A chat with Yanai Tadashi, Chairman and CEO of Fast Retailing

Fast Retailing achieved record results in August 2019, increasing both revenue and profits. Turnover neared 2.3 trillion yen, making it the top fashion retailer in Japan. Uniqlo’s “LifeWear = everyday clothing” has been upgraded to “clothes for a high-quality lifestyle” as it seeks further expansion of the business. We asked Chair and CEO Yanai Tadashi about what needed to be done to continue to be the consumer’s choice and to continue growth amid changing conditions of the fashion industry, whether it is a changing society or a changing consumer.

Manufacture without waste, and put great effort into sales

Sales in 2019 were characterized by poor climatic conditions on a daily basis, from extreme heat to mild winters and a series of typhoons. It looks like the consumer mindset and purchasing trends have changed dramatically.

There is an increased focus on sustainability and fashion is becoming more intimately linked to people’s lifestyles. Those reacting most sensitively are the young generation, leading to some people finding humor in their reaction, but this is bizarre. It is a huge problem for the planet, and it goes to the roots of our business.

This trend is permanent. The fashion industry itself could disappear if we do not make sustainability the main driver of the way we do business. We are also strengthening our initiatives. There is the technology to use resources efficiently by coming up with mechanisms to eliminate waste. This is something that the whole industry needs to make more effort on.

Climate change is a worldwide phenomenon. In Japan, the period of summer heat is getting longer and spring and autumn are getting shorter, which could be a product of global warming. Making clothes on the assumption of changes in season is actually leading to waste. I think we probably have to find ways to making and selling clothes that can be worn year-round regardless of the season.

Shops and e-commerce are both media

While e-commerce is growing, Uniqlo has also opened outlets in Italy, India and Vietnam in 2019, and big stores are opening in Harajuku and Ginza in spring 2020. The most important thing in sales is using your own words to communicate the meaning and value of the product.

A store is the biggest media. If something is selling in a brick and mortar shop, it will also sell online. It doesn’t work in a way where only one of them grabs the market share. So many experiences can only be found in an actual store, while e-commerce also offers its own unique retail experiences. A company can take control of the market by cleverly using both channels.

Even if you open a store on one of the increasingly monopolistic online shopping malls, given the same lineup of brands, you will be stuck in a war of attrition, and you will simply be moving the product overload from bricks and mortar stores to the Internet. The only standard for choice online is going to be price. Even as a small brand, it is better to build the tie-in between real world and online yourself so that you can properly communicate the meaning and purpose of your products.

Amid the changes in the way consumers choose and shop, they will increasingly demand more user-friendly products.

The direction of a brand is vital for gaining the confidence of the consumer. This should adjust to changing times. It is not just about fashion: any company in commerce that struggles against the tide will go out of business. We intend to evolve products that are more closely based on people’s lives.

Regardless of scale, you must try to survive in alignment with your values. “Survive” may have a very negative ring to it, but if you do not survive, you cannot do business. Look at your own strengths, think about how best to harness them, and change your business. That is the time we are in.

Harness the full potential of staff

Following the lead of Uniqlo, the head office of GU moved from Roppongi to its Ariake office in September 2019. We are undertaking work-style reforms to maximize the potential of each and every staff member.

We are around the end of the beginning of the Ariake Project. What we are saying at the moment is that all the time schedules have now been changed, and we want you to apply all of your skills and work as a team. Nothing will happen if you only interact with your departmental colleagues and business counterparts. We want you to take a more independent approach to work.

It doesn’t matter how big the company is, in Japan it is the boss who gives the orders and the communication is also one-way, top-down. Employees work within the predetermined scope of their role. That means that they only use some of their skills. I believe they should be more self-aware in their jobs, and that small teams should be in two-way communication with top management.

Either put your hand up to say you want to do this job, or team up with the one that put their hand up and work with them. This is the age of making your own job. Form a team of six or seven with a clear mission, tell the CEO what it means and what you will achieve, and do the job. That is the way of working we will change to, and it will bring out the maximum potential of staff.

I believe that global growth cannot continue without worldwide changes in work style across all staff to suit our changing times.

Our revenue is now over 2 trillion yen, but globally there are bigger companies than us around. If we want to compete with them, we must find a competitive edge. That is why we are changing the way we work. Retailers and apparel producers who do not change will probably find themselves consigned to the dustbin of history, either going bust or absorbed by others.

Even if companies doing business as usual do fall by the wayside, it is the nature of the fashion industry that new companies emerge. However, they cannot win if they do things in the usual way, regardless of their size or history. That is why we believe in the importance of continuous evolution, as in our statement, “Changing clothes. Changing conventional wisdom. Change the world.”

From evolution, survival

In order to get to a new stage of growth, you say you will continue to transform your way of working and your organization.

Change is good. We survive because we change. If you survive, you can continue to sell to your customers. Choji Kuramoto (business critic) has a saying, “The shop floor is for customers: it flourishes with staff and perishes with the owner.” A business leader must take care, not to become that owner.

From now on, personal growth will be company growth, and only companies in which these are aligned will remain viable. To achieve this we are changing the whole organization and way of working to reach 100% of employees’ potential, or at least 70-80%. Even if we are in the same industry or profession, by using the full potential of our staff, we will be able to work at the world’s top level.