MUJI to Launch Small-sized and Low-price Stores in China; MINISO Replaces Domestic Senior Management; Mengniu Bets on the Low-temperature High-end Milk Market | Brand Weekly Report

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MUJI Accelerates Expansion in China, to Open Small and Low-Price Stores

MUJI is experiencing a turning point in China. Not only has its performance improved, but it also plans to continue expanding by launching small and low-cost stores.

In the just-ended quarter, MUJI's sales and profits reached an all-time high. The growth rate in the Chinese market exceeded that of other overseas markets, contributing to the second-highest total sales globally. MUJI also described this quarter's performance as "a significant progress beyond expectations".

In January of this year, when the Chairman of MUJI China, Tomoaki Shimizu, was interviewed, he said, "The Chinese market is ushering in a favorable opportunity for product development and store expansion".

It is reported that MUJI plans to open its low-cost and small-sized stores in China for the first time this summer. These stores are operated under the name "MUJI 500" in Japan. It aims to continuously gain the favor of Chinese middle-class users with high cost performance. This is the first time the company is opening this type of store outside its domestic market. Different from standard stores, the small stores mainly focus on daily necessities and consumables, mainly including daily chemical products, stationery, snacks, etc., with about 70% of the products priced below 500 yen (approximately 23 yuan). The store area is only one-sixth of a regular MUJI store and is mainly located near train stations.

"MUJI 500" was a product of Japan's return to inflation and the depreciation of the yen. Due to MUJI's product positioning and pricing being higher than most daily grocery competitors, as the purchasing power of Japanese households gradually tightened, it tried this different retail format in 2022. Now, the launch of this store format in China is also based on a similar economic downturn and industry price war background.

In addition, the increased investment in China is also based on the tense trade environment where the Trump administration will tax non-US-produced goods. MUJI expects that growth in the North American region will face resistance. Coupled with its much higher popularity in Asia than in Europe and North America, and its high reliance on the Chinese supply chain, under many realistic factors, MUJI therefore chooses to expand its operations in Asia, especially in China.

Burberry's Poor Performance Leads to High-Priced Recruitment for Rescue

Burberry, in the midst of difficulties, has been making big news continuously.

Fashion Business Daily reports that Kim Jones, who has just ended his tenure at LVMH Group, is in contact with Burberry and has put forward a salary requirement of up to 24 million pounds. If the news is true, it will become the most expensive transaction in the luxury brand creative director transfer market in recent years.

In the past two years, Burberry has been deeply trapped in a financial predicament. It is spending heavily to recruit talents to rescue the situation and is eager to accelerate the reshaping of the brand. The financial report shows that same-store sales in the third quarter decreased by 4% to 659 million pounds. In Europe, the Middle East, and Africa, the decline was 2%. The Asia-Pacific region, including China, remains weak, with sales dropping by 9%.

Looking back at the financial data in recent years, Burberry's stock price has dropped significantly since 2023, with a cumulative decline of more than 50%, and it was once forced out of the FTSE 100 Index in the UK. At the end of last year, there were also rumors in the market that Burberry would be sold for survival, and the Italian down jacket brand Moncler was interested in acquiring it.

This is the result of its long-term strategic mistakes. Many Wall Street analysts have pointed out that since 2014, Burberry's market competitiveness has gradually weakened, failing to adapt to changes in consumer demand.

A core problem is the excessive reliance on discount stores. Although this business model has increased customer traffic in the short term, it has damaged the brand's high-end image, and it has even been jokingly called the "Queen of Outlets". Currently, among Burberry's more than 430 stores worldwide, 56 are outlet discount stores, accounting for as high as 15%.

In order to adapt to market changes, Burberry has frequently changed its design concept. It changed the classic knight logo in 2018 and launched the TB logo that collided with the name of a light luxury brand, but the effects have been minimal. This time, Burberry is spending a lot of money to recruit Kim Jones, who has successfully set off a trend in the luxury industry, in order to make innovations in design.

Under multiple crises, Burberry is committed to the "Advancement Plan", hoping to reverse the decline by optimizing the product portfolio and increasing investment in the Chinese market. However, how to find a balance between high-end and discount, innovation and conservatism to achieve sustainable development, Burberry still needs to keep learning.

Domestic Growth Slows, MINISO Replaces Senior Management for Innovation

In less than a month, MINISO has completed the replacement of the third-in-command.

According to Market Image, after Yao Jianzheng retired and left, Li Liliao won in the recent internal open competition and became the new "General Manager of China Operations" of MINISO.

Li Liliao was once the operational head of MINISO in the northwest and south China regions, with rich front-line operational experience. After taking over as the General Manager of China Operations, he quickly pointed out some shortcomings that MINISO needs to make up for: the same-year offensive battle, the commodity win-win battle, and the organizational innovation battle;全民经营, result-oriented.

In the past two years, as MINISO's positioning has changed, the company needs to continuously inject fresh blood, and the personnel have also been continuously adjusted. In addition to Yao Jianzheng, senior executives such as Li Minxin, the second-in-command who formulated many major development strategies, and Zhang Saiyin, the CFO who led the two listings, have all retired.

From the overall development direction of the company, MINISO is in a high-speed development stage from the "King of China's Ten Yuan Stores" to a global brand. Accelerating going global has become MINISO's new story, and resources are also tilted towards overseas. Ye Guofu stated at the 2024 Global Brand Strategy Upgrade Results Release Conference held earlier that he spends two-thirds of his time overseas, and one of the current key tasks is to study the overseas market.

MINISO's overseas growth narrative seems to make sense for now. As of September 30, 2024, MINISO has entered a total of 112 countries and regions globally, with the number of overseas stores reaching 2,936. Among them, the net increase in the number of MINISO overseas and TOP TOY stores in the first nine months of 2024 exceeded that of the entire previous year. MINISO's overseas revenue has reached nearly 40%, while the number of overseas stores has reached nearly 40% (2,936), and the number of overseas employees has exceeded 50% (as of the end of 2023).

However, under the rapid growth of the overseas business, the growth rate of the domestic business in recent years has been relatively sluggish. In the first three quarters of 2024, MINISO's income from the Chinese mainland increased by 14% to 7.74 billion yuan. Among them, the income of MINISO's offline stores in the Chinese mainland increased by 11.8%, mainly due to a 14.7% increase in the average number of stores, while the same-store sales decreased compared to the 2023 level, showing a negative year-on-year growth. The income growth rate of the overseas business in the first three quarters exceeded 40%, and the same-store sales also maintained a good growth rate.

The incremental contribution of the number of stores will decline as the enterprise expands, and the same-store sales growth is the most critical indicator for the sustainable development of the enterprise. Ye Guofu, the founder and CEO of MINISO, said at the earnings conference: "The domestic business will improve sales through product structure adjustment, store upgrading, and creating flagship stores."

This senior management adjustment also indicates that MINISO hopes that the domestic market can still maintain stable growth after the reform and not hold back on the road of brand globalization.

Delayed Salary Payment, Burger King China's Situation Changes

Burger King China is going through a difficult period.

According to Jiemian News, the internal letter of Burger King China shows that due to the fact that the bank's corporate business is not open during the Spring Festival holiday, and Burger King usually pays salaries on the last day of each month, the January salary will be delayed until February 5. According to the employee handbook, Burger King's attendance cycle is from the 21st of the previous month to the 20th of this month, and the salary is officially paid on the last day of the month. If it encounters holidays and weekends, the salary will be paid in advance. However, neither the January salary nor the 13th-month salary has been paid, and this situation did not occur in the previous year. In addition, some Burger King store employees on social platforms have also said that according to Burger King's previous practice, if the payday falls on a weekend, the salary will also be paid in advance to Friday.

In response to the reason for the delayed salary payment, Jiemian News asked Burger King China for an inquiry, and Burger King said: "There is no more information that can be given to the outside world at present."

This delay in salary payment has caused panic among employees, and it is just a facet of Burger King's unsuccessful development in China in recent years. Even the franchise rights of its Chinese operator may be withdrawn.

At the earnings conference in the third quarter not long ago, the RBI senior management of the Burger King brand publicly disclosed that they have sent a notice of termination of cooperation to the franchisee of Burger King in China, but the latter has raised objections, and the two sides are also discussing how to resolve the dispute and hope to reach a friendly solution. Regarding the latest progress of the negotiation on the franchise rights conversion, on January 26, Burger King also replied to Jiemian News that the two parties involved are still actively negotiating on the franchise business.

RBI proposed to take back the franchise rights of the Chinese market because this business has begun to become a burden for the group. CFO Sami Siddiqui said that Burger King's long-term net store growth target for 2024 was originally 5%, but due to the decline in the net new stores in the Chinese business, the net new stores of Burger King still have a gap. The Burger King Chinese operator tfi once set a plan to open 200 new restaurants in the Chinese market every year, but in the past two years, it not only failed to meet the store opening target, but the total number of stores has also decreased, from 1,714 in the first quarter to the latest 1,516.

At the same time, foreign fast food brands such as KFC and McDonald's have either reached or are striving for the 10,000-store scale, while Burger King has fallen far behind. Especially in the sinking market where major brands are fiercely competing, Burger King, which is developing slowly, has lost the initiative. According to Zhaimen Food Eye, Burger King's stores in the third-tier and below markets account for only 10% of its total, while KFC exceeds 35% and McDonald's is about 23%.

For Burger King, whether it is the low cost performance, the insufficient degree of localization, the slow scale expansion, or the poor marketing methods, they are all important reasons for its lagging behind its peers. Burger King has actually been continuously launching preferential packages of "9.9 yuan", but due to its insufficient store scale and lack of novelty in marketing methods, it has not aroused much splash among consumers.

Spending Heavily, Mengniu Bets on the High-End Low-Temperature Milk Market

Recently, Fresh Every Day can be seen in many online and offline programs. It not only exclusively titled the "With Hui Together" New Year's Eve Enjoyment Party and the "2025 China Online Audio-Visual Festival", but also sponsored the iQIYI New Year's Eve Comedy Gala "Off Work 2024", which has a high topic degree recently.

Fresh Every Day is a high-end milk brand under Mengniu. This crazy marketing campaign can be regarded as the craziest round of marketing in the 7 years since Fresh Every Day was launched. Giving a sufficient advertising budget is also a required action for Mengniu to seize the market segment for its brands. This operation has been tried and tested on products such as Sour Milk, Telunsu, and Chunzhen Yogurt. Mengniu has spent a lot of money to exclusively title hit variety shows such as "Super Girl", "Back to Field" and "Go Fighting" for these products.

The 2024 mid-year report shows that low-temperature fresh milk maintains growth, among which Fresh Every Day has achieved double-digit growth. Increasing the investment on the basis of the good performance of market segments indicates that Mengniu wants to seize more market share for it.

However, the low-temperature milk market has long been dominated by local dairy enterprises. For example, Sanyuan Dairy in Beijing, Bright Dairy in Shanghai, Yantang Milk in Guangzhou, Wandashan in the Northeast, and New Dairy in the Southwest market, etc. There has not yet been a market segment brand that unifies the consumer perception nationwide. In fact, no billion-dollar blockbuster product has appeared in this industry so far.

In recent years, many emerging brands have emerged in the domestic fresh milk track, emphasizing the health label and at the same time having a high pricing. Concepts such as "no additives" and "high-end milk" have emerged as a result.

In the case of the slow growth of room temperature milk, many dairy enterprises have also begun to regard low-temperature milk as the new "second growth curve" of dairy enterprises.

According to the data prediction of Bank of Communications International, the compound annual growth rate of low-temperature fresh milk from 2022 to 2027 will reach 12%, and it is expected that white milk will experience a high-end trend and shift from room temperature milk to fresh milk. This market segment still has a broad space for development. The proportion of low-temperature fresh milk in white milk consumption in China is within 30%, lower than 90% in the United States, Japan, South Korea, the United Kingdom and other countries, and 60% in Russia. Besides Mengniu, New Hope, Yili, and Bright have all made layouts in this market and have formulated several-year development plans for it.

The large-scale appearance of Fresh Every Day in national variety shows is also to quickly expand market awareness and gain a firm foothold in this market segment as soon as possible.

Marketing Matters

Burger King Welcomes the God of Wealth for Better Performance

As a well-known foreign fast food brand, Burger King has collaborated with the Longhu Mountain Scenic Area, one of the four famous Taoist mountains, with the theme of New Year's Blessing. It has launched a New Year's limited-edition co-branded product, including three burgers printed with the words "Blessing", "Wealth", and "Prosperity", as well as peripheral products that have been "blessed", namely the Burger King God of Wealth burger ornament, red envelopes, and the Lucky Money Order.

On social platforms, "Burger King China" posted and promoted: "Waiting for the God of Wealth to knock on the door? Come to Burger King now and welcome the God of Wealth home! Our burger joint has joined hands with Longhu Mountain to bring the blessings to our customers!"

From these actions, Burger King closely follows the Spring Festival consumption node and collaborates with the Longhu Mountain Scenic Area. But from another perspective, it is more like Burger King is "asking for help" from the God of Wealth - the reason is simple. Burger King, which is in a development predicament, needs the God of Wealth more than ever. (New Consumption 101)

Luxury Brands Release Short Films for the Spring Festival

Cooperating with Chinese local traditional animations during the New Year has become an innovative direction for many luxury brand New Year short films.

Versace released the New Year short film "The Legend of the Snake", based on the style of Chinese ink painting, telling the story of the spiritual snake and the brand's nameplate, and skillfully integrating Versace's iconic snake-shaped totem.

Cartier also launched the ink painting short film "A Wonderful Spring" in the New Year, with the leopard as the protagonist, launching a fantasy journey of exploration. (BrandStar)

New Products, Brands

Pechoin Launches the Big Blue Jar

The arrival of the New Year is also a good time for skin care products to launch new products.

The classic series of the old domestic brand Pechoin, the Big Blue Jar Multi-Effect Cream. Its inspiration comes from the 1939 classic cold cream, with a milk jelly texture that is light and not sticky. The Big Blue Jar Multi-Effect Cream adopts the 311 Gold Lipid Penetration Technology,