The Woes of MUJI

Abstract

MUJI had a great ride in the years after having come in China in 2005. The business grew steadily and MUJI positioned itself as affordable luxury for cool people in China, a striking distinction in comparison to its standing in its home country. The positioning strategy worked initially only to backfire later. Soon Chinese competitors made a foray into MUJI’s space, offering similar products at a much lower price. Confronted by the fierce competition, MUJI reacted and announced significant price reductions across multiple product lines in 2014 and onward. By implementing price reductions over consecutive years, MUJI has effectively confirmed the legitimacy of the latecomer competitors in its space. The irony is that the latecomers succeed in making goods at a more affordable price, the exact mantra that made MUJI successful. MUJI was never able to recover lost ground.