Secrets Of Muji

Okada Kiyo often comes to China. His most famous status is the former director of Muji. In 1980s, Okada acted as a commodity developer and participated in the establishment of Muji.

At this moment, walking on the busy streets of Shanghai, people are in a hurry, young people are dressed in fashion, and there are famous cars roaring past from time to time. All these are familiar with Okada's eyes. Before the Japanese bubble economy burst, people are pursuing conspicuous consumption. That is the era of "ten people and one color". Manufacturers are also spared no effort to meet these needs, adding a layer of goods to the outside. A layer of gorgeous packaging, anyway, some people are willing to pay the bill.

Okada was once a gorgeous family. He liked to wear big Logo before he joined the Muji. Later, he felt embarrassed and felt very superficial. He took a deep breath, smiled, and looked at the table in front of him. "You know, gorgeous is not bad, just greasy, especially in the mature society of Japan, when people are tired of it, they want to pursue their way of life, subtract and pursue simplicity."

At the beginning of its creation, Muji's slogan was "cheap for reasons". Without sacrificing the quality, we should choose more reasonable materials, optimize the production processes and simplify the packaging so as to reduce the cost.

Taking Okada's water washed shirts as an example, many unnecessary processes such as dyeing and bleaching were eliminated in the production. The color of the material itself was used for 40 years, and was placed in the "Top 10" list for a long time, which was awarded the "seal certification" of young artists. His most proud product is bicycle, inspired by the baby bib in which the ornaments are split up, and split the bicycle into multiple parts, which are matched by consumers according to their wishes. People queuing up for sale at the time of sale are two or three kilometers long. Cycling has become a fashionable and cool thing.

The first generation of Yuan Gang okadan witnessed the complete process of Muji from 0 to 1. In the ten years from 1990 to 1999, the former president Matsui Chusan said that it was a smooth ten year of happiness. It not only completed the target of listing in five years, but also kept the sales record constantly updated, and the profit rose from 100 million yen to 13 billion 600 million yen. Matsui joined the parent company of MUJI in 1992.

The secret behind this is the SPA (manufacturing and retail) mode made by Okazaki for Muji. This model was first proposed by GAP, referring to the design of its own products, and then commissioned the factory to produce PB (Private Brand, own brand) products, complete their own sales, and control the complete value chain from the design side to the retail side.

Looking at today's world, ZARA, UNIQLO, IKEA, 711 convenience stores... Almost all the well done retail enterprises are SPA models. Among them, Muji has the largest span, covering food, clothing, daily groceries, opening restaurants, operating hotels, and designing housing renovation. Last year, it opened the world's largest fresh store in Osaka.

Japanese retail industry regards two sentences as the Bible, one is "comply with the change", the other is "thorough foundation". They are the two basic foothold in the retail industry's success. If global expansion and cross border operation are the "adaptation to change" of Muji as the external concern, then its SPA mode is the same basis. First of all, like Kabuki, there must be a Taiwan version, which can play its own role on the basis of Taiwan's version.

Okada, who left Muji, copied SPA mode extensively and participated in "ThanksNature", "naturalism" and "FANCL". The development of many brands such as GARDEN, the next goal of the few experts who master the overall content of SPA business in China, "I am thinking of making a world brand of China, it is definitely not second MUJI. I am optimistic about the potential of the Chinese market. Here, we need to return to innocence, trace the source and find the value of the commodity itself".

The worst is the best business model.

If there are eight characters in the enterprise, the analysis of Muji's numerology is inseparable from four words: when life is at a time.

Before the appearance of MUJI products, the most profitable form of Japanese retail industry was the large integrated business super, which is the era of the famous Ito Yang Hua Tang. It is also the "second consumer society" in the eyes of Japanese consumer expert Miura Nobu.

Second the consumer society is the increasing number of nuclear families. The baby boomers with the largest population in Japan are growing up in this environment. They continue to shop and consume continuously, and through consumption, the economy can develop. Retailers do not even need to do market research, because if you dare to do it, they can sell it.

Until 1973, an oil crisis laid a rest for all this. After the crisis, Japan's economic development took off from the fast lane and entered a period of continuous development of medium and low speed for 30 years. Every household should buy the car, and the home appliances they want to buy are almost the same. Consumers' desire to buy is down, and goods can not be sold. This is reflected in the business. Let alone the growth of two figures, the goal set at the beginning of the year is very difficult to accomplish.

To cope with the crisis, Japanese retailers have adopted PB commodity strategy and NB (National). Brand, compared to the products sold in the national market, PB products have saved the sales management fee and the profit advantage is obvious. But in those days, the manufacturers who were willing to manufacture PB products for all retail enterprises were not first-class manufacturers. Therefore, although the price was indeed better than that of NB, the quality of the products was very bad.

MUJI first put forward "cheap reason", while the slogan was published, and the uniqueness of the brand was also set up. The concept of "Muji" has hit people's consumption concept through the first 40 SKU. Originally, a commodity can remove the tag, and no longer can see which commodity it is. A water washed shirt can only depend on the most fundamental value of moisture absorption and quick drying performance to decide the outcome.

Brand is, in the final analysis, building trust with consumers. Under the SPA mode, Muji is fully upturned, starting from the end of R & D, and ensuring that the concept of "simplicity, tea ceremony and Zen" permeates every single item. After all, any violation of goods in stores is nothing less than the destruction of trust.

The gross profit margin of SPA mode is very high. At that time, a commodity priced at 1000 yen could reach 50%, far exceeding 35% of the department store mode. MUJI as a sub brand after the independence of the first fiscal year, it achieved 24 billion 500 million yen sales, 100 million yen in net profit, and five years after the start of the listing, the stock price rose 50 yen from the peak, up to 17350 yen, at the low speed of the economy created a "Muji".

7-11 I Makoto, the founder of the convenience store business model, said that there is no worst, but the worst. He cited UNIQLO as an example. Although Japanese clothing consumption expenditure has been declining for 20 consecutive years, it has dropped to less than 70% of 2000 in 2018, and founder Ryui Masa still can make money to become Japan's richest man. In any era, there is a business model that adapts to it. When water falls and stones come out, the worse environment is, the more it reflects the true color of business mode.

High yield is high risk on the back.

How to help SPA mode to land in Japan is a question Okada has been thinking during Muji. In his view, SPA summed up in a word, that is, at the right time, the needed products are supplied to the customers at the required quantity and the right price, which tests the precise grasp of the customers' needs by the enterprises.

In any era, the importance of accurately grasping the needs is ranked first, because it is directly related to inventory, as for inventory, for retail enterprises, it affects life and death.

Okada said frankly, the other side of the SPA mode of high yield is high risk, because all products are only produced for MUJI products, and can not be returned, and inventory risks must be borne by themselves.

In his SPA VMD operation mode diagram, "commodity development" is not the starting point, and the order of operation is in the "internal and external information of market analysis". MUJI selection Market-in (market entry) strategy, which is different from the traditional Product-out (product launch), has been standing with consumers since the beginning and developing products according to the needs of consumers.

"Selling" and "making money" are not the underlying logic of Muji product development. In the Muji world outlook, there is one detail:

When developing jeans, Imai Masaki, the then president, said to the person responsible for the product development, "why do we sell denim pants for Muji? If we are just selling pants, we will not sell them. I hope you can consider what kind of results the Muji produced will bring to the society today. Later came the pursuit of comfort, the use of three-dimensional tailoring, and made of organic cotton Tun Ning.

In terms of inventory, Muji has not fallen off, or even more than once, happened at the turn of the century, after the stock price has reached a new high.

At that time, in order to cater to the market, the product category expanded from 40 SKU to 6000, and many goods could not stand the test, and gradually lost the ability of leading consumers to develop the leading products step by step or step by step.

At the same time, due to just ten years of brilliance, the leadership is blind and optimistic, putting forward the expansion target of "increasing the number of 40% stores and 40% business areas every year", and the overall loss of new stores has led to the rapid decline of MUJI products. In the logistics center of Xingye County, the bad stock is piling up. The bad stock of light clothing is up to 3 billion 800 million yen, and the selling price is about 10 billion yen (600 million yuan RMB), because it is too much to donate.

When President Matsui Chusan decided to adopt the "shock therapy", the stock was all transported to the nearby incineration center. All the fire was burned away, staring at the thick smoke coming out of the chimney, and watching the products developed by him were burned.

But tears could not solve the problem. Six months later, the same situation happened again. Matsui decided to reform the commodity development mode.

8 months ago, the first model was discussed, and second samples were discussed 7 months ago. 6 months ago, the final sample of the product was discussed. Finally, a decision meeting was held 5 months ago. If this is over, we decide to go into production.

Three weeks after the new product is put on the shelves, confirm the sales trend. If the total sales amount of the total sales plan is increased by 30%, if the value is less than that, it will immediately change all the materials that have been put into storage. The whole process is managed by computer, and the mechanism of commodity development and procurement in the past "feeling" is institutionalized.

The mechanism of opening stores and expanding stores also changed directionality. MUJI has combed the 25 elements that affect the sales of stores, including the sales volume of the business circle, the retail sales in the business circle and the distance from the subway station. If the total score is above B, you can open shop without any conditions; if C level, you need to reconsider and check; if D level is good, even if the location of the business circle is better, it will not be possible for the individual to have a strong desire to shop.

According to the new standard, 10 stores were reopened, and 9 stores completed the plan and realized profits. Only 1 stores failed, and the success rate of the 9 stores was greatly increased compared with the previous 10.

Matsui Chusan, who led the Muji back to life, is important to attempt and fail. But if we do not transform experience into the next step, it will be meaningless to take risks and failures. To put the failure experience into the next attempt, the key is to build a mechanism. The so-called mechanism is the foundation of an organization and the motive force for Muji's resurrection.

Because it is SPA, so do not fear the electricity supplier.

In China, compared with the e-commerce platform, Muji has a higher enthusiasm for opening stores under the line.

Since 2012, not only has it expanded at the speed of 30~50 shops every year, but also has been keen on opening large flagship stores, with a sales area of about 3000 square meters, which is 5 times the sales area of standard stores, and can cover many kinds of formats such as restaurants, books, lectures and so on. It was not until 2018 that Jingdong officially entered the Jingdong mall. Although Alibaba has flagship stores, the number of SKU is far below the line.

In the view of former president Matsui Chusan, because it is the SPA mode, it can control the supply of goods 100%, so Muji is not afraid of the impact of the electricity supplier. Moreover, not all products are suitable for sale online, and experience products are more suitable for offline sales. In a sharing, he admits, "we do not feel much about the electricity supplier, or we need to further strengthen the sense of existence of physical stores".

Okada himself is also a firm "bottom line". He told me that in Japan, where the cake of the retail industry has been shrinking year by year, the secret of keeping Muji is to increase the stickiness of local residents as much as possible. Location is a social place in the region, opening free activities space to residents, selling fresh food provided by local farmers, and even sending employees to help them grow farmland. His judgment is that China will certainly do that in the future.

I think of IKEA. In China, it has the nickname of "middle age and old age corner". With the deepening of aging in the first tier cities, Muji will become the next good place for social interaction.

I understand Okada's "disdain" for the electricity supplier. After all, Japan had online sales as early as 1980s, when it was known as "full channel sales", and retail sales were not new and old, but it was a continuous iteration. His assistant added that why China's electricity providers did a good job was largely due to the fact that the physical store was not doing well, with fewer products, higher prices and poor experience.

After some explanation, I also want to work hard. "Mr. Okada, you know that the biggest advantage of electricity providers is to collect data on consumer behavior and help them find what they want faster."

"In the final analysis, it's about selling things, isn't it?" Okada's rhetorical question is undeniable. "The basic idea of Muji is to help consumers better live and create value for them, not just sell things, but online sales only go to this stage."

With the support of SPA mode, Muji, under the deep ploughing line, cafes, restaurants, hotels... Every life scene that is suitable for passing the brand idea is firmly clutched in the hand.

In a recent interview with 36 krypton, the incumbent president, Song Qi Xiao, was asked how to look at similar products appearing in the Chinese market. He responded: "customers buy similar things, which is impossible for Muji to stop. We can only try to provide customers with more background for the development of commodities."

Matsuzaki's message conveys a layer of information. When all goods convey a unified value, Muji does not worry about being imitated.

PB merchandise, SPA, scenario consumption experience, Muji is being fully implemented in China, a retail experiment, similar experiments have been received in 7-11 positive feedback, the latter through a very precise segmentation market, solve the daily life scene encountered difficulties and problems, such as providing cheap and good coffee, develop new convenience taste. Create explosive money... As a convenience store, consumers are going to patronize stores again and again to see if there are any new ways to make life more interesting.

If the test goes well, Muji is expected to shake off its competitors, surpass the electricity supplier era, continue to lead consumption, and attract and lock the "loyalty powder" continuously, just as it was born.

The story is to be continued.

Dialogue with Okada Kiyo, former executive director of Muji

China Europe Business Review (hereinafter referred to as CBR): today more and more Chinese enterprises are aware of the advantages of SPA and have begun to practice. As one of the most successful cases of SPA, what are the key tips and suggestions for MUJI to do well in SPA?

Okazaki: first of all, the most important thing is to have a company's own standard and to make its own brand. For example, Muji's "respect for nature" must be embodied in every commodity so as to get consumers' trust. Advocating nature and simplicity is not only reflected in products, but also in everything that employees do.

MUJI is located in a company called Seiyu. It was originally a department of Xi You (Seiyu) and was independent in 1990. At that time, he made a five year listing plan. How to go public? Sales doubled, and profit was 10%. We thought of a stable SPA business model. According to the results, we basically achieved our goals according to the plan. In the future, companies who want to live well need to grasp two points, one is brand and the other is SPA.

CBR: what major changes have taken place in Japan's retail format? How does MUJI respond to change?

Okada Ching: 1980s is the bubble economy era of Japan. We all pursue big houses, big cars and famous brands. In summary, material consumption, or conspicuous consumption, is similar to today's China. To meet this demand, all manufacturers add a lot of added value to their products, and consumers also love to buy them.

This is not necessarily unsustainable, but it will be greasy, especially after entering a mature society. When consumers are tired of it, they want to pursue their way of life, subtract and pursue simplicity.

After the collapse of Japan's bubble economy, the biggest consumers were the middle and lower level consumers, because their incomes did not increase or fall, so they began to reflect on their original lifestyles. Under this background, UNIQLO and MUJI were born, with reasonable reasons for being cheap, quality not dropping, and simplification of packaging and process. Why is UNIQLO and MUJI still developing at a high speed? Because it really brings benefits to consumers.

CBR: from a single store to 1500 square meters to 3000 square meters, what is the strategic consideration behind the strategy of "big flagship store"?

Okazaki: retail is not enough. In Japan, the physical store consumption is a kind of enjoyment. MUJI online products are less intentional than offline, that is, consumers are expected to go to live experience.

Japan is facing a declining population, the retail industry's cake is getting smaller and business competition is fierce. How can MUJI keep growing? It is necessary to increase communication with local residents. So they are now opening a lot of free space, fresh food sold by local farmers, and also to increase interaction. MUJI employees also help others grow their fields. China will certainly be like this in the future.

I myself developed the MUJI CAF, and you may not believe it, because the market is very big at the same time, the development of goods can not keep up with what is done, and how to do it? The basic idea of MUJI brand is to help consumers better live, not just sell things. Good lifestyles must cover food, clothing and shelter.

How does CBR:MUJI view China's competitors? Are they worried about being overtaken or replaced in the Chinese market?

Okazaki: our competitors are UNIQLO, NITORI (Japan's home chain brand). From the product level alone, China has done a good job, but beyond the product, brand ideas and ideas can not pose a threat to MUJI.

CBR: it is reported that the price of Chinese and Japanese commodities will be consistent in 2020. Before that, MUJI has adjusted the price of the Chinese market 11 times in 5 years. How do you think of the loose high price strategy?

Okada Qing: in China, "because I have a brand, so expensive," this idea is not feasible. The global price of MUJI must be unified.

How does CBR:MUJI win the hearts of the generation born after 1995?

Okada Kiyo: MUJI has no boundaries in the age of Japanese consumers. When young people live a lot, we will provide a variety of systems and solutions, such as the storage system, the products of one person food, and Health & Beauty (health and beauty) are getting more and more attention. MUJI to Go (small shops for mobile population) will also be strengthened.

CBR: what is the most impressive product among all the products you developed for MUJI?

Okada Kiyo: I came to China 40 years ago with Design Director Tian Tianyi, and I discovered the best cotton in Xinjiang and met blue dye technology in Dali. In order to develop products, more than 50 countries have gone before and after. Our generation believes that design depends not only on the mind but also on the legs.

The most impressive one is the bicycle developed with Mr. Yoshida, which has been selling well for 30 years. It fully embodies the concept of MUJI, and consumers can match various parts themselves. I remember when I started selling, the team procession lasted two or three kilometers, and riding MUJI bicycle became a fashion.