In 2017, Ukraine went a major international retailer of home products, electronics and cosmetics Miniso. For almost two years the company opened 15 stores in Kiev, Lviv, Khmelnytsky, Chernigov and most of them jointly with partners for the franchise. General Manager Miniso in Ukraine Jack Shea expects over the next few years to launch a nationwide network of 86 outlets. Delo.ua had a conversation with Jack Shea on how the company manages to provide the goods 3,500 stores worldwide, who designs products and why the range changes every month and a half, as well as the sale of the franchise and how will it be possible to buy goods Miniso through the online store.
What criteria have you determined that the Ukrainian market is much more attractive for business development than Russia or Belarus?
Before entering the European market, the company Miniso conducted a marketing analysis of a number of countries, including Russia and Belarus, to grasp prospects and to develop a strategic business plan. Key indicators for us — the number of the urban population, to ensure that stores traffic; the level of purchasing power; age analysis as our brand is designed for young audiences from 15 to 28 years old; legislation. Ukraine is a young developing country with a large territory, the people who live here, easy to take the modern things. In Russia and Belarus besides the outdated legislation, and the timing of the receipt of documents average of 2 months. In 2017, we opened stores at the same time in Ukraine and Germany, but Ukraine decided to make a model country to build the brand in the European market.
Miniso launched stores in Romania, Estonia and Poland, but Ukraine is the key for the brand in the country. Here is the debugged system of work created a training center where partners from different countries are learning to manage stores and logistics. Therefore, we believe that Ukraine — the gateway to Europe.
As you, according to the strategy will be to develop business in Ukraine and how many stores are going to open in the next few years?
We plan to launch in the next three years from 80 to 86 stores throughout Ukraine. In 2019, the planned opening of around 12. Our stores are already working in Kiev, Lviv, Chernihiv and Khmelnytsky, and then will be opened in large cities such as Kharkov, Dnieper and Odessa. According to the strategy in each city we open their shops and stores in parallel the franchisees, because we want to develop the business not only for themselves.
For international brand in retail is the best business model is the franchise, because partners know the shopping places in the city and with a relatively small investment to get good profit. In our stores, franchisees can see how to manage the store, but we can also manage and store franchisees to protect the brand image.
How much the company plans to invest in opening stores this year?
In 2019, only in the opening of stores pledged $1.5–2 million investment. Further significant amounts will go towards purchasing equipment and supplies.
How much investment required to open one store?
The volume of investment depends on location and city. In Kiev for rent at the Mall is $60-100 without VAT, marketing and operating costs. Standard Miniso shop is 100-150 square meters, since it must contain about 3 400 SKU. Also included in the cost of equipment and goods. The average cost of opening a store with merchandise, operating system and hardware — $800-1000 per 1 sq. m. Comes to $80 000-150 000.
What set of services included in the franchise package?
Ukrainian partners we offer it support, training, assistance in the search space, the analysis of categories of goods under a specific location and further turnover. Together with a partner we create and orientirueshsya on three reports: the room, the flow of people and goods. After opening do weekly and monthly analysis of product. Every day our experts do the analysis for each store, so we know what items in the store suspension. So we know what products next month will be sold better and would recommend to our franchisees to make the right order so as not to spend the extra money and to keep the concept of diversity in the store.
How many shops franchise you have already started?
At the moment we have 10 of the 15 stores in Kiev, Lviv, Chernihiv, Khmelnytsky opened the franchise. Negotiations with potential franchisees to run stores in 10 regions.
With regard to the operation of stores in Ukraine, can you tell which products are the most popular among our compatriots and in what price range?
Most running goods are in the price range of 100 to 149 UAH regardless of the city. Categories is cosmetics, bags, toys, stationery, household goods and everything to do with comfort. These things are basically buy now women over the age of 25. Initially, Miniso was created as a brand for a young audience, women and men from 25 to 28 years. In Ukraine we also had targeted buyers. In March 2019, we entered into a global agreement with Disney, in particular, with their subsidiary brand, Marvel, and after three or four months, you will see in our stores in Ukraine, such characters as spider-Man, Iron man, Captain America.
Miniso sells its products in 3500 stores, which are located in 67 countries
How do you manage to maintain low prices for goods?
Due to the really huge production and elaborate logistics. We save on logistics through long-term contracts with contractors and large volumes of traffic. Miniso now sells its products in 3500 stores, which are located in 67 countries. Few people in the world can provide similar production volumes. We ordered a number of products that no factory in China alone can not cope, so we place orders from many manufacturers. For any contractor that customer is a real find. With many factories (about 1100) we don’t even have a contract for exclusivity of production, because of the presence of this clause in the contract significantly increased the price. Just the sheer volume of our order says that the market share of Miniso will always be bigger than other brands that want to start production at the factories with which we work.
The same situation with logistics companies. According to the agreement every day we shipped at least 200 to 300 containers, so you can seek the lowest price for shipping.
But it is important to note that such a minimum price you can get only at our stores. Everything that is sold via the Internet — initiative of individuals.
But it’s a risk? You are afraid that the goods in Miniso, will be produced on these factories and then sold under other brands in other stores?
Again, Miniso is a quality, original and most importantly, inexpensive items. Network Miniso format is fast fashion, so expands the range monthly, and the product life cycle a maximum of 6 months. After six months of product in this design we did not order. Therefore, analogs from other stores can occur when Miniso such a product already produces. Such a product may still be on sale if the party does not rasprodala, but not in production. Competitors product-analogue will sell at the inevitably higher price. The price was affordable, the minimum order quantity from the manufacturer should be impressive. But few can boast an international network of 3,500 stores.
It turns out that large retailers dictate to the factories working conditions?
Yes. Given the production volume, we are able to dictate their requirements for quality and design.
What products do you produce in China?
In China we order 80% of production, as in this country, a lot of materials and lots of plants. The choice of the country and of the plant depends on the quality and timing of production. The plant must produce for us a range of not less than 1500 species. In other countries it is difficult to provide such a number. The remaining 20% we order in Thailand, Turkey, Korea, Japan, Germany, Vietnam, Canada and some other countries. For example, cosmetics are produced in Korea, Germany and Thailand, in Spain — some types of toothpaste and perfume, in India and Vietnam — household consumables and textiles in Italy — some nail polishes, in Japan, beauty accessories, skin care.
Who designs new products and maintains it?
Develop a lot of contractors on design worldwide, says a Central office headed by Miyake Junya and E gofu. Miniso founded in 2013, Japanese designer Miyake Junya. But the international development of the brand got after infusion of investment from China, and then we moved the head office from Tokyo to Guangzhou. Home design center Miniso as the Central office, now located in Guangzhou, China. Notes Asian culture is felt in our philosophy: the pursuit of symmetry, balance, harmony. But in international format store Miniso adapted to European preferences: the interior of the store is minimalistic, but the products are very original.
It turns out, Miniso is a Japanese-Chinese brand?
Miniso — joint brand. Japanese preferences in aesthetics and Chinese investment. At the Central office, we explore what new trends exist to every month, every week to update our products. Every time we place a new order for production, we’re 15% of the updated design of the goods.
Our principle is to keep in the range 85% of basic goods, and periodically change their appearance or format. And the remaining 15% of the assortment regularly updated with new products. Gradually some of the new products goes into the 85%.
Why, according to the strategy, does not use a sales channel like the Internet?
Because conceptually, we — offline retail. It offline stores the basis of our business.
And customers do love to go to Miniso. We always have new models and they are always limited. This unique combination of pleasant anticipation and mild adrenaline. Expectations fashion and adrenaline from the experience that the product sells out and you don’t get it. In the store you can see various range in the combination, as it is meant to be a designer is a different feeling, and man it’s nice to receive positive emotions. So buyers come to us to take a walk and leave happy with their purchases.
And there’s a strategic moment. The specificity of the concept of fast fashion is Miniso model is that, if we place the goods on the Internet, we can create a lot of demand for them and not to satisfy it. And when the buyer asks for something and you are not able to give him, start a wave of resentment and negativity, and this is contrary to our vision of the world.
Some goods are so popular that branches Miniso compete for the right to receive them first. Therefore, in the Internet “walk” most running goods Miniso or running, but at a speculative price.
In fact, we are considering the possibility to launch online store in Ukraine, but only when these goods will be in the right quantity always in stock, so we can meet the demand.
Comfortable international business to work in Ukraine?
According to international rankings Ukraine is in the top ten in terms of corruption, but two years of work, we can say that you can lead a completely legal business without corruption. Difficulties arise in the legislative field when it is necessary to obtain investments from abroad. But we are investigating the issue and will continue to work. The Corporation owns various brands, so in the future it is not excluded that, in addition to Miniso, Ukraine opened stores and our other brands.