Will Muji Improve The Business Strategy Of "Less Is More"?

Retailer has become one of Japan's most famous brands by selling products that are simple, practical and designed for decades. However, facts have proved that "less is more" has its limitations as a business strategy.

After ten years of development, Muji has brought the minimalist shopping malls, which display light combination shelves, strong kitchen utensils and fashionable colors, to cities from Toronto to Shanghai, but now Muji is in a struggling predicament. In April, the performance report of Ryohin Keikaku Co., a Muji parent company, showed that the sale of Muji sales in China for the first time in 8 years fell, and the financial outlook was lower than analysts' expectations.

Investors are worried that Ryohin Keikaku's share price has fallen by nearly 40% in the past year, after the company's market capitalization almost doubled by two between 2013 and 2018.

In addition to the limited ability of consumers to design simple plastic folders and wastepaper baskets, there are still more risks. MUJI has become one of the few Japanese brands that have been popular all over the world, because SONY and Panasonic are highly respected. The potential decline of MUJI products is not a good sign for Japanese companies to thrive in the international market. Although Japan is the third largest economy in the world, the island nation has only one real global retail Champion: Fast Retailing Co. (Uniqlo).

"My idea is that by 2030, Muji stores will be used in most international big cities, and customers will buy and use our products every day," group president Satoru Matsuzaki said in an interview at the company headquarters in northwestern Tokyo. This humble building uses design aesthetics with simple design elements and recycled wood as building materials. This style is sometimes called "Muji wind". "For this reason, we need to decompose and build a lot of things."

Matsuzaki has been committed to opening more Muji stores in China and Kuwait. He hopes to lead the retailer to achieve global growth while sticking to the original concept of Muji. In the four years he steered Muji, he set up a new business, including Muji straight Hotel and Muji bus, and also entered new markets such as India and Switzerland. In order to drive growth, he took a series of measures, such as shifting production to cheaper places, designing products for Chinese consumers, etc.

MUJI was founded in 1980 and used to be the private brand of Xi you chain supermarket. It aims to provide limited price products. The brand name is Mujirushi Ryohin, which literally means "no brand quality goods". At that time, Japanese consumers attached great importance to the perfection of aesthetics. Products that did not meet strict standards were often disposed of. MUJI does the opposite: one of its first products is the broken letinous edodes sold at a discount price, which also gives a deeper meaning to a maxim maxim: "there is no reason why it should not be cheap."

In 1989, Xi you stripped Ryohin Keikaku to an independent company. Muji soon attracted a group of enthusiastic followers in Japan, whose products covered food, stationery, luggage and even furniture. In order to emphasize practicality and sustainability, MUJI products often remain unchanged for many years. These minimalist designs may be very satisfying to Marie Kondo, a stacked drawer with wide and high depth but deep consistency, or a combined plastic container for cleaning office supplies such as pens and staples on the desktop.

Though Muji had opened its first international branch in London in 1991, it was not until the beginning of this century that Muji began to expand actively. In 2012, Muji's stores in China accelerated the internationalization process of Muji. The resulting sales surge: Muji's revenue has doubled since then to about 400 billion yen (US $3 billion 700 million), while overseas stores contributed about 40% of sales.

Nevertheless, Muji's overseas expansion is not all in all directions. MUJI always copies the goods sold in the country to other countries' stores, preconceptions that there is no need to reinterpret these product categories for overseas consumers. For example, pencil boxes may be a general item, but not everything else applies to overseas markets: Muji has only spent ten years in China to launch bedsheets suitable for standard Chinese beds.

At the same time, Muji's "no brand" brand positioning and intuitive, invariable design make it the primary goal of low-cost Chinese Shanzhai. Because of the tax and tariff reasons, Muji prices in overseas markets are much higher than that in the Japanese market, including the Miniso, Nome, and OCE, which are made up of Chinese competitors.

A recent visit to a Muji shop in Shanghai illustrates this problem. The price of a small notebook is 25 yuan (3.64 US dollars), which may not be expensive, but its tag shows that its retail price in Japan is only 315 yen (US $2.92). The price of a portable fan is 190 yuan, while the price of similar products is only 39.9 yuan.

"In order to make Muji really become a supplier of low quality and high quality necessities, they have to lower the retail price and make it a brand that everyone can buy in the world," said Yoshinori Fujikawa, a professor of management at Hitotsubashi University International Business Strategy Institute in Tokyo.

To do this, Muji will produce more products in the country of sale. Next year, the company will launch more than 200 products made in India in India local stores. In addition, Muji will transfer more production to the cheap labor in Southeast Asia. In September last year, muiyin opened its first development office in China, where its staff were responsible for verifying the lifestyle of local people: the Muji has realized that designers in Tokyo may lack the necessary insight into the wishes of the Chinese people. However, not everything will be internationalized. MUJI will continue to make cosmetics in Japan, because the commitment to high quality raw materials is one of the charm of Muji.

Matsuzaki said: "we must sell essential products in the lifestyle of Chinese consumers. So far, they have bought our products because of the Muji brand, but now the era of Muji as a part of everyday life is coming. "

Considering the rapid development of low-cost cottage, Muji is facing a tough battle in China. Wherever it wants to become a global retail giant comparable to UNIQLO, it may need to make some strategic compromise like other big retailers: reducing its 7000 products to the most potential products, producing fast sales rather than durable products, and opening large stores in expensive shopping areas.

These initiatives may run counter to the simplicity and practicality of Muji's philosophy. And some fans of Muji have a liking for the pleasant smell of the shops, the strange and practical objects (such as the right angle stockings or the angle mattress), which may also discourage them.

Mike Allen, an analyst at Jefferies Japan Ltd, Jie Furui, said that although "a real good brand" benefited Muji, the radical expansion of Muji has created a series of complex problems. "They put their fingers into all the cookies in the world," he said. "Some cans contain biscuits, and some of them are mice." I think they are a bit ambitious. "

Matsuzaki insists that he can balance the interests of all parties so that Muji can turn the corner. Although he had such a broad goal, he expressed this ambition with typical restraint and Muji. Matsuzaki said: "in 1980, Muji sold by selling letinous edodes. If we compare our achievements to a piece of tofu, we hope that by 2030, the value of the company can turn two to three times, and become" two or three tofu ".

The author of this article is Lisa Du, Grace Huang and Jin Ye from Tokyo; Editor: Rachel Chang, Matthew Campbell.