First Tier Cities Consume Lower Grade MUJI Products. China'S 9 Price Cut In 4 Years Is Still Selling UNIQLO.

Japan's clothing and grocery brand MUJI, Muji, announced ninth price cuts in the Chinese market in the past 4 years on Thursday, in the Chinese economy and

Slower growth and higher housing prices have led to downgrade in the first tier cities, trying to use the biggest magic weapon in the industry to lift the slump.

The price reduction products are mainly concentrated in clothing and household categories. The price range ranges from 10% to 1/3, covering women's underwear, men's shirts, sweaters and down garments. Among them, a light weight down garment has been reduced by 1/3. In terms of home use, an air purifier has reduced the price range to 40%, from 2980 yuan to 1800 yuan, which has dropped by more than 1000 yuan.

Since the launch of the "new pricing" strategy in China in October 2014, Muji has been able to cut prices at the beginning of the year, the middle of the year or the end of the year. From the current frequency, it has basically reached two times a year.

MUJI is very suitable for the description of the price reduction and it is in line with Chinese characteristics.

The brand, through the official WeChat public, said that the brand will continue to examine the development of commodities and examine prices in order to help more customers create "feel good life".

In the domestic market as a cheap brand of Muji, in the Chinese market, because of the well-known reason, it became a brand segment between high-end and light luxury. Although the brand continued to make use of the supply chain and the tariff reduction of China, the average selling price of similar clothing was still higher than that of its main competitor, Uniqlo, and the electronic business platform of the Chinese technology company represented by NetEase and Alibaba was under the banner of "Muji supplier". It launched products with almost no difference from Muji design and appearance, and the price was only 1/2 to 1/3 or even lower than that of Muji.

After China began to expand rapidly in 2012, Muji finished its bottleneck in the three quarter of 2016, 9-11 in 2016, and the same store sales growth plummeted to 0.8%. In mid November 2016, the number of Muji stores in China reached 200 milestones.

However, due to the selling price problem, the brand is mainly concentrated in the second tier cities and the three line cities with faster economic growth.

Despite the subsequent price cuts and the sharp rebound in China's economy in 2017, the same store sales of MUJI products in the Chinese market could only be maintained at the median figure. In the first quarter of fiscal year 2019 as at the end of May and the two quarter of the 2018 fiscal year ending August 2017, the growth rate of Mui China's same store sales recorded a 1.8% increase.

Entering the 2018, especially in April, the Sino US trade war escalated. At the same time, the stock market continued to slack, causing the Chinese retail market and high housing prices to continue to squeeze consumption power. Peng Yanyan, an analyst at UBS China consumer goods industry, pointed out at this week's sharing conference that the middle class in the first tier cities is experiencing a consumer demotion and is expected to have an impact on domestic appliances, automobiles and clothing industries.

The analysts believe that the first tier cities consumer housing pressure is too heavy, the future will pay more attention to cost-effective in shopping, while reducing high spending, one-time consumption.

As a representative of the minimalist style, it has always been popular with the middle class in the first tier cities. Under the current economic and macro environment, it is bound to become one of the most affected brands.

MUJI China once again cut prices, involving 500 products

3-5 months,

Sales in the Chinese market increased by 14.8% to 18 billion 443 million yen, and sales growth mainly benefited from 27 stores with a year-on-year net increase. At the end of May, 229 Muji stores in China increased by 13.4% over the same period last year.

In the first quarter, Muji just opened 1 new stores in the Chinese market while closing 1 stores.

A net increase of 35 stores.

MUJI was headed by China in the first quarter.

Revenue 29 billion 156 million yen, an annual increase of 15.6%, operating profit rose 36.6% to 4 billion 399 million yen.

In early July, after the record quarter earnings and profits were recorded, the price of the Ryohin Keikaku Co. Ltd. (7453.T) Co., Ltd., which was sold by the Muji parent company, fell by more than 10% in Tokyo's stock market, mainly because the market was worried about the group's China performance.

In the first quarter of fiscal year 2019, group China accounted for 17.3% of the total income of 106 billion 521 million yuan, only 64.6% of Japan's local market.

Group Chairman Satoru Matsuzaki, Mr soo kazaki, said at the earnings conference that Muji would continue to invest in China, because the aging of the Japanese market and the saturation of its stores had led the company to expand overseas. In the first quarter, the local market operating profit increased by only 1.3%, while the offshore market was driven by the favorable exchange rate.

During the reporting period, the profit margin of the local market of the good plan fell to 70 basis points to 12.9%, while the East Asian market's operating profit margin rose by 230 basis points over the same period last year. 15.1%.

The future development of Muji will depend largely on the bright and clear market in China. However, the brand and its competitor, UNIQLO, are changing their roles in the Chinese market.

Before the strong growth of Chinese economy and the rising wealth of residents in 2015, consumers tended to buy Muji with higher average selling price to improve their quality of life. On the contrary, the growth of UNIQLO in the Chinese market continued to slow down.

After entering 2017, the performance curve of Muji in China is downward, and UNIQLO has accelerated its growth in China through continuous expansion of shops after correcting its mistakes.

In February 3-5, the double digit sales of UNIQLO's big Chinese market rose sharply.

UNIQLO parent company Fast Retailing Co. Ltd. (9983.T) fast Marketing Group CEO Takeshi Okazak Xun said at the earnings conference that UNIQLO's performance did not represent the overall market, but the brand continued to gain sales growth in the Chinese market through the concept of LifeWea, while gross profit margin gradually improved, and sales growth in the same quarter accelerated in the three quarter.

At the earnings conference in early July, Mr. Song Qi Xiao, President of Muji company, also worried that the current Chinese stock market entering the technological bear market may affect consumer demand of middle-class customers of brand targets, but he still indicated that he could see the future demand of the Chinese market.

In addition to the stock market downturn, high housing prices continue to reverse the savings rate and debt ratio of Chinese residents, which may further affect the future of Muji in China.

The immediate price reduction of imprint in China, but the middle class has begun to re enter 622 stores and online channels in uniqo China, and the trend to regain the frugality tradition is obviously difficult to change in the short term.

As the two most important brands in the Chinese market, Muji and UNIQLO's performance are also reflected in the stock price of the two parent brands.

As of Friday, the share price of fast selling has risen by 15.83% this year, and the good plan has fallen 7.26% this year due to a heavy setback in the first quarter, while the Nikkei 225 index was down 2.34% during the same period. In the past 12 months, the fast selling share price soared 65.62% and the good plan only 5.68% increase, which was only 1/3 of the 16.21% increase of the 225 index during the same period.