[Event Report] Engineers Weaving Fast Retailing’s Digital Transformation: A Global Challenge (Part 1)

Amazon Web Services Japan G.K. hosted Fast Retailing Co., Ltd. on July 24, 2024 for its 4.5 hour lecture titled “Engineers Weaving Fast Retailing’s Digital Transformation: A Global Challenge”. This blog post will report on the contents in three parts.

The job titles are as of the day of event.

Opening: Business transformation and digital initiatives at Fast Retailing

Shimpei Otani, Group Executive Officer (CTO and CSO), Digital Business Transformation Services, Fast Retailing Co., Ltd.

First, Mr. Otani explained Fast Retailing’s business concept and the “Ariake Project” aimed at digital transformation.

Under the mission statement “Changing clothes. Changing conventional wisdom. Change the world.”, Fast Retailing operates 8 brands including UNIQLO, GU, PLST, Theory, COMPTOIR DES COTONNIERS, and PRINCESSE tam tam. With around 3,600 stores in about 30 countries and regions, it has grown into one of the world’s largest apparel retailers with 2.7 trillion yen (as of August 2023 period) in revenue. UNIQLO in particular leads overseas operations, accounting for 60% of revenue. Aiming to provide “LifeWear” as the ultimate everyday clothes to enrich everyone’s lives and delivering high-quality clothes at affordable prices is the company’s concept. Through “PEACE FOR ALL” initiatives, Fast Retailing also focuses on social contribution, donating profits from collaboration T-shirts with well-known personalities and companies wishing for peace for people affected by conflict and discrimination.

As part of digital transformation efforts, Fast Retailing is promoting the Ariake Project. Its aim is to shift from a manufacturing retailer to a “digital consumer retailing company” transforming operations to deliver only what customers truly want. Based on the insights from customers—customer voices—the goal is to connect planning, manufacturing/logistics, and sales digitally to deliver the right products in the right amounts at the right time. Around 110,000 employees worldwide work as one team, leveraging data to accurately grasp customer needs and respond swiftly.

By visualizing and optimizing the entire process from planning to sales with data, the aim is to eliminate waste while improving customer satisfaction and reducing costs. Engineers play the core role, and as the name Digital Business Transformation Services suggests, the focus is not just on IT but on transforming how work is done.

Specific initiatives include introducing RFID-based self-checkout systems to enable seamless shopping experiences across stores and e-commerce. Fast Retailing is also promoting logistics automation and efficiency through introducing autonomous delivery robots, showing a wide range of software and hardware initiatives.

The Ariake Project aims to maximize digital capabilities to achieve its business transformation and shift to a “digital consumer retailing company”, while adopting cutting-edge technologies. The goal is to build an optimal platform on AWS and realize value provision to customers through this large-scale challenge. Through digital transformation, Fast Retailing seeks to fulfill its mission of “Changing clothes. Changing conventional wisdom. Change the world.”.

Evolution of In-house Development at Fast Retailing

Yuichi Murata, Director, Core Engineering, Digital Business Transformation Services, Fast Retailing Co., Ltd.

Next, Mr. Murata from the Core Engineering team that promotes in-house development at Fast Retailing introduced the company’s history of digital transformation and efforts in their in-house development.

The company has long recognized the importance of incorporating digital technologies into operations, beginning with the introduction of a POS system in 1988, and started digital processing of product and sales information in-house in the 1990s. In the 2000s, an online store was opened, leading advancements of various digital transformations such as operations by store staff using digital devices in the 2010s. With the Ariake Project, a company-wide reform project that started in 2016, in-house engineering was formally launched. Through these in-house development efforts, reforms such as RFID-based self-checkout and inventory management, and building an e-commerce platform for global expansion have been realized.

The background for bringing development in-house includes the strategy to fully shift from a manufacturing retailer to an information retailer by leveraging information. To achieve this, it was necessary to build platforms in-house. In addition, with the mindset “business = systems” deeply understanding operations, building simple and clear complete systems, and constructing systems that align with the future direction were considered important. When promoting in-house development, the company started with e-commerce, gradually expanding functions by establishing a membership base, opening a catalog site, and enhancing online store capabilities. Beginning such mechanisms with the country where they have newly launched business operations and expanding scope to both Japan and global markets were also key approaches.

The organization has hired global talent, adopted English as the main language, and taken various other steps to promote a global environment. A hybrid system has also been adopted where full-time employees and partner companies form single scrum teams. For engineer talent development, the focus is on strategically nurturing senior engineers who understand the business and can reflect their views onto technical decisions. Specifically, an architecture review board has been established for training in breaking down various business requirements into system designs. Rotating board members enables continuous talent development.

Major achievements of in-house development include improved speed in resolving issues and gaining control over systems. Since the company built the systems itself, it’s easy to identify problem areas and respond swiftly. Being able to make important decisions quickly, such as technology selection and understanding business logic, has also been a major result. Challenges include bridging the original apparel retailer culture and IT engineering culture, Japanese and global cultures, and handling global scale. Going forward, with a goal of 10 trillion yen in annual revenue, the aim is to build the world’s top level global engineering organization from Japan. To achieve this, continuously developing senior engineers who understand the business and who can make technical decisions will be indispensable. The company aims to provide the most rewarding workplace in the world for engineers, offering valuable opportunities to take on world-class business challenges and fostering an environment where engineers can grow the most by overcoming difficulties.

Microservices Platform Supporting Global Expansion, Store and EC Integration, and Business Growth to 10 Trillion Yen Revenue

Xiao She, Manager, Core Engineering, Digital Business Transformation Services, Fast Retailing Co., Ltd.
Natsuki Inoue, Core Engineering, Digital Business Transformation Services, Fast Retailing Co., Ltd.

Next, members of the Fast Retailing Core Engineering team introduced the microservices platform supporting global expansion, and initiatives to integrate e-commerce (EC) and brick-and-mortar stores. First, Mr. She gave an overview of past initiatives.

Previously, different EC systems were used for each brand and region, resulting in high costs for function development and operations, as well as inefficiencies. Therefore, in 2017, renewal of EC was undertaken to provide one global EC solution worldwide. In 2020, the global EC package was released in Japan, followed by the US in 2021 and Korea in 2024. The new EC platform is unified not only in design but functionality as well. The basic policy for deploying the global EC platform is supporting multiple brands and accommodating different languages, payment methods, and legal systems in each country while achieving both global standardization and localization. Going forward, continuous rollout to regions across the world is planned in line with Fast Retailing’s business expansion.

A key characteristic of Fast Retailing’s EC is integration with brick-and-mortar stores. In addition to common EC functions like purchase history, notifications, and chatbots, the system incorporates O2O (Online to Offline, Offline to Online) capabilities for integrating EC and brick-and-mortar stores. O2O services include: “store pickup” to have EC purchased items delivered to a store, “ORDER & PICK” to order inventory originally in a store via EC, and “store shipping” for direct shipping from store inventory to home. These realize benefits like free shipping, shorter delivery times, driving customers to stores, and optimizing warehouse capacity.

Next, Mr. Inoue explained the system configuration and architecture of the EC platform. Fast Retailing develops and operates the EC system as a global platform, clearly separating front-end and back-end responsibilities. The back-end consists of microservices covering different business domains in a cross-brand manner, while front-ends are developed specifically for each brand.

In terms of request flow, the structure is configured as follows: user device -> front-end client -> BFF (Backend for Frontend) -> back-end microservices. The BFF role is to aggregate data by calling multiple microservices and returning the response in a format convenient for the client. It also handles data caching and authentication/authorization. The back-end provides independent APIs as microservices covering specific business domains. For example, when a user purchases a product, microservices for shopping cart, product information, amount calculation, coupons, inventory, payment, order management, etc., receive the requests, execute the required logic, and return the results. The front-end consists of a responsive web SPA (Single Page Application) and native mobile apps. The SPA utilizes a common design system and internationalization to enable localization while maintaining unified architecture. Mobile apps also use some native Android/iOS code while building a common codebase with Flutter.

As a tech stack, standardization is emphasized across infrastructure, middleware, programming languages, and frameworks. Go, Java, Spring Boot, Node.js, TypeScript etc. are adopted for back-end, while React for front-end, and Kotlin and Swift for mobile.

Going forward, global expansion will be accelerated. Rollout will be gradual while addressing various requirements like local languages, payment methods, logistics, and regulations. To achieve the goal of 10 trillion yen annual revenue, handling increased traffic is an issue. Efforts will focus on end-to-end performance measurement and improvement to ensure scalability. O2O initiatives integrating EC and stores are also important. The goal is to enable purchasing desired products anytime, anywhere through seamless linkage between stores and EC. Convenience for customers will be pursued by advancing systems and leveraging the strength of the store network.

(To be continued in Part 2)

Original blog writers from AWS Japan:

Mariko Anan, SA, Retail

Yuto Miyoshi, SA, Retail