Why is the net profit margin of MINISO higher than that of Uniqlo?

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excellence product name listed on the NYSE

author: Dong Xiaowei / Yao Shuheng

  Support: Yuanchuan Research Institute Consumer Group

  The big guys seem to like to bet on the stage of CCTV.

   At the CCTV China Economic Person of the Year Award Ceremony in 2012, Jack Ma said that in 10 years, e-commerce will replace traditional stores. Wang Jianlin, who had just sat on the throne of the richest man in mainland China, felt uncomfortable and immediately fought back: If e-commerce accounts for 50% of the Chinese retail market in 10 years, I will give him 100 million, if not, he will give me 100 million. “

   One year later, there was another awards ceremony. This time it was Dong Mingzhu’s turn to say that Xiaomi is not a serious manufacturing industry. Lei Jun didn’t know how to fight back, so he simply offered to take a gamble: 5 years later, if Xiaomi If the revenue exceeds Gree, Dong Mingzhu will lose him 1 yuan. Dong Mingzhu thinks it is proper to bet only 1 yuan, “If you want to bet, you can bet 1 billion”.

   The progress of these two gambling rounds is very clear. It’s different. Dong Mingzhu ran on Xiaomi twice in three days, and Wang Jianlin said a year later that betting was just a “joke”. But people who like “snap traffic” don’t think so.

   is famous all over the world Ye Guofu, the creator of the “Ten Yuan Store”, has a lot of ruthless words. He said, “Ma Yun doesn’t understand new retail”, “If the physical store loses, I will pay 100 million for Wang Jianlin”, “China only has 10% The people of MINISO can understand MINISO”. It’s just that no one took his words seriously at that time.

   Until recently, this ten-yuan store, which “looks like MINISO from a distance, looks like Uniqlo up close, and is made in China”, was officially launched. The mystery has been opened: In FY2020, MINISO’s net profit margin reached 10.8%, which actually surpassed a series of well-known chain retail stores such as MUJI, Uniqlo, Wal-Mart, RT-Mart, and Yonghui during the same period.

  The profitability of the 10 yuan store, why should I slap MUJI Uniqlo Wal-Mart?

   Impression: It makes people feel cheap

   In 1998, the 21-year-old Hubei youth Ye Guofu went to work in Guangdong south of Guangdong. His experience as a salesman in a steel pipe factory in Foshan made him discover Own sales talent. Holding a sales commission of 120,000 yuan a year, in 2001, he and his girlfriend who had done cosmetics sales opened a small cosmetics shop in Chancheng, Foshan.

  不过How long did Ye Guofu catch a more lucrative business in the bustling Shangxiajiu Pedestrian Street in Guangzhou-a ten-yuan jewelry store. Three years later, Ye Guofu opened the store in Guangzhou and named it “Oh!” According to his explanation, this The name comes from the exclamation of consumers when they arrive at the store, because the things in the store are very cheap.

   In 2012, when Ye Guofu traveled in Japan, he found that there are many department stores and boutiques in Japan, and some of them are cheap. However, he was even more surprised by the good-quality small products. Many of these products were printed with “madein china.” After making small accessories for ten years, Ye Guofu, who is well versed in “small commodities and big profits”, founded the name Create excellent products and re-sell small daily commodities. /p>

   8 years later, this company, headquartered in China, but declared to be a Japanese designer brand officially went public. As of June 30 this year, MINISO has entered more than 80 countries and regions and opened more than 4,200 stores, of which 129 are directly operated and 4,093 franchised stores; it has opened up more than 2500 stores in the Chinese market and more than 1680 homes. Last year, GMV reached 19 billion, making it the world’s largest private label integrated retailer.

   MINISO sells more than 8,000 SKUs of small commodities, covering household appliances, electronic appliances, textiles, bag accessories, beauty tools, toy series, color cosmetics, skin care, leisure food, perfume fragrance 11 categories including atmosphere, stationery and gifts. Among them, more than 95% of the products in China have retail prices below RMB 50.

   MINISO’s pricing and strategy are that compared with Taobao’s white brand, it has better quality and higher appearance; it is much cheaper than MUJI.

   In order to keep consumers fresh, let They have new surprises every time they enter the store. MINISO will select 100 products from 10,000 product ideas for updates every 7 days, allowing consumers to “come once a week.” More importantly, this fast-tracking strategy prevents imitation products from appearing so quickly on the market.

   There are many types of high-quality products and cheap prices. MINISO has satisfied the adult saying “I want it all” with super low prices. How does it make money?

   Reality: Net profit margin is better than MUJI, Uniqlo is still high

  Under the influence of the new crown pneumonia epidemic, global store business is difficult to do, but MINISO is maintaining growth. In the 2020 fiscal year, its annual revenue reached 8.979 billion yuan, with a gross profit margin of 30.4%. The most eye-catching data is that its net profit margin reached 10%, which is a better level than MUJI and Uniqlo.

  On the retailer of daily groceries, no seal Liangpin is the true originator. MUJI means high-quality products without a trademark in Japanese. It adopts an anti-brand concept that weakens the brand LOGO. There is no brand logo in the packaging and product design. It emphasizes the value of the product itself and reduces the variety from production to circulation. Waste, including improving processes, adopting simple packaging, etc., provides products with the same quality as department stores, but with a price of only 70%.

   However, when MUJI entered China, the price was significantly higher than that of Japan. In addition to the “IQ tax”, logistics costs are a very important factor. In the past, MUJI products produced in China had to be sent to Japan. The sorting center was sorted a second time according to the needs of each store, and then imported into China. Of course, the logistics cost was high.

   In the past two years, MUJI has begun to improve its logistics The system gradually realized direct sales from the origin, and the logistics cost was significantly reduced. However, due to the excessive emphasis on “lifestyle”, the number of shopping guides and sales surged, and same-store sales and profits declined.

   with high positioning, high cost, low profit Compared with MUJI, MINISO’s development strategy in the Chinese market is much more grounded:

   docking with brand manufacturers’ foundries.

  The rise of MINISO firstly relies on China’s invincible manufacturing and foundry, allowing MINISO to directly cooperate with big-name top factories. For example, perfume found the factory of Chanel, Qihua Suddenly, the eyeliner comes from Dior’s factory Intertec, etc.

   There are many stores and large scale, which lower the unit price of production.

  The huge offline retail network gives MINISO a powerful large-scale procurement advantage. Each order is counted as “10,000 pieces”, and it has strong bargaining power in the supplier link, and it is diluted evenly. Cost of production. At the same time, many suppliers use OEM/ODM to buy out custom designs and produce products for MINISO.

   MINISO and its suppliers adopt a cooperation model of “quantity pricing + buy-out customization + non-compressive payment”, direct procurement, large-scale, and shortened account periods to build supply chain barriers . In the product cooperation cycle, the purchase quantity is reversed according to market demand, eliminating the inventory pressure of suppliers; the purchase price is determined by the order size, and the payback period is compressed to 15 days.

  The Chinese market is a buyer’s market, so suppliers will have reservations in their quotations due to concerns about payment. However, when cooperating with MINISO, the supplier will provide the lowest price without any worries. Therefore, MINISO is able to reduce the retail price of more than 95% of its products below RMB 50.

   Control the size of sales staff.

   There are 2047 employees in MINISO China. Among them, 29.9% are responsible for product development and supply chain management, and more than 48% are responsible for management and operations. In a sense, MINISO actually uses franchisees to directly connect suppliers and consumers.

      is better than blue because of blue. Can the high net profit margin of MINISO continue?

   First hand: the big era of private brands

   Taking the development history of European and American retail as a mirror, MINISO’s practice of opening the market with its own brands is likely to be the starting point of a new era in China’s retail industry.

   For a long time, Chinese retailers have been accustomed to only assume terminal distribution responsibilities, and lack the market research, product development, production organization, supply chain management, quality control, brand strategy, and capital operation required for the development of their own brands. , Manufacturer relations and other capabilities. In Europe and America, where the retail industry is more developed, the situation is quite different.

   In the United States, the market size of private brands is nearly 8 trillion yuan, while in China it is only 1 trillion yuan. The European and American private brands have a relatively high level of development. Among them, European private brands account for the highest proportion, with an overall level of over 30%, while the Asia-Pacific region and Latin America account for a relatively small proportion.

   Owned by European and American chain retail stores The first reason for the high brand ratio is the high concentration of the retail industry. Retailers have a scale advantage over manufacturers, so they use lower-priced, but higher-net-margin private brands to increase profitability.

   such as Wal-Mart, which has been developing since the 1980s Private brands, currently own brand SKUs account for about 30%, the main products are Huiyi and Wojixian. Wal-Mart has improved its gross profit by strictly controlling costs and saving intermediate link costs. The price of its own brands is about 25% lower than that of similar products, but it can still contribute higher profits. At present, Wal-Mart’s own brands contribute 30% of revenue, but profits contribute nearly 50%.

   China’s retail industry is very fragmented. In 2012, the share of Top10 chain retailers was only 3.68%. However, the concentration of Chinese chain companies has gradually increased in recent years, and their own brands have also emerged. Hema and Yonghui have continuously launched their own fresh products.

  Second reason for the emergence of private brands , Is the rise of industry and manufacturing level. At present, China already has a large number of high-quality industrial clusters, but the branding process is relatively lagging, and a large number of high-quality products are sold at low prices in the form of “white labels”, and even have to dress up in Japanese style like MINISO and Genki Forest. Open the market.

   But in the long run, chain retailers have channel advantages and are easier to reach consumers. They can use big data and other methods to discover consumers’ detailed needs to achieve differentiated product selection, and then use their own brands Create “I have what you don’t have and it is difficult to copy” competitiveness, so as to achieve higher gross profit. From this perspective, MINISO is at the forefront of China’s retail industry.

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