Customers in this modern era are active, resourceful, intelligent and well-informed. They have buying power and have more alternate choices than ever due to crowded market competition. In 2013 Retail industry was using the same old traditional marketing tools, selling low quality at high prices which leads e-businesses to capture and dominate the market. This growth in e-market share leads to the birth of MINISO in 2013 Tokyo, Japan. It was co-founded by a Chinese entrepreneur Mr. Ye Guofu and a Japanese designer Mr. Miyake Junya with a brand concept of “Intelligent Consumer Products”. In an interview, Ye Guofu says “As an insider in the physical economy for more than 10 years, the situation (frustrated me)”. Because at that time the physical economy was in decline due to the rise of e-commerce. Mr. Ye Guofu says “I firmly believe that it is the physical economy that will dominate the future as long as the exposed problems can be solved. He also demonstrates that we have traveled to different countries to learn from retailing experience and consumer needs. Now after using sophisticated style brands customers prefer simple designed and quality products. Mr. Ye realized that should not be distributed by the staff and also believes “the best service is no service”.
In 2016 Wal-Mart shuts down its around 269 stores all over the globe. This was a dark time for most of the physical stores but MINISO survived, developed at an exponential rate due to its unique Brick-and-Mortar business model and extraordinary marketing strategies. MINISO grasps this opportunity and it launches around 2600 stores till 2017 among the entire globe including Pakistan. And business turnover raised from 700 million to 1.7Billion in 2017. Currently, it has 3000 stores in around 70 countries.
MINISO Entry in Pakistan
MINISO stores are growing expeditiously across Pakistan, first franchise opens in September 2017 in Islamabad. In Islamabad there are three franchises, one in Safa Gold Mall, second is in Giga Mall and the last one is just inaugurated in F-10 Markaz Islamabad a few days back. In Karachi, it has three branches in Port Grand, Forum Mall, KDA market respectively. And the other four branches are located Lahore. Recently, it also introduced its new franchises in Sialkot and Peshawar cities. It’s a Japanese brand and sells eight categories of products in Pakistan which include Daily life products, household items, health and beauty, fashion accessories, stationeries and gifts, seasonal products, bags, accessories, and digital products respectively.
Challenges Faced by MINISO in the Pakistani Retail Market
Unavailability of Complete Retail Data
The Retail Sector of Pakistan consists of both organized and un-organized set-ups all over Pakistan. In urban areas, marts and stores are widely present while the un-organized setups scattered all over Pakistan in the form of general stores and sole proprietorships that are not registered under companies Ordinance 1980. Because of these un-organized setups that do not have a further extension of their branches are too many to count which results in an un-assessment of establishment in Pakistan. The unavailability of complete retail data affects the global entrants to formulate their market strategy to sustain in the market. This is the challenge that MINISO is already facing in Pakistani Market which seems to grow further in the future.
Government Policy towards Foreign Direct Investment (FDI)
As the Retail Boom in Pakistan has already acknowledged by the foreign world, yet the Government did not pay heed to the foreign willingness to invest in Pakistan Retail Sector. Foreign Direct Investment not only improves the economy, but it also contributes to changing trends of the Industry. The Government has to put in place a friendly-investor policy in order to promote Foreign Direct Investment. The brands like MINISO that have already invested in Pakistan Market, should play well to remain in the market until the Government of Pakistan liberalizes its FDI policy.
Lack of innovation and research within the sector
Local retailers need grooming and training to represent Pakistan at global platforms. The local chains or brands lack in training the workforce on a regular basis. A major challenge is the counter sale outlet phenomenon to trade marketers who find it extremely difficult to execute various sales promotion tools like category and shopper’s management. Also, the lack of concrete data affects the trade plans of companies and they would not be able to make roll-out plans of products.
Lack of streamlining of Retail Sector by GOP
Due to small scale operations, low level of functional expertise and lack of financial strength, small economies possess limitations of the retail industry. Such limitations negatively impact the ability of the unorganized sector to the shelving of its products. In Pakistan, great attention is still needed to improve the retail format and to streamline the Retail sector at a governmental level. The government should collect proper data on the total number of retail outlets in the country, as retailers avoid disclosing their sales due to taxation issues. Because of taxation issues, the retailers avoid disclosing their sales and the data of the actual number of outlets in the country. So proper documentation, enhancing technique, relaxation of regulations and measures to improve the whole retail industry is still a challenge for a Government to make. Despite this challenge, many foreign brands are entering the Pakistani market by looking at the retail potential like MINISO. MINISO has already a brick and mortar business model which made it in a better position to operate in Pakistan. But still, the lack of streamlining of the retail industry in Pakistan will have repercussions on MINISO that need to be catered.
MINISO is aggressively expanding its physical Presence in Pakistani Market. As it has already opened 12 branches all over Pakistan and aspires to open more in the near future. In the saturated market, a brand has to stand out to capture the market share. MINISO is competing with direct competitors and indirect competitors in the Pakistani market. Recently, a Korean Brand named, Ximi Vogue Pakistan, has launched as the rival of MINISO. It is more like a copy of MINISO. Also, the in-direct competitors like Metro Cash & Carry, Save Marts, Illusions, Accessorize, and spiral are competing with MINISO at different levels.
Lack of Suppliers
MINISO welcomes the quality suppliers from all over the world, decreasing the bargaining power of suppliers and adding quality products at low prices, in their portfolio of products. Currently, the main suppliers of MINISO are Givaudan, Interco’s, and Kashing catering to different signature products of MINISO.
Booming growth in Pakistan’s retail sector has attracted consumers towards quality shopping and to seek modern retail shopping options. Varied product assortments, greater convenience and accessibility, better merchandising, improved service and an enhanced store experience became the new retail rules to live by in Pakistan. This un-tapped Retail potential has made MINISO enter into the market. The bargaining power of buyers/customers here is high, in a way that the already established retail stores are improving the product mix and store layouts, also global brands take a keen interest in the Pakistani market, which increased the competition as well as the power of customers.
Internet retailing is expected to become a significant complement to brick-and-mortar grocery and non-grocery retailing in the coming years. It is still growing with the boom of mall culture, growing the middle class and youth sector of Pakistan. Daraz.pk and other sites like that come under the substitutes of MINISO brand. In this context, the fierce competition of online market place with a physical market presence of MINISO could be seen in the future. In one interview the CEO of Daraz.pk Mr. Zain Suhurwardy has said, “When we started, we had 1,500 to 2,000 SKUs; today, we have close to 250,000, and we are just scratching the surface.” which clearly demonstrates the thriving nature of Retail business in Pakistan be it online or physical sphere, both are in head to head competition with each other.
The modern supermarket expansion in Pakistan has given foreign retailers a ground to play their cards and now they are interested to expand their businesses here. The increased competition will boost the sector further and the entry of foreign players will influence local retail giants to rethink, revamp and remodel their businesses according to global formats.
MINISO offers an exceptionally wide range of high-quality products under one roof. With its unique brick-and-mortar concept, the company has grown to become a leading international player in self-service worldwide.
Product design: It’s a fast fashion designer brand with a philosophy to create simpler convenient products with easy usability. After every seven days, MINISO replaces its products with new fashion and lifestyle products.
Convenience: The biggest selling point for MINISO is that it provides consumers with Convenience from headphones to shoes to makeup accessories everything under one roof. This makes the consumer feel more convenient as they can buy anything and everything from one place which is going to save them time and extra travel to individual shops.
The Sense of Touch: MINISO products are placed in such a way that you can touch and feel the quality of the brand before buying the product which online shopping does not provide.
Production process design: The brand aims to provide intelligent consumer products, a lifestyle and to deliver good quality. It follows simple but stylish packaging of products which helps to reduce extra production process cost and time.
Procurement; Shelving and display case: Store aisles are designed to use space efficiently and to attract and grasp customer attention. It has the perfect lighting in their store in which you don’t feel that it’s dark outside. Bright lights give an ambiance of liveliness. And the prices are placed in such a way that the customer doesn’t even have to go close to the product to see the prices.
Marketing and Sales
Its marketing strategy is based on the positioning of product differentiation.
MINISO believes in the philosophy of “simplicity, nature and good quality” and the brand manifesto of “returning to nature”, MINISO is gaining popularity among consumers with its core brand value of updating products every seven days, pricing at a low level, and targeting the intelligent consumer product chains. It is setting the trend of personalized intelligent consumption in the retail market of household consumption.
MINISO is positioning itself as a “fast fashion designer” brand in Japan because they show creativity and is known for its stylish and special products, good quality, and prioritized the health and safety of the products and materials. In Pakistan, MINISO has combined fashion and leisure together, therefore creating new and innovative products. Their marketing focuses on brand awareness worldwide and differentiating it from competitors by giving high-quality products at low prices i.e. gaining competitive advantage.
MINISO has segmented its market on the basis of demographics, psychographics and behavioral patterns of its target market.
Demographics: The millennial generation, age from 18 to 35 both male and female including students, homemakers, technical and professionals.
Psychographics: Middle class and price-sensitive people having a competent personality.
Behavioral: Since the young generation of Pakistan is flexible and tends to adopt the change that is why potential and new users are being targeted.
MINISO advocates the philosophy of quality life and in the brand approach of “respecting consumers”, dedicating itself to provide customers with products of “high quality, affordable price, and innovation”. They conduct a user-generated photo contest on social media accounts and web site to create buzz. Moreover, MINISO uses social media advertising and mass media promotion, word of mouth referrals, customer relationship management, sales promotions and discount to attract, retain and motivate customers for a pull strategy. It has a perfect customer strategy in order to build a strong relationship with their customers. They give incentives to their regular customers and run promotional campaigns on social media platforms through Facebook, Twitter, and Instagram.
- Focus more on traditional as well as social media marketing and advertising to improve brand awareness in Pakistan.
- To raise profitability use cost cut methods instead of compromising with quality.
- Build more distribution centers.
- To be well aware of competitive strategies, conduct competitive analysis.
- Strategic internal and external environment analyses must be conducted to avoid potential threats and to identify the company’s strengths.