MUJI generate consolidated revenue after pursued a wide

MUJI
was established in 1980 as a private brand of The Seiyu, Ltd. and in 1989 the
company founded Ryohin Keikaku Co., as an independent company to plans,
develops, manufactures, distributes and sells the MUJI brand for all aspects of
life, including clothing, household articles, food products and more, from 40
products, has grown into a brand with more than 7,000 products today (Ryohin-keikaku
Japan, 2017). Since its founding, MUJI had developed functional, no-frills
products based on the ‘lower price for a reason concept’. To achieve this,
there are three product development approaches, to take a second look at often
neglected materials, streamline the production process, and simplify packaging
to create simple, beautiful products that people will cherish for years
(Ryohin-keikaku Japan, 2017). Apart from the quality product, MUJI also famous
of its minimal aesthetic brand concept, Mujirushi Ryohin, MUJI in Japanese,
translates as ‘no-brand quality goods.’ (Muji.com, 2018) and now become its
strongest brand image.

Despite
earlier success of MUJI, it experienced its first major profit decline in 2000,
due to brand dilution, large company disease, strategy mistake as well as the
rise of competitor who were better responding to the deflating Japanese
economy. The company was solely focus on satisfying internal stakeholders and
business expansion but failed to put effort into refining the brand’s core
concept and ignored market changes which result in loss of advantage with
competitor like Uniqlo. In 2006, the company was able to generate consolidated
revenue after pursued a wide range of structural reforms in personnel system,
production process, quality control and diminish retail store, as well as
introduce WORLD MUJI, FOUND MUJI and MUJI LABO as product development strategy
(Fujikawa et al., 2009).

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After
the crisis, MUJI not only can stick with the business core concept, also
proactively expended to oversea market like Europe (UK, Germany), Asia (China,
Korea) and more, by February 2017, it has 328 store in Japan and 372 oversea
which generate 35% of company revenue  (Ryohin-keikaku
Japan, 2017).  In 2013, MUJI launch its
loyalty program app –MUJI Passport. With the app Customer can gain MUJI miles
by shopping, leave product commends to redeem MUJI shopping Dollar as well as
stock enquiry (Muji.com, 2018).

 MUJI was not satisfy with its retail success,
it diversify business area to housing (MUJI HUT), catering (Café MUJI)
and recently open its first hotel in China and planning to open the next one in
Japan in 2019.

What
is the innovation about MUJI?

What
MUJI can learn from the pass failure?

With
a big scale of retail shop, how MUJI can combine technology and offline
shopping to resist online shopping trend?

 

 

 

 

 

In
a competitive economic environment, company have to position its brand in a
unique way to differentiate in the market, and MUJI chose to take a simplicity
approach to win the customer. In the past 37 years, the company consist on the
core concept, offering good quality product with lower price to bring pleasure
in people’s life, however, to meet the market changes, there are challenges
they must face and overcome. As a retail based business, MUJI bring in
innovation concept in its product development and urge business diversification,
besides, improving communication between brand and customer with technology to
optimise customer loyalty.

When
MUJI first established, market reaction to its concept was strong, however, its
revenue had major decline in 2000 due to internal and external factors. During
the business hard time, it is very important that they can respond the marker
quickly which require a resilience ability. Organisation resilience can define
as the ability to not only survive a hardship, but also to emerge stronger and
better prepared to face new challenges in the future (Hernandez, Goldberg and
Hess, 2017) by recover from setbacks, adapt well to change (Harvard Business
Review, 2015). After identified the causes, MUJI took action immediately by structural
reform shows its ability in recover lost profit and maintain a steady business
growth. Even after 2006 when the business is profitable again, the company
leant from the fail experience and introduce new business strategies model:
WORLD MUJI, FOUND MUJI and MUJI LABO. The first two is to collect ideas from
all around the world and in different cultures in order to advance product
development, this also built up the foundation when enter oversea market. The
third one is specify for take on the challenge of creating new clothing item
for MUJI which allow the company produce product with proprietary technology. These
tactics are responding to organisation resilience of strengthen business and
prepare for future challenges and with the strong product development support,
MUJI can explore more new product categories.

MUJI
applied an innovative business strategy in product range expansion. According
Harvard Business Review, one of the elements of an innovative business model is
to consider what company will offer, for instance, search for commonality of
products, and shows the capabilities to serve various product, customer, and
market segments. Consequently, companies can add to their mix products or
services that reflect new applications of their capabilities (Girotra and
Netessine, 2014). In 2006, MUJI only have three main product categories:
apparel, household and food and by today it expends to also stationary,
skincare, travel compliance and electronic product (Department, 2018). Although
they are from different category, one thing in common is they are all about
people’s life on a daily bases and bring pleasure to it. This type of
innovation effectively enhancing the organization’s ability to develop new
wealth-creating opportunities, identify positive twists in strategic direction,
and develop an ongoing capability to innovate (Dobni, 2006). With a wide
diversity of products it expands MUJI’s business in different market segment
which possibly result in higher revenue, however, they still need the last key
factor to bring the success to the company which is customer.

Including
Japan and oversea market, the company own 700 retails store, a huge distribution
network like this need high foot fall in the shop every day. Nevertheless, now
is an online shopping era, in 2016, an estimated 1.61 billion people worldwide purchase goods online.
And online sales project to surge enormously from 1.9 trillion U.S. dollars and
projections to 4.06 trillion U.S. dollars by 2020 (Facts, 2017). To resist the
change of consumer behaviour from offline to online shopping, MUJI launched a
membership mobile application ‘MUJI Passport’ to combine online and offline
shopping experience, as well as provide a platform for communication between
customer and the company. According to Innovation Case Studies lecture 6
Reinventing Loyalty theory, ‘Cultural and digital transformation are
reinventing the experience and definition of loyalty for consumers and brands.’,
MUJI Passport create a new shopping experience for consumer, by allowing them
track their own miles (points), check product information and stock availability,
create favourite product list, leave comment to product become a part of the MUJI
community. Last but not least, the check-in function allow them earn point when
they visit the store without purchasing products. The interaction with MUJI
Passport highly motivate consumer engage with the brand and increase foot fall
for retail store, which bring a positive result in increasing customer loyalty.
Apart from building relationship with customer, the application can also
collect data for analysing their shopping behaviour and use for predict market
change.

The
progressing in retail industry does not satisfy MUJI’s ambition, they
understand the business performance will slow down by time, in order to keep
increasing the business size, diversification is one of the approach and I
suggest it can be explained by S-curve model. S-curve has been using to explain
the change in performance of innovation technology by time, it starts slow,
accelerate, then hit a ceiling requiring company to jump to a new technology (Strategic
Toolkits, 2018). From the business research by scholars, shows that diversification
also has a S-curve relationship with firm performance (Oh, Sohl and Rugman,
2015). When they enter a new business, this first priority is to solid business
foundation and obverse market reaction, for consumer, they will need time to
adapt a new service or product, so at this stage business will maintain a low
level of performance. After adapted to the new market and modify business
strategy according to market responds, the company can enter the next stage  acceleration, at this stage, more resource are
invested and consumer are more willing to consume. However, due to market
saturation and consumer are offered new options by the market, the business
growth will slow down and decrease. Therefore, MUJI diversifies the business to
housing, catering and hotel which can bring positive result to company general
performance.

To
conclude, MUJI successfully overcome challenges and perceive market
opportunities. It possesses organisation resilience and incapable to defect the
business decline, through adopt innovation business strategies in product
development led the company gained a success in both domestic and oversea
market, then, protect company profit by reinventing customer loyalty. To
acquire a higher achievement, MUJI also diversity business to new
industry.  Economic market always full of
opportunities and challenges, after overcome those difficulties, there will be
new business chances.

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