Tadashi Yanai has a plan. A really big plan, to be precise.
This story first appeared in the May 13, 2015 issue of WWD. Subscribe Today.
The Fast Retailing chairman, president and chief executive officer had already said he was aiming to make his company the world’s largest apparel retailer by 2020. But, in February, he unleashed an even bolder ambition.
The corporate parent of the fast-expanding Uniqlo apparel chain, known for its colorful basics and high-tech fabric innovations, should aim to hit the 30 trillion yen sales mark (more than $250 billion) by 2030, Yanai told journalists assembled at the company’s headquarters in Tokyo Midtown Tower, the second-tallest building in the city.
“If it’s the year 2030, why not 30 trillion yen?” he asked the crowd, some of whom chuckled.
Reaching such a milestone — roughly half the size of annual revenue at today’s Wal-Mart Stores Inc. — would mean growing Fast Retailing’s annual sales volume by some 20 times. But Yanai, who directly owns more than a fifth of his company and is ranked Japan’s richest man according to Forbes, insisted he was serious. “It’s not a joke. I believe it’s possible that we can realize this dream.”
Two months later, Yanai is just as eager to talk about his ambitious view of the future.
“Whatever people can imagine, people can certainly achieve,” he says during an interview at his 31st floor office, overlooking a seemingly endless sea of high-rise buildings.
“Most people probably think that we can’t do it,” says Yanai, who opted for a casual look this particular day, donning a blue sweater and gray pants — presumably Uniqlo since he has a track record of wearing his own goods. “But small goals do not energize. I think you need targets that are [as big as] you can imagine, even if there’s only a possibility of achieving them.”
Yanai has never been one to steer clear of bold statements, controversy or unpopular opinion, a trait that has earned him a reputation as something of a corporate rebel in conservative — or some would say conformist — Japan. The 66-year-old, who over the past 31 years has transformed his family’s modest clothing import business into Asia’s largest apparel manufacturer and founded the fast-growing Uniqlo chain, is outspoken about a number of subjects, whether he is lavishing praise on his former collaborator Jil Sander, criticizing fellow retail giants or encouraging his country to think more competitively.
When speaking of his early days in the fashion business, Yanai makes it seem as though it was only natural for him to fall into the rag trade. The executive speaks animatedly about his fascination with Western fashion and culture, its origins in Europe and its diffusion to the rest of the world, including his own country. “Japanese people have a unique capacity to look at Western clothing from an outside point of view,” he says, pulling out a Japanese book entitled “Traditional Fashion” and flipping through pages of Scottish kilts and vintage American garb. A quick glance around Yanai’s office also reveals the executive’s appreciation for history: prints of black-and-white photos depicting Forties and Fifties New York adorn the wall, while models of two ships — an 18th century Spanish vessel, “Fragata Siglo XVIII” and the World War II-era “SS President Cleveland 1947” — grace his shelf.
In 1972, one year after he graduated from Tokyo’s Waseda University with a bachelor’s degree in political science and economics, he joined the family firm, which imported clothing from brands like Pierre Cardin, Givenchy and Levi’s. “As it happened, we [my family] were in the clothing business, so I know a lot about it.”
He worked his way up the family company’s managerial ranks, eventually becoming president and ceo in 1984, the same year he opened the very first Uniqlo store in the southern port city of Hiroshima. (It was actually called Unique Clothing Warehouse and the company adopted the Uniqlo name a year later.) In subsequent years, he spearheaded an aggressive expansion drive to practically blanket Japan with Uniqlo stores and develop innovative products like the Heattech range of insulating undergarments.
Today Uniqlo, Fast Retailing’s biggest asset, counts more than 1,500 stores across the globe. It expects sales for the fiscal year ending this August to increase 15.7 percent to 1.6 trillion yen, or more than $13 billion. The Japanese giant still trails Inditex, Hennes & Mauritz and the Gap in size, but Yanai appears determined to overtake them — as well as anyone else in his way. After all, the worldwide clothing market is close to $1 trillion right now so Fast Retailing’s targets are not all that unrealistic, he argues.
“Everything we do is geared toward the future; the present and the future,” Yanai says, explaining that Uniqlo already has an established platform on several continents — Europe, North America and Asia — on which it can expand and open new stores. “I think we can definitely grow.”
Yanai has said Fast Retailing can reach its 2020 sales target of 5 trillion yen, or $42 billion, exclusively through organic growth, but many observers believe it’s just a matter of time before the company makes a major acquisition to quickly boost its scale.
Over the past 11 years, Fast Retailing has diversified its brand portfolio, snapping up names like Theory, Helmut Lang, Comptoir des Cotonniers, Princesse Tam Tam and most recently J Brand, but all of these assets are considerably smaller than the Uniqlo business.
Last year, WWD reported the company was in talks to buy J. Crew before negotiations ultimately broke down. Unsurprisingly, Yanai would not talk about any potential M&A activity. Fast Retailing is sitting on a pile of cash and cash equivalents of 462.8 billion yen, or $3.9 billion, as of the end of February.
“If I talk about M&A, I will no longer be able to do M&A [activities],” he says.
But the executive isn’t so tight-lipped when it comes to talking about other retailers and designers in a more general way. He says he likes Polo Ralph Lauren, Levi’s, Woolrich and Carhartt and notes that there are “so many [good brands] in Europe.” He is less charitable on others, namely Sears, Kmart, Wal-Mart, Best Buy and the Gap.
“As [brands] get older, the things that they are doing tend to get outdated,” he says. “They haven’t adapted with the times.”
As for his take on designers, Yanai is similarly forthcoming in his praise for former Uniqlo collaborator Jil Sander. “She’s not working now, but Jil Sander is the best. I grant her my greatest respect,” he says. The German designer, known for her meticulous attention to detail, designed the +J range for Uniqlo from 2009 to 2011. She left the Japanese company and briefly resurfaced at her eponymous label for three seasons before effectively retiring from fashion.
“She’s such a perfectionist. She wants to do everything herself, and she’s right about everything. But because of that we couldn’t meet our planned delivery dates,” he chuckles — an answer that inevitably prompted a follow-up question on whether or not he has since been in contact with the designer and if he wishes he could work with her again some day.
“No comment,” he says with a loud laugh that reverberates around his office. “But it was good for us, and I think it was good for her, too.”
Yanai also has nice things to say about Alexander Wang, who collaborated with Uniqlo in 2008 as part the Designer Invitation Project.
“I think he might be the best designer working today,” says the executive, who lets out another laugh when asked if he would like to work again with the New York-based creative: “I hope so.”
He says he is interested in working with other designers in the future, but makes it clear that he doesn’t think designers’ egos should upstage Uniqlo’s democratic approach to fashion.
“I don’t think designers should be the stars,” he says. “The people who wear the clothes should be the stars. I think from now on the people wearing the clothes will have to be the stars, and designers must work toward that. And people like us who produce and sell clothes must also work toward that.”
Work is definitely a principle Yanai holds dear. The executive, who penned a 2003 autobiography entitled “One Win, Nine Losses,” has earned a reputation as being something of a hard-driving leader with high expectations for his employees. He regularly arrives in the office at 7 a.m. and leaves at 4 p.m.
“I go when I have to, but I try not to go [to our stores] very often. I hardly ever go because when I do go, I understand all the things [we’re doing] badly,” he says. “It’s not the fault of the store managers, but the fault of the company as a whole.” But Yanai’s demanding approach could also work in his employees’ favor — as he points out himself. “Even part-timers can become ceo or chief operating officer.”
Yanai stresses the importance of motivating employees at all levels of the organization and concedes he made a mistake a few years ago when he said store managers were the most important part of the company. He should have paid more attention to the store staff, he concludes.
“If part-timers are thinking about making their wages and not about the customers, they probably will not satisfy customers through the operations of the stores. They need to have the feeling of an owner or senior manager. I don’t work in the stores, so I leave it to everyone else [to act on my behalf],” he says.
Yanai may endeavor to create a crop of new, potential leaders, but it doesn’t look like he will be vacating his office anytime soon to spend more time on the golf green — he’s considered a fanatic of the sport — or engaging in two of his other favorite pastimes: listening to jazz and watching Clint Eastwood-directed movies like “Jersey Boys” and “American Sniper.”
“I don’t want to retire anymore, and that means I can’t retire. Because I’m the founder, I want to see this company through to an end where it is even more successful,” he says.
He has said repeatedly he doesn’t think he has a suitable successor in the wings. One possibility he seems to rule out categorically is the idea of either of his two sons —Kazumi and Koji Yanai — taking over the business, essentially repeating the same path he took himself. Kazumi and Koji both work for the company, at Uniqlo USA and Uniqlo Japan, respectively, and each owns a 4.51 percent stake, according to the latest filings available.
“I have no intention [of having them take over]. I am always affirming this but everyone doubts it,” he says, explaining that he would like to see his sons one day assume chairmanlike roles rather than become ceo’s. “I think carrying out governance is more difficult than managing [the company]. I think my sons are talented and have good personalities, and they are just as good as any of our other senior managers, but I still think it’s better for them not to do it, so that we can have a separation of ownership and management.”
Yanai says he wants the company’s senior management team — with a ceo leader — to inherit the hands-on management of the company. Although he doesn’t name names, Fast Retailing’s upper-management ranks include Osamu Yunoki, the ceo of the company’s fast-fashion brand G.U., and Ning Pan, ceo of Uniqlo Greater China, as well as Nobuo Domae, ceo of sourcing operations and the former ceo of Uniqlo USA and France. Regardless of who gets the job, Yanai says it’s important the company’s next lead executive doesn’t try to emulate him — or his style.
“Whoever takes over as ceo should not mimic me in terms of behaviors. If they acted the way I did, they would fail. I’m a founder. I’m an owner. I’m a chairman. And I’m a president and ceo. And that’s why I can behave the way I do,” he says, adding that he wants to start delegating more and more of the day-to-day tasks to the managerial team as he grows older physically. “Otherwise I’ll have to end up cloning myself over and over,” he says.
Perhaps unsurprisingly, Yanai is a man who expects just as much from his country as he does his employees and himself. In past conversations with journalists, he has criticized Japan’s government and some of the more conservative, insular aspects of the country’s society. In February — at the same event where he made his $250 billion sales forecast — he called on Japan to open its doors to more foreigners and entrepreneurs.
“I’m afraid the Japanese government is not doing such a good job. We are stepping back, whether you like it or not, Japan cannot live in a vacuum,” he said at the time.
During this interview, Yanai addresses the issue of Japan’s competitive edge — or lack thereof, considering the country just crawled out of yet another recession at the end of last year. He says “voluntary restraint” is holding Japan back and has an anecdote at the ready.
Four years ago, when Japan was reeling from a massive earthquake — the most powerful one ever recorded to hit the country — and a devastating tsunami that claimed the lives of nearly 20,000 people and spurred nuclear meltdowns, Yanai was frustrated that he couldn’t play golf.
“The earthquake was on a Friday. Every week I go to play golf, so that weekend I went to the golf course, because there was no damage to Tokyo. I went into the clubhouse at the golf course, and it was pitch black,” recalls Yanai, who reportedly owns two golf courses in Hawaii, as well as his own private driving range at his Tokyo home.
“Nobody was there, but I thought they [Yanai’s playing partners] would eventually come . . . . No one came, even though we had talked about golfing together. So I called them, and they said: ‘The Great East Japan Earthquake just happened, and you’re going to play golf today?’ I thought the two were unrelated. Because of this kind of voluntary restraint, there were a lot of people who didn’t play golf for about six months after the earthquake. But I think this voluntary restraint made the earthquake seem even bigger than it was and served a negative purpose.”
The golf incident was just the beginning of Yanai’s frustrations about Japan’s response to the March 2011 disaster — Japan’s biggest crisis since World War II. The country asked citizens and businesses to conserve energy in light of the nuclear shutdown — a move that halted production at factories and prompted many stores to dim their lights. This did not sit well with Yanai.
“We were told to turn off all the lights in our storefronts. I was against this, because the lights in the storefronts show customers that there is a shop there. They instantly tell customers: ‘Please shop here.’ They’re an instant representation of the people who are doing business,” he says. “So I told people to turn the lights on, but everyone else turned them off. So the cities became like ghost towns, and the earthquake seemed even bigger [than it was]. But we did it to make our customers happy and to enable them to enjoy their shopping. So instead of saving energy by turning off the lights at the storefront, I think it’s better to do it by turning off half the lights inside the stores and in the back rooms.”
Yanai’s vision of a $250 billion company by sales comes at something of a watershed moment for Japan. The 70th anniversary of the country’s surrender at the end of World War II approaches later this year while it also is gearing up for a much-anticipated 2020 Olympic Games. Yanai, a child of post-war Japan, is ready to reflect on the significance of the moment.
“This is really unfortunate, but most of the people around the world who experienced the war have passed away,” he says, expressing concern that Japan’s younger generations seem to be drifting toward more nationalistic and militaristic ideology. Describing himself as a pacifist, he stresses the importance of teaching the horrors of war and affliction to young people.
“We have to do things to ensure that war doesn’t break out . . . . Young people across the world are drifting to the right, and older people like myself are instead becoming liberal. It has become such a strange world,” says Yanai. “We don’t have peace. I think the most important thing is for everyone to coexist and work together.”
It’s clear that the 2020 Games will present plenty of opportunities for Japan, says Yanai, who was a first-year high school student when the 1964 Games were held in Tokyo.
He remembers his father giving him a postcard — a composite of three of the event’s official posters: one showing a group of runners sprinting, another depicting a swimmer and a third showing a graphic rendering of the Japanese flag and Olympic rings.
“When I saw those photos, I thought, ‘Ah, this is what the future of Japan might be like,’ . . . I want the young people now to be able to see the new future of Japan when the next Tokyo Olympics come.”