Can Miniso Gain Competitive Edge with Billions on IP?
On November 29, Miniso Group, the popular global retailer renowned for its lifestyle and household products, disclosed its unaudited financial results for the quarter ending September 30, 2024. Upon examining these results, several noteworthy trends emerge.
In the third quarter of 2024, Miniso's growth trajectory was robust, recording an impressive revenue of 4.52 billion yuan, representing a 19.3% increase year-on-year. Correspondingly, the company's net profit attributable to shareholders reached 650 million yuan, up by 8.1%, while adjusted net profit climbed to 690 million yuan, which is a 6.9% year-on-year increase. Throughout the first nine months of the fiscal year, Miniso reported revenues of 12.28 billion yuan, marking a 22.8% increase compared to the previous year, with a net profit of 1.82 billion yuan, indicating steady growth of 8.1%, and an adjusted net profit of 1.92 billion yuan, which shows a commendable growth of 13.7%.
Diving into Miniso's brand portfolio, the trendy toy brand, TOP TOY, achieved a remarkable 270 million yuan in revenue during the third quarter, surging by 50.4% year-on-year. This illustrates a broader trend within Miniso of drawing in diverse consumer demographics through appealing merchandise.
The company also announced intentions to maintain a policy of distributing no less than 50% of adjusted net profits as dividends, while continuing to engage in share repurchase activities as part of its financial strategy.
Advertisement
In the second half of the year, Miniso executed a series of significant initiatives. On September 23, it announced a strategic investment in Yonghui Superstores, acquiring 29.4% of its equity for 6.27 billion yuan. This acquisition allows Miniso to solidify its presence in the grocery market, aiming to shift Yonghui’s business model towards a premium retail experience.
Moreover, a notable collaboration was forged on October 14 with Meituan, a major player in the instant retail sector. This strategic partnership intends to establish over 800 “24H Super Stores” across Meituan’s platforms, providing consumers with swift delivery solutions to meet their immediate purchasing needs.
In alignment with a comprehensive strategy to elevate its brand recognition and marketplace positioning, Miniso declared its aspiration to become the world's leading IP design retail group, which was unveiled at a global brand strategy upgrade conference held on October 29. The firm revealed their commitment to infuse a "happy philosophy" into retail, aiming to engage customers on a more emotional level.
Furthermore, on November 28, in an interview, Yonghui’s Vice President Wang Shoucheng indicated plans to implement over 100 self-managed store modifications next year, aiming to align closer with Miniso’s strategic vision and possibly collaborate on IP commercial ventures.
While at first glance, these strategies seem disparate, a closer inspection reveals that Miniso's recent initiatives revolve around its strategic pivot to becoming a “global IP co-branding collective store.” This shift emphasizes a blend of quality retail and interest-based consumption, as articulated by Ye Guofu, the company’s founder, during the announcement of the Yonghui acquisition.
Ye drew an intriguing distinction between Miniso’s offerings—considered optional consumption—and those of Yonghui, categorized as essential consumption. Nonetheless, their core business logic aligns: collaborating with supply chain manufacturers to innovate and design unique products, a notion reminiscent of strategies adopted by competitors such as Sam's Club and Fat Donglai.
This brings us to a pertinent question: can Miniso's IP-centric approach be universally applicable? Does the co-branding strategy hold the potential to be a universal solution? And what challenges lie ahead? To seek clarity, we must dissect Miniso’s financial results objectively.
During Q3, Miniso garnered 1.8 billion yuan in overseas revenues, yet individual store performance pales in comparison to rivals such as Pop Mart. Notably, Miniso's average revenue per overseas store only amounts to one-tenth that of Pop Mart.
Inevitably, the underlying reasons for such disparities must be acknowledged. Miniso's impressive growth largely stems from its ongoing global expansion narrative, as evidenced by the impressive rise in its total store count exceeding 7,186 outlets, with 773 net new stores added over the past nine months, including 4,250 stores in mainland China and 2,936 in international markets.
Miniso's foray into the international market continues to illustrate its scalability, yet when juxtaposed against notable competitors, one might ponder whether its overseas revenue is as lucrative as it appears. For instance, a comparative examination against Pop Mart reveals a stark contrast; Pop Mart recorded an astonishing revenue growth of 120% to 125% in Q3, with its overseas markets experiencing a massive surge of 440% to 445%.
The glaring contrast does not end there. By June 30, Pop Mart's 83 overseas retail outlets have generated nearly 890 million yuan in revenue this year, a striking average of 1.79 million yuan per month per store, staggering when measured against Miniso’s figures.
This raises critical questions about Miniso's approach to IP integration. While it capitalizes on collaborations with premier IP brands, the assortment strategy adopted could potentially dilute the brand’s effectiveness. In contrast, Pop Mart has thrived predominantly on its own IP, nurturing unique product lines primarily focused on blind boxes, reflecting a more cohesive and sustainable business model.
Through 2024, as Miniso aspires to maintain its current trajectory of global growth, the question remains whether its prevalent model of frequent co-branding will resonate with global consumers or lead to consumer desensitization. This concern has already begun manifesting in recent IP collaborations, such as with Harry Potter, which faced criticism regarding product availability both online and offline.
In conclusion, Miniso's aggressive strategy to penetrate global markets using IP collaborations indicates a bold approach to retail, but not without challenges. As the company endeavors to realize Ye Guofu’s vision of transforming Miniso into a global leader in IP design retail, it remains to be seen whether this ambitious strategy will sustain momentum or lose its appeal among a discerning consumer base.
Overall, as the landscape of global retail continues to evolve, the journey of Miniso will likely provide valuable insights into how companies can navigate the complexities of IP strategy and competitive positioning in an ever-changing marketplace.