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25 March 2017 16:04PM

This Man Wants to Clothe the Planet

28 Aug 12 ,  http://online.wsj.com
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TADASHI YANAI, FOUNDER OF THE GLOBAL clothing retailer Uniqlo, is on the other end of a videoconference screen. From his Tokyo office, Yanai-san speaks enthusiastically about Uniqlo's innovative fabrics. "Americans believe cotton is best," he says, "but we've invented new fabrics that will change your lifestyle." First, Yanai marvels over Heattech, a proprietary warmth-generating Uniqlo cloth developed in partnership with the Japanese company that provides carbon-fiber for Boeing 787 Dreamliners. Next, he boasts that Airism, Uniqlo's cooling fabric, is "so light you don't even know you're wearing it. It is the number-one must-buy product for summer."




Photography by Eric Chung

SCALING UP | Tadashi Yanai plans to open 'hundreds and hundreds' of new stores in the U.S.


I ask if he wears it on steamy Tokyo workdays. He smiles broadly and, at that moment, the richest man in Japan unbuttons his shirt to show me his Uniqlo underwear.


Yanai is refreshingly open about his goals these days: making Uniqlo the number-one apparel retailer in the world. His target—$50 billion in yearly revenue by 2020—will require whiplash gains above Uniqlo's current revenue of $12 billion, driving the company ahead of front-runners Inditex (which owns Zara), H&M and Gap. This swaggering ambition might ring hollow if Yanai hadn't already turned heads among apparel-industry cognoscenti. He established a beachhead in the American market, opening three attention-getting stores in New York City—including a gargantuan flagship on Fifth Avenue, the second-biggest store in the Uniqlo empire. He lured designer Jil Sander out of retirement for a wildly successful multi-season collaboration. And then there's the retail environment: Yanai's scripted sales techniques and sleek spaces are studied by Uniqlo managers in Japan before being spread to markets around the globe.


Photography by Eric Chung


Uniqlo will open two new U.S. stores this fall—in San Francisco and New Jersey—while also launching an e-commerce site. The company hopes to add "hundreds and hundreds" of stores here, from coast to coast, at a rate of 20 to 30 a year. In short, Uniqlo is vowing to beat Gap at its own game, clothing all of America in basics at affordable prices. Can a brand rooted in Japan—one employing a distinctly minimalist aesthetic—become a mainstream U.S. retail force, invading malls in the Midwest and in Sunbelt suburbs?


Yanai thinks it can, largely because he sees zero difference between shoppers in Manhattan and in Milwaukee. In this sense, he draws inspiration from a noted American minimalist: Steve Jobs, another retail entrepreneur who had boundless confidence and a knack for turning simplicity into chic. It's become almost cliché to compare successful emerging brands to Apple, or to equate an iconoclastic business leader to Jobs. But this is precisely how Yanai views his mission and himself. To him, Uniqlo is less like other clothing companies and more like Jobs's high-tech corporate temple: on a constant quest for innovation, guided by a holistic vision that aims to do much more than simply move merchandise.


Uniqlo's creative director, Naoki Takizawa, a former Issey Miyake chief designer, tells this story about the first time he met Yanai: "I had been trained to imagine specific customers when I designed an item—their demographics, their income levels, their lifestyles. But Yanai-san said he didn't want a fashion designer who defines target customers. 'Leverage your competence for the mass public!' he told me. It's why he made Uniqlo's slogan 'Made For All.' He wanted me to think about the Apple iPhone, which wasn't made for a certain customer but was, instead, about creating a perfect product. It's for everyone. It's effective and reliable. But its design scheme still gives it strong branding. He wanted me to achieve the same thing with clothes."


BUILDING ON A SLEEPY FAMILY APPAREL business that had existed since 1949, Yanai opened his first Uniqlo (shortened from "Unique Clothing Warehouse") in Hiroshima in 1984. Expanding steadily over the following decade, he launched strip-mall and suburban stand-alone stores throughout Japan and, finally, breached Tokyo city limits with a Harajuku flagship shop in 1998. Soon after, Uniqlo hit upon the product that would transform the retailer from a ho-hum chain store into a Japanese household name: A $20 fleece jacket, in a rainbow of colors, found the sweet spot of the recession-strapped Japanese middle class. No longer an expensive technical fabric meant for mountain climbing, fleece could be worn on the street or around the office. Uniqlo fleece became ubiquitous in Japan—in the year 2000 alone, it sold 26 million. It also gave Yanai a taste of what it's like to leave your mark on an entire society.


But Yanai wasn't nearly satisfied. As far back as the mid-'90s, when Uniqlo was still a small-time regional player, he'd already begun writing memos laying out detailed plans for global expansion. By the early 2000s, convinced that the brand had conquered Japan, he began to turn his focus overseas, to Europe and East Asia.


Yanai is a man of ruthless ambition and bold declarations, bucking the mold of the traditional, cautious Japanese executive. Last year, he wrote an essay for McKinsey Quarterly in which he complained that "Japan's biggest problems are conservatism and cowardice" and that "Japanese businesspeople and companies are lacking in individuality." During our videoconference, he pleaded with me, "Please write that Japan's leaders must speak out. We have had 22 years of a stagnant slump. I tell people that we must have the courage to share what we feel, but no one follows me."


The Japanese business leaders he admires hail mainly from the technology sector—self-made men like SoftBank's Masayoshi Son and Nidec's Shigenobu Nagamori. But, in general, he says, "We lack an entrepreneurial culture in Japan." His real heroes are Sam Walton and Jobs, which is why he yearned to plant his flag in America—where entrepreneurial chutzpah is a religion.


In 2005, Uniqlo landed on U.S. shores, opening a trio of small shops in New Jersey malls. They performed poorly and were soon shut down. "No one knew who we were," U.S. CEO Shin Odake says. "You can't succeed as a casual clothing store when you have no brand recognition; you're in a small, ordinary space with less than 10,000 square feet. People need a reason to get excited about you."

“Yanai's heroes are Sam Walton and Steve Jobs, which is why he yearned to plant his flag in America—where entrepreneurial chutzpah is a religion.”

Undaunted, one year later Yanai rebooted Uniqlo in America—this time with a 36,000-square-foot store in SoHo, lower Manhattan's fashion mecca. Two more New York City locations followed within a few years: a glassy, gleaming 64,000-square-foot shop on 34th Street and another 89,000 square feet parked on a prime stretch of Fifth Avenue. The Fifth Avenue colossus expanded a space previously occupied by Brooks Brothers and is backed by a $300 million, 15-year lease.


"Flagship stores on high-profile streets are extremely important to the brand outside of Japan," says Odake. "They make a statement. They spur word of mouth. We can attract higher-level talent. I'm not sure Jil Sander would have worked with us back in 2005, before we had these stores."


When Uniqlo announced its partnership with Sander in 2009 (they parted ways amicably in 2011, after several seasons of her +J line), the German designer's minimalist aesthetic was well-tailored to the Japanese chain and became a cult favorite among fashion cognoscenti. Uniqlo's bread and butter is solidly made, stylishly cut basics: oxford shirts; polos; V-neck sweaters; unadorned denim. As the brand grows in the U.S., it has drawn comparisons to Zara and H&M. But Uniqlo is not, in fact, "fast fashion" (even though Yanai's umbrella company—which has additional holdings in Theory, Helmut Lang and the French chains Comptoir des Cotonniers and Princesse Tam Tam—is registered under the name Fast Retailing Co., Ltd.).


A brand like Zara attempts to chase trends, reacting nimbly season after season. When an unanticipated mini-fad for purple crocheted tops emerges, Zara will scramble to move a new item from the factory floor to store shelves in about two weeks. Uniqlo employs a nearly opposite supply-chain strategy: It places gargantuan orders up to a full year in advance, allowing it to negotiate rock-bottom costs for high-quality work. It then passes on those savings to its customers. Because it sells wardrobe essentials, it can count on fairly stable demand. "Our predictive planning is very accurate," says Odake, "so we rarely do heavy markdowns. We don't operate any outlets in Japan."


This basics-not-fads approach is particularly well-suited to America's recessionary moment. "There are only a few categories that women will still pay designer prices for," says Janet Kloppenburg, an independent retail-apparel analyst. "It's the must-have handbag, the best-fitting jeans in the business, the Jimmy Choos or Louboutins. No one wants to pay up for basic underpinnings. You want to keep those inexpensive so you can free up your budget to mix in some more expensive fashion items. Uniqlo is budget-friendly, but it doesn't feel cheap."


TO MANY INDUSTRY OBSERVERS, Uniqlo's "Made For All" rallying cry and its assortment of solid-color casual wear are eerily reminiscent of Gap. Not today's Gap—a lumbering giant in decline—but Gap in its heyday, the late '80s and '90s, when its pocket tees and pleated khakis costumed the planet.


"Gap was rooted in the American lifestyle," says Yanai. "It was wanted by people. I purchased a lot of Gap clothes. But today there is nothing to be intrigued by. You don't feel any excitement." As for Gap subsidiary Banana Republic? "It was like a European luxury brand that was reinterpreted for America and made affordable. But now you don't feel that luxury anymore and, at the same time, it's gotten more expensive." With Old Navy—the low-cost corner of the Gap triumvirate—there is a sense that the designs lack focus. (Gap declined to comment for this article.)


Creative director Takizawa feels that if there's one thing Uniqlo can steal from Gap's dusty playbook, it's the genius for merchandising that Mickey Drexler, former CEO of Gap, now at J. Crew, once brought to the brand. "It was just simple clothes, a T-shirt. But he called it a 'pocket tee' and made it an item of desire. There would be a store window with only white pocket tees one week and then all different colors the next. There was excitement about the stores."


Uniqlo has managed to return excitement to the apparel store. Though its clothes are basic, its retail spaces are novel and edgy, with sleek lines, wide-open expanses and flashing video monitors. Uniqlo painstakingly curates its displays, taking orders straight from Tokyo. It stacks items high and fans out an impressive range of colors. Racks and shelves are impeccably neat, squared off, shipshape. Service is pinpoint attentive, modeled on Japan's more formal attitude toward retail transactions. Credit cards are handed back to customers with both hands, with a touch of pomp. Greetings are dictated by central headquarters and recited like mantras. Store managers from around the world are all flown to Tokyo to receive several months of indoctrination at Uniqlo's global training academy.

The upshot: "It's almost like an Apple store," says Kloppenburg. "It's a high-tech environment you might associate with a more prestigious product. They treat customers with low and moderate incomes in a way they might not be accustomed to."


At present, Uniqlo enjoys a singular niche in the New York marketplace. Its affordable clothes are tinged with hipness, stemming from the brand's Japanese provenance, limited American availability and Manhattan gloss. If there's a challenge still to be met, it's that the brand's vow to achieve an enormous American presence will eventually force it to expand beyond urban centers and prime nuggets of real estate. When your footprint is 200 to 300 stores, each venue can't be an eye-popping flagship destination. In Japan, where Uniqlo has blanketed the countryside with more than 800 stores, some of the brand's luster has been worn away by strip-mall locations and humdrum atmospheres. The Japanese slang term "Unibare" is meant derisively, applied to someone caught, embarrassingly, clad in one of Uniqlo's ubiquitous core items.


Fit is another possible hurdle. Uniqlo's cuts are ideal for Japanese bodies, but the brand will likely need to tweak its designs to outfit a more rotund slice of the American populace. This is a surmountable obstacle: Cutting and sewing are the last steps in the apparel-manufacturing process. Uniqlo can still order those same high-quality fabrics well in advance and adapt its sizing to an average American shopper.


For now, Uniqlo's American invasion is all systems go. The San Francisco store opening this fall will be 29,000 square feet over three floors. The Garden State Plaza store in New Jersey—Uniqlo's first tiptoe back into a U.S. mall after its failed 2005 foray—will be an imposing 43,000 square feet. U.S. CEO Odake has hinted that Uniqlo might run its entire global e-commerce platform from the U.S., where tech talent is abundant, and he openly suggests that he'd like to replace himself with an American executive to head up operations here. In a symbolic move, Yanai declared earlier this year that English is Uniqlo's official corporate language.


In May, Uniqlo appointed a slightly surprising brand ambassador: Novak Djokovic. The tennis player would seem at first glance to be a spokesman more suited to endorsing a sports brand like Nike or Adidas, rather than a casual-wear brand like Uniqlo. But he provides instant global visibility of a sort Yanai craves. What's more, while Djokovic is also constantly jockeying for supremacy with fierce competitors, he's already notched a signature accomplishment Yanai-san envies: He's reached number one in the world

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