Front and back waves of grocery stores

Image source @ Visual China

Text | Decode Decode Code

In the "Fourth Era of Consumption", the famous Japanese social observer Mitura Clearly divides the changes in Social Consumption in Japan in the past 60 years into four stages:

1) From 1960 to 1974, Japan's economy grew rapidly, and productive consumption and household consumption were the mainstream;

2) 1975-1990, the era of bubble economy, the demand for consumption upgrading is obvious;

3) From 1991 to 2008, the economy fell into recession for a long time, and consumption returned to rationality;

4) From 2009 to the present, Japan's economy has recovered moderately, new consumption has risen, and simplified consumption has been generally advocated.

According to the division of Miura Exhibition, at the end of 1970 and the beginning of 1980, Japan's per capita GDP growth rate was as high as 35%, and people habitually changed the objects of consumption from necessities to necessities, paying attention to the sensual experience brought by the appearance of goods, and exerting the pursuit of personalization and differentiation to the extreme.

As a high value-added product with emotion, appreciation and admiration in Japan, it is at this time that groceries have become a refined attitude of life that people are detached from the product itself and frantically pursue.

Most of the Japanese brands that can't be avoided today when it comes to groceries were born in Japan's biggest bubble era: the opening of the Tokyu Tetsukan Shibuya store in 1978, the birth of MUJI in 1980, the opening of LOFT in Shibuya Seibu department store in 1987, and the predecessor of Seria, the second largest 100-yen store.

After the 1990s, After the collapse of Japan's bubble economy into the "lost 20 years", the per capita GDP growth rate was sluggish and the proportion of production population continued to decline, and the reduction of residents' purchasing power prompted consumption to return to rationality, from branding and high-end to cost-effective and simplified, which is essentially a consumption downgrade under the recession.

At this time, minimalist grocery stores represented by MUJI and 100-yen stores with high prices such as Daizo and Can Do developed rapidly in the late twentieth century when the Japanese economy fell into a downturn, and some of them also began to expand globally.

After 2009, with the recovery of the Japanese economy, the attributes of the grocery business format have gradually iterated from "good to buy product attraction orientation" to "good shopping experience resonance orientation", and gradually split the two poles, on the one hand, it is a niche advanced light luxury grocery store represented by MUJI, and on the other hand, it is a 100-yuan store that pursues the ultimate cost performance represented by Seria.

As the precursor of the grocery business, Japanese grocery stores have completed the dawn period and the first, second and third booms in the 60 years since 1960, and have gradually become an important force in the retail industry that cannot be ignored. Even, in the more than ten years after the millennium, the footsteps of the former waves rushing to Enter China have also led to the budding and growth of large-scale local grocery chain brands.

At this point, the front wave and the back wave of grocery stores have met in the fastest growing economy in the new century, on the one hand, to emulate and compete, and in the face of wave after wave of consumption trends, they are waiting for a suitable opportunity to meet a new round of outbreak.

The front wave into China, mixed feelings and mixed feelings

In July 2005, MUJI opened its first store in the Chinese market at 818 Plaza on Nanjing West Road in Shanghai, and a large-scale grocery chain brand appeared in the real sense of the word.

Before that, there were not many such groceries in China with distinct design styles and attitudes. During that time, China's hottest grocery brand was Ya (renamed "Ah Ya Ya" in 2005). It signed Jolin Tsai's contemporary spokesperson in 2004, and in 2006 titled a popular variety show "Entertainment Star World".

In the first three years, MUJI did not expand, and only maintained the status of one store until 2009, after which it expanded 9 new stores in one go.

Around 2008, it was the node of China's consumer society and brand awareness. Zara, H&M, Uniqlo, gap and other consumer brands all entered China before and after that, and it can be said that in that era when the Chinese people's pockets were becoming more and more substantial, the consumerism depicted by Guo Jingming in "Small Times" quietly came.

The 2008 Beijing Olympics and the 2010 Shanghai World Expo showed the world a China full of business opportunities. Like most Japanese brands, grocery stores saw the limitless potential of the Chinese market at that time.

After MUJI, Tokyu Tate, Japan's "DIY" concept, entered China for the first time in 2012, establishing a joint venture company "Wuhan Tokyu Department Store Commercial Management Company" in Wuhan, Hubei Province, and opening China's first Tokyu Department Store in 2014, with a store area of 67,000 square meters.

Unfortunately, in 2016, the Tokyu Hand Creation Museum withdrew. Nowadays, the hasty withdrawal of Tokyu Hand Creation Museum is not only due to the price problem, but also to the city where the first store chooses to open.

Compared with Shanghai, the international consumption capital of The Ten Mile Ocean, Although Wuhan is at the forefront of economic development, when it comes to fashion and consumerism, exquisite Shanghainese may be closer to the audience portrait of Japanese groceries.

A large number of foreign brands like to put their first stop in Shanghai, not only because it is the retail capital of China, but also because Shanghai has both a century-old consumer culture and a large middle class, as well as Shanghai's decades of efforts to attract foreign investment.

Three years after tokyo's withdrawal, tokyu Tetsushin, which focuses on original + handmade niko and ... It opened its first store on Middle Huaihai Road in Shanghai and is three times the size of its flagship store in Harajuku, Tokyo, making it the largest store in the world.

Also in niko and... Later, LoFt, known as the pioneer of Japanese lifestyle miscellaneous goods, opened its first store in Shanghai Metro City in July 2020. Whether it's niko and... Or LoFt, the location logic of these Japanese grocery stores in Shanghai has one thing in common – there is also a MUJI nearby, and those places have proven to be popular business districts with sustainable businesses.

Another common denominator is that they almost abandon the brand concept at the beginning of Japan's birth, and face Chinese consumers with niche and advanced light luxury goods, that is, "expensive".

niko and... Sweatshirts, autumn and winter thin single clothes casually 600 ~ 700 yuan, coats are generally between 1000 yuan and 4000 yuan. A cowhide tote bag is more than 3,000 yuan, and even a fake square bread and croissant bread cost 799 yuan.

As the first impression of Japanese lifestyle groceries in the minds of Chinese consumers, MUJI has also deviated from its original intention in China, and the "minimalism", "not over-packaged", and "this is good" advocated in the past have also changed from the concept of anti-consumerism to the words of consumerism.

MUJI's most famous advertising slogan, "Because it is reasonable, so cheap", has never appeared in the Chinese market, it tries to make a brand premium with spiritual connotation and cultural value, but the rough pricing system and product design without market research have pushed its plan to build a mid-to-high-end light luxury brand to the opposite.

In the 15 years since entering China, MUJI's pricing method in the domestic market has been particularly simple, taking the exchange rate of 1:12 at the time of entry into China as the benchmark, and the yen price at 10, which is the price of RMB. But in the case of exchange rate fluctuations, such as 1:17 in 2014, the pricing in China is almost twice that of Japan.

Such a pricing mechanism has been questioned by Chinese consumers, and it is also the direct cause of MUJI's 14 consecutive price cuts in 7 years.

Because of the model of the buyer's store, The price of LoFt is subject to the brand and channel, and it is impossible to open up the relationship between logistics, warehousing and stores at the cost of 15 years and complete the price balance through the integration of production and sales like MUJI.

LoFt's price system is still subject to whether the product enters the local market, whether there is an agent price difference, and the most headaches are tariffs and various logistics fees.

After the wave rises, the city is attacked strategically

When Japanese brands are competing to be mid-to-high-end, local brands that are houlang are quietly attacking the city with low prices.

A widely circulated story is that Ip's motivation for doing the jewelry business stemmed from a former employee of his cosmetics store. Before founding Mingchuang Premium Products, in 2004, Ye Guofu closed three already profitable cosmetics stores, turned to the jewelry industry, and set up a company called "Oops", which is somewhat suspicious of porcelain "Ah Ya".

The year after "A ya ya" signed Jolin Tsai, Ye Guofu took out nearly half of the liquidity and signed Ying Cai'er as a spokesperson, and two years later, the number of "Oops" stores has grown by nearly 1,000, with a turnover of 560 million yuan.

According to Ip, it was a trip to Japan that happened to meet young designer Shunya Miyake, and the two decided to start a business together in Japan, Miyake Shun was also responsible for designing and operating Japanese companies, and Ye Guofu himself was responsible for supply chain integration and Chinese companies.

Seria, as the second largest 100-yen store in Japan, "low price" is the most significant feature of the product, in this regard, although Minchuang Premium is not a typical Chinese "ten-dollar store", it also provides users with highly priced goods, and wins the favor of consumers through the attractiveness of the price level.

A year before Ye Guofu founded Mingchuang Premium, Chenguang, which sells stationery, also began to transform, and established the Chenguang Life Hall, which is mainly for the student consumer group of 8-15 years old, which is defined as a one-stop cultural and fashion shopping place for all categories related to learning and life, and the stores are mainly concentrated near Xinhua Bookstore and compound bookstores.

In 2016, M&G launched an upgraded version of the life hall "Jiumu Miscellaneous Goods Society" based on the operation experience of the living hall, positioning itself as a high-end cultural and creative grocery retail brand, targeting 15-29-year-old quality women as the target consumer group, and selling products including stationery cultural creation, educational entertainment, practical home and other categories, and the stores are mainly distributed in high-quality shopping centers in the core business districts of various cities.

In July 2018, the speed of franchise and store expansion accelerated, and as of 21Q3, Jiumu Miscellaneous Goods Co., Ltd. had a total of 436 major retail stores (299 directly operated and 137 franchised), and it is expected to maintain the opening speed of 100 stores per year.

Compared with the Japanese brands that have opened up the grocery retail industry, these back waves that have risen in China are obviously more aware of the influence of appearance, cost performance and practicality on consumer decisions than the front waves.

And the e-commerce platforms that are as proficient in cost-effective gameplay as Mingchuang Excellent Products, NetEase Yanxuan, Xiaomi Youpin, Taobao Xinxuan, Beijing Tokyo-made, etc., are also strictly speaking, miscellaneous retail platforms. Their common characteristics are also all Chinese apprentices of MUJI: no brand, fewer channels, anti-LOGO, and cost-effective.

NetEase Yanxuan, which was launched in 2016, had its early slogan "Good life, not so expensive", and you can find similar logic in the concept launched by MUJI in the early days. In 1980, MUJI advertised in major Japanese newspapers and periodicals, focusing on "cheap with reason", a phrase that later appeared in China's 2014 price reduction propaganda.

Launched in 2017, Xiaomi Youpin regards "cost-effectiveness" as the primary selection factor. In the trolley box priced at about 1,000 yuan for MUJI, products of similar materials and sizes, you can buy at half the price on Xiaomi Youpin. Quickly harvesting a large number of consumers through the low-price strategy is also the most familiar idea of Xiaomi, just like it has done in the mobile phone and smart hardware markets.

End

On the list of Chinese grocery brands, you can also see a series of names such as a life hall that adopts the model of a buyer's shop, NOME, which focuses on Nordic design, and a miscellaneous goods club that focuses on cultural and creative products. They have one thing in common: they were all created in the last 10 years, emphasizing both a sense of design and a price-performance ratio.

In the ten years of China's manufacturing efficiency and quality, the production technology and unit cost barriers of miscellaneous goods are actually not high, and the advantages are mainly based on supply chain integration and scale effects, but the consumption return to rationality and the pursuit of exquisite lifestyle and personality differentiation under the leadership of Generation Z have made the miscellaneous goods format grow rapidly in China.

At the same time, the distinction between front and back waves is becoming more and more obvious.

Chinese grocery brands are rooted in the local area, have supply chain and price advantages, and are more familiar with Chinese IP at the cultural level. On the other hand, Japanese grocery brands, affected by channels and tariffs, can not maintain a cost-effective model, like LoFt China selection mainly relies on total distribution, intermediaries as the main channel source, China pricing is about 2 times higher than Japan.

Looking back at history, the continuous price reduction of MUJI China and the eclipse of Tokyu's first store in China confirm the importance of high cost performance. However, the Chinese general generation model like LoFt is difficult to obtain a price advantage comparable to that of e-commerce, and the brand image has not yet been firmly established, and the launch of a small number of niche products is not enough to support continuous customer flow and repurchase.

The rout of MUJI is not only about the price, groceries in China do not have a long life accumulation, in the outlet of consumption upgrading young people and middle-class people expect to get cost-effective goods, price and design is the first consumption decision-making power.

Many of the products MUJI sells in Chinese stores are what Designers in Tokyo sit at home imagining Chinese needs. The size of a sheet that fits a Chinese bed took a full 14 years to adjust. Large and small storage boxes are lined with shelves, but I don't know that China's storage culture is not as extreme as Japan's. It wasn't until September 2018 that MUJI established a development firm in China to study popular culture and lifestyles in the country.

Of course, the latecomers of Japanese groceries also hope to establish a deeper connection with local consumers through IP co-branding, such as LoFt launching Chengdu local co-branded products such as Wu early and Super Plant Center, as well as B station dolls and Mangmang convenience stores in the process of localization in China, but in the long run, phenomenon-level products have not been spawned, and their essence lies in the shallow understanding of Chinese IP, it is difficult to impress consumers, and adhere to the high-end positioning of the future should be deeply chinese IP to create, Avoid getting caught up in price wars while maintaining brand tone.

However, a fact that cannot be ignored is that in Japan, the main cost-effective grocery brand has built itself into a light luxury brand in the Chinese market, and it is precisely because the former waves are so active as pioneers in consumption upgrading that a number of "local MUJI products" have risen and begun to seize the market of the ecological niche of daily necessities.

Resources:

[1] Chenguang Stationery Depth Report Series II: Groceries Long Slope Thick Snow, Jiumu Future Can Be Expected Huachuang Securities

[2] Commercial trade industry: Comparing Japanese companies, discussing the development potential of Mingchuang Premium Products Orient Securities

[3] Japanese grocery stores, slowly entering China, future outlook map

[4] MUJI's "Chinese-style" rise and collapse Everyone is a product manager

[5] Niko and... Who can't climb high? SelectiveSearch

[6] MUJI's history of Rout in China IC Labs