Mumbai: It’s been an exciting few days for Satoru Matsuzaki, the president, representative director and executive officer of Ryohin Keikaku Co. Ltd, as the company opened its very first MUJI store in Mumbai on Thursday. Launched in 1980 in Japan as Mujirushi Ryohin or “no-brand quality goods”, the brand was intended to be a generic line for a supermarket group. But the no-frills brand has grown over the years into a company, with an annual turnover of 307,532 million yen. It has over 700 stores globally, which sell more than 7,000 items, ranging from socks and furniture, to soap.
Matsuzaki spoke to Mint about reaching out to the Indian consumer, the company’s approach to innovation and why they don’t consider Ikea as competition. Edited excerpts:
What is the extent of investment in India and what will your strategy be going forward?
I may not be able to give exact amounts but let me put things in perspective. Last year, out of our total revenue, 35.5% came from our international business. And, therefore, increasingly, we will continue to make investments abroad and that is the basic thought process at MUJI. We are not looking at India as a high-profit, high-market share destination for the next 3-5 years. We are going to look at India more from a mid- to long-term basis. Let me give you a similar example. When we entered China in July 2005, for the next three years up till 2007, we had only one store in China. In 2008, that number went up to five stores. This year we will cross 200 stores in China, and will open stores at a pace of 40 stores per year. So, in India also, we foresee that a similar timing will come, where we will be all set to make that jump. Our priority is to set up a strong base with our joint venture partner Reliance, to wait for that timing before we can grow at that pace.
As far as e-commerce is concerned, even in Japan our sales ratio of e-commerce is only 7%. However, because of the convenience it offers to the consumer, it is growing by 15% each year. Similarly, we feel that while e-commerce is a tool for India, appealing to consumers through the store is the most effective way of doing it.
How important is localization? Is it an important strategy to grow in international markets?
We have talked about some localization in China, where we noticed that the water bottles and rice cookers we currently have available are popular but too small for Chinese consumers. But this is a market where we have close to 200 stores. We have opened our first store in India. So the shape and form that may be necessary as per the customs or usage patterns in India is something that we would like to observe going forward. Even in China we are selling the same products that we are selling elsewhere in the world.
Could you tell us about Found MUJI and the inspiration behind some of your best-selling products?
In product introduction, there are two directions of thinking—One is new development from scratch or bespoke. Another is Found MUJI, which is finding product ideas from everywhere in the world, including India, where we spend a lot of time in those markets trying to glean or collect product ideas for development, and introduce those as our standard regular offerings. These products are updated or repurposed, often working with the original artisan or designer, to better fit changing contemporary lifestyles, cultures and customs among different countries, and are reproduced at a reasonable price. For instance, we have introduced a steel bowl, which we found in India, for sale across the world. Several popular products have emanated from this practice. In Thailand, the agricultural community was using clothes dyed with indigo, a practice that we have incorporated into our products. Our right-angled socks were inspired by socks that were knit by hand by a Czech grandmother, who knit the heels at a ninety-degree angle instead of the typical hundred and twenty, feather dusters from Germany, enamelware from France, among others.
What is the company’s approach to innovation? How are new products developed?
We have three ways of approaching innovation and development of new products. The first, observation, is where we seek permission from our consumers for home visits. We use that opportunity to observe the lifestyle of the consumer as well as try and seek out “pain areas” which even they are not yet conscious of. Some of the products such as the self-standing, collapsible, cleaning products range have been inspired from such home visits. We created wall-mounted furniture. In Japan, in many cases, the wall is made of thin plaster, unlike here. Also, in many cases people rent houses and therefore don’t want to damage walls. We invented a unique pin, which allows the furniture to be wall mounted with minimal damage to the walls. We created visible and neat bathroom bottles, which replace the other noisy products that have been designed to stand out in shelves of modern retail, but look intrusive in the house.
The other way is to communicate with the customer. This is even before the popularity of social media and the internet. The soft bead, body-fit cushions were developed based on consumer inputs. We also have Idea Park, a website where customers can comment and interact with us and other customers on ideas for MUJI products. Every Monday, the top officials of the three divisions—household, food and apparel—meet and discuss the ideas from Idea Park and take decisions.
How do you brand the unbranded?
We are “no brand” but consumers still identify us as MUJI. Once you remove the tag, nowhere on the product will you continue to see the Muji logo, mark or name, and yet it is differentiated and identified as MUJI. How does that happen? When we talk about our product philosophy, and from the marketing point of view, there is a concept of segregation or differentiation. Simple differentiation between two products can happen, not just based on brand but also on quality and functionality. In the case of MUJI, that differentiation has come from the customer’s experience of our quality, design and features. To convey that, our methodology or tool is to use three things. One is the product, to let it speak for itself. Second is the store space, which is designed in a way that it appeals to the consumer, and third is information about the product that we impart at the store—(hands over a book) not a catalogue with pricing, but it communicates the product story.
Why is MUJI being promoted as a premium brand in India when its brand ethos is minimalistic, no-frills, and purely functional?
I wonder how you got that impression. If you are referring to our choice of location (Palladium Mall), it was something that we did express concerns over. However, our partners explained that in a city like Mumbai, there is this dichotomy where a Gucci store is sharing the location with a fast fashion brand like Zara. So, if you notice, even in Palladium, our store in on the third level, which is not a prime location. When we were looking for locations in Bangalore with our partners, we were clear that we did not want to be at the UB City Mall, which is known for its luxury brand stores. We asked Darshan Mehta (CEO, Reliance Brands Ltd) to help us find a location where the young families live.
But the Indian consumer is anything but minimalistic. How will you get them to buy into MUJI’s concept of unbranded products that are high on functionality and design?
Brand attraction is one of the first reasons that drives brand appeal and drives a consumer to purchasing the brand. There is also that pride in possession and then the aspect of showing off the brand. This is true not just of consumers in India, but also in Japan and other parts of the world where high-priced brands are sought after and do well. But, there is also a set of evolved customers who understand the value in the usage and features of the product and the solution it provides. These are consumers who are spending more on good-quality everyday items to enrich their everyday lives, and they are everywhere.
The pricing for MUJI products varies from country to country. What will your pricing be here?
We would like to have consistent pricing across the world. But as you know, we are debating uniform VAT (value-added tax), or GST (goods and services tax). Every country has country-specific taxation, which is higher than that of Japan. So it is a hindrance to getting to that ideal. But there is a group of products which we call Global Strategic Products (GSP), such as the right-angled socks, the wall-mounted CD player, the diffuser, best-sellers, which we would like to price at a maximum of 20-30% of their price in Japan. There are many products in our store here that are almost at the same price as in Japan.
There has been a long-standing comparison between MUJI and Ikea. How will you differentiate yourselves from them in the eyes of the Indian consumer?
We are operating in 28 countries outside of Japan. Ikea is operating in 48 countries and has a larger global presence. But even when we operate in the same market, we do not identify them as our competitors. Just like Ikea there are other manufacturers which are restricted to one particular product category, like Uniqlo, Zara or H&M. They do not feature as large-scale, across the board, 7,000 SKUs (stock-keeping units) in various categories starting from apparel to household goods. We also attach a lot of importance to product design and quality. Ikea may make similar products in areas of furniture, in multiple colours, but they do not apply a similar design concept across their SKUs which you will find in MUJI.
How important is it to minimize wastage? Especially with products such as the U-shaped spaghetti?
This has been the brand philosophy since inception, not a passing trend where everyone is talking about being kind to the earth. Our basic philosophy is to have no-frills products, which don’t add unnecessary things just to push sales. We put into the product only features that are functional for the consumer. Even with wastage, for instance, when we are making fabric, the threads that fall down are collected and made into mops. We also make socks out of this “rescued yarn”. Even in a country like China, it captured the imagination of consumers, and the mop made out of this rescued yarn is among the top 10 selling products there. We used to sell U-shaped spaghetti, the leftover part that is cut off to sell straight spaghetti, but that has been discontinued for now.