Muji takes its China playbook global

{"text":[[{"start":6.84,"text":"Helping cash-strapped Chinese consumers “downgrade with dignity” by offering stylish but affordable products that appeal to local tastes has helped Muji’s sales soar in China."}],[{"start":18.72,"text":"Now the minimalist Japanese retailer plans to extend that playbook to the US and Europe."}],[{"start":25.1,"text":"The China sales surge has been a key factor behind this year’s 64 per cent rise in shares of parent company Ryohin Keikaku to a record high."}],[{"start":35.12,"text":"Investors are hoping that a long-awaited transition from three decades of Japan-centric management towards stronger regional leadership will aid its global expansion."}],[{"start":44.52,"text":"Mjui’s renewed ambitions for Europe and the US come after the purveyor of storage boxes, aroma diffusers and organic clothing has started to reap the benefits of a five-year-old turnaround instigated by former president Nobuo Domae."}],[{"start":57.68,"text":"“This company has been known for its edgy brand but execution, marketing and stability of earnings have always been a question mark,” said Sho Kawano, analyst at Goldman Sachs. “Things, however, have started to change.”"}],[{"start":71.36,"text":"Kawano said international expansion is “totally the key”, adding: “The defining question is whether they can keep up the progress in marketing, the large-scale format stores and productivity improvements.”"}],[{"start":null,"text":"

"}],[{"start":88.68,"text":"Domae, who came from Uniqlo owner Fast Retailing, spearheaded Muji’s “second founding”, transforming it from a niche brand adored by designers and Japanophile minimalists into a lifestyle brand with far broader appeal."}],[{"start":96.36,"text":"One key move was offering more health, beauty and food products to drive more frequent customer visits. He also pioneered a greater push of larger stores into suburban Japan with managers empowered to adjust product line-ups to meet local demand."}],[{"start":110.54,"text":"The upshot has been annual net profit more than trebling since 2023 to ¥76bn ($482mn) as revenues jumped about 60 per cent to ¥923bn ($5.8bn) over the same period."}],[{"start":null,"text":""}],[{"start":127,"text":"In particular, the Japanese brand has defied the malaise gripping Chinese consumer spending that has caused the value of Europe’s top luxury groups to plummet by about €250bn this year."}],[{"start":137.52,"text":"“There’s a consumption downgrade in China and there’s this idea of downgrading with dignity,” said Matthieu David, chief executive of Daxue Consulting. “Muji is playing a role of guaranteeing quality and design for those Chinese consumers.”"}],[{"start":152.32,"text":"Further underlying the sales boom has been Muji entrusting the local China team to take charge of product development, merchandising and marketing. That has led to a wave of new hit products such as rice-bran fermented shampoo, Chinese hemp clothing and bedding made from cooling fabrics."}],[{"start":170.04,"text":"Sales at existing stores and online in mainland China surged more than 16 per cent in the 12 months to August, accelerating to almost 27 per cent in September, as the Japanese retailer also overcame political tensions between Beijing and Tokyo."}],[{"start":185.28,"text":"David said there appeared to be no clear direct competitor to Muji in China, as Miniso and KKV focus on character IP collaborations and colourful merchandise."}],[{"start":null,"text":""}],[{"start":194.88,"text":"Muji’s roots go back to department store Seiyu establishing its own line of private brands in 1980, which was spun out nine years later."}],[{"start":203.24,"text":"Yoshinori Fujikawa, a professor at IMD Business School in Lausanne, Switzerland, said Muji’s success in China “resembles their original success in Japan in the 1980s”, when extravagant consumption pivoted to simpler lifestyles."}],[{"start":217.52,"text":"Other businesses that thrived in deflationary Japan, such as Italian restaurant chain Saizeriya and conveyor-belt sushi operator Sushiro, are performing well in China by offering quality products at attractive prices."}],[{"start":230.76,"text":"Fujikawa said Muji’s China model could be repeated across south-east Asia as middle classes grow disillusioned with splashing cash on flashy brands — but “North America and Europe is a different story”."}],[{"start":null,"text":""}],[{"start":242.12,"text":"Muji was pigeonholed by its narrow appeal to creative types in previous attempts to expand in western markets, contracting from 71 stores before the Covid-19 pandemic to 49."}],[{"start":253.24,"text":"Muji generates 40 per cent of its revenues from about 760 overseas stores but aims to increase that to above half by 2029. Europe and North America will account for a significant number of the planned 225 net increase in international stores over the next three years."}],[{"start":270.6,"text":"Satoshi Shimizu, Ryohin Keikaku’s chief executive since 2024, hopes that applying the China playbook will give local teams more scope to introduce products that appeal to local tastes."}],[{"start":282.12,"text":"It has set a target for 10 per cent of clothing, 30 per cent of household goods and 80 per cent of food offerings to be localised in the US and Europe. Localisation rates in China have already hit 80 per cent for household goods and 90 per cent for food."}],[{"start":299,"text":"“Growth in Europe and North America will depend not only on opening more stores but also on how effectively we can increase the number of products that resonate with local customers,” said Shimizu during full-year earnings this month."}],[{"start":312.28,"text":"The desire to become a truly global company, where Japan is not always taking the lead, echoes a similar transformation at Uniqlo."}],[{"start":320.14,"text":"In Fujikawa’s view, coming up with localised versions of products in the US and Europe is Muji’s key challenge. “There’s a big chasm for them to go across to mainstream America and Europe.”"}],[{"start":331.94,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1793417617_3780.mp3"}