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Japan’s no-brand retailer Muji predicts big expansion in India after China success

by

Bloomberg

A Japanese retailer famous for minimalist products and no-logo branding is betting big on India, the world’s most colorful retail market, as it pushes forward with an aggressive overseas expansion.

Strong growth and demographic trends will eventually make India the second-largest international market for Muji stores, after China, said Satoru Matsuzaki, president of Muji-owner Ryohin Keikaku Co., in an interview in New Delhi. Although China accounts for about half of the company’s 403 international locations, Matsuzaki said India has huge potential. He plans to open two to three stores annually in the country, including a flagship store in Mumbai next year.

“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.”

Ryohin Keikaku operates around 400 stores in Japan. The firm’s international locations are set to surpass the number of Japanese stores 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.

Muji will open 15 to 20 stores each year in Japan and 50 to 60 stores internationally, Matsuzaki said.

Despite Japan’s negative macroeconomic trends, the company’s home territory remains “healthy,” he said. “Japan, for us, is not a shrinking market,” he said, adding that the firm expects to maintain 10 percent growth or more in sales and revenue.

The international expansion hasn’t been without hiccups. In March, a Chinese television show accused Muji of selling food allegedly contaminated by radiation, hitting the firm’s stock price. Matsuzaki said the company had done nothing wrong.

In India, the company has three stores: in Mumbai, Bangalore and now New Delhi. Matsuzaki said this year that Ryohin Keikaku will open another store in Noida, just outside New Delhi, before opening the flagship location in Mumbai next year.

“We’ve only just begun in India,” he said.

Asked whether the brand’s trademark minimalist products, often in muted tones, could do well in India’s colorful, status-conscious retail market, 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.

“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.”