Listen to this article
It is notable that Tadashi Yanai, president of Fast Retailing, best known for its Uniqlo brand, has chosen to go without a tie for this interview.
Recently, Japan’s king of casual clothes has taken to wearing a more formal outfit of dark suit and tie, whether it is to unveil the world’s largest Uniqlo store in Tokyo’s Ginza neighbourhood or to announce the group’s strong results for the first half of the year.
Mr Yanai’s personal style has changed in parallel with Fast Retailing’s transformation into a global brand showcased in stylish, urban megastores occupying prime real estate in cities from New York to Paris to Shanghai.
“At first, Uniqlo was a casual chain on the back streets of Hiroshima. Then . . . we became a national brand in Japan. So, the next step is to become a global brand,” he chuckles, as if he had just told a good joke.
But the 63-year-old Mr Yanai, who has been at the helm of the group for most of its nearly three decades, is dead serious about building Fast Retailing into the world’s largest and most influential apparel group.
Since opening Uniqlo’s first non-Japanese store in London in 2001 and a global flagship store in New York’s SoHo in 2006, Mr Yanai has accelerated the charge overseas by opening nine stores in prime locations in eight cities, including London, Paris and Seoul, where the brand has become a style barometer and captured the wallets of the world’s most discerning shoppers.
Sitting in his office in Tokyo’s fashionable Midtown Tower, surrounded by black and white photographs by Andreas Feininger, Mr Yanai gives no hint that his personal wealth has multiplied with the rise in Fast Retailing’s stock price, making him Japan’s richest man, worth $10.6bn, according to Forbes magazine. Nevertheless, his current surroundings are a far cry from the spartan offices in Shibuya – which caters to a younger, less formal demographic – where the group was located in its early days in Tokyo.
The only son in a family that owned an apparel store in the sleepy town of Ube, in western Japan, Mr Yanai was not always the driven man he now seems. When he was attending the prestigious Waseda university, in Tokyo, he spent most of his time playing mah-jong.
It was not until his father, concerned about his son’s future, recalled him to Ube to join the family business that Mr Yanai found his calling. Once he started working for his father’s store, which sold men’s suits, he discovered that he liked it. So much so that he quickly built Fast Retailing into a national chain, listed it on the Tokyo Stock Exchange and made a fortune before setting his sights beyond Japan’s borders.
As Mr Yanai readily acknowledges, the group’s first overseas forays were not always plain sailing. Flush with success in Japan, by 2001 Mr Yanai thought Uniqlo was ready to join the global competition by venturing into London.
“But we failed completely,” he says of Uniqlo’s initial attempt to crack the UK market. The group closed most of its UK stores in 2003, before opening a store on Oxford Street in 2007.
Uniqlo also struggled in China, where it opened two stores in Beijing in 2005, but was forced to close them within less than a year. With little experience outside Japan, Fast Retailing had completely misread those unfamiliar markets.
Nevertheless, those setbacks failed to dent Mr Yanai’s resolve to expand outside Japan and establish Uniqlo as a global brand. For while he may be diminutive in stature, he certainly thinks big.
“Even if it may just be a dream or a joke now, there might be a time when we can even buy the Gap,” he wrote in a book about his business in 2009. “If you always think about your dreams or goals, work steadfastly towards them and continue to challenge yourself, you will definitely be able to realise those dreams or goals.”
Given Japan’s dwindling and ageing population and persistent deflation, Fast Retailing has little choice but to look overseas for future growth. A man of strong opinions who is not afraid to speak his mind, Mr Yanai makes no secret of his concern about Japan’s economic decline and his scorn for the way Japanese politicians and bureaucrats are handling the situation.
“Japan is shrinking. It will become like Greece, or Portugal, or the English disease or the Japanese disease,” he says with more than a hint of frustration. And one day, “people who believed that they were middle class will realise that they are poor, that they are lower class. It’s been 20 years since Japan has been in a slump. So, that day will come soon.”
Mr Yanai is determined to ensure that Uniqlo does not sink too. The group is back in New York and London, and has also been expanding at breakneck speed in Asia, which
Mr Yanai sees as Japan’s best hope of overcoming its own decline.
“I call it the gold rush,” he says of the explosion of middle class consumers he expects in the region. “Japan has only 100m people. Asia has 4bn. At least one-third, maybe nearly half, will become middle class and this is a big opportunity for Japanese businessmen.”
Fast Retailing plans to open more than 1,000 stores in greater China, where it currently has 136 stores, and another 1,000-plus in the rest of Asia, which now has 181 stores.
Another reason why Mr Yanai feels the need to take Uniqlo global is to revamp its image in Japan as a domestic chain of drab, suburban clothes shops and revitalise domestic growth. “We have really changed a lot, but there is still the old image of Uniqlo,” he says. “We have to change that old image and that is why we opened in SoHo [New York]. We thought that we would have to open in New York, Paris and London and from there come back to Japan as a global brand.” By locating its stores on pricey real estate on Fifth Avenue or in Paris, Mr Yanai hopes to send the message back home that Uniqlo is no longer just a maker of affordable clothes but a global brand capable of sharing prime real estate with Gucci and Tiffany’s.
At the same time, being in a Tokyo landmark helps spread the word globally that Uniqlo caters to the world’s most demanding consumers, whose attention to detail and quality, whether in cars or clothes, is unparalleled. “We are a country of artisans, and a country of manufacturing. I think Japanese textile technology is the best in the world,” he says.
The quality that Japanese consumers expect in any product or service is key to Uniqlo’s success with high quality, functional but affordable clothes such as its “heattech” series of warm clothing and ultralight down jackets.
“The level of quality that Japanese consumers expect . . . is probably the highest in the world. It’s even high for cheap clothes, which is a very difficult situation for businesses,” he says.
What is more, the country’s short history of wearing western clothes means Japanese people can bring an innovative approach to fashion because they are less tied than westerners to preconceptions about how clothes should be worn.
“Since we don’t know the culture of western clothes, we can make new combinations, new discoveries. I think that is something that only Japanese people can do,” he says. “By using Japanese technology, making things in Asia and taking them to the world – if we do that, I think even Japanese companies can compete successfully with western companies.”