Muji battles Chinese copycats over products

Bloomberg

The retailer Muji became one of Japan’s most recognisable brands by selling simple, practical items that it hopes will last for decades. It turns out, though, that “less is more” has its limits as a business strategy.
After a decade of expansion that brought its minimalist emporia of modular shelving, sturdy kitchen gear and earth-tone fashions to cities from Toronto to Shanghai, Muji is struggling. In April, parent company Ryohin Keikaku Co reported its first decline in operating profit in eight years and a financial outlook below analysts’ expectations, as well as a rare drop in same-store sales in China.
Investors are worried: After the value of the company almost tripled from 2013 to 2018, Ryohin Keikaku shares have declined nearly 40 percent in the past year.
There’s more at stake than consumers’ ability to buy simply designed plastic folders and wastebaskets.
With once-revered companies like Sony Corp and Panasonic Corp a shadow of their former selves, Muji
is one of a small crop of Japanese brands that have succeeded in winning a worldwide following.
Its potential decline doesn’t bode well for Japan Inc’s ability to thrive in international markets; although its economy is the world’s third largest, the insular country has only one true global retail champion, Fast Retailing Co’s Uniqlo.
“I have a vision where in 2030, Muji stores are in most of the world’s major cities, and customers are buying the products and using it on a daily basis,” President Satoru Matsuzaki said in an interview at the company’s headquarters in northwest Tokyo, a nondescript building designed in the sparse, reclaimed-wood aesthetic sometimes known as “Muji style.” “For that, we need to break down and build up a lot of things.”
Matsuzaki, who spent his career at Muji opening stores from China to Kuwait, is hoping to navigate the retailer through global growth while also staying true to its original philosophy.
In his four years at the helm, he’s embarked on new ventures like Muji-branded hotels and Muji-designed buses while pushing into new markets such as India and Switzerland. To drive growth, he’s now taking steps like shifting production to cheaper locations and designing products specifically for Chinese consumers.
Muji started in 1980 as a private label of the Seiyu supermarket chain, intended to offer a limited selection of low-priced products.
(The brand’s full name, Mujirushi Ryohin, means “the non-branded quality goods.”) At the time, Japanese consumers placed a premium on aesthetic perfection, and produce that didn’t meet exacting standards was often discarded. Muji went the other way: One of its first offerings was broken pieces of shiitake mushroom, sold at a discount—giving meaning to one of the company’s mottos: “lower priced for a reason.”
Seiyu spun off Ryohin Keikaku as a separate company in 1989, and Muji soon attracted a cult following in Japan, with product lines encompassing food, stationery, luggage and even furniture.