Today, UNIQLO is a global brand. With sales of 1.6 trillion yen, UNIQLO has opened 2,250 stores (as of August 2020) in 25 countries in North America, Europe, and Asia, in addition to Japan. UNIQLO’s red square logo can now be seen on the clothing of professional tennis players Roger Federer and Kei Nishikori, and professional golfer Adam Scott, who are sponsored by the company.
Tadashi Yanai, chairman and president of Fast Retailing, the holding company for UNIQLO and other corporate groups, inherited a men’s clothing retail company from his father and built it into one of the world’s leading apparel companies. Even if you know the UNIQLO brand, few people know about his background and true character. In this article, I will introduce some stories of Mr. Yanai that are unknown to most.
Fast Retailing is the world’s No.1 apparel manufacturer and retailer, with about 3,630 stores and sales of about 2.2 trillion yen (as of August 2020), and its predecessor was the men’s store Ogoori Shoji, founded in Yamaguchi Prefecture in 1949 by Mr. Yanai’s father.
Mr. Yanai, who inherited a men’s clothing store, had doubts about the conventional business of selling purchased clothes, and he was searching for a new business model. At that time, he learned about the success of Giordano’s SPA in Hong Kong, and in 1984, he started the SPA “Unique Clothing Warehouse” in Hiroshima Prefecture.
With the huge hit of fleece in the late 1990’s, the company established its name recognition and market share as a casual wear SPA in Japan. Furthermore, after the introduction of functional underwear such as HEATTECH, the customer base, which was mainly young people, quickly expanded to include a more mature audience.
Thanks in part to the global casual downtrend in clothes, Fast Retailing is experiencing phenomenal growth, even in the apparel industry, which is considered to be in the doldrums.
Mr. Yanai has a keen eye for detail and never smiles affectionately, which gives him a rigid presence despite his small stature. At press conferences, he often uses a strong tone of voice to intimidate reporters.
However, Mr. Yanai’s personality changes when he reads out his business results at earnings announcements. He has a stutter. Even though the presentation is simple, just reading out numbers such as sales figures, you can sense from the press box that Mr. Yanai is nervous. I was surprised to learn that even Mr. Yanai, the king of apparel in Japan, has his weaknesses when I attended his first earnings announcement. Even so, he did not leave it to his subordinates but did it himself, probably because he believed that business performance was the most important thing for a company.
During the question and answer session after the earnings announcement, Mr. Yanai’s tone of voice became much smoother, and it was strange to think that the way he spoke earlier was a strategy to fool the reporters.
“I want to hear about your company’s corporate philosophy, but why are you so focused on sales and scale?”
This was the question that Yusaku Maezawa, the previous president of apparel e-commerce company, Start Today (now ZOZO), asked Mr. Yanai at a seminar in 2008. At the time, Mr. Maezawa’s company had just been listed on the Mothers section of the Tokyo Stock Exchange and was not very well known, with sales in the order of 6 billion yen. Mr. Yanai’s answer to this question was clear: “You can’t talk like that until you increase your own company’s sales.”
In 2013, Mr. Yanai also urged the former president of SPA Cross Company (now Stripe International), Yasuharu Ishikawa, who had been opening about 100 small stores of about 66 sqm per year, to change his course, saying, “Why do you keep making small stores?”
Mr. Ishikawa retorted, “We can fight with small stores like convenience stores,” but he was astonished by the difference in sales per store of Fast Retailing, and changed his policy to opening large stores.
Why is that? First of all, there is no doubt that the purpose of a company is to achieve as much business as possible. Large-scale stores with high profit margins are the global standard, and it may have meant making such store operations the norm.
However, perhaps more importantly, Mr. Yanai had the foresight to realize that unless his company was accepted in the global market, it would decline at an accelerated rate. With the advent of IT, the cycle of rise and fall has become faster and faster, and unless a company can do these things, it will be difficult for it to maintain and grow.
The decline of the apparel industry has been remarkable, and COVID-19 disaster has driven a number of established brands, such as Brooks Brothers, into bankruptcy. The aforementioned Mr. Maezawa also stepped down as president of ZOZO in 2019 due to poor performance and slumping stock prices. Fast Retailing, on the other hand, has been struggling in the first half of 2020 but is rapidly recovering.
Mr. Yanai had a prosperous childhood under his father, who was engaged in a wide range of businesses including the sales of men’s clothing in Ube, a prosperous coal mining town. However, the town itself declined as the demand for coal decreased. Watching this situation, Mr. Yanai realized that “Even the most reflective things decline, and everything changes.” This original experience is one of Mr. Yanai’s philosophies.
Everything changes, which is why Mr. Yanai said in his lecture, “We must engage in innovation, listen to our customers, and create customers.” By being able to continue to prosper and grow, we can make our employees happy and realize our corporate philosophy and motto. No matter how many lofty ideals you hold up, if you don’t adapt and change with the rapid changes of the times, it will only be a pipe dream.
Mr. Yanai, who has an impetuous nature, knows that “You can only grow by grasping things through your own experience,” and that is why he simply appeals to young entrepreneurs to “Grow your business first.” Phenomena change and vary depending on individual circumstances. He must believe that each person must learn to manage his or her own business in a unique way.
Mr. Yanai is obsessed with scale, with sales, with a sense of speed, and with continuing to change himself and produce results. In doing so, he will realize Fast Retailing’s corporate motto of “changing clothes, changing conventional wisdom, and changing the world.