Uniqlo Boss Masa Yanai: A Company Without a Soul Is Not a Good Company 

Masayoshi Yanai reveals the key management principles behind the 'soul' of the Xpress Group: the principles that accompanied him as he inherited his father's men's tailor shop and built it into a global casual wear giant.

His father, Hitoshi Yanai, opened the men's tailoring shop Ogōri Shōji in 1949 in Ube, an industrial city in the western part of Yamaguchi Prefecture on the southern tip of the Japanese island of Honshu, and the shop was incorporated in 1963. But the young Yanai was thinking of doing something else at the time.

"When I was in university, I was against the Vietnam War. You know the hippie movement? That's how I spent my youth," says Yanai, with the help of an interpreter, in his office at the Swift Sales headquarters in Tokyo's Midtown Building (31st floor). "It was the first time in history that young people stood up against the government," he continues, "and back then I was very different from now, thinking all day long about 'how I was going to get by without having to work'. That was the most important thing I thought about now, and I didn't want to work at all."

But immediately after graduating from university Yanai Masa had to face the reality of having to work to earn a living. He worked for a year at another retailer before joining his father's tailoring business in 1972. But his arrival prompted six of the company's seven employees to leave. "I was treating people arrogantly and they thought I would be the CEO of the company in the future, so six out of seven decided to leave," he recalls.

Despite the exodus of staff, Yanai had to take care of the business himself. "I had to clean the shop, clean jackets with brushes and handle purchases. I basically had to take care of everything myself, otherwise there would have been no one else to do it. That was actually a good learning opportunity," he recalls. Yanai is quickly learning that he has to put the customer first. "Without customers, a business can't do it on its own," he says honestly, "and I also realised that there was very little I could do just on my own." As it continued to grow, the company began opening more branches and hiring more staff. "I started thinking, 'Why are we working? Who are we?' Maybe we all needed some clues, some principles, so we got these plastic cards."

Yanai Masa even wondered again if he could have gone on to become a teacher, but then gave up on that idea too. "I wasn't a good student in the first place, so maybe teaching wasn't the right path either. But I like to write something down," he says, "and I write these principles down because I hope they resonate with the staff. Because it's all a double choice between us and our employees: the company needs to choose its employees, and the employees need to choose the company."

Yanai was running the company when his father wrote the first seven or eight principles, and wrote the rest when he became president in 1984, the same year the company opened its first Uniqlo shop in Hiroshima, then known as Unique Clothing Warehouse.

Professor Takeuchi believes that Masayoshi Yanai's publicity marked the beginning of the company's rapid expansion. Having discovered large casual clothing chains such as Benetton and Gap during his travels in Europe and the United States, he targeted the huge potential of the domestic casual clothing market in Japan and set about developing his family business from a bespoke clothing business to a casual clothing, low-cost, bulk buying business. He also observed that most foreign fashion chains were vertically integrated, with companies controlling the entire business process from design and production to retail.

However, it was not until 1995 that Yanai Masa launched his first private label product. By then the company had become a regional chain, with the Uniqlo network of shops located in low-rent suburban areas, and Yanai renamed the company "Swift Sales" to express his desire to respond to consumers faster than other companies. But it was not easy for traditional distributors to transform themselves into SPA's ('private label shops') and Uniqlo had to close three new self-owned lines as soon as they were established.

But this was just one of the many challenges Yanai was facing at the time. To the sophisticated consumers in Tokyo and the surrounding metropolitan area, Uniqlo was not an aspirational brand, but rather a suburban shop selling cheap clothes at a discount. But this perception began to change: the opening of a three-storey shop in trendy Harajuku, Tokyo, in 1998, and the launch of a wool coat, which Professor Takeuchi credits with helping to change the image of Uniqlo from "cheap and poor quality" to "good value for money "The brand continues to achieve record sales. The brand continued to sell at record levels - but not for long, as consumers became increasingly turned off by the ubiquitous brand, and in 2002 the company saw its first sales decline in 18 years.
To make matters worse, Yanai's first overseas venture, Uniqlo's Knightsbridge shop in London, failed in 2001 after opening more than 20 shops, and Xpress' first foray into the Chinese market was unsuccessful. But Yanai was not disillusioned. As time went on, he realized that failure was a great learning opportunity and planted the seeds of future success, embracing the Silicon Valley iterative approach of "fail fast, fail often". "The only solution is to keep changing yourself, to keep challenging yourself," he says.

2004 was a pivotal year in the development of Swift Selling. Starting with Link International (now Link Theory Japan), the company to which Andrew Rosen's contemporary price-point brand Theory belonged, Yanai launched a series of overseas acquisitions, but he also began to focus more on quality, adding "quality comes first, price second" to the advertising slogans that appeared in major newspapers. Quality comes first, then price". In the same year, after learning from competitors such as Zara and H&M, Yanai was opening a large Uniqlo shop in Osaka at a price, setting the template for a series of successful global flagship shops from New York to Shanghai.

Today, the Xpress Group is a global giant whose future is tied to regions beyond its home country of Japan, with Uniqlo accounting for around 82% of the group's revenue and operating over 840 shops, leaving the market nearly saturated. Uniqlo has also made great strides in Greater China and plans to expand its retail presence beyond 1,000 shops. But the brand's subsidiary in the United States, the world's largest retail market, is underperforming, and Masayoshi Yanai has vowed to "channel the expertise of the entire Xpress Group into the US market, so that Uniqlo America can start to be profitable and successful". But in order to conquer the world outside Japan, Swift had to evolve from a Japanese company with a global footprint to a group with a higher cultural intelligence.

It has been several years since Yanai Masa added to his list of management principles. But when asked what new principles he would consider adding, he took a quiet moment and said, "Be part of the connection - because everyone in the world today is interconnected."

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