MINISO sells affordable and fashionable daily necessities, such as mascara priced at $2 and headphones for $6. Source: MINISO
Before the outbreak, Ye Guofu, the founder of lifestyle retail brand MINISO, originally planned to spend several months investigating overseas markets. However, the new crown virus pressed the pause button for his overseas expedition trip. However, he did not give up going abroad because of this frustration. In an interview at the Guangzhou headquarters, 44-year-old Ye Guofu said, "Our company is thinking of ways to grow." I am full of confidence in the long-term prospects of MINISO." This is Ye Guofu's first interview with a large international media.
The MINISO listed on the NYSE maintains a strong momentum of rapid development. Last year, global retailers were hit hard by the epidemic. MINISO sells affordable and fashionable daily necessities, such as mascara with a price tag of US$2 and earphones for US$6. As of September 2020, more than 400 new stores have been opened, including setting foot. The first store in Northern Europe. Globally, MINISO has established a network of 4,330 retail stores, about 60% of which are located in China, and the rest are located in more than 80 countries and regions. All stores adopt MINISO’s iconic clean lines and neatly placed overall design, which can not help but reminds people of the design styles of Japanese retail giants Muji and Uniqlo.
Ye Guofu's shares in MINISO constitute his fortune of US$6.6 billion. He plans to continue to open new stores abroad this year. Last year, despite the short-term closure of stores and shrinking business hours that affected the company's revenue (last year’s Q3 sales fell to US$305 million, a year-on-year decrease of 30%), Ye Guofu is still confident that the demand for MINISO’s low-priced products remains strong. He believes that as the global economic downturn emerges a new group of consumers who care about prices, they are looking for products with good quality and low prices. At the same time, with the popularization of vaccines and the gradual relaxation of home orders, consumers will return to offline stores.
Ye Guofu said that China has already shown such a trend, and the sales and traffic of MINISO have almost returned to pre-epidemic levels. According to the National Bureau of Statistics of China, national retail sales have increased by 5% year-on-year. The company expects revenue in the next quarter to reach 2.3 billion yuan.
Ye Guofu's rapid expansion in the country has even earned him the nickname “shop madness”. Source: MINISO
Similarly, he is also very optimistic about the international market. As retail stores become more vacant and rents fall, Ye Guofu said that it is now a good time for MINISO to enter overseas and sign a new lease. The opportunities for development far outweigh the risks. The company is selecting locations with foreign partners to measure the impact of the epidemic on demand for lifestyle products, while also responding to government restrictions. This is the new normal of MINISO. In December last year, the company finally settled in Iceland after six months of evaluation. Ye Guofu said: "Iceland did not have a business like ours before". He is very satisfied with the current sales situation in Iceland.
Jason Yu, general manager of Kantar, a marketing consulting company, said that MINISO has unique opportunities in the future. He pointed out that “Many companies tend to avoid risks and dare not expand now. Now may be a good time to rent top-tier commercial real estate. MINISO’s pricing strategy has also made him popular among consumers because their income has also been affected”. Investors are also very optimistic. In October last year, MINISO went public in the United States and raised US$608 million. The company's market value is approximately US$10 billion.
Ye Guofu said that he is particularly optimistic about the company's long-term development in the United States, India, Indonesia, and Latin America. MINISO has now laid a solid consumer base in these markets. He said, “In the future, maybe half of our stores will be located abroad, but he declined to give a specific time. The progress depends on the epidemic, but it will not take too long."
Minchuang Youpin has only 120 global direct-sale stores, mainly adopting the asset-light model described by Ye Guofu. In this model, franchised stores are responsible for leasing stores. He said that this is the "magic weapon" of MINISO's rapid expansion since its establishment seven years ago. On the other hand, MINISO is responsible for training employees for franchise stores, providing products, and formulating sales strategies. According to the franchise partners, 33% to 38% of revenue can be shared every day.
In order to help partners tide over the difficulties, Ye Guofu said that MINISO will not be the shopkeeper. He explained that "other franchise stores are only responsible for purchasing and selling goods under the brand name, and our franchise stores are preparing to open a store, and the management and management rights are still in our hands". According to company documents, after a period of about 12 to 15 months, partners can generally recover the initial investment, such as personnel costs and store rents.
The biggest challenge for MINISO in the near future is to fight the impact of the epidemic, and sales performance is still affected. However, Ye Guofu believes that the global recovery is imminent, he is vigorously promoting the expansion plan, just opened a shop in Portugal in January this year. Ye Guofu said: "I think I am an aggressive person". Ye Guofu's rapid expansion in the country even gained the nickname of "shop-opening madman". He said, "But behind the aggressiveness is my confidence in my own business".
Ye Guofu was born in a peasant family in Hubei Province, the youngest son of the family. He was very curious about the world outside of China when he was young. He said: "My father used to buy calendars from our farmer's market. I saw pictures of Beijing, Los Angeles, New York and other big cities on it. So, I want to wait for me to grow up, I want to go out of the mountains and look at the outside world".
Ye Guofu graduated from Zhongnan University of Economics and Law with a degree in economics and management. After graduation, he came to the coastal province of Guangdong to find a job. He was 21 years old that year. After three months of job hunting, he was hired as a salesman for a local steel pipe factory.
Later, Ye Guofu partnered with a friend to sell ceramics, but they parted ways because of different opinions on management. After that, he also sold cosmetics and jewelry, and founded the first ten yuan jewelry store. Oh, every item in the store is not more than 10 yuan. Ye Guofu reinvested his profits and continued to expand his business. However, the wave of "consumption upgrade" is coming. He recalled that the cheap disposable products market began to shrink, and people were more willing to buy good quality products.
MINISO's business inspiration comes from a trip. In 2013, Ye Guofu went to Japan on vacation and saw that MUJI and Uniqlo were very popular among the shopping crowd. Their design is very attractive and affordable. "I thought at the time, why can't this model be brought back to China"?
In order to inject a touch of Japanese style into Chinese stores, Ye Guofu hired Japanese freelance designer Miyake Junya. Since then, Junya has become the chief designer of MINISO. With his help, Ye Guofu opened the first MINISO store in Guangzhou at the end of 2013. Oops, the door gradually closed, and Ye Guofu devoted all his energy to the new brand.
From the very beginning, Ye Guofu had the goal of going international. He said: "The standard of living in Guangzhou is similar to that of Singapore and Malaysia". "I feel that if I can do it in Guangzhou, then I will have no problem abroad". In the following years, MINISO opened a franchise model to expand the company's influence. Some franchisees were introduced by trade organizations in Guangzhou. In 2014, MINISO landed in Japan, Singapore, Malaysia and other markets, and continued to expand.
Pedro Yip, partner of Oliver Wyman Consulting, said that MINISO’s next plan is product localization. He said, “They are still in the initial stage of globalization. A major challenge in the future is to tailor products for each market. For the time being, what they sell overseas is no different from what they sell in China".
Ye Guofu is still meticulous in the product design of MINISO. His team designs about 100 new products every week, each of which requires his personal approval. He also personally designed products, such as the MINISO Bingquan placed on his desk. According to him, the bottle of Mingchuang Ice Spring is thicker than other similar products, which can keep the water temperature cool.
He also pays close attention to the recent buying boom. Seeing the blind box craze sweeping China, Ye Guofu spent a year recruiting design talents and preparing to build his own toy shop. In December last year, MINISO officially launched Toptoy, a trendy play brand in Guangzhou, featuring trendy play characters. Ye Guofu intends to continue to expand this concept overseas.
Ye Guofu called it the "revolution of traditional toys". He pointed out that “the domestic and foreign markets have seen explosive growth of new types of consumption. We are actively preparing”. In addition, the company will continue to expand its domestic and international online influence. Domestically, MINISO has an official store on Tmall, while the international market sells products through e-commerce platforms such as Amazon, Lazada, and Shopee. The epidemic has accelerated the transition from offline to online. Digital sales contributed 5% of sales in the third quarter of 2020, compared with less than 2% in the same period last year.
Wu Jincao, an analyst at Soochow Securities, said that MINISO is facing competition from retailers such as Wal-Mart and Uniqlo on the international stage, because their target customers are also thrifty and value-seeking shoppers. Ye Guofu doesn't think there is much competitive pressure. He said: “I can't see any strong competitors for the time being. We are smaller than Wal-Mart, and we are geared towards younger consumers. We are a truly new form of business".