Talking about travelling in East Asia, my favorite activity is going to Muji while having fun in Japan.
- As to Muji’s opportunities, two important opportunities have been found:
The first opportunity is international expansion. Sato (2010) maintains that the current domestic market in Japan is already saturated because Muji is a very popular and well-known brand in Japan. Meanwhile, the eco-friendly, no-brand trend looks very attractive and desirable globally. Thus, Muji can expand internationally. Now Muji also has many stores in Europe, North America, Asia, Australia and the Middle East.
The second opportunity is launching new sustainable and environmentally friendly products. Because Muji’s current main focus is simplicity and minimalism, using alternative materials to gradually replace polyester and plastic can be a big opportunity for this brand. In this way, Muji can be considered a truly eco-friendly company. For instance, instead of using standard plastic to make products, Muji could use biodegradable plastic and wood as materials. Additionally, Muji can differentiate itself even more by utilizing 100% organic cotton to make all clothing.
- But Muji also faces three main threats at the moment:
First and foremost, Hill (2013) explains that price inconsistency brings more disadvantages than benefits. It is true that Muji has significant price consistency between different markets. For example, a lot of customers are comparing prices on the Internet and they have discovered that the same products in a foreign country are cheaper than what they can find in their own countries. As Muji was founded in the 1980s when the Internet was not mainstream, it has to catch up with this modern phenomenon that encourages down-to-earth customers to check different prices online. Research shows that when a customer realizes that they can find a lower price in another market, they are less motivated to purchase a product (Hill 2013).
Next, the competition on the market is increasingly stiff. There are many competitors that have lots of advantages: Uniqlo, IKIEA and Hema all offer customers good value. If Muji does not prioritize innovation, this brand might become obsolete in the future, in spite of its current success and popularity.
Last but not least, in some emerging markets, Muji’s ‘no-brand’ message does not really have any meaning. Take India as an example. In Indian culture, people generally prefer having logos on products they use. Consequently, as a minimalist brand, Muji must convince Indian customers in the first place. Basically, the ‘no-brand’ philosophy is based on the response to the countless brands in East Asia, Europe, America and Australia (Weissman 2020). However, in India, there are not many brands yet. Hence, the ‘no-brand’ image may not look desirable or attractive in India. What’s more, the ‘no-brand’ policy is unclear in an emerging market like India – Ideally, in order to penetrate an emerging market, the marketing campaign has to be clear, not clever.
- Porter’s 5 forces model:
First of all, speaking of competitors in the industry, Muji’s competitive edge is very good. More exactly, Muji not only has quality and style, but also has highly effective and clear positioning as well as market segmentation. Because Muji’s designs are dramatically different from their competitors’ designs, Muji is able to attract and keep the right target market who are loyal in the long term. People between 15 and 35 years old who prefer a simple, natural and practical lifestyle would find Muji products very valuable.
Secondly, talking about buyers, it is clear that Muji’s customers have high price sensitivity and low switching costs, for there are a variety of substitutes in its competitors’ stores. Nevertheless, the real reason why customers still like Muji is because Muji’s style is unique and the quality is high. That being said, if Muji would like to strengthen its competitive edge, it has to further improve its design and quality to keep loyal customers in the long run.
Thirdly, the bargaining power of suppliers is relatively low. In the supply chain, it can be seen that Muji conducts the downward integration as well as the upward integration: from product ideation, product design, material allocation, product manufacturing, sales and marketing, to inventory management – Muji participates in this process fully and deeply.
Besides, the threat of substitute products should not be ignored. Even though Muji has achieved great success over four decades, there are many substitute products that can be found on e-commerce stores online these days. Currently, a growing number of individuals prefer convenience, as online shopping has become mainstream already. As a consequence, a lot of people may use Amazon and eBay to find affordable and high-quality products that can be purchased easily on the Internet. This is particularly true during the current pandemic which does not encourage people to go out for shopping. Also, a lot of e-commerce stores offer many more options than Muji which does not really have the best online presence.
“There are many potential entrants as barriers for anyone to enter this market are limited. Having said that, capital requirements are significant for a retail chain to get started and grow its business. At the same time, the market is almost saturated right now. Thus, Muji must keep generating highly creative and innovative ideas in order to keep its existing customers and find new customers.”