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Uniqlo founder has confidence in Canadian expansion

Tadashi Yanai, founder of the fast-growing casual wear Uniqlo fashion chain, issued an urgent call to action earlier this year.

In an open letter, the chief executive officer of the Japanese global powerhouse said it had "bloated operations" and been "lulled into complacency" by its strong growth, with products that no longer focused on "fresh revolutionary features" such as breathable, heat-insulated underwear.

On Thursday, sitting calmly in a Shangri-La Hotel suite, dressed in a dark Zegna pinstripe suit and speaking through an interpreter (although he has a good command of English), Mr. Yanai shows nothing but confidence that Uniqlo will be able to dominate the apparel retail world by 2020, leapfrogging from No. 4.

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As part of that trajectory, he is overseeing the launch of Uniqlo's first store in Canada – at Toronto's Eaton Centre – on Friday amid an increasingly crowded market for affordable fashion, including the world's two biggest chains, Zara of Spain and H&M of Sweden.

Uniqlo's arrival in this country comes as the chain, known for minimalist-style casual wear such as $99.90 cashmere sweaters in 16 colours, struggles with losses in the U.S. market and profit declines overall amid shifting currency values. South of the border, Uniqlo, which is owned by Fast Retailing Inc., is closing suburban stores to focus more on flagships in cities. Over all, it has cut costs and prices and concentrated more on research and development.

In Canada, the Uniqlo brand has only 10 to 15 per cent brand awareness among consumers, he acknowledged.

"Whether the brand is known would have less of an impact than you would expect," Mr. Yanai, said. "Whether the brand resonates with the local people – that is the key, from my perspective."

Mr. Yanai, 67, is the richest man in Japan, according to Forbes. Some excerpts from the interview with The Globe and Mail:

What retailers have inspired you in building Uniqlo?

The list is long. It would include Marks & Spencer from the U.K., Gap from the U.S., H&M, Zara. It's not limited to them. We truly want to offer great clothing as everyday wear. You tend to associate inexpensive clothing with suboptimal quality. We aspire to offer truly great quality of clothing for everyday wear.

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What was the challenge of adapting a Far East Japanese look and feel to North America? You are known for "functional" clothing such as Heattech underwear designed to keep people warm.

Let me step back and talk about apparel technology or textile technology, which has long been the Japanese tradition and expertise. ... We do not have a tradition of wearing Western clothing. Japan is a country of kimonos. But the flip side of it is: We are able to look at clothing in quite an objective fashion.

How have you learned about Western clothing?

When I was young, Japan was under U.S. occupation. My father used to run a men's clothing business with brands like Pierre Cardin, he was selling suits. When I inherited the business, I shifted gears and started to sell casual clothes. Back in those days, American college students were looking for U.S. East Coast looks, Ivy league styles, back in the 1960s or 1950s.

How were you influenced by the American East Coast?

I was born when Japan was under occupation of the United States. And back in those days TV used to broadcast American dramas, such as Rawhide with Clint Eastwood. This was my everyday life. And my father's business sold men's and women's clothing with American and French brands. So that's the environment I went through to learn about apparel.

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Uniqlo has a big business now, Canada is its 18th country. But you're struggling in the key U.S. market. Why and what is your recovery plan?

When we first went to New York, it was a store in a shopping mall and we failed miserably. Our brand was not known at all. We rented an office in Soho in New York. There was a warehouse nearby and we started to sell some of our merchandise and the sales outperformed those of the mall store. We built a store in Soho and it performed extremely well. Then we moved to Fifth Avenue. All of these were successful. The current mall stores are the source of struggle. ... So we need to be present in the centre of a city first. We have stores on the East Coast and West Coast. We tend to do a better job on the West Coast. The West Coast is closer geographically to Asia. We are a firm believer we could be very successful in the U.S.

What about the suburban mall stores?

"A" class malls are good. In "B" and "C" malls, we will be closing stores. We try to negotiate the deal whenever they [landlords] are ready to let us go. We want to exit some of these underperforming stores. The current plan is to close five stores [which it has already done, leaving 45.]

What lessons to you take from the U.S. for Canada?

Canada and the U.S. are different. In Canada, it's a cold region and the difference between the warm climate and the cold climate is big. We have stores in Russia, which is very cold. We believe we can equally enjoy a good business in Canada as we do in Russia. ... Geographically, Canada is close to the United States but you tend to have more in common with Europe and Australia.

How many stores do you envision in Canada?

If things go well, probably the outside potential could be 100 stores.

And in the U.S.?

I don't know. ... We will be aggressively engaging in e-commerce. If we build brick-and-mortar stores, we definitely want to be picky on the locations. ... Probably we will have several hundred.

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