Case study: Uniqlo – New look Japanese management

Single-mindedness
has made Uniqlo a retail success story in Japan. And if all goes to plan, it
could be coming to High Street near you

Last
month, UK retailing welcomed a newcomer, the Japanese "cheap chic"
chain Uniqlo. Yet given the uncertain, not to say cut-throat, conditions on the
high street at present, "welcome" may not have been the word on
everyone’s lips.

All
the more so because it is already clear that Uniqlo, which plans a whirlwind
assault on the UK over the next few months, is no mean contender.

Three
years ago few people in Japan had heard of Uniqlo, let alone its single-minded
founder and CEO Tadishi Yanai. Now the chain is so ubiquitous that its simple,
no-logo, no-frills jeans, fleece jackets and T-shirts are often described as
the Japanese national uniform.

Trouncing
opposition

Against
a background of economic turmoil, Uniqlo has trounced the opposition to emerge
as one of the country’s few high-growth, high-profit performers.

In
the process, Yanai has emerged as the apostle of a new kind of Japanese
management thinking, based on the twin principles of opportunism and cho-kechi
(super-thrift).

By
his own avowal, Yanai is hardly a typical Japanese chief executive. In fact, he
prides himself on his "un-Japanese" approach to business.

"We
operate like a foreign company," he says, and often mocks the style of
management that values tradition above profits and puts a premium on job
security in the sort of undeferential language that would have traditionalists
spinning in their swivel chairs.

‘Survival
of the fittest’

As
far as Yanai is concerned, you can forget the measured, long-term, gradual
approach to markets that once served Japanese companies so well. He thinks big
risks reap bigger rewards. His brand of capitalism is firmly based on the
"survival of the fittest" ethos.

As
a consequence, Uniqlo’s business model is often likened to that in western
companies, in particular the kind of US fast-food chain that offers identical
products and service for a low price to anyone, anywhere at any time.

Some
claim that Uniqlo’s slick, lean inventory system – an important element in its
price-cutting strategy – owes a good deal to techniques pioneered by companies
such as Dell Computer and 7-Eleven.

Within
the clothing industry itself, Yanai includes those old, and currently somewhat
lame, western warhorses Gap, M&S and Next, in his personal list of
inspirations, although of course that hasn’t stopped him singling them out as
direct targets for attack.

Eastern
twist

But
if Uniqlo really is a "western" company in Japanese hands (a moot
point anyway, given the influence that Japanese techniques such as kanban and
meikiki have had on concepts like just-in-time and market agility), it is
certainly one with a decidedly eastern twist.

This
is best demonstrated by its ability to get to grips with a paradox that has
long perplexed rivals in the US and European rag trade – how to combine the
kind of quality manufacturing and in-store service that guarantee consistently
strong customer satisfaction ratings with cheap, cheap prices.

Yanai’s
solution owes a good deal to traditional Japanese manufacturing techniques, in
which quality control and the elimination of waste are cemented into the
process at every stage of the cycle.

He
may keep costs down by manufacturing in bulk in China, but Uniqlo’s parent
company Fast Retailing handles most other aspects of the production, marketing
and distribution process, ensuring costs are kept down and quality guaranteed.

And
there is also something decidedly Japanese about the perfectionism of another
of Uniqlo’s main selling points – its policy of offering customers on-the-spot
alterations, finishing and tailoring, guaranteed to be completed within 30
minutes.

Tight
ship

Yanai
may have abandoned the job-for-life ethos that used to underpin Japanese
management techniques, but when it comes to issues such as staff training,
motivation and discipline, he has willingly espoused tradition. You need to run
an extremely tight ship to guarantee that level of service.

Indeed,
for all Yanai’s protestations about his western outlook, visitors to Uniqlo’s
flagship store in central Tokyo claim they tend to confirm "every
stereotype you’ve ever heard about Japanese workers". Polite, well-dressed
and faultlessly polite, they are a million miles from the typical human product
of the UK retail industry, a breed GQ magazine describes as "the surly
adolescent, his face incandescent with a volcanic eruption of sebum".

Uniqlo
pays its staff more on average and also offers strong incentives to
self-motivated employees.

Pep
sessions

And
then there are the pep sessions. Ten minutes before opening, staff at every
store are gathered together in neat rows, pen and notebook to the ready. They
may not go as far as singing the company anthem in perfect harmony, but they
are certainly asked to repeat in unison commonly used phrases such as,
"Mata okoshi kudasai" – "Please come again".

Meanwhile
individual store managers mirror the group’s overall aggressive growth ethos by
geeing staff on to better last week’s record figures.

Not
that the average UK shopper will be aware of this. "We don’t want to push
the Japanese way of life, we just want to sell clothes," Yanai explains.

Antidote
to labels

Yet
this drive for anonymity – for clothes without logo or lifestyle connotations,
intended as basic tools for people to create their own style – is in itself a
new strategy in western retail. It could be seen as a Zen-like antidote to the
label-frenzy of the past decade.

The
Uniqlo brand’s democratic values, in which cheap is no longer a synonym for low
quality, has made it a recession-beater in Japan. With the rest of the world
now apparently headed in the same direction, Yanai’s unique new fusion of
survivalist eastern and western management techniques is looking increasingly
attractive. The pendulum has swung again – the Japanese are back.

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