My wife and I recently popped down from Seattle to Portland for a quick overnight trip. While strolling around downtown, we saw something that filled my heart with joy, and that made my Tokyo-born spouse feel right at home.
Portland had a MUJI.
We bounced into the place like a couple of bumpkins fresh off the train from the country, soaking in the wonders of a large city for the first time. It was 11am on a Sunday, and the space was packed. Practically every checkout station was manned, and the line snaked well past the registers. We walked out with around $200 of unexpected purchases – shirts, undergarments, pens, stationery, and even coffee. Did we need all of this stuff? Arguable. Did we have fun purchasing functional, elegant and relatively cheap stuff that will get good use around the house? Most definitely.
MUJI is an abbreviation of Mujirushi Ryohin (無印良品), which translates as “Fine Off-Brand Goods.” Mujirushi literally means “no label,” a clever marketing plot from a brand name that’s already a household word in Japan, and is spreading rapidly through Asia and the West. There are 18 MUJI stores in the United States currently, including the newly opened Portland store. More are undoubtedly on the way. The chain has recorded a profit increase for 15 years straight; in 2018, it saw a 13.9% jump in sales and a 19.2% rise in ordinary profits.
How is a brand that pretends to be no brand at all taking over the world?
The MUJI Philosophy: Our Stuff Will Do, So Shut Up and Buy It
MUJI got its start in 1980, not as a company, but as a line sponsored by the Seiyu Corporation (合同会社西友), a supermarket and general merchandise chain. Japan’s explosive post-war growth was slowing down, and Seiyu sought to take advantage of the trend towards economizing by releasing a “no-label” line of goods.
The MUJI line was so successful that, in 1989, it separate from Seiyu and became the Ryohin Keikaku Corporation (株式会社良品計画). It expanded into stores overseas in 1991, and by 1999, was pulling in sales of 100 billion yen (around $1B USD) yearly.
But it wasn’t all smooth sailing. In 2000, sales took a massive hit. MUJI’s stock lost billions in valuation, sliding from a high of 17,350 yen down to 2,750 yen. The press declared it “the end of the MUJI era.” The company shuffled its top staff, and employed a number of strategies – closing inefficient stores, revitalizing its stores and its offerings – to turn its fortunes around. According to chairman Matsui Tadamitsu, the revitalization including making tough decisions, including disposing of about $100M USD of dead inventory.
MUJI’s attitude toward itself as a brand changed around this time as well. For its brand offerings, the company embraced a philosophy of “5% planning, 95% execution” – making swift decisions on brand refurbishment, and quickly putting them into production. Instead of emphasizing its affordability, MUJI partnered with some of the world’s top designers to create “World MUJI” goods with universal appeal. It made stores more efficient, and employed a new ordering system that reduced standing inventory levels from 40% down to 10%.
The result of all of this effort was a dramatic turnaround. MUJI’s sales soared back to double their previous levels by 2010, allowing the company to expand its international presence. Its pan-Asia stores now account for 20% of its total business. The bitter experience not only turned around the company’s fortunes; it gave it the distinctive brand and style that people now think of when they think “MUJI.”
While the company’s methods have evolved, the original MUJI philosophy is still part of the brand’s ethos. As the English language brochure distributed in its North American stores explains, MUJI aims for functional designs devoid of pretension:
This is because we do not make objects to entice responses of strong affinity, like, “This is what I really want” or, “I must have this.” MUJI’s goal is to give customers a rational satisfaction, expressed not with, “This is what I really want” but with “This will do.” “This is what I really want” expresses both faint egotism and discord, while “This will do” expressed conciliatory reasoning. In fact, it may even incorporate resignation and a little dissatisfaction. MUJI’s goal is to sweep away that slight dissatisfaction, and raise the level of the response, “This will do” to one filled with clarity and confidence.
It’s a bold marketing statement in the era of the iPhone, where brand status has become as important as ever: a sort of crossbreed between IKEA’s Swedish functionalism, and the sense of resignation contained in the oft-uttered Japanese phrase shikata ga nai (“It can’t be helped”). If John Stuart Mill had opened a general goods store, it may well have been a MUJI.
Supermarkets, Bakeries, and Hotels – Oh My!
The focus of MUJI’s product line is, in the company’s words, “convenient goods for everyday living.” That’s a wide target, and MUJI’s product line reflects it. In a typical MUJI store, you can buy seemingly everything you may need for day to day life: clothing, towels, food storage containers and other kitchen goods, pens and stationary, health and beauty goods, and even soups and curries.
While all MUJI stores carry its basic product line, some go above and beyond. The best example would be the chain’s new flagship store in Ginza, which boasts a full produce section, a grab-n-go lunch service, a bakery, a diner, a restaurant, and an atelier where designers showcase their next-generation thinking on the evolution of the MUJI brand. As if all that weren’t enough, the location even sports a hotel for weary travelers. MUJI’s hotel, while not the cheapest option available, is a decent value when comparing price to size: a small, basic room for one person starts at around USD $140, with more spacious digs climbing to $350/night.
MUJI’s Uncertain Future
Despite this roaring success, it’s not all straight sailing for MUJI, which faces challenges on several fronts.
The first is its presence in China, where the company has been dealing with a new knockoff brand called “Mujirushi Ryohin Natural Mill” that sells MUJI-looking goods produced in China. The key difference is quality: according to Chinese netizens, the knock-off MUJI’s goods are uniformly crappy.
The worst thing is that there’s little that Ryohin Keikaku can do about the knock-offs. The company has dealt with knock-off brands before, and in those cases as well as the current case, Chinese courts have uniformly refused to uphold Ryohin Keikaku’s right to the MUJI trademark, claiming that the brand is “not well known enough” in China for the imitators to be considered as infringing on the company’s rights.
The larger challenge for MUJI, however, is its fortunes in Japan. While its stores abroad continue to perform strongly, its in-country fortunes have taken a hit: the chain reported a dip in both sales and profits at the end of February.
Ryohin Keikaku attributed the bump to an unusually mild winter in Japan, which impacted clothing sales at Uniqlo and other companies as well. However, retail expert Sato Masashi (佐藤昌氏) says the trend is part of a general decline in the general lifestyle goods space, where he sees a decline in the purchase of home goods and interior products.
Sato also argues that MUJI is facing another threat at home: home goods retailer Nitori (ニトリ), who’s been muscling in on MUJI’s turf since opening its Ginza store in 2015. Sato attributes Nitori’s appeal to its diverse product line: its products come in a number of styles, thus serving a larger array of consumer tastes. Sato also says Nitori kicks MUJI’s ass in terms of retail space – something that MUJI is currently working feverishly to correct.
If MUJI’s history proves anything, however, it proves that the retail chain is no stranger to overcoming adversity. So long as the retailer can bring the same innovation to the current challenges it faces as it did to its 2000 slump, it promises to have a bright future – both in Japan and abroad.
