TADASHI YANAI: FAST RETAILING

1. Biography
Tadashi Yanai is the Chairman and CEO of Fast Retailing Company of Japan with
the brand name UNIQLO. This company has over 2500 stores selling apparel, competing
with brands like GAP, H & M, and ZARA.
Born in February 1949, to the owner of a tailoring shop, Yanai was raised not in a
rich environment. He assisted his father in sweeping the floor, cleaning the shop, and
brushing the clothes. For Yanai, the complexities of retail began as a young boy, with
deeply ingrained learnings from a childhood spent working in the men’s clothing store
owned by his father in the small town of Ube, in Yamaguchi Prefecture of southwestern
Japan. The first few years proved to be a steep learning curve for Yanai, and no less than
a crash course in running a business. “I needed to clean the store, brush the jackets, (do
the) sourcing – I literally had to do everything myself because there was nobody else,”
he had said, as per CEO World. “It was a huge learning opportunity.”
Graduating in 1971, from a University in Japan, Yanai was employed in a
supermarket for a year or so. This one year gave him an earthly touch of what the
customer’s preferences are as regards clothing is concerned. Having spent a few years
working for a supermarket chain and travelling the world, Yanai finally returned to his
father’s shop, then called Ogori Shoji. He set up his own apparel store in 1984 and there
is no looking back. The billionaire later changed its name to Fast Retailing in 1991.
The motto of Yanai is that customers should have high-quality products at the
most competitive prices. UNIQLO stores are always preferred since the most trending
products are available at cheaper prices. The youth are crazy about trendy-looking
products.
“High turnover of business with low profits”, Yanai explains to the employees.
“The merchandise should not be on the shelves for more than 48 hours,” he asserts.
Tadashi Yanai had entered into a collaboration with TORAY Industries, a
chemical company in Japan, manufacturing everlasting dyes and chemicals for clothes.
The collaboration continues even today after 20 years.
Tadashi Yanai is emphatic about the gigantic apparel market of the universe. He
is preparing his company to face the challenges and the opportunities.
New employees are taught the culture of KAIZEN, which is the pursuit of
perfection. All the employees willingly work for longer hours in times of need. Yanai is
also a kind boss and is considered a father figure. His philanthropic attitude is
appreciated by all. He always talks of bettering society and the world through his
welfare schemes set up by his companies for the welfare of his employees.
He proposes to sell high-quality, highly functional, and simple apparel for all. He
is certain that kind of objective alone will sustain the company for many years. All his
policies are customer oriented. Tadashi Yanai receives emails appreciating the products
as well as complaints even today. He acts on these complaints. Appropriate replies are
also sent regularly.
In spite of its popularity, the brand had gained the unflattering reputation of
“cheap and shoddy”. Determined to turn things around, Yanai embarked on a mission
 to revamp Uniqlo’s image. In 2004, the company announced its Global Quality
Declaration, a pledge to stop making low-priced, low-quality garments. “I want to be
valued for offering good clothes,” Yanai said at the time. “To be known for being cheap
is sad”, as per the report. Innovation became Uniqlo’s new number-one priority. Each
year, the products improved in imperceptible ways. In 2005, Fast Retailing adopted a
holding company structure, making Uniqlo a wholly owned subsidiary which Yanai also
heads up as CEO.
While he’s been delaying the idea of a possible retirement for many years, Yanai
shows no signs of slowing down anytime soon. “I believe that the founder of a company
never truly retires, and my passion for business remains as strong as ever,” “Having said
that, my most important job is to nurture the next generation of leaders.” In particular,
Yanai has expressed his desire for his successor to be female, saying, “The job is more
suitable for a woman, (because they) are persevering, detail-oriented and have an
aesthetic sense.” Yanai insists he has no interest in money. “I would describe myself as a
very average man,” he told The Financial Times. “I’m not extraordinary. I don’t think I
was cut out to be making all this money. I have long prioritized being fair, doing
something good for society.” He is also pragmatic about his success. “I might look
successful, but I’ve made many mistakes,” Yanai told Monocle, as per the report. “People
take their failures too seriously.” During his decades in the industry, the entrepreneur
has discovered that above all else, businesses need to be adaptable – keeping in mind
not just the unpredictable flux of fashion, but also the ever-evolving society we live in.
“The world is constantly changing,” he told The Star in 2010. “To succeed in this
environment, you need to make mistakes, fail, learn from them and move on.”

2. Beginning of Fast Retailing

Being a tough boss, he is tenacious to build as many as 2500 stores all over the
world. “Do or die” is always his attitude for success. He never gives up on his goal of
increasing sales.
The Fast-Retailing Company is listed in all the stock exchanges in the world
including, the New York exchange. The company has more than 835 stores in China, 815
stores in Japan, and several hundred in Southeast Asia, in countries of Taiwan,
Singapore, Indonesia, Vietnam, Malaysia, South Korea, and Cambodia.
In the US and in Europe, the stores are only in a handful of numbers. The reason
is that these apparels do not have adequate sizes fitting the men and women of the US
and Europe. Yanai’s designers are working continuously to make the apparel suitable
for the Western markets too.
In 1972, Tadashi Yanai inherited his father’s chain of 22 men’s tailoring stores,
Ogori Shoji in Ube, Yamaguchi. Shortly after becoming company president in 1984, he
opened a new store in Hiroshima – Unique Clothing Warehouse, which was later
shortened to Uniqlo. His promotion is well-documented as the catalyst for the
company’s rapid expansion. Inspired by his travels to Europe and the US, where he
discovered large casual apparel chains like Benetton and Gap, Tadashi Yanai saw
immense potential for Japan’s casual wear market and set goals to evolve the family’s
business strategy from suiting to casual clothing, buying fashion goods in bulk at low
cost. Tadashi Yanai also discovered that many foreign fashion chains were vertically
integrated, taking control of the entire business process from design to production to
retail. By 1998, he had successfully opened more than 300 Uniqlo stores across Japan.
However, one of the main challenges faced was consumer perception of the
brand – it was perceived to be a discount retailer selling cheap and low-quality apparel
to the suburbs. This perception completely changed when the brand launched the
Global Quality Declaration in 2004, a pledge to stop making low-priced, low-quality
garments. Since then, people started noticing Uniqlo for its high-quality fleece jackets.
The brand perception instantly shifted from being cheap and low-quality, to being
affordable but high-quality.
Today, Uniqlo is a wholly-owned subsidiary of Fast Retailing Company Limited
and it is known for providing high-quality private-label casual-wear at low prices. As of
September 2019, the brand has grown to more than 2,250 stores in 25 countries across
Asia, Europe and US in just a matter of 22 years. It is the biggest apparel chain in Asia
with over 800 retail stores in Japan alone.
Fast Retailing’s market capitalization is over USD 49.2 billion and it employs
more than 56,000 people globally. For the year ending 2020, Fast Retailing had revenues
of USD 22 billion and a profit of USD 2.5 billion. The company’s home market Japan
contributed 38 percent to its total revenue, with one in four Japanese said to own a
Uniqlo down jacket. Fast Retailing has been growing at an incredible rate in the past 5
years and its confidence is reflected in its revenue forecast of 9.5% growth for FY2021.
According to global management magazine Forbes, Uniqlo has a brand value of
USD 9.2 billion and is 84th on the list of the World’s Most Valuable Brands. Much of it is
credited to its founder’s strategy of innovation and its very customer-centric culture.
Uniqlo aims to be the world’s largest mass clothing retailer, based largely on
expansion in US, China and online. It is slowly catching up with global fashion giant
H&M’s market share, whose 2019 revenues stand at USD 24.3 billion. If Uniqlo achieves
this ambitious target, it will dethrone Inditex (Zara’s parent company) as the leader in
global apparel.
Delivery system supporting a clear brand promise: Two of the biggest challenges
for any brand is to define a clear brand promise and to consistently deliver effectively on
its brand promise across all touch points of the customer experience journey. Successful
brands are those that create supportive organizational and operational structures that
facilitate the implementation of strategies to deliver on the brand promise. On one hand,
Uniqlo has indeed managed to successfully define a clear brand promise for itself to
provide high quality, performance-enhanced, universal, basic casual wear at affordable
prices. On the other hand, it has also created a strong delivery system to deliver on this
brand promise.
Product development approach and efficient supply chain: Tadashi Yanai is fond
of saying that “Uniqlo is not a fashion company, it’s a technology company.” And
indeed, the brand’s approach to making apparel has more in common with the iterative
approach to product development embraced by the technology industry than the
cyclical, trend-driven rhythm of the fast fashion retail industry. While leading
competitor Zara has built the world’s largest apparel business based on rapidly
responding to fast-changing fashion trends, getting items from factory to store in
approximately two weeks, Uniqlo takes the exact opposite approach, planning
production of its wardrobe essentials up to a year in advance. Unlike its competitors
who sell a large variety of trendy fashion inspired by the global runway, Uniqlo focuses
on producing a few styles of urban practical basics.
Company culture and visionary leadership: In 2019, Tadashi Yanai was ranked
number no. 54 on the list over the best-performing CEOs in the world by Harvard
Business Review. He is credited widely for the huge success and explosive growth of
Uniqlo in the past 36 years due to his creation of a strong company culture which
focused on teamwork and customer experience. Uniqlo’s focus on teamwork is
demonstrated through its flat organizational structure with employees greatly
encouraged to provide suggestions. The values and goals of the company are translated
directly into processes and measures exhibited strongly by employees all over the world.
Company financials are completely transparent to employees and sales and charted and
posted daily. The brand also places a huge emphasis on its retail store experience and
micromanages every customer touch point.
High dedication to innovation: As Peter Drucker said, innovation and marketing
are the only two functions of any organization. Uniqlo understands this well – the brand
is well-known for its fabric innovations. The company also hires Japanese textile masters
called “Takumi”, who work closely with factories in China and Japan to continually
develop new high-tech fabrics for Uniqlo. One of Uniqlo’s signature innovations is
HeatTech, a fabric developed in conjunction with Toray Industries (a Japanese chemical
company) that turns moisture into heat and has air pockets in the fabric to retain that
heat. The HeatTech fabric is thin, comfortable which has enabled the brand to create
stylish designs which are very different from the standard traditional warmth clothing
segment. The HeatTech innovation keeps improving over time with new fiber
technology, allowing the brand to come up with different collections of thermal clothing.