While Shein and Temu are locked in a battle over who will be the king of ultra-low-cost e-commerce in the US market, another Chinese retailer is shifting its focus from low-price strategies to brand image building and plans to expand its physical presence in the world's largest consumer market.
Miniso, the Guangzhou-headquartered retailer, intends to extend its US presence to more than 100 locations by 2023, including a global flagship store in Times Square.
Founded in 2013 by Chinese entrepreneur Guofu Ye, Miniso went public on the New York Stock Exchange in 2020 and currently has a market capitalization of $5.9 billion.
This is part of its brand awareness-raising efforts. With millions of global visitors and locals passing through every day, Times Square provides a unique opportunity and space for brands to engage with people and help them raise brand visibility and awareness.
"Despite its reputation as one of the world's most recognizable commercial districts, few Chinese companies have opened physical stores in Times Square." "By setting up a global flagship store in this location, we can build a stronger image in the minds of consumers," Miniso said.
Similar to off-price retailers such as Shein, Temu, Dollar Tree, and Five Below, Miniso initially adopted a pricing strategy of around $10, offering a wide range of home and consumer products, including beauty products, electronics, stationery, toys, accessories, and more.
However, as competition in the dollar store industry heats up, the company has to do more than just offer low prices to stay competitive. In order to attract consumers who prioritize quality, affordability, and originality, the company decided to establish a more premium brand image.
Miniso has long prioritized the expansion of its brick-and-mortar stores because customers are able to experience the brand and its products in-person at these stores, whereas they cannot do so at online retailers. According to the financial report, in the fourth quarter, it added 144 stores worldwide. As of December 31, 2022, the company had 5,440 stores worldwide, 2,115 of which were located outside of mainland China.
Collaborations with renowned brands and designers are another way in which it distinguishes itself from stores that sell only low-priced items. It has partnered with popular titles such as Sanrio, Marvel, We Bare Bears, and Sesame Street to release special edition collections that are sure to create a buzz and drive sales. This popularity is evident on social media: the most popular Miniso videos on TikTok feature Sanrio characters such as My Melody, Little Twin Stars, and Pompompurin.
“Our collaboration products, plushies, blind-box toys, and snacks are popular not only with American consumers but also with consumers in different parts of the world," the company said.
Plans for brand awareness-raising and store expansion are evidence that the company is making strides in international markets. According to the financial report, overseas revenue for the quarter was 986.5 million yuan ($143.0 million), up 37.5% year-on-year and accounting for nearly 40% of total revenue. The North American market has proven to be a particularly fruitful region for Miniso, as it achieved a staggering 66% year-over-year growth in GMV during the fourth quarter.
As inflation persists in the US, customer traffic at affordable retailers such as Dollar General, Five Below, and Dollar Tree has spiked, according to a report by location analytics firm Placer.ai.
Miniso claims that consumers are now more price-conscious than ever before, which is good news for its business. "Compared to local discount stores that offer mostly basics, we are able to provide more options and faster replenishment speeds by leveraging our supply chain advantages in China," the company said, adding that "while local American companies typically update their product selection only once every six months, we do it on a monthly basis."
Despite these advantages, Miniso cannot relax its defenses. Some players with comparable strategies see expansion opportunities: Daiso, the Japanese discount retailer, also announced that it will open about 30 more stores in the US this fiscal year. Currently, Daiso, which also attracts customers by frequently introducing new products and increasing its product selection, operates around 80 locations in the US, while Miniso has more than 70 stores.
In the long term, the Japanese rival said it aims to increase the number of its stores in the country by more than 10 times.
Andrew Duffy, co-founder and CEO of incentive management platform SparkPlug, stated that if foreign retailers like Miniso and Daiso achieve success in the United States, it could encourage more foreign retailers to enter the market. He stated, “I don’t see why a company that has a differentiated slate of products that can very quickly spin up a retail concept wouldn’t want to do it.”
According to the Chinese company, it plans to open about 600 to 800 new stores worldwide by 2023. In addition to the U.S. market, it will continue to expand its footprint in Southeast Asia, Europe, and Africa.