A Chinese-Japanese joint venture is proving that conventional retail can compete with online rivals through the right business model, and its micro-department store is even being regarded as possibly recession-proof retail.
Conventional retailers have been hit by the growth of the eCommerce sector, which has been luring consumers with lower prices, wider selections and convenient delivery options, says the Hong Kong Trade Development Council (HKTDC).
High-street traders have seen footfall drop and margins slashed, with many now struggling to break even. Against this backdrop, one conventional retail group has been posting record profits while it rapidly expands its global outlets.
Making its high-street debut in 2013, Tokyo-based fast-fashion outlet Miniso soon became a fixture in nearly every major city in the Chinese mainland. It now has more than 1000 mainland stores, with outlets in many malls and shopping streets. Each outlet is said to offer a range of about 3000 product lines, with new items being introduced every week.
Miniso also has outlets across the world, including stores in Bangkok, Beijing, Dubai, Florence, Hong Kong, Los Angeles, San Francisco, Shanghai and Singapore.
“This year, we have been expanding at a rate of 80 new stores a month,” says co-founder Ye Guofu, who is also the company’s president for the Greater China region.
He believes e-tailing growth may have peaked, and suggests that conventional retailers with a high cost-performance ratio as their selling point may well rally and return to dominating the sector.
Ye’s business partner, designer Miyake Jyunya, is the group’s head designer, and its policy is to stick to products that are “simple, natural and rich in texture”. New items are introduced every week, with the group maintaining a low-cost but cutting-edge strategy. Most of its products are priced between RMB10 (US$1.53) and RMB29, and are said to particularly appeal to middle-income and white-collar consumers between 18 and 35 years old.
Apart from a range of foodstuffs, most Miniso products are designed at its headquarters in Japan and must meet stringent Japanese quality-control standards. In China, the group works with premier suppliers, with many of its products being offered throughout its global network. About 80 per cent of its products are sourced from 800-odd mainland manufacturers, nearly all in the Pearl River Delta and Yangtze River Delta regions.
Industry insiders have even commented that its micro-department store business model may actually be recession-proof, allowing the group to expand despite the non-conducive trading environment, says HKTDC.