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Authors: Yoshinori Fujikawa (Hitotsubashi University ICS); Miyuki Igarashi (Hitotsubashi University ICS); Chiyoko Oshima (Hitotsubashi University ICS); Juri Ishida (Institute for Fashion Industries)
Originally published in: 2007
Version: 30 April 2009

Abstract

This is the second of a two-case series (309-313-1 and 309-314-1). The MUJI case series describes how Ryohin Keikaku Co, Ltd, established its unique positioning in the lifestyle retail industry in Japan and successfully expanded into overseas markets. MUJI began in 1980 as a private brand of Seiyu, Ltd, one of Japan''s largest grocery retail chains. MUJI''s original concept was ''lower priced for a reason,'' featuring function-oriented and no-frills products emphasising a simple lifestyle. Ryohin Keikaku was established in 1989, adopting the name MUJI independently of Seiyu. It recorded steady growth throughout the 1990s until it experienced its first large profit decline in 2000. The problem seemed to be attributable to internal factors such as brand dilution, big company disease, and strategic mistakes, as well as external factors such as the rise of competitors that were better adapting to the deflating domestic economy and the fading uniqueness of the MUJI concept. The MUJI (A) case gives a detailed account of the company''s early growth path during the 1990s, subsequent crisis around 2000, and ensuing recovery resulting in a record high profit for 2005. Under the leadership of Tadamitsu Matsui, appointed as President in 2001, the company revived its domestic business by redefining its brand concept, revamping its human resource management, and improving its operational efficiency. The MUJI (B) case traces the firm''s entry into overseas markets, driven by its somewhat conservative growth strategy, which emphasized steady profitability for each store over rapid growth. By May 2006, the firm''s overseas operations had expanded to 55 stores in 13 countries, with sales of 12.9 billion yen, accounting for 9% of the company''s total revenue in 2005. In 2006, the business appeared to be running smoothly. However, concerns regarding future domestic business emerged as the company witnessed the sixth consecutive year of decline in customer traffic at existing stores. At the same time, overseas markets seemed to provide MUJI with a wide range of opportunities. Faced with such circumstances, Matsui considered five courses of direction, which were not necessarily mutually exclusive: Two alternatives in the domestic market centered around the question of whether to focus on: (1) acquiring more new customers for existing MUJI businesses, and / or (2) creating new businesses (unrelated to MUJI) as a potentially new source of profit (see MUJI (A)); and three alternatives overseas required Matsui to decide whether to put more effort into (3) further penetration in Europe, where MUJI was achieving the largest success; (4) further expansion in Asia; and / or (5) entry into the US.
Location:
Industry:
Size:
4,300 employees
Other setting(s):
2006

About

Abstract

This is the second of a two-case series (309-313-1 and 309-314-1). The MUJI case series describes how Ryohin Keikaku Co, Ltd, established its unique positioning in the lifestyle retail industry in Japan and successfully expanded into overseas markets. MUJI began in 1980 as a private brand of Seiyu, Ltd, one of Japan''s largest grocery retail chains. MUJI''s original concept was ''lower priced for a reason,'' featuring function-oriented and no-frills products emphasising a simple lifestyle. Ryohin Keikaku was established in 1989, adopting the name MUJI independently of Seiyu. It recorded steady growth throughout the 1990s until it experienced its first large profit decline in 2000. The problem seemed to be attributable to internal factors such as brand dilution, big company disease, and strategic mistakes, as well as external factors such as the rise of competitors that were better adapting to the deflating domestic economy and the fading uniqueness of the MUJI concept. The MUJI (A) case gives a detailed account of the company''s early growth path during the 1990s, subsequent crisis around 2000, and ensuing recovery resulting in a record high profit for 2005. Under the leadership of Tadamitsu Matsui, appointed as President in 2001, the company revived its domestic business by redefining its brand concept, revamping its human resource management, and improving its operational efficiency. The MUJI (B) case traces the firm''s entry into overseas markets, driven by its somewhat conservative growth strategy, which emphasized steady profitability for each store over rapid growth. By May 2006, the firm''s overseas operations had expanded to 55 stores in 13 countries, with sales of 12.9 billion yen, accounting for 9% of the company''s total revenue in 2005. In 2006, the business appeared to be running smoothly. However, concerns regarding future domestic business emerged as the company witnessed the sixth consecutive year of decline in customer traffic at existing stores. At the same time, overseas markets seemed to provide MUJI with a wide range of opportunities. Faced with such circumstances, Matsui considered five courses of direction, which were not necessarily mutually exclusive: Two alternatives in the domestic market centered around the question of whether to focus on: (1) acquiring more new customers for existing MUJI businesses, and / or (2) creating new businesses (unrelated to MUJI) as a potentially new source of profit (see MUJI (A)); and three alternatives overseas required Matsui to decide whether to put more effort into (3) further penetration in Europe, where MUJI was achieving the largest success; (4) further expansion in Asia; and / or (5) entry into the US.

Settings

Location:
Industry:
Size:
4,300 employees
Other setting(s):
2006

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