Recently, MINISO opened pop-up stores in three shopping malls in Shanghai and Beijing, and the popular Japanese animation IP Chiikawa has triggered a rush to buy.
Compared with conventional products, the price of MINISO's IP co-branded products has risen significantly, which has also caused consumers to complain, "This price increase is too outrageous, is it still a 'ten-yuan store'?"
Different from the public's traditional impression of MINISO's "10-yuan store", in 2023, the price of MINISO's products will show an upward trend - in the second half of 2023, the average selling price of MINISO will be 14.2 yuan, compared with 11.8 yuan and 12.8 yuan in the same period in 2021 and 2022, respectively.
Why doesn't MINISO stay at the positioning of "10 yuan store"? Can it change its original brand positioning and successfully "upgrade to coffee" by relying on IP co-branding? When the development of the domestic market slows down, will the overseas market be a life-saving medicine?
The "ten-dollar store" is difficult to walk
Since its establishment in 2013, MINISO has achieved rapid rise in just a few years and has become a dark horse in the retail field.
The primary reason for its successful rise is the high-quality and low-price strategy of the "10 yuan store" - it is committed to providing cost-effective products. By working directly with manufacturers, sourcing at scale, and optimizing supply chain management, MINISO effectively controls costs and ensures that products are priced lower than competing products.
At the same time, MINISO invests a lot of resources in product design to ensure that its products are not only affordable, but also have a stylish, practical and beautiful appearance. This is in line with the aesthetic needs of young consumer groups, especially young people who pursue fashion, pay attention to quality of life and have limited budgets, forming a "high-quality" competitive advantage.
The low price and high quality of the "10 yuan store" have helped MINISO rise, but it has gradually become a constraint to the development of MINISO.
First, the competition for "low prices" is too fierce.
With the rise and development of e-commerce platforms, consumers can more easily compare prices, choose products online, and enjoy lower prices and a more convenient shopping experience, which not only diverts the traffic of offline physical stores, but also weakens the competitive advantage of MINISO's low-price strategy.
Even, there is a "replacement" of MINISO on the market. Some brands focus on a certain segment and form direct competition with MINISO through refined operations and differentiated products. There are a large number of sharing posts on social media, and young people can buy almost the same quality products at lower prices.
Second, the low-price route directly affects the profitability of MINISO.
MINISO relies on a low-cost, low-margin model to operate, and the profit margin of each product is limited. In the long-term operation, with the rise of raw materials, rent, and labor costs, MINISO is facing increasing profit pressure.
Third, the long-term low price makes consumers have a "cheap" impression of the brand image of MINISO.
When MINISO tries to shift from low prices to high-end routes, it is likely to encounter problems such as low consumer acceptance, loss of original customer base, and increased cost of acquiring new customers.
In such a situation, improving the brand image, upgrading the brand "coffee position", widening the distance from the replacement products, and improving profitability have become the development direction of MINISO.
IP co-branding "Shengca"
Co-branding with big IP has become the preferred choice and main practice of MINISO to improve the coffee position.
Co-branded goods with Japanese anime IP Chiikawa sparked a rush to buy. Previously, MINISO has cooperated with nearly 100 well-known IPs around the world, such as Disney, Sanrio, Pokémon, Jurassic, and Barbie.
MINISO tries to enhance its brand image and popularity with the help of the high popularity and good reputation of these IPs, and the co-branding with well-known IPs also creates the brand image of MINISO that keeps up with the trend and is full of innovative spirit, attracting young consumer groups who pursue fashion and personality.
IP co-branded products have a classic image and unique design, which helps to enrich the product line of MINISO, make its products more differentiated and recognizable, meet consumers' needs for novel and characteristic products, and stand out in the fierce market competition.
Co-branded products are also an effective way to increase revenue capacity.
For example, on March 29, the first stop of the MINISO X Chiikawa theme flash mob landed in Shanghai Jing'an Joy City, with a single store sales of 2.68 million yuan in 10 hours, a performance of more than 8 million yuan in three days of opening, and a customer unit price of more than 1,000 yuan. The launch of IP co-branded products can also create marketing hotspots, trigger a rush to buy, and quickly improve sales performance in the short term.
The price of IP co-branded products is higher, which directly raises the average unit price of MINISO. According to Times Finance, in the second half of 2023, the transaction volume of MINISO's domestic stores will be 183 million, compared with 120 million in the same period last year, and the average selling price will be 14.2 yuan, compared with 11.8 yuan and 12.8 yuan in the same period in 2021 and 2022, respectively.
IP co-branding has increased the selling price and profit margin of MINISO, which has also led to the continuous increase in sales and distribution expenses of MINISO. According to the financial report, in the second half of 2023, MINISO's sales and distribution expenses will be 1.363 billion yuan, compared with 798 million yuan in the same period last year, a year-on-year increase of 70.80%. One reason for this is the increase in the cost of IP licensing.
The wool is out of the sheep, and many consumers continue to complain about the high price of MINISO IP co-branded products. If MINISO relies too much on IP co-branding to drive sales, while ignoring the quality improvement and design innovation of the product itself, sales will fluctuate greatly once it loses the blessing of IP.
It can be seen that IP co-branding helps to "promote coffee", but it cannot only rely on this.
Going to sea is not a peace of mind
Going overseas is another major way for MINISO to increase revenue. As early as 2015, MINISO began to go overseas.
By the end of 2023, MINISO has 6,413 stores worldwide, including 3,926 domestic stores, a net increase of 601 stores in 2023, and 2,487 overseas stores, a net increase of 372 stores in 2023.
At present, the number of overseas stores has reached 38.8% of the total number of stores in the world. In 2023, MINISO's revenue in overseas markets will be 4.824 billion yuan, accounting for 35% of the total revenue.
MINISO does have the advantage of going overseas. Through rapid expansion and successful marketing, MINISO has established a certain brand awareness overseas, backed by China's strong manufacturing industry, enjoying abundant supplier resources, efficient production capacity and low manufacturing costs, which is conducive to MINISO to maintain competitiveness in overseas markets.
Through close cooperation with overseas partners, agents and partners, etc., the risk and cost of overseas expansion are reduced, and the cooperation with world-renowned IPs such as Disney, Sanrio, Pokémon, etc., makes its products have a wide range of cross-cultural appeal, which helps to quickly gain consumer recognition in new markets.
Through its global presence, MINISO has a larger market size and more growth opportunities. In the fourth quarter of 2023, the total value of overseas merchandise transactions increased by 38% year-on-year, with the North American region increasing by approximately 1.1 times year-on-year, the European market increasing by nearly 70%, the Latin American market increasing by nearly 40% year-on-year, and the Asian market (excluding the Chinese market) increasing by 21% year-on-year.
The relative success of overseas business does not mean that MINISO can sit back and relax. On the one hand, as far as the overseas market is concerned, sooner or later it will encounter the problem of domestic brand upgrading. In the North American market, established retail discount stores such as Dollar General and Dollar Tree will be eyeing each other, and if you are fighting for a brand, MINISO needs to successfully "upgrade to coffee".
On the other hand, although the growth rate of the overseas market is considerable, the domestic market still accounts for more than 60% of the total revenue, but the growth of the domestic market is sluggish, and the mission of "upgrading coffee" has not yet been completed.
In addition to deepening cooperation with internationally renowned IPs, MINISO's top priority is to further enhance the sense of product value, such as launching more innovative and unique designs, or introducing patented technologies and intelligent functions to improve the technical content and user experience of products, so as to ensure that high-priced products are significantly better than ordinary products in terms of material, craftsmanship and durability, so that consumers can perceive the substantial value behind the high prices.
At the same time, through effective brand communication and marketing, consumers can strengthen their awareness of the new brand image of MINISO with high-end, high-quality and value-for-money. At present, the super store strategy implemented by MINISO is also a desirable path. In 2023, MINISO will open city flagship stores and city image stores in Shanghai, Hangzhou and other places to create an immersive shopping experience for consumers.
In the final analysis, the high-end brand image ultimately comes from high-end products and high-end services. In order to successfully "upgrade coffee", MINISO should eventually return to the basics.
Chen Zifei
Editor-in-charge: Liu Yunshan