MUJI's Disappointment And Frustration: Cheated Customers By Diverting Heat

Nowadays, it is embarrassing to mention MUJI products and fans' mentality. As a brand that brings exquisite aesthetics and Japanese lifestyle to China, Muji's "good quality" image is collapsing. MUJI has recently been notified by the Beijing Municipal Administration of market supervision of the 6 furniture material "shoddy" incident, compared with the previous quality "small fault" compared to the "upgrade". In the biggest market of China, the brand image is even more disappointing under the frustrated growth of business revenue. Under the questioning, Muji said in July 23rd that after that, some distinctive strategic shops will be opened in China, and the range of products will also be different from those of Japanese stores. By the end of 2023, China's local grocery products will be raised to 50% of this category.

Suspected fraud

Once the rich and convenient life is over, people may begin to yearn for simplicity and eliminate redundant Zen life. MUJI was originally developed with such a concept to open up the Chinese market. But the repeated quality landslides will inevitably disappoint a lot of fans.

In July 17th, the Beijing municipal market supervision and Administration Bureau announced that the 5 pieces of furniture, including beech racks, walnut solid wood chairs, living room dining rooms, sofa chairs, side tables and combined wooden frames, were found to be incompatible with the actual materials. The black walnut was rated as walnut, plywood and walnut, and the fiberboard was rated white oak, which was suspected of deceiving consumers. Two days later, Muji issued a statement of apology and promised to return it. At the same time, four rectification measures are put forward. The furniture industry insiders told the Beijing Commercial Daily reporter that the price of the same style furniture is different from that of the furniture. White oak and walnut belong to solid wood, fiberboard and plywood belong to man-made board, the price difference between them is more than doubled. MUJI has been suspected of deceiving consumers, regardless of intentions or intentions.

Since this year, Muji has been exposed to product quality problems. In January, the Hongkong Consumer Council found that Muji hazelnut oatmeal biscuits contained genotoxic and carcinogenic alcohols and acrylamide. In February, Muji part of the batch "natural water" was also detected potential carcinogen bromate exceeded the standard, recalled the product. In April, Muji was once again recalled due to safety hazards due to the use of notebook (M) and stainless steel ruler.

On the question of furniture disqualification and material discrepancy, the Beijing Commercial Daily reporter interviewed Muji (Shanghai) Commercial Co., Ltd., the other side said that the reason for the difference in the name of the commodity was the translation of Japanese trade names.

For what strategic actions will be taken to restore the reputation in the Chinese market, the official said, "in Japan, Muji shops have their own characteristics. For example, there are supermarkets in the North flower shop in Osaka. There are local fruits and vegetables and convenience products on the first floor of the flagship store in Ginza. The flagship stores currently open in China are still relatively similar, and then some distinctive strategic shops will be opened. There will be some differences in the scope of commodities. Besides, the menu and service mode of the restaurant will be different from that of the previous flagship store. In addition, according to the plan, by the end of 2023, the proportion of localized commodities in the Chinese market will be raised to 50% of the total commodity in the grocery department.

Heat cooling

In 2005, Muji set up China's first store in Shanghai, which opened the way to enter the Chinese market. Over the past 14 years, Muji has opened up shop in China the fastest and the largest proportion in the overseas market. As of the 2019 fiscal year of February 28th, the total number of overseas Muji shops was 497, of which only 358 in the Chinese market.

At the beginning of China, Muji printed "less is more", and the exquisite and simple Japanese life aesthetics just catered to the demand of the middle class's consumption upgrading, and quickly became a powder. At the same time, Muji also deliberately created "high-end" sense in store image design, marketing strategy and product pricing, which made Muji become a "high-end" brand in China. In 2012, Muji has entered a fast growing period in China, expanding at an annual rate of 30-50 new stores. At the same time, "the price of China's Muji is two times that of Japan", which has been widely seen. Since then, Muji has implemented 11 price reductions since 2014. But the price reduction effect did not last too long. Lack of product renewal and word-of-mouth decline, on the one hand, make Chinese consumers fatigued with MUJI products, and on the other hand overdraft brand value. In 2017, CCTV 3. 15 evening party reported that some imported food from Muji was produced in Japan's nuclear contaminated area. Although the matter was clarified later, the sales growth of Muji in the Chinese market began to slow down from this year.

In the 2018 quarter of fiscal year two to the two quarter of fiscal 2019, the quarterly revenue of Muji in the Chinese market increased by 22.6%, 21.2%, 18.3%, 14.8% and 10.4%, respectively. In the first half of fiscal year 2018, the Chinese market declined for the first time compared with sales, and the rate was 2.2%, which also led to a 0.2% decline in the revenue of the parent company's good plan. In the 2019 fiscal year (March 2018 -2019 February), the Muji China market still fell at 2.1% compared to the sales decline, but net profit fell 31%. The first quarter results of the first fiscal year 2020 announced by the good quality plan show that the comparable sales decline in the Chinese market has risen to 4.9% during the reporting period.

In response to the situation and solutions of Beijing Commercial Daily reporter on the growth of MUJI products in mainland China in recent years, the reply of Muji company showed that "mainland China's revenue grew 120.4% in the two quarter of fiscal year 2018, and the revenue in the two quarter of fiscal 2019 increased by nearly 111.1% over the same period last year. So the company did not see a profit decline in the 2019 fiscal year, but a slowdown in revenue growth. This is mainly due to inventory reasons. On the one hand, the internal circulation management system has been replaced. On the other hand, the make-up reservoir of the basic Moisturizing Series is also scarce, but now the problem has been solved.

Customer diversion

Although Muji has attached great importance to the Chinese market, it has been slow to change for Chinese consumers. In March of this year, Muji announced that it had developed a series of "China needs" commodities from the perspective of China, made changes for China, and adjusted the size of beds and mattresses. This is the first time Muji has made adjustments to meet the needs of Chinese consumers. But this kind of pandering seems a bit late. Since the first store opened in China in 2005, Muji has entered the Chinese market for 14 years.

At the same time, a series of Chinese local lifestyle brands such as NetEase, Taobao, and mica have emerged. Most of these brands follow the same pattern as MUJI products: minimalist commodity design, display style, products covering daily necessities, home furnishing, clothing, food, electrical appliances and other major categories; self built or integrated more effective supply chains, and prices are more competitive.

Lai Yang, executive vice president of the Beijing Institute of business economics, said that the exploration of Muji has been quite good in business transformation in recent years, such as the introduction of MUJI HOTEL and other innovative experience models. But it faces several problems at the same time. First, market audiences are shrinking and shunting. The low-key, quality brand image created by Muji is probably unique in the past, but now the brand marked by this image is increasing, which will actually divert customers from MUJI products. The two is the mode of innovation. Although the brand image of Muji has been strengthened, the corresponding business operation cost is also increasing. The experience shop itself will not be too high, and more importantly, it will convey brand awareness and identity to consumers. The future sales trend should be shifted more to online, shrink the scale of shops, and highlight only limited experience shops to show the image. In addition, because the shopping mode of consumers has changed from demand shopping to random shopping, Muji can also make some explorations in joint creative marketing.