Industry: Plain and simple: The Uniqlo formula

Until recently, Uniqlo was big in Japan but little known anywhere else. Now, the retailer's colourful, logo-free designs are sweeping the globe – and its owner is considering buying Gap. So what makes it recession-proof?

On a recent visit to Japan Fashion Week in Tokyo, I set aside several hours to browse the famously hip Harajuku boutiques in search of quirky, non-chain-store clothes that you can't buy in London. I imagined basking in the compliments that they would attract back home, replying with a nonchalant: "Oh this old thing? I picked it up in this fantastic little boutique in Tokyo."

Four hours later, I found myself at the till in Uniqlo, buying a T-shirt dress. I'd set out to make a consumer stand against globalisation, and ended up as a perfect case study of its irresistible reach. My purchase was mass-made, and yet not cliched; inexpensive without looking cheap. Such is the appeal of Uniqlo.

Three years ago, that name – not Japanese, but a blend of the words "unique" and "clothing" – would've meant nothing to anyone but the exceptionally well-travelled. The Japanese chain launched itself into the UK in November 2007 by opening two huge new stores in one day (it was actually a relaunch; it tried first in 2001 but scaled back). Since then, its popularity in Britain has exploded. Suddenly, you can't swing a shopping bag without hitting Uniqlo's rainbow-coloured Merino wool jumpers or £24.99 denim, and in the midst of the worst recession in Britain since the Second World War, UK sales since Christmas have been up 140 per cent on the same period last year Worldwide, the store says it sells 400 million items a year.

How is Uniqlo doing it? And what does its growing reach in a gloomy economy say about the future of our consumer culture?

"Great retailing is often about understanding the Zeitgeist and getting into a consumer's headspace," says retail guru Mary Portas, and with Uniqlo's parent company Fast Retailing posting record sales in 2008, the company is clearly adept at getting under the skin of modern consumers. In an age when many people take their shopping choices as seriously as their political ones, perhaps society doesn't so much get the government it deserves as the stores. If so, Uniqlo represents a distinct improvement on the last big consumer trend, the so-called "value retailers" such as Primark. There, you can find dresses and sandals for under £10, but such cheap prices sometimes have a moral cost. Last year, a BBC Panorama investigation found that the chain had unwittingly used sub-contracted child labour. (Uniqlo, for its part, says it complies with international labour, environmental and human rights laws, "including our partner factories).

"The last time Uniqlo tried to break into the UK it was all about the growth of the 'value retailer'," says Portas, "People were looking at the chain and thinking, 'It's not that cheap.' They didn't really fit in with people's preoccupations at the time." But Portas believes that now, many consumers are looking for something else – clothes "with a bit more longevity, something with legitimate design. There are always going to be people who think it's clever to buy very, very cheap, but there is going to be a seismic shift in our spending habits."

Seismic might be overly optimistic, given that Primark posted a respectable 10 per cent increase in profits in the six months to March this year, but the term "value retailer" seems increasingly misleading for chains whose products often shrink or stretch beyond recognition after one wear. If last year's surge in complaints about women's clothing to the Government's consumer helpline, Consumer Direct, is anything to go by, shoppers are becoming disgruntled with bad quality.

In recessionary Britain the average shopper isn't about to start buying one Chanel jacket every 15 years in the spirit of investment dressing, but we also no longer want things that feel so cheap, and quite often, concomitantly nasty. Uniqlo is still inexpensive by most people's standards, but, according to Maureen Hinton, lead analyst at the retail experts Verdict Research, "Uniqlo sits at the lower end of the middle-market, rather than in the value sector." Not only do the shops give the products a more luxurious patina – uniformly fitted out as they are with bright lights, cleanly designed and gently utilitarian fittings and futuristic presentation whereby T-shirts can come in clear plastic tubes – but the clothes are well made for their price. OK, the finish isn't exactly Lanvin, but the skinny cords I bought two years ago still have the velvety plushness that they boasted when they were folded on a low shelf in the shop. They might go bald in five years' time, but they certainly aren't disposable.

"I think the thing that really appeals about Uniqlo is the relationship between the price and the quality," says the company's UK CEO Simon Coble. "Even in the most basic lines we are still using better quality fabric than our competitors."

The first Uniqlo store opened in Hiroshima in 1984 and today the chain has 777 shops around the world. It was founded by Tadashi Yanai, CEO of its parent company Fast Retailing. He is now the richest man in Japan, with a net worth estimated by Forbes at $6.1bn (£3.7bn). In 2001 the chain came to the UK and opened 21 stores in 18 months, but scaled back dramatically, because, as Coble tells me, "there was no sense of building a base and a loyal following". However, in November 2007 Uniqlo opened two Oxford Street stores on the same day, and projected a somewhat cooler image with advertising campaigns featuring Primal Scream singer Bobby Gillespie and Skins actor Nicholas Hoult.

Along with over 300 stores in Japan it now has 14 shops in the UK (all in and around London), as well as in China, South Korea, Singapore, Hong Kong, the US and France. Inevitably, the company is pushing its e-commerce operation, making its products available to anybody with a postal address. Fast Retailing has also acquired several international brands – purveyors of French yummy-mummy wear Comptoir des Cotonniers, French lingerie brand Princesse tam.tam, and Theory, an American label which resembles an upmarket Cos. All three are small, chic brands with plenty of fashion prestige and the potential for growth.

As the world economy contracts, expansion is at the forefront of Tadashi Yanai's mind. He recently said that he wants Fast Retailing to become the world's biggest clothing manufacturer and retailer, with annual sales of ¥5 trillion (over £30bn) within the next decade. He has said that, "to achieve our target, the Asian market is the most important and we have already begun to expand there. In Europe and the US it is not realistic to establish hundreds or thousands of new stores solely via our own efforts, so we want to buy a big chain business." There has been speculation that the brand in question could be Gap, which would be an enormous prize for the group; Yanai has described it as, "within the scope" of the names he might be after. So is Uniqlo about to take over the world?

"The ambition for the company is huge," confirms Simon Coble, "and it's not just to be a Far Eastern player but to be a truly global player along the lines of H&M and Zara. What we are seeing now is that it's the right time to expand." Unlike H&M and Zara, however, the company's focus is not a dizzyingly fast turnover of catwalk-"inspired", trend-led designs. Coble says, "There are an awful lot of people who respond to the catwalks very quickly and it's very hard to beat Topshop. We aren't aiming to copy stuff from the catwalks. I think people now want products that last that little bit longer, and are maybe getting tired of such a rapid turnaround."

So how does Uniqlo do it? The products are all made in the Far East, and a large proportion in China. The company doesn't own any factories but Coble says that by working closely with the same manufacturers there for many years, and giving them a large volume of clothes to produce, it has built up a loyalty which ensures high quality. Tadashi Yanai recently told Monocle magazine that Japan is still the heart and soul of the company, and that, "without a heart and soul, a brand cannot be understood. We try to incorporate Japanese attention to detail into our products ... we use Japanese technology combined with China's huge production power." He adds that: "In Europe people have a misapprehension about production in China ... we believe we can make the best products in the world there." The brand is careful not to let production overseas and a global reach irrevocably dilute its image as a quintessentially Japanese label, however, given the country's reputation for quality, order and cutting-edge design. Selfridges introduced a Uniqlo menswear concession in February this year, the highlight of which was the new Japanese Denim range, made in Japan on antique looms using fabric from historic denim makers Kaihara.

Hot on the heels of Selfridges' seal of high-fashion approval, however, was a retail coup that must have made competitors such as Gap quake in their chinos: the announcement that Uniqlo had hired Jil Sander, the high priestess of minimalism. Unlike most designer collaborations, such as Matthew Williamson for H&M, this is no one-off range but an ongoing consultancy that will see Sander involved across all aspects of the design and manufacture of Uniqlo's products.

The move has the fashion industry on the edge of its gilt chairs. "The Jil Sander collaboration is an act of genius," says Calgary Avansino, executive fashion editor of Vogue magazine. "Her look is classic and simple, but also cutting edge in the way that she cuts and presents her clothes."

But not everyone gets the Uniqlo formula. Some dismiss it as just Benetton with fresher marketing, while the company's mission to make the contents of every store worldwide the same will make opponents of globalisation's hearts sink.

For many, however, it's a no-brainer option. They flock to Uniqlo for basics; if it was easy to get a perfect checked shirt, white T-shirt, or worn-looking jeans on a budget, classic brands such as Ralph Lauren or "premium denim" labels such as Seven for All Mankind wouldn't exist. GQ's Robert Johnston, an ardent fan, sums up the label's appeal when he says: "It's so credit crunch. I used to buy £200 jeans and then I discovered Uniqlo denim."

If something fits well we inevitably want to buy more of it, especially when there's a plethora of colours to choose from – men included. Jeff Halmos of the label Shipley & Halmos, which has collaborated with Uniqlo on a range, says: "My friends and I appreciate the simplicity of its design, which is very wearable. My favourite are the men's socks. I literally have every colour." Thanks to Uniqlo and other polychromatic emporiums such as American Apparel, male shoppers are embracing zingy and, perhaps significantly, optimistic hues such as tangerine and peppermint. Robert Johnston agrees that the brand's colour range has helped seduce men away from more muted tones. "I see men wearing lilac or pink jumpers that they wouldn't have worn say three years ago," he says. By putting sorbet shades on low-key basics such as polo shirts, Uniqlo's designs avoid the garish, "here's my summer BBQ shirt" look. "Uniqlo is huge for men," says Mary Portas. "My brother is obsessed by it, and it has the cool factor associated with a brand such as Acne but at affordable prices."

My own brother, an illustrator, recently declared that he was only going to shop at Uniqlo, having returned from the shop with four striped T-shirts in different colours. Male shoppers also respond well to a limited choice – it's much easier to decide which colour polo shirt to buy than ponder collar size, fit and slogan – and to clean, fuss-free functionality of the interior design, which is actually very neutral in terms of gender and age.

A recent letter to Grazia came from a 47-year-old woman asking if she was too old to wear Uniqlo's purple stonewashed jeans. The reply, from Style Director Paula Reed, was: "If something fits brilliantly ... why not. The purple jeans sound fab." Avansino has a similar view. "I think the store is for a young customer but at the same time I went with my mum who is 60 and she bought the skinny jeans in taupe and burgundy," she says. "That's a real strength." Uniqlo's lack of baggage or affiliation to a specific demographic is an advantage when it comes to broad appeal, and to attracting interesting collaborators because it doesn't have to work against any negative connotations. Jeff Halmos says of the New York store: "Uniqlo appeals to a wide range of people here in NY. Being on Broadway, it captures some tourist traffic. But it's a frequent stop amongst the hipster set as well. It has something for everyone."

Uniqlo's appeal for design-conscious consumers is largely down to pared-down cuts and almost total absence of the naffness usually associated with casualwear – the combat trousers 12 years too late, the faux Ivy League sweatshirts. Its advertising campaigns and collaborations have worked hard to signpost the brand as a 'cool' one. In 2007, young and edgier-than-thou British designers Gareth Pugh, Carri Mundane and Kim Jones all created T-shirts for the brand. Uniqlo's ongoing "UT" T-shirt range has featured images by artists Keith Haring and Michel Basquiat, been modelled by the likes of actress Chloë Sevigny and Kills singer Alison Mosshart, and been photographed by Terry Richardson. The latest campaign, for Uniqlo's new sportswear range, shot by photographer Daniel Jackson and styled by Nicola Formichetti (both in-demand young image-makers), features British models Agyness Deyn and Luke Worral. Their hair is identically short and bleached, underlining the store's androgynous approach. In its T-shirt designs, in its advertising and its in-house magazine, the visual message is unrelentingly hip.

In Japan, trend analysts WGSN's correspondent Reiko Kuwabara reveals that Uniqlo "became really popular around 1998 when it started to reinvigorate its brand image by launching celebrity-fronted ad campaigns. It was the same time as it launched its hit fleece jackets in 15 colours. I was working there part-time as a student and I remember seeing a long line of people queuing up to buy them. Before this Uniqlo was seen as very unappealing." Designer collaborations, of-the-moment models and top photographers all give the brand an identity that illustrated T-shirts alone can't create, as well as endearing it to the style press.

Calgary Avansino says: "Uniqlo has its own aesthetic and identity, and people want a brand with its own identity. A lot of high-street brands just imitate catwalk looks and do the trends, and I think we are moving away from that cookie-cutter, knock-off Balmain jacket thing."

Equally the mix-and-match, democratic dream of modern fashion – that combining cheap high-street clothes with designer and vintage pieces can look eclectic and fresh, rather than jarring – only works if you get the basics right. Apart from a few duff items – don't buy the synthetic blazers and office wear unless you are auditioning for The Apprentice or have a court appearance in which you actively want to be found guilty – Uniqlo gets them right.

I've had a sneak peek at the autumn range and the checked shirts are a Nineties-revival, Twin Peaks-style hit in the making. Undeterred by their inevitable ubiquity, I've mentally added several new items to my wardrobe already. That'll be in addition to this season's £24.99 skinny jeans, a mannish stripy shirt and of course, the T-shirt dress that I picked up from a quirky little Tokyo boutique I know called Uniqlo.

Why we buy: Uniqlo Shoppers on Oxford Street, London W1, give their verdicts

Gustav Kinder, 21, student

I live in Sweden and we don't have Uniqlo. It's cheap and the quality is OK, better than Topman and Zara, but I think H&M is better. The T-shirts are cool but the other stuff is just basic.

Jan Hulme, 59, charity trustee

I love the rainbow colours and I think it's good value, so I look in here quite a lot. The other shops I go to regularly are Whistles, Jigsaw and French Connection.

Rafaela Alves, 18, student

The cut of the trousers really suits me, and the designs are very versatile and easy to mix and match.

Holly Holmes, 20, textile design student

Uniqlo designs don't date and you can make the clothes look your own with more individual accessories. I love the massive range of colours.

Maggie Kew, 56, pattern cutter

I like the reasonable prices and the bright colours. Uniqlo enables me to keep a hold on fashion without looking ridiculous. My only complaint is that the sizing can be quite small.

Nick Whiteley, 27, visual effects artist

I like the bright colours and the fact that there are no naff slogans or logos. I'm only wearing grey today because these are my emergency clothes. I'd say more men have been wearing bold shades recently, but then the shops are all doing them.

Andrew Dawes, 31, estate agent

I come here when I'm in London, I like plain clothes and Uniqlo does them well.

Iona Inglesby, 20, textile student

I like the simplicity. There are no overwhelming prints, so it's easy to wear. I started coming here in the last four months after I saw loads of ads in magazines.