Reporter | Zhou Fangying
Edit | Lou Shuqin
The daily grocery store MUJI is preparing to increase its investment in the Chinese market.
Recently, MUJI's parent company, Japan Good Products Plan, released a medium-term plan saying that it will open 50 stores in China every year starting in fiscal 2024 (ending August 2024), twice as fast as the current store opening. The company will also assemble a management team responsible for its China operations to accelerate store openings in cities with fewer stores.
In addition, the Company expects sales in fiscal 2024 to increase by 42.9% from fiscal 2021 to 700 billion yen (approximately 41.2 billion yuan) and operating profit by 53% to 75 billion yen (approximately 4.4 billion yuan). In its long-term goal, the company expects to achieve sales of 3 trillion yen (about 175.8 billion yuan) and an operating profit of 450 billion yen (about 26.4 billion yuan) in fiscal 2030.
Due to the siege of the new crown epidemic, the good products project with offline retail as the core is still trying to achieve recovery.
According to the third quarter of fiscal 2021 released by GoodPin, the company's overseas business achieved revenue of 118.44 billion yen (about 6.9 billion yuan) in the nine months ended May 31, 2021, a slight increase of 4.6% over the same period last year. Overseas business accounted for approximately 34.3% of total revenue.
Among them, The East Asian region where China is located has become the most important market in overseas business with a proportion of 27.7%. During the Period, sales in East Asia reached 95.58 billion yen (approximately RMB5.6 billion), an increase of 17.2% year-on-year.
In fact, since entering China in 2005 and experiencing an early stage of rapid development, MUJI's growth in the Chinese market has slowed down since 2016 and experienced negative growth for the first time in the second quarter of 2018. The epidemic has further impacted MUJI's offline business.
On the third-quarter earnings call, GoodPin Planning said that the performance of Chinese mainland stores, including cafes and restaurants, fell by about 3% to 4% compared with the same period in 2019.
At the same time, the GoodPin Plan believes that it will take a long time for Chinese mainland performance to return to the pre-epidemic level in 2019. In addition to continuing product development in China, the company plans to improve its customer relationship management system by hiring additional marketing personnel for this purpose.
In its medium-term plan, the company also said that MUJI will concentrate its resources on the development of new business models in Japan and China.
According to the Nikkei Chinese Network, Hideo Dozen, the managing director of the new Good Products Program in September, recently pointed out, "In China, our products give the impression of high prices, and the range of customers is not wide enough." "MUJI will expand its store area and number of products in China to acquire new customers.
Gao Huan, senior director of Ammann Corporate Consulting Co., Ltd. in China, said in an interview with Interface Fashion that THE DESIGN STYLE AND POSITIONING OF MUJI IS IN LINE WITH THE SIMPLE STYLE POPULAR IN THE CHINESE MARKET AND IS VERY POPULAR IN HIGH-TIER CITIES.
But in terms of goods, there is a difference between the simplicity that Chinese consumers can accept and Japanese consumers. Daily miscellaneous stationery with a low unit price is also more easily accepted, and if it is a furniture product, personal products and other products with a high unit price, consumers may not pay for it.
In her view, even in the minds of many Chinese consumers, minimalism should be linked to parity. As a result, the price difference between MUJI in Japan and China has led consumers to gradually have the impression that it is not cost-effective. However, MUJI has also continuously changed its product positioning in recent years to adapt to the Chinese market, such as launching products that are more in line with Chinese consumers through China's product team, reducing prices to meet the price-performance ratio in the minds of Chinese consumers, and so on.
In April 2021, MUJI once again lowered the price of products in China. In the past five years, MUJI has carried out more than ten price reductions in the Chinese market in an attempt to consolidate consumer loyalty.
On the other hand, it can be seen from MUJI's recent new stores in China that large stores and community life services may become the focus of the brand's transformation. In particular, strengthening life services will help MUJI to strengthen the interaction between consumers and consumers in combination with its own tonality.
Interface Fashion has reported that in the second half of 2020, MUJI opened two convenience stores "MUJIcom" in Beijing and Shanghai, the former located in the Jingdong headquarters park and the latter in Shanghai Baolong Apartment. The Powerlong Apartment is also designed by MUJI. Muji also opened a shared laundry room on the second floor to provide 24-hour self-service laundry services for the building and surrounding residents.
In January 2021, MUJI opened a second large-scale flagship store in Shanghai, located in Yangpu District Youmai Life Plaza, covering a total area of 3288.72 square meters. At the same time, MUJI introduced home improvement services to its flagship store for the first time.
According to the third quarter financial report, as of the end of May 2021, the number of MUJI stores in China has reached 368, and it plans to open 8 new stores in Chinese mainland by August. However, MUJI, which is still in the process of recovery, has to consider the issue of profitability.
Gao Huan said that MUJI's current positioning is still a high-end niche brand, which means that it does not have a broad mass base. Continuing to open stores after occupying the best position in the city will inevitably lead to poor performance of some new stores.
Moreover, MUJI is generally located in the core business district, the store design pays attention to the shopping experience, and there are more categories with low unit price and low sales. These factors will challenge its single-store profitability. To improve the profitability of stores, MUJI must improve the efficiency of the ping through refined management.