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Can Muji’s radical simplicity survive the pandemic?

July 14, 2020, 11:55 AM UTC

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The design aesthetic of Muji, the Japanese home-goods retailer, is a riddle, wrapped in a mystery, inside a Zen koan.

Since the opening of its unassuming, almost austere first shop in Tokyo’s Aoyama district in 1983, Muji has maximized profits by extolling the virtues of minimalism, built a formidable brand by rejecting the idea of branding, and swelled into a complex global empire by urging consumers to simplify.

But the COVID-19 pandemic has disrupted Muji’s wa, at least in the United States.

On Thursday, Muji USA filed for bankruptcy under Chapter 11 citing debts of $64 million, joining a parade of other U.S.-based retail operations seeking such protection amid the pandemic.

Landlords top the list of Muji USA’s unsecured creditors, according to The Wall Street Journal. Before the virus hit, Muji operated 19 U.S. stores in high-profile locations like New York City’s 5th Avenue, Boston’s Newbury Street, and L.A.’s Hollywood Boulevard. The company shuttered all stores in mid-March. It has reopened ten, but sales are running at 20% of pre-outbreak levels.

Muji’s parent, Ryohin Keikaku, now has six months to submit a restructuring plan. President Satoru Matsuzaki says Muji isn’t abandoning the U.S. market and vows he’ll personally lead the revival. “The U.S. is the cornerstone in building name recognition,” he told Japan’s Nihon Keizai Shimbun.

If Muji is to survive in the only major developed economy where the virus continues to rage out of control, Matsuzaki will have to make radical adjustments to the company’s U.S. business model.

The decision to go to the U.S. in 2006 was both inevitable and paradoxical. Japan’s shrinking, aging population forced the company to look abroad for new customers. And yet Muji was created by Saison Group billionaire Seiji Tsutsumi and graphic design guru Ikko Tanaka as a rebuke to the blingy excesses of American-style consumerism. Saison’s Seiyu supermarket chain launched Muji as a generic grocery brand in 1980. It sold 40 everyday staples in simple packaging at reasonable prices. The original name, Mujirushi Ryohin, means “no brand, quality merchandise.”

When Tanaka died in 2002, he passed the mantle for setting Muji’s design philosophy to a committee of four men that included two of Japan’s most celebrated creatives, product designer Naoto Fukasawa and advertising and design prodigy Kenya Hara. The group broadened the product line to include clothing, office supplies, and furniture—but stayed true to the brand’s minimalist design ethos.

Muji’s first U.S. store, in New York’s SoHo district, was 3,200 square feet and offered 2,000 different products. But over the next decade, the company decided that, to compete in America, it would have to supersize. It began opening big-box stores of more than 7,500 square feet in prime locations, each stocking more than 3,500 products. The company dutifully expanded online offerings, but the focus of its U.S. strategy was in-store experience.

“We perceive the store to be the most important element in Muji’s sales,” Toru Tsunoda, then-president of Muji’s U.S. operations, told Fast Company in 2017. “A lot of companies are closing their retail locations…We’re trying to expand to more locations.”

Clearly, that strategy will have to be reconsidered.

Muji has proved more nimble in other markets. At home in Japan, which accounts for 60% of Muji’s operating revenue, the company operates 477 stores. Muji recently announced that it will launch a furniture subscription service with Idée, its design brand, aimed at Japanese customers setting up home offices. In May, the company announced plans to team with Amazon to sell about 250 products, the first time it has ever worked with an outside e-commerce platform.

Muji also has expanded rapidly in mainland China, where it now operates more than 273 stores. The company closed about half of those during China’s coronavirus outbreak but reopened them quickly as China contained the disease. Muji is hugely popular here in Hong Kong—where it just opened a giant flagship store, its 21st outlet in this city, a few blocks from Fortune‘s office—and Taiwan, where it has 41 stores.

Muji also has applied its anti-design, “anti-gorgeous” approach to the hotel sector, opening new Muji properties in Shenzhen, Beijing, and Tokyo. They are sleek, subdued, and border on the monastic. When I interviewed Matsuzaki at Brainstorm Design in Singapore in March of last year, he outlined ambitious plans for expanding Muji’s vision of radical simplicity into the global markets for travel and mobility. For now, though, that vision has been complicated by the virus.

More design news below.

Clay Chandler
clay.chandler@fortune.com

NEWS BY DESIGN

Fox network

James Murdoch, son of media mogul Rupert Murdoch, is taking a major stake in MCH Group—the owners of Art Basel. Murdoch is looking to buy up to 44% of the Swiss company. In a statement, MCH said the investment will transform the company from a simple events business into one focused on “future-oriented platforms and communities.”

Arm

Softbank is reportedly preparing a full or partial sale of U.K.-based semiconductor designer Arm, which the Japanese conglomerate bought for $32 billion in 2016. While Arm is not a household name, the firm’s chip designs and architecture are utilized by the world’s biggest tech brands, including Apple, Samsung, Nvidia and Qualcomm.

Taxi; take off

Lilium, a German company betting on the future of flying taxis, unveiled designs for modular rooftop “vertiports” that can be built on top of existing buildings, providing space for Lilium’s flying taxis to take off and land. Sci-fi has long promised flying cars but has rarely considered the infrastructure required to support them (never mind the more prescient question, do we need them?).

Gone

Christie’s raised $420.9 million in sales through its virtual global auction last Friday—the latest of the auction house’s forays into online sales. Offline showcases of the lots were on show in Hong Kong, Paris, London and New York ahead of the sale but online auctioning has yet to keep pace with in-person sales. Christie’s revenue in the second quarter was down 60% over last year.

LONG READ

The Washington ?

After decades of resisting public campaigns to do so, the Washington Redskins NFL organization has agreed to change its name—a racial slur against Native Americans. In the end, all it took for the owners to agree was a threat from the team’s largest corporate sponsors, led by FedEx, to stop financing the team. Last week, retailers including Amazon and Nike stopped selling the team's merchandise while ESPN said it would stop showing the team's logo.

Interestingly, the team's logo—a profile shot of Blackfeet chief John "Two Guns" White Calf, was designed by former National Congress of American Indians president Walter Wetzel in the 1970s. The image of the chief replaced the initial “R” that had previously been the team’s logo. Wetzel’s son, Lance, argues the logo (without the name) should remain a positive representation of a “forgotten people.”

Several designers have already submitted alternative branding for the team and a few names have emerged as popular candidates—Red Hawks, Red Wolves, Red Tails. Those suggested monikers wouldn’t require the team to spend as much on rebranding and would fit the meter of the team’s current fight song.

On Monday the team owners said the review of the official name and logo had "begun in earnest." As numerous brands ditch racist iconography in the wake of Black Lives Matter protests, calls have sounded for corporate leaders to empower marginalized designers as part of their rebranding. It will be interesting to see whether the nameless Washington team heeds that call.

QUOTED BY DESIGN

"Rich people who can have a house outside and one in town will want to do that. But there are a lot of indications that people are cherishing outdoor spaces more than ever. The countryside has had a rough ride of it for a long, long time. If there was one thing you’d hope, it’s that this flight to the city would become a bit reversed."

Tom Dixon, the 61-year old British product designer, on whether real estate tastes will change as a result of the pandemic. While the choice of location might change, Dixon doesn’t think interiors will be altered too much—home design will continue a trend towards open spaces and small devices. The change in public spaces such as theaters and offices, however, “will be interesting to see.”

This week’s edition of BxD was curated by Eamon Barrett. Email him tips and ideas at eamon.barrett@fortune.com