Muji earned 21.2 per cent of its $2.35-billion revenue in overseas markets in 2013, and is aiming to make it 30 per cent by 2016.Sylvie Milner/The Globe and Mail
This is the first of an occasional series from The Globe's Brian Milner, who visited Japan to assess the results of dramatic efforts to revitalize the world's third-largest economy.
An innovative Japanese retailer that inspires fierce loyalty among customers for its unusual no-brand philosophy and carefully crafted apparel, appliances, stationery, furniture and myriad of other household items is coming to Canada.
Muji, which has expanded rapidly across large swaths of Asia and Europe and recently opened its ninth store in the United States, will launch its first Canadian foray in the heart of downtown Toronto near the Eaton Centre in mid-December. It intends to add two more stores in the city by the end of next year, before spreading to other large urban markets.
With some 3,000 available products (compared with about 7,500 in its Japanese stores), Muji will be doing battle in the hotly competitive local market with everyone from nearby purveyors of branded casual clothing, home and fashion accessories, to the likes of Target, Staples, Shoppers Drug Mart and even Ikea.
But this doesn't faze the Japanese invader, which sticks resolutely to its pitch as an environmentally responsible antidote to overpriced global brands, shoddy discount goods and wasteful packaging. To keep costs down, it steers clear of the highest-priced malls, spends nothing on market research, next to nothing on advertising – less than 2 per cent of sales in Japan and below 1 per cent overseas – and largely ignores the competition.
"We have over 270 shops around the world," Satoru Matsuzaki, the ebullient senior managing director responsible for overseas operations, says in an interview at the company's low-key headquarters in northeast Tokyo. "We did not do any market research coming into a new country. We don't spend such money. Then, we can achieve reasonable prices."
Like other major Japanese retailers, Muji has focused increasingly on foreign expansion, especially to China and faster-growing Asian emerging markets, to counter slower sales on the home front. The Japanese launched a similar overseas drive in the 1970s and booming 1980s. But then, the charge was led by higher-end fashion and department stores.
Today, the action is centred in the mass-market end of the business. By 2017, Muji expects to be operating more stores abroad than in slow-growth Japan, where retailers are grappling with fierce competition from foreign and other domestic players, amid reduced spending by an aging, shrinking population and declining work force.
Fast Retailing's Uniqlo apparel chain, Asia's biggest, is also reported to be coming to Canada by 2016 as part of a huge overseas expansion. The company declined an interview request to discuss its plans.
Aeon Group, Japan's largest retailer, which once owned U.S. clothing chain Talbots, has been building its own malls across China and other markets in emerging Asia. Its goal is to reach 1-trillion yen ($10.65-billion) in overseas revenue by fiscal 2016, double the current level and 12.5 per cent of its target for total sales.
But Aeon is steering well clear of the established markets of Europe and North America, where Muji executives see plenty of potential for their array of products featuring consumer-friendly designs, simple materials, plain packaging and reasonable – though not discounted – prices.
In Europe and the U.S., "we were told that there are many simple products on the market. However, there are not many that are both simple and well-designed," Mr. Matsuzaki says.
Like Aeon, Muji is still expanding in Japan. But foreign sales are growing faster. They accounted for 21.2 per cent of total operating revenue of $2.35-billion in fiscal 2013 and the company is aiming for 30 per cent by 2016.
Muji itself is the retail brand of Ryohin Keikaku Co. Ltd. But you won't find its plain logo on any of the thousands of items on display in its spacious, uncluttered stores. It doesn't even acknowledge the often celebrated designers it has recruited to develop everything from entire houses to made-in-Japan jeans, its best-selling aroma diffusers, ubiquitous travel cases, ball-point pens and notebooks.
"I don't think things have to be branded. It's more that they have to be useful in daily life," Shiori Tajima, 24, a yoga instructor, says as she checks out neat piles of exercise apparel at the softly lit flagship store in Tokyo's Ginza district. "Wearing Muji is different from Ralph Lauren. I only wear [branded] clothes for special occasions."
The name is short for Mujirushi Ryohin (no-brand superior items), which began life in 1980 as the private-label brand of a major supermarket chain. At the time, Japan was starting to feel the effects of the bubble economy that would drive real estate and other asset prices sky high. Consumers, who had long equated discounts with lower quality, used their increased wealth to acquire foreign luxury brands.
"They thought that expensive was good, so the products must be good too," Mr. Matsuzaki says partly in English and partly through an interpreter. As a result, something worth, say, 500 yen was being sold for 10 times that amount "just because of one brand logo. We thought: What if we could provide customers with truly valuable products at a good price?"
Canadians will soon get their first look at the answer.