Smooth Logistics Ensure Success for Asian RetailerWed, 05/08/2019 - 09:57
Any retailer with strong financial muscle can generate an aggressive strategy for physical expansion but the real challenge lies in generating the needed logistics to support the business operations of all the stores opened, says César Medina, CMO of Miniso Mexico and LATAM. “Miniso’s success as a retailer is partly based on its ability to sort out the logistics challenge that every company in this area faces.”
Miniso, a Japanese-Chinese retailer that has gained recognition for its quick expansion and its assortment of daily products at affordable prices, entered the Mexican market in December 2016. “In less than two years, we have opened 110 stores. In Mexico, we opened on average three stores per week during a particularly intense expansion cycle. In other countries, we open between one and two stores per month,” says Medina.
Although Miniso’s growth in the Mexican market set a milestone in terms of international expansion, Medina says that sorting out the logistics was the key to the company’s successful growth. “Miniso’s logistics expansion is impressive. We reached a point where there was no logistics company in the country that could support on its own the number of operations we required.” To solve this problem, Miniso took logistics into its own hands. “When we started to accelerate our growth, the company began constructing its own factories and warehouses to reduce operational logistics costs.” Its first warehouse in Brazil was supposed to feed operations across the continent. However, growth in Mexico forced Miniso to open a warehouse in the country to support local operations.
“China centralized the logistics operation, creating its own distribution channels, and started shipping containers at the same speed that products were being manufactured. In Mexico, all the products that are sold arrive at a Mexican port and then are taken to our warehouse, from where they are then redistributed to stores across the country,” Medina says. Operations in Mexico have grown in such capacity that Miniso has had to change its warehouse on four occasions and is now in the process of opening a second storage facility in Cancun to stock stores in the south.
Although the logistics component is vital to ensure success, Medina says that other elements have contributed to Miniso’s positioning in the country. “From an economic perspective, Miniso’s business is based on selling products with a small profit margin but in large volumes.” From a creative point of view, the brand has created a strategy based on “smart consumption,” which entails selling highquality products at affordable prices. Highlighting the price variable has been part of Miniso’s international marketing strategy but Medina says that in Mexico, the company has chosen to focus on Miniso’s other qualities, leaving price as the last added value in the equation. “In Mexico, we decided to present a more aspirational Miniso, stressing the design and quality of our products. As a result, performance of Miniso’s boutiques are based on customer experience rather than on the advertising of prices.”
As part of the customer experience that Miniso creates, Medina says that stores are organized following ordered patterns of accommodation based on repetition, balance and sales psychology. “We have designed a concept of selfservice and accommodation that balances the store and gives users the sense that the store is not saturated, despite having over 2,500 Stock Keeping Units (SKUs) on display.”
In many parts of the world, e-commerce is leading a retailer transformation. Medina says the brand is not against transforming its business model but it will not abandon it for the sake of doing e-commerce. “I believe e-commerce is overrated; rather than being the ultimate commercialization platform, it is just another one.” Particularly in Latin America, Medina says conventional retail continues to maintain a social component rather than being a simple commercial operation. “In Latin America in general, we go to malls to socialize and for family entertainment.” Still, Medina says the brand and its stores are evolving toward more digital concepts. “We are changing to deliver more digital experiences in our stores that help consumers relate Miniso’s products to their everyday life.” He adds that Miniso will venture into e-commerce when it is ready. “We needed to figure out the details and logistics for the current business model before venturing into another."