The person who garments Asia: Uniqlo chief Tadashi Yanai

TOKYO — 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, Yanai may most likely afford costlier garments than these he’s carrying. However he has made his fortune as an evangelist for informal put on. At present, it’s nearly unattainable to seek out anybody in his native nation who has by no means shopped in Uniqlo.

“Informal put on will be worn anytime, wherever, by anybody, freely,” he wrote in his 2003 autobiography. “If we may promote mass volumes of informal clothes for each women and men, that might be an enormous success.” This has been his mantra for the reason that 1980s, 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 shopper tendencies to emerge from the worldwide monetary disaster because the world’s third-largest clothes retailer.

Just lately, Yanai, the 71-year-old chairman and chief govt of Quick Retailing, Uniqlo’s father or mother, is sounding ever extra assured that the zeitgeist has caught up together with his unique imaginative and prescient. In a press convention final yr, Yanai declared that the age the place individuals purchased garments to meet their materials needs has ended.

“Gone is the period when individuals strove wholeheartedly to counterpoint their materials lives,” he stated. Not like earlier occasions when individuals dressed to impress others, he stated, individuals now need garments that enable them to dwell “a high-quality life-style.”

At Uniqlo, philosophy and garments effortlessly intermingle. “LifeWear” — the phrase coined by Uniqlo for its merchandise — “is the final word on a regular basis clothes,” Yanai stated final yr, promising that it might proceed to adapt and evolve by “deeply contemplating each facet of on a regular basis life wants.”

Eerily forward of style tendencies, the corporate’s LifeWear has turned out to be uniquely appropriate for this yr’s pandemic: breathable masks, quarantine-friendly sweatpants, cuddly Zoom-call-chic jersey T-shirts. The corporate is advertising “working from residence” product traces on its web sites and commercials.

“[Coronavirus] is a giant disaster for corporations everywhere in the world, however additionally it is a giant probability,” he advised Nikkei Asia. “Profitable corporations at all times emerge out of a disaster.”

The AIRism masks, for instance, are a number of the most profitable and recognizable symbols of Uniqlo’s branding genius. Although, for months, Yanai was dead-set towards them — “We are going to contribute [to the fight against the coronavirus] by clothes, somewhat than masks,” he initially stated — overwhelming demand has shortly made them a staple product of LifeWear.

Survival of the fitted: Japanese buyers line as much as purchase Uniqlo’s AIRism masks the day they went on sale, June 19. (Photograph by Yo Inoue) 

A large hit as quickly as they debuted in June in Japan, the masks additionally performed a task in attracting clients again to Uniqlo’s bodily shops. Many queued for hours to purchase them.

“Coronavirus is the middle of the [consumer’s] curiosity,” stated Yanai, finally. “Security measures are one of the simplest ways to draw clients.”

COVID-19 has not been type to clothes retailers: Brooks Brothers, J-Crew and J.C. Penney are among the many dozens and even tons of of companies which have declared chapter.

After the COVID-19 outbreak this yr, Quick Retailing was compelled to shut its shops worldwide, struggling a virtually 40% drop in gross sales within the March-Could quarter. The corporate’s gross sales within the fiscal yr ended August are forecast to complete 1.9 trillion yen ($17.9 billion), a 13% drop from the earlier yr.

However Uniqlo has been saved by its clients, who’ve tenaciously continued to buy, regardless of the dangers. “I purchased a whole lot of Uniqlo and [its sister brand] GU clothes this yr,” together with a number of snug attire for lounging at residence, stated 27-year-old Akari Ono, procuring at certainly one 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 never gone out as a lot this yr,” she stated.

Regardless of the star-crossed opening date, the glossy Harajuku retailer has executed pretty effectively, with a number of buyers milling round attempting on garments in the future in October. One lady who had traveled into Tokyo from the neighboring Saitama Prefecture stated that, regardless of shopping for fewer garments after the coronavirus outbreak, she has nonetheless been spending on Uniqlo for her household — T-shirts, pajamas, padded Bra Tops and technical Heattech gadgets. “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 e-commerce, grew by 26% yr on yr. Month-to-month gross sales have elevated by September, which confirmed development of 10%.

Yanai says he nonetheless believes in bodily shops, regardless of the bruising expertise of this yr. “E-commerce is a digital world, which is an imitation of the true world,” stated Yanai. “There may be nothing that tops the unique.”

However he sees room to mix the 2 fashions. “Bodily shops that serve clients 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 socialize seamlessly in each digital and bodily areas. The success of Harajuku can be a part of a plan to proceed embracing bodily shops whereas mixing it with the digital world. On the Harajuku retailer, there are over 200 shows that present fashion solutions and gadgets supplied by Uniqlo each in-store and on-line.

Many style manufacturers have been pushed by the pandemic to speed up their shift to digitization and shut down bricks-and-mortar shops, together with Quick Retailing’s world rivals, Zara father or mother Inditex and Sweden’s Hennes & Mauritz.

Inditex’s quarterly gross sales declined by as much as 44% this yr, whereas H&M’s dropped by as much as 50%. Inditex just lately introduced plans to scale back as much as about 700 shops, whereas H&M additionally stated in October it plans to scale back complete retailer depend by about 250 in 2021.

Uniqlo, however, is but to announce closures. Its retailer depend has truly risen since mid-2019.

Empty streets: Japan’s usually rowdy space of Shinjuku was abandoned as Tokyo went right into a state of emergency in April.

  © Reuters

Tinker, tailor

Yanai’s life has by no means been removed from retail. After briefly working as a graduate within the grocery store chain now generally known as 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 yen brought about a sensation.

Again then, Uniqlo merely represented low-cost clothes — the cool issue got here a lot later. However 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 gadgets and an abroad growth drive, Quick Retailing resumed development, even by the 2008 world monetary disaster.

Since its beginnings, Quick Retailing’s energy has at all times been to nail cheap pricing for primary gadgets, stated Takahiro Kazahaya, a retail analyst at Credit score Suisse Securities. 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 realize that.”

The key of Uniqlo’s pricing energy is partly as a result of giant volumes of orders it locations with the textile trade. That enables it to work with textile makers extra intently, to mass-produce unique supplies for low costs. “Most attire makers simply inform us to do issues at low value,” a Japanese textile firm advised Nikkei. “However Yanai-san asks us what we want with a purpose to do issues he needs us to do.”

Different partnerships embrace one with knitting machine maker Shima Seiki Mfg. for a seamless “3D Knit” assortment, and it has efficiently raised design high quality by releasing common collections with prime designers together with Christophe Lemaire and Ines de la Fressange.

The corporate has at all times been led by Yanai, at the moment chairman, president and CEO. Previously, Yanai has expressed plans to retire at 65, and once more at 70 — however, at 71, he’s nonetheless going robust. 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 world growth.” When he left the board of tech funding big SoftBank Group on the finish of 2019, an organization spokesperson stated Yanai deliberate to deal with his job of working Quick Retailing.

Yanai’s unyielding self-discipline and strongly-held rules have additionally been offputting. Solely as soon as, in 2002, did Yanai step right down to let Genichi Tamatsuka, a former deputy, take over the function of president.

However three years later, Yanai had returned. Tamatsuka “wished regular development, however I need extra transformation and development,” stated Yanai on the time. Tamatsuka left the corporate to finally change into the president of the Japanese comfort retailer chain Lawson.

Yanai leaving his place could be the “greatest danger” for Quick Retailing, stated Kazahaya.

“The stability of high quality and pricing has been taken effectively [by customers], resulting in rising share primarily in Asia. … That has not modified [with COVID-19],” the analyst Kazahaya prompt. 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 clients of all ages and life, which suggests the “long-term potential market is greater for Uniqlo [than Zara],” stated Takahiro Saito, CEO of style retail consulting agency Demand Works and creator of the ebook “Uniqlo vs. Zara.” Finally, he stated that Uniqlo could be well-placed to change into the worldwide No. 1 by way of income, however stated it’s nonetheless effectively behind Zara in profitability.

Its father or mother firm Inditex generated $31.5 billion in income and four billion {dollars} in internet revenue within the fiscal yr resulted in January, whereas Quick Retailing generated $20.7 billion in gross sales and $1.four billion in internet revenue within the fiscal yr resulted in August 2019, primarily based on Fast-FactSet knowledge.

As extra customers shift to purchasing on-line, Uniqlo is deprived in comparison with Zara within the race to generate income, Saito identified. Uniqlo’s gadgets are cheaper in comparison with Zara’s trend-following gadgets. E-commerce accounts for 11% of Quick Retailing gross sales for the fiscal yr ending 2019, whereas it goals to boost the ratio to 30%. For Inditex, which has greater gross sales than Quick Retailing, e-commerce accounted for 14% of complete gross sales in fiscal 2019.

Going world

Uniqlo noticed phenomenal success in cultivating the loyalty of Japanese clients, however room to develop there may be restricted. Uniqlo’s residence market is saturated and shrinking as its getting old inhabitants declines. Quick Retailing sees Asia as its development driver.

Yanai stated that mainland China would “quickly” prime the general Japan retailer depend of 814, together with franchises. Uniqlo has 782 shops on the mainland as of the top of September. The quantity has already surpassed Japan by way of instantly operated shops, in addition to overtaking the shop counts of H&M and Zara in China.

China has additionally lengthy been a serious manufacturing hub for Quick Retailing and can be a key market. The corporate first arrange a producing base in Shanghai in 1999, earlier than unveiling its first shops in 2002. Amongst Yanai’s inspirations then have been the Hong Kong-based model Giordano, based by Jimmy Lai, in addition to Western manufacturers reminiscent of Subsequent and The GAP.

Working an Asiawide enterprise will be fraught. Having studied politics and economics as a pupil, Yanai has a selected view of the world, which, as he places it, is shifting from a Western-centered one to an Asian one. Japan, and its companies, can not afford to take sides. “Japan is in the course of it,” stated Yanai. Japan could be a bridge for either side, he stated, “however within the worst case, [Japan] could be a defend for the U.S. protection.”

To navigate the shift, “individuals who do enterprise need to have historic perspective, or one thing like a worldview,” stated Yanai. “Abroad Chinese language nonetheless have financial energy [in Southeast Asia] — it’s important to cooperate with them,” he stated.

Uniqlo at the moment has about 60 shops in North America and 100 in Europe. Shops in key cities reminiscent of New York, Milan, and Paris have been a part of its world branding. Whereas the corporate had plans by 2013 to open 200 shops within the U.S. by 2020, it’s struggling to show revenue within the nation and has round 50 to this point.

There will probably be some changes to its bodily shops because the retailer faces the pandemic, in line with Yanai. In Japan, which is Uniqlo’s greatest market, he stated about one-third of over 800 shops could be “renewed” by way of designs or places.

“One of many massive adjustments in [consumer] life-style is that they store in neighborhoods,” Yanai noticed, including that extra retailers could transfer from retail facilities to rural residential areas. “Gross sales and land costs don’t correlate,” he defined. Metropolis-center shops have been vital for attracting vacationers, however “inbound vacationers sooner or later could not store as a lot as they used to.”

Uniqlo merchandise usually are not bought on the U.S. Amazon e-commerce platform. “We’re near all of them,” stated Yanai, referring to Amazon and in addition to China’s Alibaba Group. The corporate makes use of Amazon providers reminiscent of 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.

Mixing actuality: digital screens and bodily places at Uniqlo Harajuku. (Photograph by Ken Kobayashi)

Quick Retailing has staked its status on changing into a “new digital shopper retail trade” in recent times, in an formidable effort to digitize and rework all elements of its provide chain. These targets “should pace up, with or with out the coronavirus,” admitted Yanai.

Since opening an automatic warehouse for e-commerce gross sales in Tokyo’s Ariake district in 2018, it arrange a second warehouse in Japan this yr. Additionally it is planning to open related warehouses in different markets.

Uniqlo final yr 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 Southeast Asia, India and Australia. Yanai advised Nikkei final yr he foresaw Southeast Asia gross sales finally reaching the identical degree as China.

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,” stated Yanai. “Southeast Asia, particularly, is a greenback field” that might normally generate excessive development charges, regardless of some slowing down due to COVID-19, stated Yanai.

Yanai can be hopeful about Asia for hiring expertise. “In India, we rent a whole lot of graduates, and everyone seems to be so vivid,” he stated.

Whereas the U.S. and Europe are stuffed with rivals that promote low-priced primary gadgets, rising markets are nonetheless new battlefields with no clear winners. Kensuke Kojima, a style retail guide, additionally prompt that Uniqlo has a bonus over Zara and H&M in Asia as a result of it’s typically designed for Asian physique shapes.

Yanai is already enthusiastic about the form of shopper that can emerge post-pandemic. “The truth that the coronavirus unfold so quick is proof that the world shouldn’t be divided,” stated Yanai. Moderately than simply isolating individuals, COVID-19 made “individuals notice that unilateralism, or bilateralism, shouldn’t be good,” he stated. “That may be the brand new norm.”

“Everybody began enthusiastic about life and demise,” he stated. As a retail enterprise chief who at all times wants to pay attention to adjustments in customers, he stated, “that can change into mirrored in varied elements of life.”