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After China Success, Big India Growth Predicted By Japan's Muji


05/10/2017


After China Success, Big India Growth Predicted By Japan's Muji
Betting big on the world’s most colorful retail market as it pushes forward with an aggressive overseas expansion is a Japanese retailer famous for minimalist products and no-logo branding.
 
Satoru Matsuzaki, president of Muji-owner Ryohin Keikaku Co., said in an interview in New Delhi, that eventually India will become the second-largest international market for Muji stores after China, due to its strong growth and demographic trends. Matsuzaki said India has huge potential although China accounts for about half of the company’s 403 international locations. Including a flagship store in Mumbai next year, he plans to open two to three stores annually in the South Asian country.
 
"If I look at our overseas footprint, I feel that India will be second to China -- there’s no doubt about it," Matsuzaki said before he celebrated the opening of the company’s first store in New Delhi. "India’s going to be on the same path as China. Looking at the demographics and the number of youngsters we have in India who are open to concepts like Muji, I feel that it’s a very positive environment."
 
Nearly $3 billion in revenues in fiscal 2017 was earned by Rvohin Keikaku, which operates around 400 additional stores in Japan. As the company capitalizes on Asia’s rising middle class and moves away from its home market, which is struggling with deflation and a shrinking, aging population, the firm’s international locations are set to surpass the number of Japanese stores.
 
Compared to the 4.4 percent rise in the benchmark Topix Index, shares of Ryohin Keikaku have gained about 15 percent this year in Tokyo. The stock dropped as much as 0.8 percent Wednesday.
 
Matsuzaki said that compared to between 50 and 60 stores internationally, Muji will open 15 to 20 stores each year in Japan.
 
He said that the company’s home territory remains "healthy" despite Japan’s negative macro trends. "Japan, for us, is not a shrinking market," he said, adding the firm expects to maintain 10 percent growth or more in sales and revenue. 
 
However there has bene hiccups in the international expansion. The firm’s stock price ewwas hit when a Chinese television show accused Muji of selling food items allegedly contaminated by radiation in March. The company had done nothing wrong, Matsuzaki said. 
 
Noting a far cry from China’s 200 stores, the company has three stores -- in Mumbai, Bangalore and now New Delhi, in India. Before opening the flagship location in Mumbai next year, this year Ryohin Keikaku will open another store in the national capital region -- in Noida, just outside of New Delhi, Matsuzaki said.
 
"We’ve only just begun in India," he said.
 
Matsuzaki said the same concerns had been raised when the company prepared to open stores in China, where red is seen as an auspicious color when asked whether the brand’s trademark minimalist products, often in muted tones, could do well in India’s colorful, status-conscious retail market.
 
"Everything that we’ve got in China has had an amazing response," he said. "There is a pattern there. As countries grow economically, and there’s high momentum, people tend to steer toward simpler and more functional products."
 
(Source:www.bloomberg.com) 


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