MUJI price cut: will Chinese consumers buy it

MUJI Muji Muji has started a new round of price adjustment, with the price reduction of some commodities reaching 1000 yuan. The price adjustment involves sofas, daily necessities, cleaning supplies, kitchenware, etc. On April 12, Muji China headquarters told Beijing Business Daily that “Muji Muji Muji Muji has been constantly re examining the price in order to make it easier for people to get hold of the high-frequency used goods in their lives, and strive to restore the value of the goods at a flat price.”.

A reporter from Beijing business daily saw on Muji’s official website that the new price took effect on April 9. Most commodity prices fell by about 30%, while some commodities fell by 1000 yuan. The initial price of a 3-seater sofa is 3980 yuan, and the current price is 2980 yuan.

In addition, make-up cotton, cotton sticks and other goods need to choose 2 or more to enjoy the new price. Among them, the price of 180 pieces of 60 * 50mm cosmetic cotton is reduced from 22 yuan per piece to 15 yuan per piece, and the price of cotton sticks is reduced from 16 yuan to 10 yuan per piece. In response, Muji China headquarters said to Beijing Business Daily: “this is based on customers’ purchase and use habits.”

Beijing Business Daily reporter saw on Muji’s official website that the price of 180 60 * 50mm cotton pads is 3.5 pounds (about 31 yuan), and the price has not been adjusted. As for whether the price reduction is only aimed at the Chinese market, Muji China headquarters said that “the re examination of the price is aimed at Chinese customers”.

“In addition to the strong sales performance of Japan’s domestic market, China, as an important overseas market for Muji, has played a driving role in improving its overall performance.” Xiao Xu, a lecturer at the school of Business Administration of Capital University of economics and trade, said.

He further pointed out that China’s rapid economic growth has brought huge profits to MUJI products. In order to speed up the expansion and attract more consumers, MUJI products began to reduce prices for different categories of goods as early as the autumn of 2014 while strengthening China’s domestic production control. “Muji can reduce the price by checking the process, simplifying the packaging, improving the logistics, and eliminating the logistics cost of transferring the products made in China to Japan and then back to China. Enterprises hope that reducing the price can expand the customer base.”

“However, from the actual effect, it is difficult to retain Chinese consumers only by continuously reducing prices and accelerating the opening of stores.” Xiao Xu continued that the rapid expansion not only did not significantly improve the sales of Muji, but also affected the quality of products. It is difficult to meet all consumer preferences only by price reduction. It is also a good development direction to choose “technical specialty” and to cultivate deeply and carefully where product quality and design can produce high added value.

Beijing Business Daily reporter in the social platform to see, consumers for Muji this price attitude is mixed. “Muji clothing quality is much better than other fast-selling brands, like this simple style.” However, some consumers are worried about the price reduction. “The price reduction may be to consolidate the consumers, but the quality and workmanship should also be improved. Otherwise, can the simple style work?” In addition, some consumers said: “Muji goods have always been more expensive, this price reduction is an inevitable trend.”

In fact, Muji has continued to implement the price reduction strategy of “new pricing” since 2014. So far, more than 10 price adjustments have been made in the Chinese market.

It is reported that Muji opened its first store in Shanghai in 2005 and officially entered China. Since 2012, Muji has expanded at the rate of 30-50 stores a year in China. As of February 28, 2019, Muji has 420 stores in Japan, and there are 497 stores overseas, of which Chinese mainland has the largest number, reaching 256, accounting for more than half of overseas stores. By the end of February 2021, Muji had 288 stores in China.

In April 2019, Ryohin Keikaku Co., Muji’s parent company, announced its financial report for the whole year up to February 28, 2019. The operating profit declined for the first time after eight consecutive years of growth. The sales volume in the Chinese market increased by 11.6% year-on-year to 75.09 billion yen (about 4.8 billion yuan), and the same store sales volume decreased by 2.1% year-on-year.

According to the annual financial report of liangpin plan in 2019, the annual sales of liangpin plan is about 28.6 billion yuan, a year-on-year increase of 7.1%; the net profit is about 1.5 billion yuan, a year-on-year decrease of 31.3%.

However, with regard to the performance in 2020, Muji China headquarters said that after the resumption of store operations in China in 2020, the sales performance will gradually recover. On the other hand, the sales of online shopping mall keep good momentum. In addition, sales of groceries developed by China’s localization team also increased last year.

Beijing Business News (reporter Zhao Yuwei)

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