Fast Retailing is in the midst of transforming itself into an “information and manufacturing retailer”, which can instantly respond to the requests of its customers. By rearranging its product planning, production and sales to an unconventional and industry-first approach, the company is aiming to facilitate continual growth by riding the wave of globalisation and digitalisation sweeping the world. In this interview, President and CEO of Uniqlo, Tadashi Yanai, discusses how it is imperative to be able to incorporate the latest in technology while also recognising the importance in value created through “real” people-to-people interaction.

■Moving towards clothes that reflect global trends

Uniqlo posted both a rise in revenue and fall in profit in August 2016, and downwardly revised its mid-term target for consolidated sales in 2020 from 5 trillion to 3 trillion yen. President Yanai describes 2016 as a turning point for the company.

To raise our sales from 1 trillion to 3 trillion yen requires us to change the very nature and structure of Uniqlo; 2016 was the year we really considered how to do that. The slump in the previous period’s results was largely attributable to the weakening yen coupled with our decision to raise the prices of some products. If consumer income is not rising in real terms, then it’s only natural they will reject any price hike we implement.

Although sales got back on track after we lowered our prices last spring, nowadays clothes aren’t selling in general – not only in Japan, but around the world as well. While the economic malaise is partly to blame, looking at the market overall, we see the same items being made the same way and lined up in shopping centre stores; there is no real difference in how they look and are priced. And that’s why clothes aren’t selling these days.

Naturally, people won’t spend all the money in their wallet only on clothes; now it’s things like mobile phones and the games you play on them that take a larger share of spending than clothing. What’s lacking is the creativity needed to develop appealing products that will sell, and beat other industries for a share of the consumer wallet. So we have to create clothes that reflect the trends in the world today.

Uniqlo’s answer to this is “Life Wear”; the company wants to convey to the market the reason why we even wear clothes, as seen from the stance of a clothing retailer.

Each company has its own definition of clothes that reflect global trends, which is a product of the company’s current position in the global market coupled with an overview of its past, present and future, and view of how the world is changing. For Uniqlo, it’s a new style of clothing that anyone can wear; the ultimate everyday wear.

Trends are an important element of fashion, and the very act of trying to keep up is a homogenous goal. Why do we make clothes, and why do we even have companies? We need to consider those questions, and clarify our position in the market. Any company that doesn’t truly and continually pursue its own mission and way of existence won’t survive. So in that sense, I believe we will see fewer old-style companies from here on.

Last year in my message to shareholders, I wrote that “The industry will undergo a complete transformation over the next three years.”; there are only two years left. The emergence of services such as Uber and Airbnb means consumers no longer need to own a car or other mode of transport, and they also have a wider selection of travel accommodation to choose from.

■High tech coupled with human touch

The fashion industry is also facing the challenge of how to make the most of the rapid spread of information on the internet.

Changes are also afoot in the fashion industry. For instance, Amazon has launched its own personal brand of clothing, and is even travelling to textile production areas in Japan. Google and other internet-based growth companies have started selling a range of products and sending out all kinds of information. These days, those who have information are the eventual winners. A decade ago the top 10 companies in terms of market capitalisation were nearly all energy corporations, but now it’s mostly high-tech companies; we can see how industry is shifting.

Although a movement against it is emerging, the fact remains that globalisation is already an unstoppable force. For a large majority of people, the world today offers a wealth of opportunity. Digitalisation is happening in businesses everywhere, and the internet of things (IoT) and big data are prevalent on a global level.

That said, information cannot be the only thing you sell; a company’s strength lies in being able to offer exceptional products at a satisfactory price for customers. What’s important is the kind of business you run to survive, and digitalisation is one approach to that; it enables you to communicate information to anyone at the same speed. I believe business needs to be customer-centric from here on in order to succeed.

Artificial intelligence is continuing to develop, and it’s said that jobs without the need for humans will emerge in the future. However, achieving growth in the fashion business requires a combination of “high tech and a high sense of touch.” To me, this means balancing advanced technology with the detailed touch and care only a real human can provide.

■Everyone working together on one floor

There’s no stopping globalisation and digitalisation – they are here to stay, whether we like it or not. Fast Retailing is striving to become a customer-centric company in this era of business; this year, we will start operations at our Ariake distribution centre.

Most of Uniqlo’s product- and sales-related head office functions will be shifted to the new Ariake centre, along with the relevant personnel. The centre is five times the size of the current distribution centre, which means everyone can work together on the same floor. We are living in an era of being able to connect with anyone anywhere; so unless we bring a physical proximity to the workplace, we won’t be able to sync the feelings and aims of all employees.

Any company can collect vast amounts of information on the internet, analyse it and use the data to create products. But making that your selling point will be the death of your company; it won’t attract customers. So you really have to ask yourself, why does my company exist? Clothes that sell well are made by considering various aspects such as your company’s standards and quality, and customer preferences. Uniqlo’s Ariake distribution centre will play a key role in determining those aspects.

They need to go beyond just transforming their products and how they run their business; The company must also work on a multifaceted approach that will show the market their stance as a company.

Last November, Uniqlo’s CSR Department became the Sustainability Department; this is so we can consider social responsibility from a broader perspective. We won’t succeed unless we demonstrate a real commitment to making the world a peaceful place. And Uniqlo will do what it can to help realise that.

Uniqlo will also make all of its business transactions transparent; specifically, we will show consumers what kinds of materials are sewn at which factory, and how our products are processed from the factory floor to stores. We haven’t revealed this information so far, but there are a growing number of customers who are interested in how Uniqlo clothes are manufactured. So from here on, we will make an effort to thoroughly disclose and communicate these processes to the public.

■People are the face of clothing retailers

They don’t want to stop at just transforming their head office functions and work styles, and how they send out information. Fast Retailing is also aiming to optimise the way they sell at stores and how their staff work, so that they can see the effect of these changes in the market.

Customers won’t come to an actual store unless they can experience shopping in a way that’s not possible online. Also, even if you have great products, they won’t sell unless customers know about them. And customers won’t choose your clothes if you cannot effectively communicate to them the type of retailer you are. In Uniqlo’s case, we offer LifeWear – the ultimate everyday wear – while at GU, we aim to speedily provides customers with the fashion they want at the lowest prices in the market.

Our sales staff are crucial in clearly communicating this stance to customers. The relatively simple labour of over-the-counter service will be streamlined using robots and machines, and the work of sales staff will become more knowledge-based. Specifically, they will assist customers in finding the right styling, size and fit of the clothes. So far we haven’t been able to do that at all, but we will now start to train our sales staff to provide such customer service. Also, we will need to keep abreast of the changing times and accordingly adjust what products we sell at which stores.

Ideally, I’d like Uniqlo to be close to a standalone store like those in shopping arcades of the past, where the shop staff were able to tell customers about things sold at other shops in the arcade even if they’re not related to fashion. We’ve been promoting a diversity of work styles such as local full-time employees, so that all Uniqlo employees of all lifestyles can provide service naturally, and be able to offer info about nearby shops etc.

No single company can monopolise the market. Similarly, it’s impossible to consider Uniqlo products as representing the whole spectrum of fashion. Each company operates in its own optimal way to manufacture and sell products. I believe the progression of globalisation and digitalisation is, in a sense, bringing the business of selling back to its starting point.