Can We Find New Opportunities For MUJI Products When We Open Our Stores To The Lower Tier Cities?

MUJI Xuzhou new store

"Sorry, we can't go in now. We haven't opened yet." Seven or eight security personnel lined up in front of the glass door to block customers eager to enter the store.

According to the world clothing and shoe net, Suning square, which is regarded as "the most high-end shopping malls in Xuzhou and even the whole north of Jiangsu", has officially opened for 1 hours and 10 minutes, but customers obviously can't wait. They gathered around the mall door or stroll nearby, and others asked the security guard to open the door after a while. In the late spring and early summer, the sun was already somewhat poisonous. Many people were red faced and sweaty.

"Look at this building, you know the grade of this shopping mall. This is the tallest building in Xuzhou." this reminds me of what the driver said when he was driving to Suning square. The best shopping malls in Xuzhou were Suning square. Golden Eagle department store But it has been relatively old, not many good brands, "Suning has done a lot of publicity, all the people in Xuzhou know that there will be a lot of brands that Xuzhou has never sold before, and are waiting for its opening."

In the official introduction of Suning Plaza, more than 50% of its employees were recruited. brand For the first time in Xuzhou. MUJI is one of them. In the shopping mall publicity leaflet, Muji's name and Vivienne Westwood, Michael Kors, Pandora and other light luxury brands were placed in a prominent position, undertaking the important task of attracting customers.

If we search for reports on Suning square, many of the headlines will focus on "Muji" has finally come to Xuzhou.

By the end of 2011, MUJI There are only 36 stores in China. By 2013, this number had become 100. 3 years later, by the end of December 2016, the number of MUJI products in the Chinese market has exceeded 200.

After entering the WeChat era, the growth of these figures was recorded by a push of "new store opening". Slowly, the names mentioned in these push are no longer concentrated in Beijing, Shanghai or Shenzhen, or Nanjing, Hangzhou and Chengdu. Instead, there are more and more places such as Xuzhou, Zhuzhou, Jiaxing and Nanchang.

Xuzhou Suning Plaza

Heading for low tier cities

"The development of Muji has become a mature brand in the Chinese market now, so in recent two years it has begun to sink to the lower tier cities," Chen Li Lin, deputy general manager of the real estate consulting firm Rui Yide and chairman of China commercial data chairman, explained the opportunity for the development of Muji to the low level cities in an interview with reporters. "It is now very crowded in a second tier city, and it is very difficult to find a good shop. The three or four tier cities will have better opportunities."

In Suning Plaza, Xuzhou, if you enter the main entrance, take the large down escalator placed in the middle of the atrium to the negative level. If the elevator turns left, it will take a few steps to enter the Muji shop. Although it is on the first floor, but look around the surrounding environment can also feel that this is a prosperous shop - a small area of the next door is on the next door; not far away from UNIQLO, H&M, and brand collection shop I.T's newly opened brand new concept store zi.ti zi.ti's first store in the country.

Usually, Muji is located in the second tier city stores in the secondary location of the city's core business circle, such as the three or four floor, or the street shop away from the main entrance. The location strategy of "only second good" stores has been attributed to the success of Muji in China.

In related reports, Matsui Chusan said, "good location means high store rent, while high store rent will affect revenue". Therefore, Muji should be selected in the "second good" location to open a store and improve its revenue efficiency. This is the experience gained by Muji in 1990s when it opened shop in China's Hongkong and Singapore, but its profit was bleak.

This strategy has been loosened in Xuzhou, largely because Muji has a brand sense of superiority here. For those shops that do not have a luxury brand store, the most high-end brands such as Coach and Furla are Xuzhou and other low tier cities. Although Muji is not a light luxury level, it can also leave many people with the impression of "high quality" or even "advanced". Chen Lilin believes that many shopping malls in low - level cities are "hoping to upgrade their shopping malls by Muji", so they will give them a good berth and "serve them as guests".

Low level city shops rent is substantially lower than the second tier cities. This makes Muji even a better location than the "second good" shops, and it also has the opportunity to harvest a higher store opening effect than a second tier city. But there is a premise that Muji needs to develop enough purchasing power in the three or four tier cities.

MUJI Xuzhou new store

Slow pace

From this point of view, Muji is not much superior to the clothing or fan lifestyle brand that has entered the Chinese market in the same period. Because it's a bit slow.

Similarly, UNIQLO from Japan entered the Chinese market in 2002. As of December 2016, the number of stores in Greater China exceeded 500. Another neighbor of Suning Plaza and H&M, a fast fashion brand in Sweden, came to China two years later than Muji, and opened 300 stores in China at the end of the 2015 fiscal year. The speed of Zara, Spain's fast fashion giant, has been even more amazing. From 2006 to January 2015, it has completed the goal of opening 500 stores in China, and announced that it will slow down the pace of opening stores and start the strategy of streamlining and opening stores.

"Muji" is slower than fast fashion brands in the penetration of low tier cities, largely because of certain thresholds for pricing and brand image. Chen Lilin said.

MUJI products with high pricing characteristics are most outstanding in groceries, especially in Japanese handicrafts. For a condiment porcelain bottle to sell for 200 yuan, a wooden stool to sell 1000 yuan brand, most Chinese customers are more willing to maintain the "onlookers" attitude. This situation will be more obvious in the three or four tier cities.

To a large extent, this is why Muji has launched the so-called "new pricing" in the Chinese market from February 2015 onwards, namely, lowering the price of commodities. At present, Muji has two new pricing practices every year, and the price reduction is not small. Taking the two new pricing in 2016 as an example, the prices of the categories involved in price adjustment are about 20%.

This will help Muji to reach a larger audience in China. Matsuzaki Kyo, the incumbent president, plans to make Muji a "more popular" in China.

In addition to the price, and the spirit of Muji brand, the "Muji", which is the opposite of the "people first", can be branded.

In fact, this is in line with the demand for "consumption upgrading" after the consumerism boom in Chinese society. For example, Magdalena Kodaj, director of the global apparel industry of Europe consulting company, said in a news interview with reporters that China's fashion and lifestyle industries have undergone changes in recent years. The most obvious manifestation is that Chinese customers no longer blindly pursue luxury goods, but begin to prefer "such brands as Muji, a simple, low-key and unique aesthetic philosophy". This is exactly the same as the chance of Muji's birth in Japan in 1980s.

But this wave of consumption upgrading takes time from the second tier cities to the low level cities. Moreover, in the absence of physical stores, relying solely on online stores, purchasing agents, and media publicity, customers can understand the brand, but it is difficult to understand in depth.

However, this sense of distance, which can not be seen or bought, will also add a layer of aura to the market development of Muji in the three or four tier cities, which will aggravate the "higher sense" of the price, the "made in Japan" and the popular second tier cities.

Just like 10 minutes and 08 minutes later, security guards just opened the door of Suning square, but Muji shops were already crowded with people. A 50 year old female customer told the news that when she opened the mall, she did not go anywhere. She came directly to Muji, because she heard that the brand was not added and the quality was good, so she wanted to see it. After entering the shop, she said he felt "wonderful, like coming to Beijing and Shanghai".

Among the crowds who had been pouring in from the entrance, two girls who were looking at the excitement said they had visited the MUJI products in other cities and felt that they were "cool, simple and good-looking". But they had never had the chance to stroll around, and could not buy them. Fortunately, "now it finally opened a shop in Xuzhou."

A shop from scratch.

Xu Tingting belonged to the first person to know that Muji would set up shop in Xuzhou. She is the regional manager of the 3 area of Muji. According to the instructions received, the Xuzhou Suning Plaza store will be assigned to the 3 districts of Jianghuai under her jurisdiction. Before that, the staff of Muji development department completed the evaluation of the city, business circle, shops location and other projects according to the set up shop benchmark book established by the company, and completed preliminary communication with the commercial real estate developers to be settled. What Xu Tingting wants to do is to start the first store in Xuzhou according to the scheduled time on the berth confirmed by the company.

Forming a team is her most critical and urgent task at the moment.

First of all, we must confirm the store manager. Under normal circumstances, the first store manager of a non Shanghai city will be spanferred from other store managers in the new store area. This is to ensure that the first store in a city can maintain its standard and move on to the right track and open the market as soon as possible.

Meanwhile, the recruitment of shop assistants started. In order not to delay the opening of the new store, Xu Tingting completed all interviews before the Lunar New Year holiday in 2017 and confirmed the list.

"Now I have more stores than I do at that time." Xu Tingting recalls his participation in Muji in 2008 when he first participated in the opening ceremony of the first shop in Nanjing.

MUJI has entered the Chinese market since 2005. Until 2008, it had only been a store in Zhengda square, Shanghai. At that time, the headquarters of Muji China also did not rent independent office buildings. Instead, it used offices in the shops to open offices and set up shop, which also needed external resources outside the Chinese market.

For example, the new staff training in Nanjing new store is in the open shop in Shanghai, and the teacher from Japan headquarters is responsible for carrying out the training. There is no written rules and regulations to refer to the layout of new stores, the procedures of opening shops, etc., and it is also necessary for Japanese headquarters to send special personnel to guide, and seconded the shop assistants of Hongkong shops for short-term support. If you encounter an unexpected problem, you can only rely on the clerk to do the job in his own work.

All this did not change until 2010 when Muji accelerated its expansion in the Chinese market.

Xuzhou store enters the layout stage

Slowing growth rate

MUJI's own caution has slowed its penetration into China's low tier cities.

Song Qi Xiao told reporters in the 200 Muji china shop activity, Muji does not specify a clear number of shop targets, he believes that "in the current situation, 30-40 stores a year is the right speed." MUJI has been keeping pace since 2011. Even in 2015, its sales grew at an all-time high - the sales of Muji single brand increased by 20.4% year-on-year, and there was no plan to speed up its progress.

This does not mean Muji is not in a hurry. As a matter of fact, we can feel that the growth target of Muji has been added to the sales target of 500 billion yen in 2020, which was attached to the 2016 year results report released by the Muji company. In the 2016 fiscal year, the good plan achieved a total sales of 333 billion 200 million yen, and opened 870 stores, 821 of which were Muji shops.

It is also noteworthy that the overseas market performance of the good products showed a significant fluctuation in the 2016 fiscal year, with a growth rate of only 7.8%. In the 2014 fiscal year and 2015 fiscal year, the growth of these markets was 60% and 40.7% respectively.

China, as the best overseas market, is not ideal. If we only look at the performance of Muji brand, the sales in the 2016 fiscal year increased by only 4.7%. Over the past three years, Muji has achieved an increase of two digit sales year-on-year.

Under such circumstances, MUJI products should also seek new growth points. The mainland of China, which has not yet been ploughed, can become an excellent opportunity.

If the strategy of placing a store is placed in a larger strategic layout, the discretion of a good plan can be easily understood. Because in parallel with the opening of low level cities, Muji has also tried to create bigger image stores and new formats in cities like Shanghai, Chengdu, Beijing and Shenzhen. At present, Shanghai and Chengdu have opened "flagship stores", and in June 3rd, Shanghai is about to open the world's first MUJI Diner restaurant. At the end of the year, Shenzhen and Beijing will issue the world's only two MUJI Hotel. This means that no matter from the management of capital chain or the level of brand image, Muji should not be too aggressive.

MUJI Xuzhou new store

Judging from the layout of the global market, there is no reason why the plan will slow down.

In an interview with reporters about the potential of the India market, Matsuzaki Kyo said, "India has the potential of the Chinese market in the past", so the good plan expects to replicate the successful experience of the Chinese market in the India market. He believes that this experience applies to any country that is going to experience or is going to experience economic development, "because once people experience rapid development, people will gradually start to prefer simpler and more useful products."

As we can see now, similar to the approach when we first entered China, the good plan also set up a low frequency expansion plan for 2-3 India Muji stores every year. But a little different is that the flagship store's image strategy has been incorporated into the India market development plan at this stage. The Muji flagship store in Mumbai, India, will open in 2018.

These practices make the success or failure of every new attempt in the Chinese market more important. Especially at this stage, the practice of opening the first store in China's more and more low level cities has important reference value for expanding the India market.

"There is a characteristic of China's three or four line cities, that is, the purchasing power of local customers is very large. Some people are very rich, some are far from the degree of consumption upgrading, and the middle class is almost missing." Chen Lilin's remark also makes people believe that China's operation, especially the experience of developing low level cities, can be applied to the feasibility of India market.

A city only has the first store to have this "What is MUJI" publicity board.

However, this great prospect seems far from the relationship between Xu Tingting and the new Xuzhou store. In Xu Tingting's view, she prefers to enjoy the sense of accomplishment she can get from her first store in a new city.

"This store is a little bit done by ourselves. It is the first store in Xuzhou. The process of opening the shop is after that, if you have the opportunity to participate in two shops and three shops in Xuzhou, it will be very difficult to have any more experience." Xu Tingting said to all the staff at the morning meeting held half an hour before the shop opened, feeling that she was somewhat emotional. "Everyone has worked hard during this period. Everyone should be very busy in the next week, but we hope you can enjoy this process."

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