MUJI Is Done Being "Cold" in China, and Its New Store Says So

This four-month-old flagship store holds the key to MUJI's future in China.

Liu Kai, founder of Ruiji Design, likes to hold up the design of MUJI stores as a model for clients and visitors. His reasoning: "There's nothing to MUJI's shelves or fit-out. The store's image is simply the goods on display." For fast-moving consumer goods, he says, not upstaging the product is an excellent solution.

The new MUJI flagship that opened on Huaihai Road last December is a rare exception. MUJI hired the Japanese designer Takashi Sugimoto and his firm, Super Potato, to design it. It was their second job for MUJI's stores in China. In the Chengdu Taikoo Li flagship, which opened a year earlier, decorative materials that Super Potato hunted down in local flea markets and suburban villages are everywhere.

For the Shanghai global flagship, they chose wood as the main material. Timbers hang over the store entrance and the second-floor walkway, so low that you barely need to tilt your head back to see them.

MUJI's signature palette has always had "the feel of wood," but the grain and character of that wood were softened and tucked away in clothing and furniture. It was never as exposed as it is now. During the design phase, MUJI's China team warned Super Potato that timbers this prominent and this sharp could be dangerous.

If there is danger, it is first of all physical. At the corners and in the small wooden huts on the second floor, MUJI has to make sure customers don't bump into the wood. But these big, sculptural blocks of timber also signal that MUJI is starting a transformation. The Japanese retailer, which used minimalist products to attract a particular kind of shopper, now intends to rework its relationship with consumers.

Today you can find close to 150 MUJI stores in nearly 40 Chinese cities, almost half of all MUJI's stores outside Japan. From 2017, another 50 will open every year. Flagships of about 3,000 square meters will each anchor a region, with smaller stores of about 600 square meters scattered around them.

But MUJI is still far from that goal. In China, it needs more people to know it. People leave comments all over the internet complaining that they have never seen a real MUJI store. Even in Shanghai, home to MUJI's China headquarters, the opening of the Huaihai Road flagship made shoppers think: maybe I don't really know MUJI. The queue outside the store lasted two to three weeks.

MUJI treats its large flagships as places for joho hakko, a Japanese term that roughly means a brand's showcase. Here MUJI is clearly doing more than displaying products, and even the products are displayed in unusual ways.

Wallpaper shortlisted a new MUJI toaster for best domestic design in its “2015 Design Award” selection. When this toaster, designed by Naoto Fukasawa, appeared in MUJI's Shanghai flagship, it had a book slotted into it in place of a slice of bread.

Longtime customers who remember the clean, spare MUJI stores of the past find this a little odd. But they also sense that something new is happening at MUJI. More books now sit beside the clothing and household goods in the Shanghai flagship. After its Tokyo Yurakucho flagship, this is the second MUJI store to sell books.

Linghu Lei, creative director of Fangsuo Bookstore and Hengshan Heji, believes that by adding books, MUJI has stepped outside the closed system of manufacturing and retail it built for itself. "It is opening up this system." As the system opens, books will also draw more people into MUJI stores, a motley crowd who may have long heard about MUJI's style but never imagined becoming its customers.

As its system opens, MUJI is also more outgoing with China's urban consumers than it used to be. What Naoyuki Yamamoto, MUJI's general manager for China, says may surprise you: "We want to create an environment that is close to nature, and lively." In the Shanghai flagship, MUJI has also set up a lively public rest area called open MUJI.

Yet when New Yorkers walk into the newly opened MUJI on Fifth Avenue, they feel much as we used to: it's a "quiet IKEA."

MUJI's mission in China has clearly changed. The China team, which brings in more than 10% of the company's sales, wants to drop the quiet, cold style it was once labeled with.

So a lot is riding on books. Yamamoto explains: "Adding books lets people see MUJI expanding, and arranging things around books also shows the products becoming more integrated." The team still regrets the display design of the Chengdu Taikoo Li store, which drew such clear lines between product zones that the goods failed to come across "as one continuous whole."

Integrated display used to be common in Japanese stores. Now it shows that MUJI has changed in China. MUJI says it cannot disclose the share of each product category in the Shanghai flagship, but clothing, which brings in more than half of MUJI's sales in China, did not get the best spot as it usually does. The travel line MUJI to go and beauty and skincare products sit closest to the entrance, and the range in these categories is growing. Skincare alone has 160 items.

A MUJI China survey ten years ago found that its core customers were 25 years old. The latest survey, Yamamoto says, puts their age at 27 or 28, and their needs have changed. Chinese consumers' needs, he says, are looking more and more like those of Japanese consumers in years past. Japan still accounts for about two-thirds of MUJI's total sales.

MUJI's furniture sells very well in Japan: over the past two fiscal years, sales in the category grew 28.1%. Furniture takes up a large part of the Shanghai flagship's second floor. MUJI's interior advisors sit at the entrance, and behind them cotton and linen bedding is laid out on a larger number of Japanese-style wooden beds.

Yamamoto believes MUJI can sell furniture well in China, as long as it gets enough chances to show it. "The Shanghai flagship is the proof." On opening day, furniture made up 13% of the Shanghai flagship's sales; in other stores the figure is only 3%.

"Our focus in China in 2016 is furniture and food," Yamamoto added.

Because of import rules, food has never made up more than 2.4% of MUJI's products in China. In the Shanghai flagship, its share rises to 4.7%, with 150 items, and MUJI launched a new chicken and lemon curry for the occasion. These foods don't carry a strong MUJI look and aim at a broader market; a third of them are not even MUJI's own brand.

These sizable sales figures don't include the cafe and restaurant, MUJI Cafe&Meal. Business there is good, but MUJI doesn't plan to keep enlarging its dining space the way IKEA does to earn more from food. It is just another way for MUJI to seem friendly and lively: "In a big store, if you browse slowly you're bound to get tired. Customers can rest (in the cafe or restaurant) and have a meal."

But unless MUJI solves its price problem, all this friendliness will count for little. A 2015 report by The Atlantic and Goldman Sachs Global Investment Research, The Rise of China's New Consumer Class, found that an acceptable price is still the first thing China's urban mass-market consumers look for.

Molly Young, a reporter for The New York Times, visited all five MUJI stores in New York and compared their goods to a Toyota Corolla: "practical and economical." In Japan, MUJI has much the same image, "good design at a fair price." But in China, nobody praises it as good value the way they would a Nissan. Instead it has always worn an aura of being "high-end," one that many people find hard to understand.

After all, it's not LV, Chanel, or Prada, so why the premium? Yamamoto understands this and tries to explain. "There are many reasons behind our pricing (including value-added tax and rising labor costs), but we can't ignore what customers are telling us," he says. Over the past year, MUJI has cut prices in China as never before, in four rounds across different categories, by 16%-20%. The latest round came at the end of this January.

MUJI gave the cuts a gentler name: "new pricing." Most likely it wanted to protect the relatively upscale image it had built. Satoshi Matsuzaki, who became MUJI's president last year, said in an earlier media interview that MUJI's prices are higher than in Japan not only in mainland China but also in the United States, Europe and Hong Kong. That gap is hard to close, but he plans to bring the markup into line across overseas markets. "Starting with strategic products, something that sells for 100 yuan in Japan, say, will sell for 110 everywhere overseas. That is how we will get our overall price advantage."

Yamamoto thinks shopping habits can shape MUJI's pricing. MUJI noticed that customers often buy four pairs of socks at a time, so it lowered the price of socks.

Shoppers are still not satisfied with the prices, but the cuts at least show that MUJI is thinking about widening its customer base. Some of these new customers may have seen MUJI as a near-luxury purchase; others thought it sold only distinctive clothes that are hard to wear. What pleases Yamamoto is that store displays can change both views. At the tenth-anniversary event of MUJI's store in Hangzhou's Lixing Plaza, Yamamoto heard that the event's host had finally learned that "MUJI sells everyday goods too."

But it all depends on getting consumers into the store first, even if they only come for Duku, the book series that sells briskly at MUJI. That is one reason MUJI's e-commerce is growing slowly. MUJI China's online sales are only 2.5% of its total.

MUJI is in fact reorganizing and expanding its e-commerce team so it can bring in more sales, but Yamamoto insists that a mature consumer market needs places for face-to-face contact all the more. "That's why we put so much effort into expressing MUJI's worldview and values in our stores," he says.

This is what MUJI does best. "Many people buy MUJI for its philosophy. Of course, others buy it because it meets their basic needs, and that's fine too," says Gong Yingqi, co-founder of Qingdan, a media outlet that helps consumers decide what to buy. Or, as Molly Young of The New York Times wrote, MUJI puts useless things next to useful ones, and this way of selling always works. "Don't go to the supermarket when you're hungry, and don't go to MUJI when you're bored," Young added.

Now, though, the message MUJI sends in China is itself changing, and that makes in-store display more urgent. So MUJI's flagships keep getting bigger. In the past 16 months, four flagships have appeared, all larger than 3,000 square meters: the Chengdu Taikoo Li global flagship in 2014; then, in 2015, the Tokyo Yurakucho global flagship and the Fifth Avenue flagship in New York; and the Shanghai global flagship, which opened four months ago.

If the Yurakucho store had not added floor space during its renovation, Yamamoto says, the Shanghai flagship would have been bigger than MUJI Yurakucho and become the largest MUJI in the world.

Cover images from fashionsample, MUJI, muji

Reporter Yang Jingkai and intern reporter Shao Honghui also contributed to this article.