MUJIwas established in 1980 as a private brand of The Seiyu, Ltd.
and in 1989 thecompany founded Ryohin Keikaku Co., as an independent company to plans,develops, manufactures, distributes and sells the MUJI brand for all aspects oflife, including clothing, household articles, food products and more, from 40products, has grown into a brand with more than 7,000 products today (Ryohin-keikakuJapan, 2017). Since its founding, MUJI had developed functional, no-frillsproducts based on the ‘lower price for a reason concept’. To achieve this,there are three product development approaches, to take a second look at oftenneglected materials, streamline the production process, and simplify packagingto create simple, beautiful products that people will cherish for years(Ryohin-keikaku Japan, 2017).
Apart from the quality product, MUJI also famousof its minimal aesthetic brand concept, Mujirushi Ryohin, MUJI in Japanese,translates as ‘no-brand quality goods.’ (Muji.com, 2018) and now become itsstrongest brand image.Despiteearlier success of MUJI, it experienced its first major profit decline in 2000,due to brand dilution, large company disease, strategy mistake as well as therise of competitor who were better responding to the deflating Japaneseeconomy. The company was solely focus on satisfying internal stakeholders andbusiness expansion but failed to put effort into refining the brand’s coreconcept and ignored market changes which result in loss of advantage withcompetitor like Uniqlo. In 2006, the company was able to generate consolidatedrevenue after pursued a wide range of structural reforms in personnel system,production process, quality control and diminish retail store, as well asintroduce WORLD MUJI, FOUND MUJI and MUJI LABO as product development strategy(Fujikawa et al., 2009).Afterthe crisis, MUJI not only can stick with the business core concept, alsoproactively expended to oversea market like Europe (UK, Germany), Asia (China,Korea) and more, by February 2017, it has 328 store in Japan and 372 overseawhich generate 35% of company revenue (Ryohin-keikakuJapan, 2017).
In 2013, MUJI launch itsloyalty program app –MUJI Passport. With the app Customer can gain MUJI milesby shopping, leave product commends to redeem MUJI shopping Dollar as well asstock 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 inJapan in 2019. Whatis the innovation about MUJI?WhatMUJI can learn from the pass failure?Witha big scale of retail shop, how MUJI can combine technology and offlineshopping to resist online shopping trend? Ina competitive economic environment, company have to position its brand in aunique way to differentiate in the market, and MUJI chose to take a simplicityapproach to win the customer. In the past 37 years, the company consist on thecore concept, offering good quality product with lower price to bring pleasurein people’s life, however, to meet the market changes, there are challengesthey must face and overcome. As a retail based business, MUJI bring ininnovation concept in its product development and urge business diversification,besides, improving communication between brand and customer with technology tooptimise customer loyalty.
WhenMUJI first established, market reaction to its concept was strong, however, itsrevenue had major decline in 2000 due to internal and external factors. Duringthe business hard time, it is very important that they can respond the markerquickly which require a resilience ability. Organisation resilience can defineas the ability to not only survive a hardship, but also to emerge stronger andbetter prepared to face new challenges in the future (Hernandez, Goldberg andHess, 2017) by recover from setbacks, adapt well to change (Harvard BusinessReview, 2015). After identified the causes, MUJI took action immediately by structuralreform shows its ability in recover lost profit and maintain a steady businessgrowth. Even after 2006 when the business is profitable again, the companyleant from the fail experience and introduce new business strategies model:WORLD MUJI, FOUND MUJI and MUJI LABO. The first two is to collect ideas fromall around the world and in different cultures in order to advance productdevelopment, this also built up the foundation when enter oversea market. Thethird one is specify for take on the challenge of creating new clothing itemfor MUJI which allow the company produce product with proprietary technology. Thesetactics are responding to organisation resilience of strengthen business andprepare for future challenges and with the strong product development support,MUJI can explore more new product categories.
MUJIapplied an innovative business strategy in product range expansion. AccordingHarvard Business Review, one of the elements of an innovative business model isto consider what company will offer, for instance, search for commonality ofproducts, and shows the capabilities to serve various product, customer, andmarket segments. Consequently, companies can add to their mix products orservices that reflect new applications of their capabilities (Girotra andNetessine, 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). Althoughthey are from different category, one thing in common is they are all aboutpeople’s life on a daily bases and bring pleasure to it. This type ofinnovation effectively enhancing the organization’s ability to develop newwealth-creating opportunities, identify positive twists in strategic direction,and develop an ongoing capability to innovate (Dobni, 2006).
With a widediversity of products it expands MUJI’s business in different market segmentwhich possibly result in higher revenue, however, they still need the last keyfactor to bring the success to the company which is customer.IncludingJapan and oversea market, the company own 700 retails store, a huge distributionnetwork like this need high foot fall in the shop every day. Nevertheless, nowis 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 andprojections to 4.06 trillion U.S.
dollars by 2020 (Facts, 2017). To resist thechange of consumer behaviour from offline to online shopping, MUJI launched amembership mobile application ‘MUJI Passport’ to combine online and offlineshopping experience, as well as provide a platform for communication betweencustomer and the company. According to Innovation Case Studies lecture 6Reinventing Loyalty theory, ‘Cultural and digital transformation arereinventing the experience and definition of loyalty for consumers and brands.’,MUJI Passport create a new shopping experience for consumer, by allowing themtrack their own miles (points), check product information and stock availability,create favourite product list, leave comment to product become a part of the MUJIcommunity. Last but not least, the check-in function allow them earn point whenthey visit the store without purchasing products. The interaction with MUJIPassport highly motivate consumer engage with the brand and increase foot fallfor retail store, which bring a positive result in increasing customer loyalty.
Apart from building relationship with customer, the application can alsocollect data for analysing their shopping behaviour and use for predict marketchange.Theprogressing in retail industry does not satisfy MUJI’s ambition, theyunderstand the business performance will slow down by time, in order to keepincreasing the business size, diversification is one of the approach and Isuggest it can be explained by S-curve model. S-curve has been using to explainthe change in performance of innovation technology by time, it starts slow,accelerate, then hit a ceiling requiring company to jump to a new technology (StrategicToolkits, 2018). From the business research by scholars, shows that diversificationalso 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 businessfoundation and obverse market reaction, for consumer, they will need time toadapt a new service or product, so at this stage business will maintain a lowlevel of performance. After adapted to the new market and modify businessstrategy according to market responds, the company can enter the next stage acceleration, at this stage, more resource areinvested and consumer are more willing to consume. However, due to marketsaturation and consumer are offered new options by the market, the businessgrowth will slow down and decrease.
Therefore, MUJI diversifies the business tohousing, catering and hotel which can bring positive result to company generalperformance.Toconclude, MUJI successfully overcome challenges and perceive marketopportunities. It possesses organisation resilience and incapable to defect thebusiness decline, through adopt innovation business strategies in productdevelopment led the company gained a success in both domestic and overseamarket, then, protect company profit by reinventing customer loyalty.
Toacquire a higher achievement, MUJI also diversity business to newindustry. Economic market always full ofopportunities and challenges, after overcome those difficulties, there will benew business chances.
