In February of this year, Miniso's first flagship store in China opened on Chunxi Road in Chengdu, and the Miniso Fragrance Museum also officially opened. In the same month, at the Miniso Global Brand Strategy Upgrade Conference held in Guangzhou, Chairperson Ye Guofu(叶国富) proposed the goal of becoming a global "super brand" and striving to become "the world's number one in the industry".
In May of this year, Miniso's first global flagship store was located in the highland of global retail - Times Square, New York, becoming the first Chinese brand to enter Times Square in New York. In October, Miniso's first Sanrio IP limited theme store opened in Margo City, a popular shopping center in Indonesia.
Throughout its tenth year of operation, Miniso has achieved remarkable success. Despite the challenging conditions in the consumer retail industry, Miniso has emerged as a shining star, meeting people's expectations for economic and consumer recovery in the post-pandemic era. The company's performance, as evident from several financial reports this year, has been consistently impressive.
What factors have contributed to our ability to expand and grow amidst adversity? How did we establish an early foundation for global expansion and rapidly increase the number of stores? What does the future hold for Miniso? With these questions in mind, EqualOcean had an insightful conversation with Miniso's Chief Marketing Officer, Liu Xiaobin(刘晓彬). We hope that Miniso's experience in global development can inspire retail brands aspiring to enter overseas markets.
Bigger Stores Attract More Attention
EqualOcean: Miniso opened its global flagship store in Times Square this year, becoming the first Chinese brand to settle in New York City. You once said that the rental prices in the area were too high for the company to imagine. What factors made opening a store in the "world's consumer center" an achievable goal?
MINISO: In the past, MINISO's store area was generally less than 200 square meters, and the prices of its main products were relatively low. Under this model, we are not suitable for opening stores in global core business districts like Times Square in New York because we cannot afford the expensive rent. However, in the past two years, we have experienced repeated discussions internally. As a major offline retail brand, the store is regarded as an important channel for us to communicate with consumers and is the "image of the brand". If the store is located in the core area of high-end business districts and occupies a relatively large area, it can very intuitively demonstrate the brand's new positioning and strong strength.
Finally, in February of this year, we held the "Miniso Global Brand Strategy Upgrade Conference" in Guangzhou. Based on the new brand strategy, we decided to open a global flagship store in Times Square, New York. In fact, Miniso is still an emerging brand in the US market, with a total number of stores of less than 100. However, such a landmark store is of great significance for us to establish brand awareness in the local market, reach local consumers and a large number of tourists from around the world. This is also our primary consideration when we acquired this store. Secondly, we hope to use this store to verify our "super store" model.
In terms of revenue, our initial goal was relatively conservative, striving for break-even. In the US market, retail stores can generally enjoy relatively favorable rent in the first year, which will double from the second year. The monthly rent of our New York store in the first year was around 200,000 US dollars, which far exceeded our original monthly rent of 100,000 US dollars. However, thanks to the design we spent a lot of energy in the US market in the early stage, in terms of timeliness of product development and refined store management, even in the case of high rental costs, The store still successfully achieved considerable profits. On the first day of opening, the store's sales exceeded 550,000 yuan, and the monthly revenue set a new high for global store monthly revenue with nearly 10 million yuan.
This greatly enhances our confidence in continuing to expand our stores and open flagship stores in the US and other markets around the world. Next, we also have relevant plans in Oxford Street, Spain, Italy and other places in London. In October, our flagship store in Jakarta, Indonesia was renovated and opened, creating the first Sanrio IP limited theme store with a larger store area. This is also our first cooperation with the well-known IP "Sanrio" in the South East Asia market.
EqualOcean: For flagship stores with high rents, such as the Times Square flagship store, will Per Customer Transaction be improved by adjusting the product portfolio and raising prices?
MINISO: US is our direct market, and we have a subsidiary in the local area. The subsidiary will propose the demand for goods based on the market situation, which will be ordered by the commodity team of headquarters. This is about the goods.
In terms of pricing, our company does not directly convert domestic commodity prices into US dollars, but supplies them to subsidiaries at a certain gross profit level based on the local financial model calculated based on the order price, plus operating costs such as warehousing and logistics, manpower, and stores. Therefore, subsidiaries also have certain pricing power for commodities.
Taking blind boxes as an example, the average price of blind box products in China is around 49 yuan, while the price in the US is around 14.9 to 19.9 US dollars. Of course, due to the high inflation in the US in the past two years, the price is more expensive than in China, but it is still very cost-effective locally.
In the design of the product portfolio, we still take blind boxes as an example. We will improve Per Customer Transaction through marketing methods such as price-break discounts, full gifts, node promotions, and user operations. For example, if consumers feel that "end boxes" - that is, complete sets of purchases are more cost-effective, they will buy multiple at once.
According to third-party data, the average annual flow of people in Times Square exceeds 1.50 billion, and the average daily flow of people is also around 1.50 million. On the basis of such a large flow of people, we ensure a relatively high conversion rate by relying on good products, good prices, and well-known IPs . In fact, the sales efficiency of the store is higher than the average level.
EqualOcean: Is the Times Square global flagship store the first iconic action of Miniso's global brand strategy upgrade?
MINISO: Although it was only released to the public on February 24th, we have been planning for about a year for the "global brand strategy upgrade". At the end of last year and the beginning of this year, Mr. Ye (editor's note: Ye Guofu, founder and CEO of MINISO) went to New York for a business trip. The weather was particularly cold at that time, but Times Square was still crowded with people, so he resolutely signed the lease. The renovation began in March and opened in May, which is to some extent a phased achievement of the "global brand strategy upgrade".
Although we define the Times Square store as the "first global flagship store", in the first half of this year, we have opened about 1000 square meters of "city flagship stores" in the core business districts of Chengdu Chunxi Road and Guangzhou Beijing Road, and "city image stores" in the core business districts of Changsha, Taiyuan, Xi'an, Wuhan, Tianjin and other places. As mentioned earlier, the location and area of such stores are more "high-end". In addition, SKU is richer, and the scenes inside the store are more exquisite, with unique spaces such as " IP paradise" and "fragrance museum".
EqualOcean: In the current economic environment, is the focus on "super stores" going against the trend? Does this run counter to another strategic plan - to develop non-major markets?
MINISO: Frankly speaking, if it weren't for frequent communication with industry friends, my perception of the "economic downturn" would be relatively weak. Especially since the second quarter of this year, our various performance indicators, including sales and profitability, have shown an upward trend overall. Thanks to clearer brand positioning, strategic goals, and landing paths, as well as our long-term adherence to cost-effective routes, MINISO's resilience against the downward cycle is relatively strong, and it can even rise against the trend. At the same time, due to the early start of our global layout, we have established a large business portfolio overseas, which also contributes to hedging the overall operational risks of whole company.
Regarding "Super Store" and Sinking Market, I think the two are not contradictory. At the end of last year, our senior management team led the core backbone of various departments to conduct a round of research in multiple Sinking Markets and saw many opportunities. Many fourth and fifth-tier cities are "blank" for us, but they also have strong consumer demand, especially for IP products with strong attributes, design sense, and reasonable prices. Moreover, the various costs of Non-Major Market are lower, and the payback period is shorter. Therefore, we believe that Sinking Market has great room for expansion in the future. During the National Day, MINISO also opened a large store of more than 400 square meters in my hometown Ganzhou, Jiangxi. While developing the Sinking Market, we can still land more image stores in cities.
At the same time, overseas markets are also one of the important engines for our business growth. In addition to the direct market US and some countries in South East Asia mentioned earlier, we still opened stores in Europe against the trend during the epidemic. Mexico and Colombia in Latin America and UAE in the Middle East also performed very well. Globalization, large stores, and non-major markets are not contradictory, they are different implementation paths for the strategic goal of greater development space and more benign business growth.
Although it was mentioned earlier that the primary goal of opening a big store is to enhance brand awareness and image, from an operational perspective, the SKU of the big store is richer, consumers stay longer, and the association rate is higher. Per Customer Transaction is significantly higher than our average Per Customer Transaction. Now there is no impact of the epidemic. As long as the location is scientific, passenger flow of the core business district can support the higher sales and profit margins of the big store.
World Renowned Chinese Brands
EqualOcean: Among Miniso's overseas markets, the Americas region has the highest total GMV and average annualized revenue per store. Apart from the fact that the US is the largest single market, have you evaluated other reasons or areas that are doing well?
MINISO: The retail industry in US is very mature, with influential retail brands in various sub-sectors. In the field of cost-effective retail stores, Dollar General, ranked first in US, has a market value of around USD 26 billion (latest data on November 8th) and has 20,000 stores.
In such a market, on the one hand, we attach importance to absorbing local retail talents to help business development. On the other hand, we are also exploring our own differentiation advantages. For example, the shopping environment of many cost-effective retail stores in the US is relatively poor. By doing more detailed design and optimization in store design, display, atmosphere, product IP attributes, and store personnel management, we can establish highlights. Based on China's supply chain advantages, MINISO's accumulation in IP over the past seven years, and constantly improving design innovation capabilities, we have been able to establish a foothold in the US.
EqualOcean: What is Miniso's talent model in the US market?
MINISO: The US subsidiary is mainly responsible for recruiting professional talents locally. In the early stage of market development, we will also send some experienced store managers or regional managers from China to the local area to make benchmark cases and precipitate a standardized process. Of course, talent localization is still our ultimate goal.
EqualOcean: Is the US still one of the most important strategic markets in the coming globalisation?
Miniso: Yes, followed by South East Asia.
EqualOcean: In the process of brand globalization, organizational management and iteration have always been one of the more challenging issues. What difficulties did Miniso encounter in adjusting the organization when entering different countries? What experience do you have?
MINISO: We do have a deep feeling about this. The cultural nuances of different countries are very large. In China, our organization responds quickly and has strong execution. But overseas, such as the US, first of all, they pay great attention to labor rights and have strong union organizations. Their work style is also systematic, even small things need to be planned or scheduled in advance.
There is another small episode in this regard. Once, when Mr. Ye was on a US store tour, he made some suggestions for adjusting the placement of goods in the store. In China, the store manager or clerk may respond immediately and execute them immediately, but the US staff first wrote down the requirements and planned and arranged them when there was a schedule. This small matter is also a very typical manifestation of cultural nuance.
There are also some religious countries, such as Indonesia, where they need to pray regularly, so copying the domestic employee scheduling system will cause problems. Therefore, we have set up a prayer room in our Indonesian store, which not only saves employees time traveling to and from the prayer place, but also respects their beliefs and customs. Companies like ours, which operate on multiple continents around the world, will encounter various cultural nuances, and the core is to adapt to local conditions.
Who is the leader in a highly competitive market?
EqualOcean: Many new consumer companies choose to establish themselves domestically, accumulate strength, and then seek overseas development. Why did Miniso attach great importance to global development from the early days?
MINISO: Our overseas venture started around 2015, first in Singapore (Editor's note: MINISO was established in 2013). The earliest opportunity was when some overseas Chinese from South East Asia returned to China and saw MINISO's stores. They were very interested and took the initiative to contact us to help expand overseas markets.
Later, the reason why we were able to bloom globally at such a fast speed was mainly because we implemented a "light asset" agency system in most overseas markets, which did not involve excessive investment. Although the markets we first explored, such as Singapore and Indonesia, were directly operated, they were geographically and culturally close to China, and the cycle of goods from development to departure and from warehouse to store was relatively short, which to some extent reduced the difficulty of operation and trial and error costs. The lightness of the model was a necessary condition for us to go global in the early stage.
From the perspective of long-termism, the global market has unlimited opportunities, and China's supply chain advantages are very significant. I think most Chinese companies have long-term plans for expanding overseas, but in terms of time, we are indeed "one step ahead". MINISO operates in a relatively universal category that meets the common needs of global consumers, with relatively low policy barriers and political risks. Our globalization is supported by various favorable conditions.
EqualOcean: What is the difference between Miniso's "partners" in China and its "agents" overseas?
MINISO: MINISO is mainly responsible for the daily operation of the stores in the domestic market, and the partners mainly provide the initial funds and site selection. After obtaining the brand agency authorization of MINISO, overseas agents are responsible for daily business matters such as site selection, store opening, recruitment, and management in the local area. Based on a more realistic and accurate insight and experience of the local market, agents can propose product requirements to headquarters, which is responsible for development and supply. Under the condition that agents comply with the brand authorization criteria, we will only provide suggestions for key decisions, which is also to ensure that the store conforms to the overall brand positioning and can operate for a long time.
EqualOcean: What are the main considerations when choosing an overseas partner?
MINISO: In addition to the hard indicators such as financial strength, retail experience, and social resources, we also value the attitude of agents towards cooperation and whether it is consistent with our goals. For example, one of our agents in Mexico and Colombia has a very pleasant cooperation. The other party has a very long-term consideration, actively building the MINISO brand locally, and even actively investing part of the profits in brand marketing activities, which is significantly different from the pure selling mindset. Overall, we combine qualitative and quantitative evaluation criteria for partners.
EqualOcean: How to empower overseas partners more at the operational level?
MINISO: In the agency market, "patrolling" is our regular action. Our regional leaders in each agency market will be stationed locally and spend a lot of time patrolling. During the inspection process, we pay a lot of attention to details. In addition to the overall service quality of the store, we also pay attention to the satisfaction rate and display of the goods.
In order to better maintain the relationship between agents, we hold two agent conferences every year. Except for July this year in New York, most of the time we invite agents to come to China to learn from Miniso China's operational experience and visit model stores.
Overall, we ensure the quality of store operations for agents through various means, export successful domestic experiences, and better serve local users.
In March of this year, Miniso reached cooperation with agents in four countries: Panama, Angola, Latvia, and the Republic of Trinidad and Tobago
EqualOcean: How does Miniso's digital capabilities extend overseas?
MINISO: There is also a very clear demand for digitization overseas. In response to this demand, we will first evaluate whether we can directly reuse mature domestic tools or need to re-purchase solutions based on personalized needs overseas. We have cooperation with many IT Service Providers and Retail Digital Solution Providers worldwide.
EqualOcean: Miniso's localization has also been very successful, segmenting and refining operations in different countries and regions in terms of store products, IP collaboration, social media and other dimensions. How to develop differentiated brand strategies and marketing methods for different markets?
MINISO: In terms of marketing, we mainly focus on controlling the overall direction and delegating appropriate authority to agents for different markets. The core is to help agents understand MINISO's brand positioning, strategic goals, and main audience, clarify necessary matters and red lines. At the same time, we will also output some domestic proven successful methodologies to partners, such as content marketing and user operation concepts, efficient marketing tools, etc.
Taking the differentiated categories of each market as an example, blind boxes have the highest strategic position in the Chinese market, blind boxes and aromatherapy in South East Asia, and blind boxes and dolls in the US and Europe. The differences in these categories will also affect the allocation of marketing resources, whether it is cooperation with local celebrities or KOLs, creating localized content, or cooperating with important local marketing nodes, all need to be as localized as possible.
EqualOcean: Why were blind boxes, figurines and fragrances selected as the three strategic categories globally?
MINISO: Firstly, it is based on the high growth potential of these three categories. Secondly, MINISO's new brand strategic positioning emphasizes IP Design, blind boxes and dolls are two categories with strong IP attributes. In addition, it is the "happy philosophy" that Mr. Ye often mentions - MINISO brings consumers not only practical value, but also emotional experience. The above three categories are very in line with this concept. They bring consumers more of a sense of companionship. Consumers often feel happy when they see their favorite IP, and using fragrance can create a comfortable atmosphere.
EqualOcean: What are the main differentiators and highlights of Miniso compared to similar retail brands overseas?
MINISO: Without considering China's supply chain advantages, I think it is IP . In terms of quantity, we have accumulated more than 80 cooperative IPs and are constantly expanding well-known IP resources. During the same period, the number and sales of IP joint products accounted for more than 25%. In terms of experience, we have been operating IP joint products for more than seven years, involving various types of global mainstream and vertical niche. In this process, we constantly polish and precipitate the development, operation and marketing capabilities of IP products, as well as standardized processes, which have formed barriers at the organizational level. IP has thresholds, and IP reserves and IP product development capabilities are competitive advantages. Moreover, this advantage will "snowball". The more IPs we cooperate with, the easier it is to expand new IP cooperation. We hope to create MINISO's IP paradise.
From the perspective of business format, Miniso's product design team can develop a large number of SKUs and complete production and delivery based on the authorized image library of the IP party in a very short period of time. Taking our cooperation with Marvel as an example, we have launched more than 1,500 joint SKUs in global stores in just 3 months. If it is a single category brand, it may launch up to 20 SKUs per year for IP, which is not the same level.
EqualOcean: At this year's brand strategy upgrade conference, it was mentioned that "upgrading from channel brand to product brand, from retail company to content company, and upgrading customers to users". Can you explain the term "content company"?
MINISO: Indeed, many industry friends will feel strange, MINISO is a "seller", why call itself a "content company"?
Generally, people have a narrow understanding of "content companies", such as streaming media platforms iQIYI, Netflix, Disney, or more precisely, China Literature Limited.
We propose to become a "content company" with several considerations. Firstly, we hope that the development of products will have content attributes and improve dissemination through innovation in stories, IP , design, and other aspects. In addition to cooperating with mature IPs, we also have original IPs, such as mini family and dundun chicken. Dundun chicken has gained 150 million views in Douyin since its launch more than a year ago, and there are also many users' re-creation notes on RED. We have also explored various ways of joint marketing and original IP theme stores. The company as a whole is developing business and building organizations towards the incubation and operation of IP paradise.
Secondly, being a content company also means that we adopt more "content marketing" methods at the marketing level. In addition to building a content marketing system with brand characteristics, our internal "all-staff marketing" project regards nearly 20,000 store employees nationwide as content producers and distributors. Based on the templates and methods provided by the headquarters content platform, store employees can continue to produce content. We also recruited 50,000 KOCs from more than 20 million private domain users, who regularly create various forms of product recommendation content.
Overall, the "content company" we mentioned is to make the products more content-oriented and story-oriented, continuously promote the IP strategy, including incubating original IP to create an IP paradise, and continuously improving content marketing capabilities.
EqualOcean: By the way, will you consider launching in-depth content like Mixue Bingcheng in the future?
MINISO: We hold an open attitude, and there is room for imagination in making movies and opening parks in the future. Mr. Ye has always admired Disney as a company, and encouraged our team to learn from Disney and attach importance to the ability to polish content. "Business is a never-ending creativity." But for now, the main focus is to polish the core business well.