China's Miniso to double U.S. stores, add NY 'flagship' as pandemic slashes mall rents

RYOHIN KEIKAKU

14/09/2021 12:00

* Sees 60 outlets by year-end; NY flagship in Flushing in
Nov 
    * Ambitious, NY-listed budget retailer nears 5,000 stores
globally
    * Potential for 'thousands' of U.S. stores - o'seas business
VP
    * Lower rents help cut U.S. expansion costs 20% - VP
    * Pandemic brings pivotal moment for U.S. malls; big names
gone

    By Sophie Yu and Brenda Goh
    BEIJING, Sept 14 (Reuters) - Chinese retailer Miniso Group
 MNSO.N  will open a 'flagship' New York store and nearly double
its U.S. outlets this year, betting post-pandemic shoppers on a
budget will snap up cheap but fun goods for homes and work like
$10 soft toy cats and $4 staplers shaped like avocados.
    At less than 60 outlets, Miniso's U.S. presence will still
be dwarfed by giant low-price retailers like Dollar Tree
 DLTR.O , as well as its own home Chinese base of nearly 3,000
stores.
    But Miniso says it's moving quickly to take advantage of
lower rents in the pandemic-hit U.S. economy, and Vincent Huang,
a company vice president responsible for overseas business, told
Reuters he ultimately sees potential for "thousands" of U.S.
stores.
    The plan highlights the vaulting ambition of a company
founded just eight years ago in Guangzhou that now reels in
about $1.41 billion in annual revenue, and is listed in New York
with a $4 billion market value. Shares have dropped 2.3% since
its October 2020 float, amid a broad COVID-induced retail slump,
but it counts the likes of Chinese tech giant Tencent  0700.HK 
and Hillhouse Capital among investors. 
    The expansion also comes at a pivotal moment for malls
across the United States, with many storied retail names having
succumbed to the scything downturn in sales that swiftly
followed the first wave of the coronavirus pandemic in 2020.
    Among brands that disappeared from the U.S. retail landscape
was Flying Tiger Copenhagen, a Danish variety store chain that
is a rival to Miniso in many markets around the world, but
closed its 13 U.S. outlets in November last year. 
    With some 4,800 stores around the world in more than 90
countries, Miniso will have 54 outlets in the United States by
the end of this year, up from 30 at the start, Huang said. 
    "We choose to expand our presence in the U.S. now for
several reasons, including that the cost of a new store opening
following COVID-19 is lower," Huang said in a recent interview.
    The new stores include the November opening in the recently
launched Tangram mall in Flushing, New York - an area known for
a vibrant Asian-American community - of Miniso's first outlet in
the city, what Huang called a "flagship" store taking up 3,300
square feet of space, slightly bigger than a tennis court,
selling everything from neck pillows to notebooks and make-up.
    
    'STRATEGIC MARKET'
    Expansion costs in the United States had fallen by about 20%
mainly due to rental cuts and the pandemic had also made it
easier to secure good locations, he said.
    "We have always believed that we are an international
business and North America is our strategic market," he said.
    Miniso describes itself as "a Japanese-inspired lifestyle
product retailer", and has in the past been compared to the Muji
chain operated by Tokyo-listed Ryohin Keikaku  7543.T .
    But Miniso's busy stores and bargains place it in a segment
occupied by Japan's renowned $1 store chain, Daiso Industries -
present in the United States since 2005, with a network of
nearly 80 stores including a first East Coast branch also in
Flushing.   
    Miniso doesn't disclose exact sales numbers for stores in
the United States, where it opened its first outlet in
California in 2017, but last month it reported it booked about
20% of its 9.07 billion yuan ($1.41 billion) overall revenue for
the fiscal year ended June from its 1,800 overseas stores, in
countries such as Mexico, Indonesia and India.
    Huang said Miniso's U.S. sales have recovered to
pre-COVID-19 levels, with sales in the first half of 2021 seeing
a rise of 73% year on the year. "We are more popular than ever
since the pandemic," he said. 
    Helping drive that popularity have been product
collaboration collections in recent years with leading trademark
holders including Disney  DIS.N , Coca-Cola  KO.N  and Marvel
Entertainment, resulting in items like Mickey Mouse facial
cream, Coca-Cola ceramic mugs and Spider Man mouse pads.
    "Ultimately, consumers do not care whether we are Chinese or
Japanese, American or European," said Huang. "What concerns
consumers is whether they can buy good value products with the
least amount of money."

($1 = 6.4511 Chinese yuan renminbi)

 (Reporting by Sophie Yu and Brenda Goh; Editing by Kenneth
Maxwell)
 ((Sophie.Yu@thomsonreuters.com; 861056692136;))