Syamrath Weekly : The Richest Tradesman in Japan

To all outward appearances Tadashi Yanai strikes you as a common 66-year-old Japanese, rather ancient-looking, wearing black-framed eyeglasses, roughly a normal Old Uncle.  But, surprisingly, he IS the richest man in Japan!  The Yanais neither owned an industrial plant nor were in the automobile, electrical appliance or computer industry.  Tadashi’s father merely ran a retail shop in Ube, Yamaguchi Prefecture, in 1949 (the year Tadashi was born).  Having inherited the shop in 1984, Tadashi expanded the family business which currently has more than 1,400 branches in 16 countries worldwide with employees numbering more than 30,000.  Last year, it recorded an income of 1.7 trillion Japanese yen (equivalent to 500 billion baht) and a profit before tax of 1.8 billion yen (or 5.4 billion baht).  His objective is to achieve a total sales volume of 5 trillion yen with 1 trillion yen profit.  His estimated net worth itself was 8.4 billion baht, although he never admits to running a retail business.

“I run technology business, with emphasis on innovation, and by no means does it involve just selling goods.  Our products are made from first-rate raw materials which have resulted from careful development by the manufacturer of Boeing 787 Dreamliner propellers.  As such, they are products of high quality, not ones with quality that is worth the price but high-quality products that everyone can afford to buy,” he said.

“Our products have not been designed to meet the demand of any specific customer group but for everybody, in the same way that iPhones are not designed for any particular person.  They are quality products that everyone can trust … ones that are perfect for everyone,” added Naoki Takizawa, Creative Director and one of Yanai’s staff.

Business Slogan: “Made For All”

It’s no surprise that Tadashi Yanai’s hero is Steve Jobs.  Before today’s success came a complete flop.  Growing up in post WW II era under the U.S. occupation forces, he admired Americans instead of hating them.  He liked to watch American movies on TV and thought American families were happy and prosperous as they could afford to buy luxury merchandises.  On the first visit to the U.S. at the age of 18, he toured the country in Greyhound buses.  The sight of shops and department stores there was a source of inspiration as regards his future business.  By the time he inherited the family business from his father in 1984, it had expanded from one small shop to 22 branches.  The new shop he opened under a different name in Hiroshima sold merchandises with famous brand names imported from abroad.  With a constant increase in the number of branches, he started to sell ones under his own brand name.  As it turned out, the expansion in business resulted in an increase in his buying power while the selling prices became cheaper.

Given beautifully and well-designed products that caught the fancy of the Japanese middle class, by 1998 Yanai’s shops nationwide numbered more than 300 plus a large store located in a fashion center such as Harajuku.  It was around this time when he began to ask himself why foreign brands could start a business in Japan but not vice versa. In 2005, Tadashi Yanai opened his own store in America.  The result?  A complete flop. “Nobody knew us,” said Chin Odake, Store Manager in America.  “Because we opened the store with our brand name being unknown to anyone, it was bound to be a flop.  A small shop with unknown name in a bad location?  What’s there to interest or excite a customer?” But Tadashi Yanai was not disheartened.

“Business is an endless experimental process with uncountable flops.  Mistakes are a part of business operations.  With ten new launches, about nine are bound to flop. The business circle changes so fast it could cause dizziness.  Keeping abreast of change to ensure the company can survive entails our willingness to reform the entire corporate for constant growth as it is the very reason for our business sustainability.”

Not surprising, either, why Yanai’s book in 2003 was entitled “One Win, Nine Losses”

In a new move, he launched the mega-sized flagship retail store with 36,000 sq m shopping space in Soho, the fashion center in Manhattan, New York.  This was followed by the branch with 64,000 sq m shopping space on 34th Street and the one with 89,000 sq m space at the prime location, i.e. on 5th Avenue, where he took out a 15-year lease worth US$ 300 million.  This time, his products sell like hot cakes. “These flagship stores are crucial for our brand outside Japan.  This is word-of-mouth advertising.  We are able to hire high-caliber people,” said Odake. “People with good reputation would not have collaborated with us had we still tucked ourselves away in a corner somewhere like before.”

At the time, Yanai’s stores were located in all parts of the world, be they England, Shanghai, Hong Kong, Seoul or Kuala Lumpur.  Of the ten most profitable branches today, only three are in Japan.  The remaining seven are located overseas.  35% of the company’s income is generated by his stores in foreign countries worldwide.

One complete difference between Yanai’s stores and those of his rivals lies in supply chain.  While his rivals offer fast changing fashion products with trendy colors and styles being available within barely two weeks, Yanai places huge orders one year or years in advance, which explains why he can come up with superb merchandises in terms of quality but at very low costs.  The margin is then shared among his customers.  Besides, as his stores carry items that are people’s general necessity, demand for his merchandise remains rather stable all through the year.  Therefore, he has no need to open stock clearance outlets. Quality goods at cheap prices designed by world-renowned designers reflect a non-stop innovation, selection of modern and unique raw materials, supply chain cost reduction, spacious and grand store layout as well as Japanese-styled service mind requiring a three-month training course before actual practice. Tadhashi Yanai encountered yet a series of problems he needed to overcome in steering his business toward success, be it the different clothing size between Americans and Japanese affecting the production line or the need to expand from major cities to small towns in order to have 200 – 300 branches across the U.S., which could mean the absence of a superstore’s extravagance. In the process, English was declared the company’s main language in 2012.

This along with the Japanese, Americans and people in many other countries have all played a part in making Tadashi Yanai the richest tradesman in Japan.

Having inherited Fast Retailing Co.,Ltd. from his father, Tadashi Yanai opened a new shop in Hiroshima in 1984.  He first named it Unique Clothing Warehouse.  After a while, it was shortened to Unique Clothing by customers.  In 1988, he intended to register it by an even shorter name.  As it happened, the registration official made a mistake by spelling the word ‘Clothing’ with a Q.

Hence the world-renowned brand Uniqlo originated by the mistake made at the time!!

Credit Syamrath Weekly Issue No. 24/2558; composed by Mr. Syamrath Suthanukul, Managing Director of SCG Logistics Management Co, Ltd. (Internal Communication)

Compiled by BLOG.SCGLogistics
Picture by  pixabay.com (account : unsplash)

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