MUJI's "Acclimatization" Chinese Market Is Far From Japan's Glory

MUJI China has experienced the most beautiful 2015. In the 2016 fiscal year, China's market growth rate was the same as the same store sales for the first time, to 4.7%. In the latest 2018 financial year performance, the Chinese market has a negative growth compared with the same store sales.

MUJI has more than 900 stores worldwide with an annual revenue of nearly 26 billion yuan.

MUJI (MUJI) was first launched in 1980 and developed rapidly after the bursting of the Japanese economic bubble in 1990s. By the end of February 2019, Muji has 917 stores in the world, covering 32 countries and regions in the world, with an annual revenue of 408 billion 840 million yen (RMB 25 billion 950 million yuan) and a profit of 44 billion 740 million yen. It has become a world-renowned lifestyle brand. Reviewing its development history, its success is due to the brand concept, business model, supply chain and globalization.

MUJI's SPA business model

SPA business mode (Speciality retailer of Private label Apparel), that is, private brand professional retail business mode, is a close to "manufacturing retail" concept. ZARA, H&M, FAST RETAILING's UNIQLO, good quality plan Muji, World Group world clothing company OZOC, FIVE FOXes COMME CA CA, and other brands are using the mode. China's Hai Lan's home, hot air, millet, famous products and so on are all this model. From GAP company, it is a vertical business mode integrated from commodity planning, manufacturing to retail. SPA mode can effectively link customers and suppliers, and innovate the supply chain to achieve the speed of reaction to the market.

MUJI product strength core

Because reasonable, so cheap.

MUJI products were initially established because they were reasonable and cheap. The products developed by MUJI products, which are simple in packaging, simple in design and focus on the essence of commodities, cater to the pursuit of cost performance by Japanese consumers in the latter part of the bubble economy. In pursuit of low price, Muji design is close to the details of life, creating some value in casual. At the same time, Muji will inform consumers of the reasons why products are cheap in trademark and planning, which will convince consumers and enhance user stickiness.

　 Scene marketing of Muji

Lifestyle provider

MUJI continues to try to expand the consumption scenario, and promote the development of professional stores in the subdivision area. The construction of professional stores based on commuter, catering, camping, tourism and other topics, is based on the strategy of multi scene marketing, which enhances users' recognition and experience of brand, and then delivers the exclusive Muji lifestyle and life philosophy to users.

Meticulous operation of MUJI products

MUJI has seen a sharp decline in operating profit since 2001, and sales growth has slowed down. In 2002, Muji eliminated 3 billion 800 million bad stocks at once and inefficient stores closed. In that year, net profit fell by 98% to 13 million yen.

Matsui Chusan, the newly appointed general manager, started the internal reform of the company, and now it is the beginning of meticulous operation of Muji. There are two main directions: on the one hand, we should listen to the opinions of customers, enhance the effectiveness and pertinence of product development, at the same time, make inventory management more refined, accelerate inefficient elimination of single products, and accelerate the speed of product iteration. On the other hand, from the standardised management, the staff work guide and standardized shop guide are worked out, the shop opening process is strictly regulated, and the "30% committee" is set up to control the operation cost.

The Chinese market is far from the glory of the Japanese market.

MUJI has entered the Chinese market in 2005, and has experienced a dormant period of 7 years. By 2010, there were only 8 new outlets for Muji in China, and 12 in 2011. Since 2012, Muji has been expanding at 30~50 stores in China every year. In the past two years, Muji still maintained the expansion speed of 30 stores. By the end of February 2019, the number of stores in China reached 324, of which 20 were in Hongkong and 48 in Taiwan.

But sales growth did not grow at the same time as the stores. According to the company's earnings report, Muji can rise 20.4% in sales in the Chinese market by the end of February 2016, much higher than that in the 2015 fiscal year 14.5% and 2014 in fiscal year 14.3%. The strong same store growth and new store expansion led to a 45.7% rise in China's revenue in RMB in fiscal year 2016. After that, the growth rate slowed down and even dropped in some quarters.

According to the analysis of billion euro think tank, Muji has lost some capabilities in the Chinese market.

1) local supply chain capability

At present, the supply of products in the Chinese market depends on the Japanese market, even if the OEM OEM products need to be sent back to Japan for re sorting and exporting to China.

Despite the transformation of the two major Asian logistics centers represented by Beijing and Shanghai since 2010, the "through" warehouse location of temporary storage and ordering of goods received has been changed, and the stock of commodities has been greatly increased and transformed into a reserve center. The two warehouse can supply nearly 1000 kinds of goods, and a large number of products need support from the Japanese mainland.

2) dislocation of brand positioning

MUJI products, which are located in the middle end of the country, are priced in the middle and high-end stores in China. Shops are also far away from supermarket stores and choose among high-end shopping malls in the first tier cities. Far away from the core consumer group, it is difficult to guarantee sales.

3) product development

Lack of products that meet China's needs. In the early days of its creation, the product development team went deep into fifty countries around the world to find quality products and supply chains. Now the demand for products is large, and there is no guarantee of product development.

4) fierce competition in the market

Miniso, or NetEase's strict selection, Taobao's core election, MI Jia products and Jingdong made in Beijing, are highly competitive in product design, concept and supply chain integration.

epilogue

According to the layout of Muji's stores, the Chinese market has become the core of the strategy under the condition of the Japanese market being saturated. Every year, more than 30 stores have also expressed their determination to build Muji. The misconception of brand concept, the lack of product development, and the inadequate supply chain of overseas supply have become the pits that we have to face. How long will the Muji's acclimatization continue?