Tadashi Yanai turns as much as the interview in his Uniqlo masks and a cardigan over a button-down shirt, striding into his Tokyo workplace assembly room. The wall is adorned with an intricate world map and a framed piece of Japanese calligraphy that reads “world’s primary”.
Ranked as Japan’s richest man by Forbes, Mr Yanai might most likely afford dearer garments than these he’s carrying. However he has made his fortune as an evangelist for informal put on. Immediately, it’s virtually unattainable to search out anybody in his native nation who has by no means shopped in Uniqlo.
“Informal put on could be worn anytime, anyplace, by anybody, freely,” he wrote in his 2003 autobiography. “If we might promote mass volumes of informal clothes for each women and men, that may be an enormous success.” This has been his mantra because the Nineteen Eighties, when he was opening his fourth Uniqlo store.
That was greater than 2,200 shops in the past. Since then, his Uniqlo model has harnessed the facility of world manufacturing chains and an uncannily prescient eye on client developments to emerge from the worldwide monetary disaster because the world’s third-largest clothes retailer.
Lately, Mr Yanai, the 71-year-old chairman and chief govt of Quick Retailing, Uniqlo’s mum or dad, has been sounding ever extra assured that the zeitgeist has caught up together with his authentic imaginative and prescient. In a press convention final 12 months, he declared that the age when individuals purchased garments to fulfil their materials needs had ended.
“Gone is the period when individuals strove wholeheartedly to counterpoint their materials lives,” he stated. Not like earlier instances when individuals dressed to impress others, he stated, individuals now need garments that permit them to dwell “a high-quality way of life”.
At Uniqlo, philosophy and garments effortlessly intermingle. “LifeWear” — the phrase coined by Uniqlo for its merchandise — “is the last word on a regular basis clothes,” Mr Yanai stated final 12 months, promising that it could proceed to adapt and evolve by “deeply contemplating each side of on a regular basis life wants”.
This text is from Nikkei Asia, a worldwide publication with a uniquely Asian perspective on politics, the financial system, enterprise and worldwide affairs. Our personal correspondents and out of doors commentators from world wide share their views on Asia, whereas our Asia300 part gives in-depth protection of 300 of the largest and fastest-growing listed corporations from 11 economies exterior Japan.
Eerily forward of style developments, the corporate’s LifeWear has turned out to be uniquely appropriate for this 12 months’s pandemic: breathable masks, quarantine-friendly sweatpants, cuddly Zoom-call-chic jersey T-shirts. The corporate is advertising and marketing “working from dwelling” product strains on its web sites and ads.
“[Coronavirus] is a giant disaster for corporations all around the world, however it’s also a giant probability,” he informed Nikkei Asia. “Profitable corporations at all times emerge out of a disaster.”
The AIRism masks, for instance, are among the most profitable and recognisable symbols of Uniqlo’s branding genius. Even supposing, for months, Mr Yanai was dead-set towards them — “We’ll contribute [to the fight against coronavirus] by clothes, quite than masks,” he initially stated — overwhelming demand has shortly made them a staple product of LifeWear.
An enormous hit as quickly as they debuted in June in Japan, the masks additionally performed a job in attracting prospects again to Uniqlo’s bodily shops. Many queued for hours to purchase them.
“Coronavirus is the centre of the [consumer’s] curiosity,” stated Mr Yanai, ultimately. “Security measures are the easiest way to draw prospects.”
Covid-19 has not been form to clothes retailers: Brooks Brothers, J-Crew and JC Penney are among the many dozens and even lots of of companies which have declared chapter.
After the Covid-19 outbreak this 12 months, Quick Retailing was pressured to shut its shops worldwide, struggling an almost 40 per cent drop in gross sales within the March-Could quarter. The corporate’s gross sales within the fiscal 12 months ended August are forecast to whole ¥1.9tn ($17.9bn), a 13 per cent drop from the earlier 12 months.
However Uniqlo has been saved by its prospects, who’ve tenaciously continued to buy, regardless of the dangers. “I purchased lots of Uniqlo and [its sister brand] GU clothes this 12 months,” together with a number of snug attire for lounging at dwelling, stated 27-year-old Akari Ono, purchasing at one in every of Uniqlo’s latest flagship shops in Harajuku, a stylish district of Tokyo, which opened in June. The manufacturers “are moderately priced and they’re helpful particularly since I have not gone out as a lot this 12 months”, she stated.
Regardless of the star-crossed opening date, the modern Harajuku retailer has finished pretty effectively, with a number of buyers milling round making an attempt on garments sooner or later in October. One lady who had travelled into Tokyo from the neighbouring Saitama Prefecture stated that, regardless of shopping for fewer garments after the coronavirus outbreak, she had nonetheless been spending on Uniqlo for her household — T-shirts, pyjamas, padded Bra Tops and technical Heattech objects. “As a household, Uniqlo is the model we use probably the most,” her 12-year-old daughter added.
Total, the numbers have been stunning. In June, Japan same-store gross sales, together with ecommerce, rose 26 per cent 12 months on 12 months. Month-to-month gross sales elevated in September, which confirmed development of 10 per cent.
Mr Yanai says he nonetheless believes in bodily shops, regardless of the bruising expertise of this 12 months. “Ecommerce is a digital world, which is an imitation of the actual world,” he stated. “There’s nothing that tops the unique.”
However he sees room to mix the 2 fashions. “Bodily shops that serve prospects effectively would nonetheless develop,” he stated. “That’s the identical for digital [online] shops.”
Because the pandemic continues to run its course, know-how is ever extra embedded in individuals’s lives as they work, relaxation and socialise seamlessly in each digital and bodily areas. The success of Harajuku can also be a part of a plan to proceed embracing bodily shops whereas mixing them with the digital world. On the Harajuku retailer, there are greater than 200 shows that present type strategies and objects supplied by Uniqlo each in-store and on-line.
Many style manufacturers have been pushed by the pandemic to speed up their shift to digitisation and shut down bricks-and-mortar shops, together with Quick Retailing’s international rivals, Zara mum or dad Inditex and Sweden’s Hennes & Mauritz.
Inditex’s quarterly gross sales declined as much as 44 per cent this 12 months, whereas H&M’s dropped as much as 50 per cent. Inditex lately introduced plans to cut back as much as 700 shops, whereas H&M additionally stated in October it deliberate to cut back whole retailer rely by about 250 in 2021.
Uniqlo, alternatively, is but to announce closures. Its retailer rely has truly risen since mid-2019.
Mr Yanai’s life has by no means been removed from retail. After briefly working as a graduate within the grocery store chain now often called Aeon, in 1972 he moved into the clothes firm based by his father within the rural prefecture of Yamaguchi. He opened his first Uniqlo retailer in 1984, with its breakthrough second following in 1998, when the model opened the primary Tokyo outlet in Harajuku. Launched amid Japan’s post-bubble financial system, the model’s opening marketing campaign promoting light-weight fleece for ¥1,900 brought about a sensation.
Again then, Uniqlo merely represented low-cost clothes — the cool issue got here a lot later. Nevertheless it was sufficient to see the corporate’s income swell fivefold between 1998 and 2001. For some years it stuttered, earlier than, supported by recent hit objects and an abroad enlargement drive, Quick Retailing resumed development, even by the 2008 international monetary disaster.
Since its beginnings, Quick Retailing’s energy has at all times been to nail affordable pricing for primary objects, stated Takahiro Kazahaya, a retail analyst at Credit score Suisse Securities. Mr Yanai has “set a transparent mission for the corporate to supply cheaper and extra purposeful clothes for everybody of all ages, and has been doing what it wants to attain that”.
The key of Uniqlo’s pricing energy is partly because of the giant volumes of orders it locations with the textile trade. This enables it to work with textile makers extra carefully, to mass-produce unique supplies for low costs. “Most attire makers simply inform us to do issues at low price,” one Japanese textile firm informed Nikkei. “However Yanai-san asks us what we’d like with a view to do issues he desires us to do.”
Different partnerships embody one with knitting machine maker Shima Seiki for a seamless “3D Knit” assortment, and it has efficiently raised design high quality by releasing common collections with high designers together with Christophe Lemaire and Ines de la Fressange.
The corporate has at all times been led by Mr Yanai, at present chairman, president and chief govt. Previously, he has expressed plans to retire at 65, and once more at 70 — however, at 71, he’s nonetheless going sturdy. Many marvel the place Uniqlo’s relentless drive would go ought to he step again.
In 2013, he stated: “It’s unattainable to resign from being president as we speed up international enlargement.” When he left the board of tech funding big SoftBank Group on the finish of 2019, an organization spokesperson stated Mr Yanai deliberate to give attention to his job of operating Quick Retailing.
Mr Yanai’s unyielding self-discipline and strongly-held rules have additionally been in proof. Solely as soon as, in 2002, did he step right down to let Genichi Tamatsuka, a former deputy, take over the function of president.
However three years later, Mr Yanai had returned. Mr Tamatsuka “wished regular development, however I would like extra transformation and development”, Mr Yanai stated on the time. Mr Tamatsuka left the corporate to ultimately change into the president of the Japanese comfort retailer chain Lawson.
Mr Yanai leaving his place can be the “largest danger” for Quick Retailing, stated Mr Kazahaya.
“The steadiness of high quality and pricing has been taken effectively [by customers], resulting in growing share primarily in Asia . . . That has not modified [with Covid-19],” he steered. Whilst customers globally change into extra selective, Quick Retailing “can nonetheless develop as one of many winners”, he stated.
Uniqlo casts a large internet, focusing on prospects of all ages and existence, which implies the “long-term potential market is greater for Uniqlo [than Zara]”, stated Takahiro Saito, chief govt of style retail consulting agency Demand Works and creator of the guide Uniqlo vs Zara. Finally, he stated that Uniqlo can be well-placed to change into the worldwide primary when it comes to income, however stated it was nonetheless effectively behind Zara in profitability.
Zara’s mum or dad firm Inditex generated $31.5bn in income and $4bn in internet revenue within the fiscal 12 months resulted in January, whereas Quick Retailing generated $20.7bn in gross sales and $1.4bn in internet revenue within the fiscal 12 months resulted in August 2019, primarily based on Fast-FactSet knowledge.
As extra customers shift to purchasing on-line, Uniqlo is deprived in contrast with Zara within the race to generate income, Mr Saito identified. Uniqlo’s objects are cheaper in contrast with Zara’s trend-following objects. Ecommerce accounts for 11 per cent of Quick Retailing gross sales for the fiscal 12 months ending 2019, whereas it goals to boost the ratio to 30 per cent. For Inditex, which has larger gross sales than Quick Retailing, ecommerce accounted for 14 per cent of whole gross sales in fiscal 2019.
Uniqlo noticed phenomenal success in cultivating the loyalty of Japanese prospects, however room to develop there may be restricted. Uniqlo’s dwelling market is saturated and shrinking as its ageing inhabitants declines. Quick Retailing sees Asia as its development driver.
Mr Yanai stated mainland China would “quickly” high the general Japan retailer rely of 814, together with franchises. Uniqlo had 782 shops on the mainland on the finish of September. The quantity has already surpassed Japan when it comes to immediately operated shops, in addition to overtaking the shop counts of H&M and Zara in China.
China has additionally lengthy been a significant manufacturing hub for Quick Retailing and can also be a key market. The corporate first arrange a producing base in Shanghai in 1999, earlier than unveiling its first shops in 2002. Amongst Mr Yanai’s inspirations then had been the Hong Kong-based model Giordano, based by Jimmy Lai, in addition to western manufacturers corresponding to Subsequent and The GAP.
Working an Asia-wide enterprise could be fraught. Having studied politics and economics as a scholar, Mr Yanai has a selected view of the world, which, as he places it, is shifting from a western-centred one to an Asian one. Japan, and its companies, can’t afford to take sides. “Japan is in the midst of it,” he stated. Japan could possibly be a bridge for each side, “however within the worst case, [Japan] can be a defend for the US defence”.
To navigate the shift, “individuals who do enterprise should have historic perspective, or one thing like a world view,” Mr Yanai stated. “Abroad Chinese language nonetheless have financial energy [in south-east Asia] — you need to co-operate with them.”
Uniqlo at present has about 60 shops in North America and 100 in Europe. Shops in key cities corresponding to New York, Milan and Paris have been a part of its international branding. Whereas the corporate had plans in 2013 to open 200 shops within the US by 2020, it’s struggling to show revenue within the nation and has about 50 to this point.
There will likely be some changes to its bodily shops because the retailer faces the pandemic, Mr Yanai stated. In Japan, which is Uniqlo’s largest market, about one-third of greater than 800 shops can be “renewed” when it comes to designs or areas.
“One of many huge modifications in [consumer] way of life is that they store in neighbourhoods,” Mr Yanai noticed, including that extra outlets might transfer from retail centres to rural residential areas. “Gross sales and land costs don’t correlate,” he stated. Metropolis-centre shops have been essential for attracting vacationers, however “inbound vacationers sooner or later might not store as a lot as they used to”.
Uniqlo merchandise usually are not offered on the US Amazon ecommerce platform. “We’re near all of them,” stated Mr Yanai, referring to Amazon and likewise to China’s Alibaba Group. The corporate makes use of Amazon companies corresponding to for cloud computing, however there may be little profit for Uniqlo in changing into one of many many manufacturers on others’ on-line malls, he stated.
Quick Retailing has staked its popularity on changing into a “new digital client retail trade” lately, in an formidable effort to digitise and rework all elements of its provide chain. These targets “should pace up, with or with out the coronavirus”, Mr Yanai admitted.
Since opening an automatic warehouse for ecommerce gross sales in Tokyo’s Ariake district in 2018, it arrange a second warehouse in Japan this 12 months. It is usually planning to open comparable warehouses in different markets.
Uniqlo final 12 months entered Vietnam and India, which is seen as one other potential development driver for the corporate. As of the top of September, Uniqlo had 251 shops in south-east Asia, India and Australia. Mr Yanai informed Nikkei final 12 months he foresaw south-east Asia gross sales ultimately reaching the identical degree as China.
Mr Yanai’s optimism for development comes largely from his religion within the development of Asia’s center class. “We’re going to arrange extra shops than earlier than,” he stated. “South-east Asia, particularly, is a greenback field” that may often generate excessive development charges, regardless of some slowing down due to Covid-19, he stated.
He’s additionally hopeful about Asia for hiring expertise. “In India, we rent lots of graduates, and everyone seems to be so vivid,” he stated.
Whereas the US and Europe are stuffed with rivals that promote low-priced primary objects, rising markets are nonetheless new battlefields with no clear winners. Kensuke Kojima, a style retail advisor, additionally steered that Uniqlo has a bonus over Zara and H&M in Asia as a result of it’s typically designed for Asian physique shapes.
Mr Yanai is already fascinated about the sort of client that can emerge after the pandemic. “The truth that the coronavirus unfold so quick is proof that the world isn’t divided,” he stated. Reasonably than simply isolating individuals, Covid-19 made “individuals realise that unilateralism, or bilateralism, isn’t good”, he stated. “That might be the brand new norm.”
“Everybody began fascinated about life and demise,” he stated. As a retail enterprise chief who at all times wants to pay attention to modifications in customers, he stated, “that can change into mirrored in numerous elements of life”.
A version of this article was first revealed by Nikkei Asia on October 14 2020. ©2020 Nikkei Inc. All rights reserved