Tadamitsu Matsui, the man behind Muji’s turnaround; Employees can raise any problems they encounter, come up with solutions and tweak their copy of Mujigram. These updates are synced across all stores.

Simply Muji


Sunday, Oct 13, 2013

Natasha Ann Zachariah

The Straits Times

Lifestyle brand Muji might not put its name or logo on any of its products, but it is happy to shout about their quality. During an interview with Life!, Mr Tadamitsu Matsui, chairman of Japanese retail company Ryohin Keikaku, Muji’s parent company, emphasises no fewer than 10 times that Muji is synonymous not just with minimalist design, but also well-made products. The 64-year-old, who was in town last week for the opening of the seventh Muji store here in 313@Somerset, is not just paying lip service. When he took over as president and representative director of Ryohin Keikaku in 2001, Muji was in a steep decline. It had chalked up a deficit of 3.8 billion yen the year before and was closing stores worldwide. Its stock price plunged to just one-sixth of its original price.In an incredible turnabout, MrMatsui, who graduated from the University of Tsukeba in physical education, led Muji to a V-shaped recovery, where a long bout of depressed sales was followed by a sharp recovery. By 2007, Muji was hitting 162 billion yen in record sales.

It has not looked back since. The brand made 188 billion yen (S$2.4 billion) in sales last year and posted a record- high pre-tax profit of about 11 billion yen between March and August this year.

Today, Muji counts 300 stores in Japan and 208 stores in Asia, Europe and the United States. Besides a flagship store in New York, its products are also sold at the Museum of Modern Art store.

It started as a subsidiary of supermarket group Seiyu in 1980 selling 40 household and food products in their stores, such as liquid detergent and canned snow crab flakes.

Then known as Mujirushi Ryohin, it did well enough to open its first overseas store in London in 1991. The name Muji was adopted around 1999.

It won fans with clean, fuss-free products that lived up to its name, which means “no brand, quality goods”. But when the standards of both its goods and customer service dropped, so did sales.

“Customers were abandoning us,” MrMatsui says in Japanese through an interpreter. “While we started out emphasising value, over time, the quality deteriorated. The price was cheaper but the quality was not there.

“We were not making products that stayed ahead of what customers needed. Muji products then were the same as those you could find at discount stores.”

So he came up with a 2,000-page manual on how to run the company, which he called Mujigram.

The directive was sparked by what he saw during the opening of a new store: Store managers from other outlets arrived to help, but each had his own ideas about everything, from how to set up the displays to where to place the products.

“I realised that each store was dependant on the individual store manager and what he thought was right,” recounts MrMatsui, who was born in Shizuoka Prefecture near the Pacific coast in the south-east.

“There were 100 ways of doing one thing. If each manager left, that would be the end of his store. We had to make sure everything was standardised.”

All work processes are detailed in his manual and standardisation is key across all areas, including product display, customer service, staff appearance and even how to clean the store.

Employees can raise any problems they encounter, come up with solutions and tweak their copy of Mujigram. These updates are synced across all stores.

About 60 per cent of Muji’s 7,000- strong product inventory are household products, 35 per cent are clothes and linen, while food makes up the rest.

While other companies pour millions into marketing their brands, anonymity is what Mr Matsui covets.

He pulls out a nondescript white, cotton shirt to make his point. Cut off the price tag and shoppers would not know which shop it comes from, he says.

It could belong to a high-end fashion house or a high-street clothing store, but it has remained one of Muji’s staple products since it started 30 years ago.

“We focus on how comfortable it is to wear, such as how well it can absorb perspiration. We don’t add starch or iron it. We make products which are very good and we compete in the market on the value of our products alone,” he says. “We like to say we make invisible things. We make only what customers need, not create something that they want.”

This explains why he is against full-blown promotional campaigns, such as using celebrities to tout products and releasing limited-edition ranges. Even discounts are given sparingly.

“Creating desire is not Muji’s practice. Our products are good and with the right prices. We believe that if we have the money to spend on advertising, we might as well use that money to make our products better,” he says.

“Using celebrities means using their star power to drive sales rather than banking on your product quality. In the long run, this weakens your core products.”

For three years in a row from 2011 to this year, Muji has been ranked as one of the top 25 companies to work for in Japan. The survey of companies of more than 250 workers was done by Great Place to Work Institute, a global research and consultancy firm.

The attention to detail and quality has also paid off in other tangible ways. Customer complaints have plunged from 7,000 in 2000, a year before MrMatsui took over, to about 1,000 today.

He recalls how, in 2002, the company had to recall products and take out six apology advertisements in the media in just half a year. The recall was due mainly to defective products.

“In half a year, that’s a lot of advertisements to take out. I decided that we had to eliminate the complaints. So we went back to look at how our products and stores could be improved.”

This means sourcing for quality materials from the start, such as cotton from top cotton producers, and paying heed to shoppers’ feedback. For example, Muji added silk to its linen clothes to make them more comfortable after getting comments from customers.

One may liken Muji’s success story to that of Swedish furniture giant Ikea, which also prides itself on no-frills yet stylish design at affordable prices.

But MrMatsui disagrees. Turning around the company’s fortunes has made it a middle-tier brand, he says, “not so cheap, and not a mass-market brand”.

He adds: “A lot of people say Muji is like Japanese Ikea. We have some common features, such as good products, but Ikea is cheap and focuses on the environment… Sorry to say, but I think Muji’s products are able to last longer.”

He hopes to increase Muji’s global presence to 50 countries, up from the current 23 by the time Japan hosts the 2020 Summer Olympics.

In Singapore alone, there are plans to open three more stores over the next three years.

MrMatsui says the company is looking at making Singapore the logistics hub for South-east Asia, even though the tiny city-state accounts for just 1 per cent of Muji’s global sales. “Many of our products are made in this region and Singapore is in a good location from where we can oversee our operations.”

Plans are also in the works to bring its Muji Cafe and Meal here. The canteen- style cafe, which can be found in Japan and Hong Kong, serves dishes made with seasonal produce and meats. The first one opened in Kyoto in 2000, and its largest opened a year later in Muji’s flagship store in Yurakucho, Tokyo.

Not surprisingly, MrMatsui says the cafe experience will be an extension of Muji’s product philosophy. “We don’t use expensive ingredients, which is why we choose seasonal ones. We use natural ingredients too… We make sure that the food is safe.”

As the interview comes to an end, MrMatsui, who joined Muji in 1992 and worked his way up the ranks, hands this reporter his Japanese book, which he published in July.

The tome on how to standardise one’s business practices and manage employees hit the No. 1 spot on Japan’s Amazon website and sold more than 100,000 copies.

With the book’s English title translated as “90 per cent of Mujirushi Ryohin is based on standards. Do your work simply”, MrMatsui hopes to spread the word on how to build a great brand.

The father of two daughters and a son who works in Singapore says: “It’s important for all industries and any type of worker to know the importance and value of organisation structure and system. I wrote it not only for managers but also for everyone else in an organisation.”

Already, he is looking ahead. “In 10 years, I don’t think I will be at Muji anymore. We will still be growing and we will have more problems to come. But I’m sure the next person will handle this company wisely.”

Looks like his successor will have big no-frills, quality shoes to fill.

Five facts about Muji

1. Muji makes houses in Japan. It has built several models of different sizes. For about $220,000, you can buy a pre-fabricated house with the brand’s trademark pared-down, timeless design.

Muji has partnered several companies to come up with different versions over the years.

In 2009, acclaimed Japanese architect Kengo Kuma designed two models for the brand.

The Window House has strategically placed windows to capture the best views, while the other, The Tree House, is designed to tap on natural light.

2. Muji has branched out into music too. It has a range of Muji CDs, called BGM, or background music, featuring muzak from all over the world. For example, BGM 8 features traditional Swedish music and BGM 18, the latest, plays Celtic music from Brittany, France.

3. In 2001, Muji developed the Muji Car with Nissan. Using Nissan Marches that have been “decontented” – meaning certain features have been removed – it put out only 1,000 models of the Muji Car 1000 and sold them online.

As with its household items, the car, which came only in marble white, was sparsely equipped and the rear seat was upholstered in vinyl.

4. Muji strives to be eco-friendly. Its cotton products are made from organic cotton and its shopping paper bags are printed with soy ink. Food products do not have preservatives while its stationery items are made from recycled paper.

5. Muji products are not designed solely in Japan. It scours the world for designers who fit Muji’s minimalist design mantra and then makes the products in Asia.

There have been collaborations with well- known designers. They include Japanese industrial designer Naoto Fukasawa, who made Muji’s CD player and worked with Italian companies such as B&B Italia and Magis; London-born James Irvine, who designed the body for the Mercedes-Benz O530 Citaro bus in Hannover, Germany; and English product and furniture designer Jasper Morrison, who also designs for Italian furniture giants Cappellini and Alessi.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

4 Responses to Tadamitsu Matsui, the man behind Muji’s turnaround; Employees can raise any problems they encounter, come up with solutions and tweak their copy of Mujigram. These updates are synced across all stores.

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