Miniso adapts strategy: “The market is a bit different than we thought”
When Miniso initially entered the Australian market in 2017, the Chinese retailer said it would open 300 stores across the country. But 32 stores and two years later, plans have changed slightly.
“What we found is that the market is a bit different than what we thought in the beginning,” Richad Li, vice president of Miniso Australia, told Inside Retail.
“The logic at the beginning was based on population,” he said, referring to the “ideal number” of shops per capita that Miniso uses when it enters a new market.
“But you need to think about how your traffic will be impacted by the density of the population.”
Miniso on Thursday announced plans to open 100 stores across Australia by the end of 2020, an impressive number to be sure, but also a significant drop from its initial goal.
Australia is notoriously difficult for businesses like Miniso, and arguably Amazon, that rely on high population density to make their model, built on economies of scale, profitable.
Li clarified that the company still wanted to open 300 stores in Australia eventually, but that this number would include other brands in the Miniso stable that sell different products and target different customers.
“The reason [we want to open 300 stores] is not only to chase the huge goal,” he said.
“We need more shops and more business to reduce our per unit cost.”
As Miniso’s footprint expands and its turnover increases, the cost of shipping goods to Australia, warehousing and distributing them to stores comes down.
“Even if we’re selling products cheaper than our competitors, we have more gross margin because of volume,” he said.
“Then we have enough volume to optimise our supply chain to reduce per unit cost, and this can increase our margin. It’s a positive feedback circle.”
Founded five years ago by Japanese designer Miyake Junya and Chinese young entrepreneur Ye Guofu, Miniso is a low-cost retailer offering a wide range of household products.
The chain positions itself as a Japanese brand, though it is headquartered in China and many of its products are manufactured there, and has 3869 stores in more than 80 countries.
In 2018, the company had a turnover of US$2.5 billion ($3.7 billion) globally. Turnover in Australia was around $30 million, according to Li. He expects that figure to triple by the end of next year, as the company’s physical footprint expands.
The company has forged profitable partnerships with globally recognised characters, including Hello Kitty, Pink Panther, Sesame Street and most recently the Marvel superheroes, including Captain Marvel, Iron Man and Captain America.
East coast in focus
Li said Miniso would focus its expansion efforts on the east coast of Australia, given the location of its warehouse in Sydney.
“We have shops in Perth right now, but the challenge for Perth is the logistics. It costs more to ship products from Sydney to Perth than from China to Perth,” he said.
But he said it was not only good for consumers but for Miniso’s “branding” to have a footprint there.
Miniso currently has stores in some of the country’s top shopping centres, including Chadstone in Melbourne and Westfield Parramatta, and Li said the retailer would continue to seek locations in newer shopping centres, where it is easier to secure a good position than in existing centres.
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