MUJI First Quarter Net Profit Rose 21% To Penetrate The Chinese Market Through Online Channels

? After the price reduction is showing signs of success, MUJI Is trying to penetrate the Chinese market through online channels.

According to the first quarter earnings report of the Muji's parent company's good plan (TYO:7453), as of May 31, 2018, its operating income increased by 9.7% to 106 billion 521 million yen (about 6 billion 400 million yuan), operating profit increased 12.2% to 13 billion 319 million yen (about 800 million yuan), and net profit rose 21.7% to 9 billion 542 million yen (about 570 million yuan).

The picture shows the first quarter results of good quality plan.

By Region:

Native Japan market Revenue grew 6.5% to 68 billion 830 million yen, linen clothing, socks and suitcases became best sellers.

Thanks to strong sales of men's clothing and other products in the Chinese market, East Asian market revenue rose 15.6% to 29 billion 156 million yen compared to the same period. During the period, the group opened its first MUJI HOTLE hotel in China, which also had a positive effect on its performance.

Sales in Europe and the United States increased 13.1% to 4 billion 968 million yen compared with the same period last year. The market losses narrowed from 330 million yen last year to 272 million yen due to the cost reduction of business restructuring and warehouse relocation.

Sales in other markets increased 24.2% to 3 billion 565 million yen.

During the period, the group added 10 stores in the Japanese and East Asian markets, closed 4 stores in the European and American markets, and added 6 stores to the net. As of May 31st, Muji has 934 stores in 25 countries around the world.

It is noteworthy that this year's 6 month MUJI products entered Jingdong to participate in the "618 grand ceremony" and become sales of clothing, home textiles, home appliances, TOP3, and men's French flax slacks became TOP3 products. In less than a month, MUJI Jingdong's official flagship store has gained 140 thousand attention.

At the same time, Muji's shopping app MUJI passport is officially launched. Consumers can directly browse the brand official website through this APP, purchase orders, inquire orders and apply for after-sale, so as to achieve the integrated shopping experience of mobile terminals.

But the ambition of Muji has not stopped selling. In June 30th, Matsuzaki Kyo, President of the good quality program, met with Liu Qiangdong, chairman and chief executive officer of Jingdong group, in Beijing, and visited several "unbounded retail" samples of Jingdong with management.

In this regard, Liu Qiangdong said Jingdong will give full play to its own advantages, further develop China for MUJI products. market In particular, the online market will provide an important boost and will create an ideal lifestyle for MUJI products for global consumers.

Some analysts pointed out that Jingdong holds that the data of China's middle class are matched with the core consumer groups of MUJI products, plus Jingdong's first-class distribution and warehousing services can effectively reduce the time and financial resources of the self built channel of the brand. At the same time, working together with MUJI products is in line with Jingdong's strategy of testing the quality of e-commerce through the brand concept of "Jing Zhi Ji" and "Jing Zhu" in recent years. The two can complement each other.

The development of Muji in China is ushering in a new stage of transformation from offline to full channel.

Founded in the depression of Japan, in 1983, Muji finished its first independent flagship store in Qingshan, Tokyo. In 1990, it established the good quality planning company. MUJI is intended to be a "good quality product without trademarks". After reducing unnecessary packaging advertisements and middle retail links, it has launched a series of daily necessities from stationery to kitchenware and household.

Reviewing the history of brand entry into China, since the first store was stationed in Shanghai, China in 2005, Muji has opened more than 200 stores. According to the fashion headline data, China's market rose the highest in the 2017 fiscal year's composition of the good plan, and surged 25.3% to 68 billion 890 million yen, or about 4 billion 30 million yuan, which has become the world's second largest market for MUJI products.

Unlike Japan, which only opened as a "grocery store" at the subway station and street side, Muji has always been a boutique store in China's large business district. Its simple and environmentally friendly unique design attracts a large number of Chinese consumers and rapidly expands in the first tier cities.

In addition to the location difference, Muji has more diversified services in China. Take the flagship store opened in Shanghai and Chengdu last year, for example, the three storeyed stores cover MUJI BOOKS bookstore, AROMA Labo aromatherapy workshop and Caf &Meal MUJI restaurant, and so on.

MUJI Muji, the world's first hotel opened in Shenzhen

"In the process of entering China, Muji uses the way of brand penetration from top to bottom," Ye Qingbo, an independent home designer, once said. The designer who collaborated with the brand, Fukazawa Naohito, and Yan Zai, just matched the admiration psychology of Chinese young people and even the designers in pursuit of quality.

However, the high price gap caused by the gap between China and Japan is gradually being amplified with the growth of China's middle class and the rise of cross-border electricity providers. According to people familiar with the matter, China and Japan market This price gap can be as high as 2 times, and more importantly, MUJI products are made in China. Consumers are largely buying the rents of the brand in the prosperous area.

Although quality and design are the guarantee of premium for Muji, it is not a designer or a high-end brand in terms of business mode. MUJI products can expand rapidly worldwide, and the product contribution is only a part. It has introduced Speciality retailer of Private label Apparel earlier, which is related to the professional retail business mode of private brand, and is still a department store retailer.

This also explains the inevitability of the price expansion of MUJI products to the Chinese market. The first round of price adjustment took place in 2014, with a drop of 10% to 20%, mainly in daily life products, which mainly covered three categories of furniture, electronics and health beauty. A spokesman for the good planning program has predicted that China and Japan will be able to achieve the same price as soon as possible in the 2018 year of the year.

As of this quarter, MUJI products, which had undergone 8 rounds of price adjustment, recorded a 6.8% increase in sales in the mainland market, up from 4% in the fourth quarter of last year. In an interview with the media, Matsuzaki Kyo said that the same store sales in China achieved two digit growth in March this year. The rise in performance is closely related to the three "special time benefits" and the "new pricing" promotion of Muji.

Price cuts undoubtedly paved the way for channel sinking to expand the consumer base. Matsu also said that in addition to increasing the number of China's flagship stores by 4 to 5, Muji will also add new areas to display health beauty products. The original 30 new stores expansion plan will speed up to 50 to 60 per year, with three line cities as the focus of layout.

In fact, Muji accelerated the layout of China. market It is also based on the needs of self development and strategic adjustment.

Relevant data show that about 200 million to 400 million of the new middle class in China has become the driving force of social development. The industry has summed up the middle class characteristics as well-educated, having a certain amount of leisure time, and pursuing quality of life. The consumption potential of the group in clothing, lifestyle and other fields is shaping a number of brands that pay more attention to quality, and the demand for quality products in Chinese society has already formed a scale.

For the 2019 fiscal year, the plan is expected to increase business profit by 11.8% to 424 billion 300 million yen compared with the same period last year, operating profit rose 10.4% to 50 billion yen, and net profit rose 10.6% to 33 billion 300 million yen over the same period.

As of Friday's close, the TYO:7453 price dropped 4.61% to 32 thousand yen, and the market value was about 899 billion 900 million yen, or 54 billion yuan.