TOKYO — When you step into the office of Tadashi Yanai, the 67-year-old founder of the retail clothing giant Uniqlo, it’s clear that the United States has had a deep influence on the man who created this very Japanese brand.
The walls of his office, located on the 31st floor of the Tokyo Midtown Tower, are decorated with classic photographs of mid-20th century New York City.
“I was born and raised in occupied Japan,” Yanai explains through a translator. “That’s under the great influence of American culture — the good old days at the peak of American culture. Shows such as ‘Laramie’ and ‘Rawhide’ and ‘Father Knows Best’ ...
“All the songs that we learned were the translated pop songs from the United States,” he says. “That was the influence when I was being brought up.”
On Friday, Yanai brought his company to America’s capital — or at least close by. Uniqlo, featuring simple garments designed with a nod toward high fashion at a relatively low price, opened a 10,500-square-foot outlet at the suburban shopping mecca Tysons Corner Center.
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It’s a long way from the store that Yanai’s father, a tailor, operated in the small city of Ube in Yamaguchi prefecture, where America’s influence extended to the Levi’s and Wrangler jeans on the rack.
As a teenager in the late 1960s, Yanai took his first foreign trip and headed straight for the United States. It took two weeks to get to San Francisco via boat. From there he crisscrossed the country on a Greyhound bus, staying in YMCAs and cheap motels, before reaching his ultimate destination: Disneyland.
Yanai says this journey was an “eye opener” and more important to him than anything he studied in college. He was inspired that a country made up of immigrants could come so far.
On subsequent trips abroad, he saw the spread of casual clothing chains such as Gap. When he finally took over his father’s business in 1984, he decided to branch out with his own casual clothing store in Hiroshima.
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He named it, in English, “Unique Clothing Warehouse.” By 1988, it had officially contracted to Uniqlo.
Twenty-eight years later, Uniqlo is one of the largest clothing chains in the world. Its parent group, Fast Retailing — which includes other labels such as Theory— posted revenue of 1.7 trillion yen last year (approximately $16 billion). The company’s clothing is ubiquitous in Japan. Between 1984 and 2014, the company claims to have sold 300 million pieces of fleece clothing alone.
The huge success of Uniqlo has made Yanai Japan's richest man. According to Bloomberg, his net worth is $18.2 billion, which makes him the 40th richest person in the world.
Uniqlo entered the U.S. market in 2005, and by 2015, when it announced the Tysons Corner outlet, it had 39 stores around the country. At the time, the retailer also announced plans for a new store in Denver, which also opened Friday.
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But Uniqlo’s rapid growth has hit some hurdles over the last year. According to earnings released in October, Fast Retailing’s annual net profit dropped 56.3 percent to 48 billion YEN ($462 million). While the company predicted a record profit of 100 billion yen for the year ending in August 2017, it also publicly backed off its long-held goal of 5 trillion yen in sales by 2020, lowering it to 3 trillion yen — another setback in Yanai’s long-held ambition to catch up to rivals such as Zara and H&M.
Share this articleShareOne problem: the long-stagnating economy in Japan, a market that still accounts for more than half of Uniqlo’s revenue. The company had once priced itself slightly above its competitors, but in early 2016 Uniqlo moved to cut prices in the hopes of appealing to penny-pinching Japanese shoppers. Meanwhile, the high yen has been eating into Uniqlo’s international business.
Yanai maintains that it’s vital to be the top brand domestically in Japan, but he knows the situation for a company selling to a young market is difficult. “Unfortunately, Japan is an aging society,” he says. “There are a smaller number of children.”
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“I’m afraid the current financial policy is going wrong, too,” he adds, citing the country’s negative interest rates — an unconventional economic policy launched by Japan’s central bank this summer. It effectively means borrowers can earn interest rather than pay it, Yanai explains. He thinks it’s “crazy.”
Given the situation in Japan, Uniqlo has expanded abroad. China, in particular, is a huge market for the company, with 479 locations. Earlier this year, Yanai announced plans to open a further 100 stores a year in China — with the aim of quickly reaching 1,000 — and more stores at a slower pace after that milestone.
Despite America’s influence on its founder, Uniqlo has not had an easy time in the United States, still the world’s largest retail market. First it tried to enter the market by opening three stores in suburban New Jersey. It flopped, badly. “It was not selling at all,” Yanai says. The company decided to rent a space in New York City to liquidate their stock. To Yanai’s surprise, the same goods that didn’t sell in New Jersey found a market in trendy, urban Soho.
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More stores followed. But in the past year, Fast Retailing recorded a loss of 7.4 billion yen ($71 million) in the United States, largely because of the shuttering of a number of underperforming outlets in malls outside major urban centers.
That experience may best sum up Uniqlo’s American challenge. While the company can sway fashion-savvy shoppers in major urban centers with its simple design and collaborations with high-profile designers like Christophe Lemaire, it has found it hard to connect with the average American consumer.
It remains to be seen whether Uniqlo will appeal to shoppers frequenting Tysons Corner, a rapidly developing but still very suburban area. Yanai himself has only been to the Washington area once — last year, when he attended an event at the Embassy of Japan in honor of former New Jersey senator Bill Bradley. Yanai suggests that the store’s button-down shirts and navy blazers may prove well-suited to the city’s work culture, although he adds that you never quite know what would sell in an area until the store opens.
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“Its quintessential everyday life, everyday clothing,” says Yanai, who looks comfortable in an all-Uniqlo outfit: Lemaire cardigan, button-down shirt and jogger pants. “That’s what we deliver.”
And Yanai has experience adapting to difficult international expansions. In the early 2000s, Uniqlo expanded aggressively in Britain, opening 21 stores thought out the country. Uniqlo had plans to open 50 stores in three years, Yanai says now. But the British expansion was “disastrous,” Yanai admits, with 16 of the stores eventually closing. While Uniqlo’s stores in London now do good business, it was a hard lesson.
“Things never work out the way you wish,” Yanai says.
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