INTERVIEW | From Hiroshima to the World: Tadashi Yanai on the Secrets of UNIQLO’s Success

(First of 5 Parts) 

Tadashi Yanai is the richest man in Japan, according to Forbes. Yet, the creative entrepreneur, founder, and CEO of Fast Retailing Co., Ltd — owner of the Uniqlo brand — has been little known in broader public circles.

He started what became Uniqlo as the “Unique Clothing Warehouse” in 1984 with a single store in Hiroshima. But he actually got his start in the industry a dozen years earlier. Born in 1949, he returned to his hometown of Ube in Yamaguchi prefecture in 1972 to take over the men’s clothing store of his father. Since then, he has revolutionized the perception in Japan that good quality clothing requires expensive foreign brands, to embrace the value and quality of an affordable domestic one.

What does the retailer-turned-fashion tycoon have to say about the ideas behind and growth of his now-international business empire, which has over 2,000 stores in 22 countries and regions? The Sankei Shimbun and JAPAN Forward sat down with Mr. Yanai to find out, and to pick his brain about the future of Uniqlo and people-oriented fashion. 

In the excerpts below, Yanai discusses the distant origins of Uniqlo and some of the ideas that led him to build the Fast Retailing empire.

You’ve said you read a lot of fashion magazines, but in what other ways did you educate yourself on the latest in the fashion industry?

I took overseas trips every year, spending lots of time walking around shopping districts. I was quite motivated by the chain stores of the leading retailers of the time, like Esprit, Benetton, Gap, The Limited, and Next. I came up with the idea for big stores that sell casual wear, drawing on the self-service system of U.S. university co-ops. I wanted to create stores where people could shop for clothes much like they shopped for books or records.

You have mentioned that in your search for unconventional methods to expand sales, you learned about the SPA (Specialty store retailer of Private label Apparel) method, through which you contract directly with manufacturers to make products of your own design, buy them all up, and set prices. How did this change your business?

Appreciation of the Japanese yen after the Plaza Accord in 1985 should have made it easier to sell name-brand products cheaply in the domestic market, but that didn’t happen. Around the same time, on a visit to Hong Kong, Giordano polo shirts caught my attention. The quality was good, despite the relatively low price.

I went to meet with Jimmy Lai, founder of Giordano, and learned that there are no borders to trade, and no borders to manufacturing and sales. We’re the same age, and I thought, “If he can do it, so can I.” After that, I started doing business in Hong Kong and was travelling there nearly every week.

Your first store opened in 1984 in Hiroshima, followed by a suburban store in 1985. How did your company grow from such beginnings?

In 1991, I gathered all employees at our headquarters and announced that we were changing the company name to Fast Retailing. At the time, we had 29 stores, but I told them we would expand the chain by 30 more stores each year and have 100 stores in three years, aiming to go public. That’s when I myself went from being a merchant to becoming an entrepreneur. In 1994, we listed our stock on the Hiroshima Stock Exchange.

What was the impact of your decision to open the Harajuku store in Tokyo in 1998, and is that what helped you break the general public perception that “cheap is bad”?

In the early days, the quality of our products was not so good, and we had very few original Uniqlo products. It was when we opened the Harajuku store that we made a huge leap. We focused on environmental improvements and consolidated into a brand under the Uniqlo name, making all our products low-price and high-quality.

How have things changed or stayed the same since the early days of Uniqlo?

Even now, I go overseas twice a month. Recently, I’ve travelled to Europe, the U.S., China, and Southeast Asia. I talk with store managers about how things are going at their stores, and I get a feel for the surrounding towns. No matter where you do business, local partners are important. So, I also meet with others involved in our business, like shopping center owners.

You said you chose the company name “Fast Retailing” with the objective of selling casual wear much in the same way as McDonald’s sells hamburgers — fast, cheap, and satisfying. Around 2016, your sales exceeded that of the U.S. casual clothing retailer and your rival in fast fashion, Gap. How did you assess their competition?

Gap was started as a jeans shop by Don Fisher. It had a golden age when Mickey Drexler was involved. But companies mature and then they decline. A few CEOs were brought in from outside, but, in the end, they were unsuccessful in fundamentally reorganizing and couldn’t respond to the needs of their customers. They certainly had the potential to become one of the leading brands in the U.S., like Coca Cola or Disney.

You’ve declared your intent to become the world’s number one SPA. Now that you’ve passed Gap and are in the No. 3 spot, have you set your sights on Spain’s Zara and Sweden’s H&M, which currently hold the number one and two rankings?

I’ve come to realize that it’s better not to worry too much about rank. We worked hard to catch up with Gap. But our set-up is completely different from Gap, and we’re different from Zara and H&M too. We have to focus on how to capitalize on our own strengths to improve our company.

Have you abandoned the goal to be number one?

Zara and H&M grew because they were located in Europe, which has great purchasing power. But we’ve entered the Asian era. Japan is on friendly terms with many countries in this “growth center” of the world, including Southeast Asian countries, Bangladesh, Sri Lanka, and India. Japan is in a very good position and we get all the information.

For that reason, we definitely aim to be in the No. 1 spot in the end.

(In Part 2: Mr. Yanai discusses fathers and sons — his own.)

Interview by Hideki Yoshimura, The Sankei Shimbun