eight to nine times a year, that's expensive."

That's why H&M, and even companies like off-price retailer TJX Cos Inc's T.J. Maxx, a fast-growing U.S. chain, have yet to set up online U.S. shopping sites, she said.

Many fashion chains side-step those problems by offering online only a fraction of their in-store merchandise. They also create online exclusives.

Still, Odake said Uniqlo's U.S. website will offer everything its stores do, plus extra sizes and fits for a few items like men's ultra-light down jackets or women's corduroy leggings.

"Basically, our e-commerce and our store experience should be the same," he said.

The uniqlo.com site, designed with Razorfish and Digitas, units of French advertising company Publicis Groupe, will have a recommendation engine based on a customer's preferences and prior purchases.

(Reporting by Phil Wahba in New York; Editing by Bernard Orr and Bernadette Baum)

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