MUJI: How To Save The Declining Trend Of "Big Shops" And "Price Reduction"

The MUJI products that are carrying out the good plan are wandering at the crossroads. The flagship design of grocery brand is facing the impact of the target market. The overseas market, which accounts for 40% of its performance, is the growth focus of Muji. The biggest Chinese market for the first time showed a decline in performance, and the sales of existing stores in February 2019 were lower than those of the previous year. In this regard, Muji President Matsuzaki Kyo played the two cards of "big shop" and "reduced price", hoping to achieve long-term brand growth.

　 "Imprinting the world view"

In Japan, Muji is developing the concept of simple, cheap, high-quality goods. The slogan is "cheap because it is reasonable," so it can catch the eye. Ironically, the concept of overseas development has turned into a more expensive "branded goods" based on developing countries.

MUJI takes into account the integration of overseas consumers' daily life as a connecting point for long-term growth of enterprises. In 2030, when the enterprise founded 50th anniversary, it proposed the growth target of opening shops in major cities in the world.

In the interview, President Matsuzaki made clear that the 1 shop in Vietnam will be opened in spring next year. The shop is a large shop with a business area of 2000 square meters, which is two times the size of 1 shop opened in China in 05 years. He fully declared that Vietnam's No. 1 store would become the cheapest shop in all overseas stores, and "it would be a success before opening." At the same time, it is estimated that the area of Finland 1 shop will be more than 3000 square meters in the year.

However, large shops also pose a risk of increased costs. In the first quarter (3-5 months) final accounts of MUJI products published in July 10th, sales and management fees accounted for over 40% of sales, and the first quarter was 13 years of profit decline after 6 years. President Matsuzaki said that the increase in domestic logistics fees and the increase in initial cost of large and large shops at home and abroad were the reasons. In view of the future implementation of Mui Ying Yi's strategy for large overseas stores, improving efficiency and reducing expenditure has become a major problem.

Another big trump card is "price reduction". The price of domestic shops has increased passenger flow. Therefore, Muji will adjust the prices of various shops in the world and reduce prices by adjusting the origin and logistics sites.

Changes in consumer preferences become opportunities

"In pursuit of reasonable prices, the production and sale of self produced products at the place of sale is the best." Matsuzaki said that nearly 80% of MUJI products were manufactured in ASEAN countries, and nearly 50% of groceries, such as cosmetics and clothing boxes, were made in Japan. However, the geographical distribution of producing areas is gradually adjusting.

MUJI is intended to reduce logistics costs and enhance efficiency in ASEAN countries. ASEAN is geographically close to the Asian market, and Japan and ASEAN countries have signed a free trade agreement (FTA) to transfer their origin to ASEAN countries to enjoy preferential policies for tax reduction or tax exemption.

President Matsuzaki said that the prices of the same products in the Chinese market were higher than that in Japan's domestic 25%-30%, because all the groceries were imported from Japan. As a matter of fact, there are also examples of over 30% of Chinese market prices. For example, Japan's low noise small fans (large air volume) are priced at 550 yuan (about 8470 yen) in the Muji China electronic business platform, while the Japanese domestic price is only 5890 yen (including tax), which is about 44% higher.

Zhang Yingqiu, an analyst at Citigroup, said: "the problem is that the cost and performance of groceries are offset, and can not reflect the results."

President Matsuzaki said that Muji has always been a "brand product" in China, but consumer preferences are changing. "Choosing to buy famous brand in order to express differences with others is gradually becoming more concerned about daily goods and more emphasis on the quality of products. This is our opportunity. "

The goal of Muji is to expand the Chinese market and let more consumers choose MUJI products. In September last year, Muji set up a commodity development department in China and developed a daily thermos cup suitable for Chinese people to drink hot water all the year round. The price adjustment of Muji China is also advancing.

However, some people believe that if Muji is cut, it will be difficult to distance from other brands. Fujikawa Kanori, an associate professor of consumer behavior at Hitotsubashi University, points out that the move to reduce prices of goods abroad may have an impact on customers who identify with "one cent, one share". "How to make this change acceptable to consumers at a subjective level is a challenge for MUJI products."

Maintaining the status quo

In China, several chains like Muji have been developing rapidly. "Name creation and superior products" mainly sell cheap groceries, water bottles, U pillows and so on. The price of the products is below 1000 yen. In 2013, the "name and quality products" was established, and the store network expanded. The official website announced that it would open 3600 stores in Japan and other countries around the world. The NetEase NetEase's strict selection has also launched an offensive.

In this regard, President Matsuzaki said, "no matter which field will be a lot of new pressure. Competitors are constantly introducing new marketing and new products, and changes are overwhelming. However, no matter the size of the rack or the size of the box, Muji's commodity specifications are fixed. At the time of design, in order to allow the commodity to use for a long time, it also sells accessories such as small teapot lid and so on. Therefore, Muji selection is used to challenge the charm of the brand's "invariable" charm.