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Despite these successes, however, Uniqlo remained a periph-
eral player in the apparel retail market. Its presence and image
were associated with the suburbs and small towns, which lim-
ited its ability to compete with the larger national chains.
Recognizing this constraint, Uniqlo’s management made a
series of key decisions in the late 1990s that propelled the com-
pany from a regional to a national stage and reshaped its image
from a producer of standardized products to a retailer known
for customer-focused innovation.
Until 1996, Uniqlo stores had stocked a mix of private-label
and branded products. In 1997, management made the decision
to stock only private-label products and to establish a clear
brand focus. Simultaneously, company management reshaped
Uniqlo’s image, deciding to move from suburban to Main Street
stores. This resulted in the opening of the first Uniqlo store in
Tokyo’s high-fashion Harajuku district in 1998. Meanwhile, the
company discarded traditional advertising channels—such as
door-to-door pamphlet distribution—in favor of TV and poster
ads that promoted Uniqlo’s new, trendier image.
The sales strategy shifted: instead of trying to sell as much as
possible of what was produced, the company sought to develop
blockbuster products that would sell out. This new focus
resulted in the launch of its first range of fleece jackets in
1998—which we described earlier.
To make this strategy work, Uniqlo required changes in
management style: store managers were given greater autonomy
and incentivized to increase store sales. Uniqlo also rationalized
its production system. By 1998, 90 percent of its merchandise
was produced through contract manufacturing in China, which
ensured low prices. It consolidated the number of factories,
reducing the number from 140 to 40. It also set up an office in

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