Muji’s recent financial performance is declining. Though Muji has achieved huge success over the years, COVID-19 has made its business in the United States fundamentally struggle. Lung (2020) points out that Muji’s US operations recently filed for bankruptcy due to the pandemic. Further analysis reveals that Muji’s stores have been struggling since March 2020 because of COVID-19. This retailer cannot afford its high rent as well as other costs; consequently, it is hard for Muji to survive in the United States.
- What actually happened?
Truthfully, Muji had struggled even before the pandemic because the rental prices in key landmarks and locations in the United States are very high. It is reported that in Muji’s first-quarter announcement in 2020, its revenue fell 30% to US$736.2 million and the net loss is US$38.3 million (Lung 2020).
Since Muji’s market penetration in the United States in 2007, costs increased significantly due to the distance between its production areas and the United States. Therefore, Muji has to up its prices and decrease its product offerings in order to lower its import costs.
Apparently, the United States is one of the most important markets in the world. Although Muji’s sustainable approach and anti-consumerism philosophy are popular in Japan where people prioritise quality, American consumers tend to buy in bulk and value aesthetic features more than functionality, for in American culture, aesthetic features are also an important value. As a consequence, without proper localisation, Muji cannot be truly successful in the United States.
The second key aspect that will be explained is positioning. Since Muji’s philosophy is ‘no-brand’, its products are considered minimalistic, practical, basic, affordable and functional. Muji is mainly a furniture retailer; its values are simplicity, minimalism, cost consciousness, quality, transparency and Zen. Its cultural heritage is modern, Japanese, nature-oriented and simple. Its assets are affordable prices, good quality and well-designed products. Its customers want to feel stylish and special in an effortless manner (Kanai 2018).
- Understand the dynamics.
In the first place, Muji’s retail stores pay attention to simple designs and good value which satisfy customers’ expectations. Its retail stores sell a wide range of products, including clothing, stationery, makeup and personal care products. Its target market is students and professionals who work in offices. Therefore, its market share is big. Yet this industry is quite saturated; hence, its growth rate in the industry is low.
Muji launched Muji House in 2000 (Fast Company 2016). With three offerings (‘wooden house’, ‘window house’ and ‘vertical house’), Muji House designs for those who live in cities where the population is big. The wooden house is designed in Japan where earthquakes happen frequently. This is the most basic design offered by Muji House. As to the window house, various sizes of big windows are the main feature of this offering. Individuals who live in the window house can enjoy a good view. As for the vertical house, this design certainly saves space. The idea is to build a three-storey house in a relatively limited space. Since Muji House designs high-quality houses, its growth rate is high. Nonetheless, Muji House’s market share is small because it has not been on the market for a very long time.
Flower Muji is a shop which sells flowers, plants as well as gardening supplies. Customers are able to order products from Flower Muji on the Internet. The product is usually delivered within two weeks. Since modern individuals highly value the quality of their lives these days, they would buy flowers and other plants to decorate their houses. Because of this trend and the online shopping convenience, Flower Muji’s industry growth rate is relatively high. However, as its prices are also high compared to other flower shops, customers are more likely to buy flowers and other plants from Flower Muji’s competitors that offer lower prices. As a result, Flower Muji’s market share is quite low.
Café & Meal Muji were launched in 2000 as well (Fast Company 2016). Because they use fresh ingredients and healthy recipes, Muji’s restaurants are frequented by health-conscious individuals who highly value health and wellbeing. Yet there are many successful cafes and restaurants all over the world; therefore, Café & Meal Muji have low market share and low industry growth rate. Yet, Café & Meal Muji can use furniture that is sold in its retail stores, thereby allowing customers to experience their household products while dining in their restaurants.
“Those who like what they see in Café & Meal Muji would consider buying tables and chairs from Muji’s retail stores.”