By Nandita Bose and Ruma Paul
Published on: Thu Jul 4, 2013
(Reuters) - On a bustling Dhaka street full of buyers looking for deals on export rejects and designer fakes, a flight of stairs leads up to an anomaly in a country known for producing international clothing brands - a global high street fashion store.
Uniqlo, owned by Japan's Fast Retailing Co (9983.T), is opening two stores in Bangladesh, a favorite low-cost sourcing hub for many international retailers but a country where, until now, they have not sold their clothes.
Inside the brightly lit confines of the larger of Uniqlo's two Dhaka stores, staff frantically rushed among stacks of clothing manufactured exclusively for the local market to add the final touches before a grand opening on Friday.
The Japanese retailer, in a tie-up with Bangladesh's Grameen Bank, founded by Nobel laureate Mohammad Yunus, has dared to venture into a $70 billion retail market untouched by global chains, where about 30 million people make up the middle-income bracket.
In April, more than 1,100 garment workers died in the collapse of a eight-story building in Bangladesh, putting pressure on international fashion brands to improve worker safety and livelihoods.
MIDDLE CLASS FOCUS
At 1,000 sq ft (90 sq meters), the Dhaka store is a far cry from Uniqlo's large-format shops elsewhere and stocks mostly menswear - women in Bangladesh, a largely Muslim nation, still prefer to wear traditional clothes.
A group of college students, who looked curiously at the store from across the street, had never heard of the brand.
"The store looks good from the outside. I can shop here for Eid, but not always," said Jamshed Robin, a 25-year-old political science student, looking at the price catalogue.
Eid al-Fitr is a key religious holiday and marks a major shopping period for Muslims.
A typical slim fit pair of jeans here costs 990 taka ($12.73) and a short-sleeve shirt costs 890 taka ($11.44), before a 5 percent local tax. That means they are aimed at the small but growing middle class, rather than the masses who make up the ranks of garment factory workers and who earn a minimum monthly wage of $38.
Uniqlo, on its website, says its T-shirts cost 20-30 percent more than those sold in the local market, and says it is banking that customers will pay a little more for the higher quality.
"We're not selling Uniqlo products, we're going to be selling Grameen Uniqlo which is more geared to the local market, for between about 200 and 1,000 yen ($2-$10)," said Naoto Miyazawa, a Fast Retailing spokesman in Tokyo.
Fast Retailing has so far not joined a global safety pact for factories in Bangladesh drawn up after April's disaster at the Rana Plaza complex, in an industrial suburb north of Dhaka, preferring instead to ramp up its own inspections.
Miyazawa said the company had not yet decided whether to sign up to the pact because its details were still unclear.
Uniqlo is investing $4.6 million in Bangladesh. The company describes the initiative with micro-lender Grameen as a "social business venture" on its website and plans to reinvest the profits to alleviate poverty in rural areas.
"We want to deliver innovative designs and fashion to the middle class customers here and have plans to open more stores across several cities that will create more jobs," said Yukihiro Nitta, chief executive officer of the joint venture.
Uniqlo will hold 99 percent of Grameen Uniqlo Ltd and Grameen Healthcare Trust will hold the rest.
At its second store, in a residential middle-class suburb, the power goes out twice before its restored with a generator.
Outside 28-year-old sales executive Omar Iqbal is eager to check out the glistening store.
"It will be nice to wear a global brand to work," he said. "Will their clothes have the Uniqlo logo on them like Adidas does?" ($1 = 77.7700 Bangladesh takas)
(Additional reporting by Sophie Knight in Tokyo; Writing by Nandita Bose)