The fascination with branded intellectual property (IP) among the younger demographic has sparked what is often termed the "Guzi Economy." In this context, one of the most dynamic players in the market is Miniso, which has recently confirmed plans to roll out its self-developed "Guzi" products monthly next yearThis expansion reflects a broader trend of young consumers eagerly seeking out and purchasing merchandise linked to their favorite brands and characters.

Miniso's alignment with this trend is commendable, as its collaborations with popular IPs like 'Chiikawa' have resulted in fervent buying frenzies among youthMoreover, the company's aggressive strategies have ignited heated discussions in the industryIts substantial investment to acquire Yonghui Supermarkets, coupled with ambitious declarations to establish itself as the "world's number one IP design retail group," illustrates Miniso's lofty aspirations.

Undoubtedly, the modern consumer, particularly younger individuals, increasingly gravitates towards a shopping routine embedded with IP-related products

The practice of "eating Guzi" is becoming a staple in their spending habits, suggesting that the IP market is rich with potentialNevertheless, Miniso's success is a multifaceted interplay of effective partnerships for IP licensing and heavy investments in physical retail spacesWhether this capability can enable them to fulfill their grand vision remains a question for the industry.

Miniso has effectively evolved from its origins rooted in low-cost retail to offering a diverse range of productsHowever, to understand Miniso's prominence, one must look beyond the facade of a conventional "variety store." An analysis of its financial reports indicates a compelling ability to generate revenue, with IP-driven strategies acting as a significant growth engineFor instance, in the third quarter alone, Miniso's revenue reached 4.523 billion yuan, marking a 19.3% year-over-year increase, while its adjusted net profit saw a 6.9% rise to 686 million yuan.

The company had earlier announced a global brand strategy upgrade targeting IP consumption, which has translated into remarkable performance metrics

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These developments prompt external observers to ponder: Does the IP industry truly possess such transformative power? Miniso's focus on IP development stands in stark contrast to many other retail brands that only venture into occasional IP marketing campaigns.

The IP business has an extensive history with staple names like Disney and Lego enjoying immense success, yet most follow a path akin to Disney’s—creating content and extending brand presence across various channelsIn contrast, Miniso's method can be labeled as more of a "Lego-like" strategy, relying on purchasing partnerships with existing IPs and retailing those products.

Unlike Lego, which is primarily confined to the toy block category, Miniso has diversified into a wide array of merchandise, covering dolls, building blocks, badges, squeeze toys, and blind boxesThis extensive net-casting and vigorous approach to IP engagement not only simplifies the pursuit of hit products, but also leads to significant sales boosts.

A prime example of this strategy's success in 2023 was the launch of the Chiikawa collaboration in March, which witnessed Miniso release over 100 new products in just three months, many of which were quickly sold out

On the opening day of their flash store in Shanghai's Jing'an District, Miniso was inundated with fans, showcasing the pronounced impact of its IP initiatives on consumer behavior and the broader market.

In the words of Miniso's Vice President and Chief Product Officer, Dou Na, this moment not only reshaped their own understanding of "super IP" but also illuminated the broader Chinese market regarding this resource's potentialIndeed, while super IPs are elusive, Miniso's approach highlights a model founded on quantity, amassing over 150 collaborative IPs and achieving a sales volume exceeding 10 billion yuanEach year, they introduce over 10,000 new IP products, with over 800 million units sold cumulatively to date.

The ambition coursing through Miniso is palpable—having marked substantial success in the first half of the year, their aspirations turned even more audacious in the latter half

A landmark moment came in September when Miniso made headlines by investing an astonishing 6.27 billion yuan to gain stake in Yonghui SupermarketsThe market's immediate reaction was that of disbelief, reflected in a sharp 17% drop in stock price following the announcementAfter all, Yonghui had been struggling with performance and strategic positioning—how could a retail company rooted in IP make sense of such a considerable acquisition?

Yet, the founder, Ye Guofu, remains undeterred, seeing in Yonghui the potential to pivot and emulate the success of domestic retail giant Pang DonglaiWith a distinctive appeal, Yonghui could not only prove a valuable investment but also serve as a vital channel for Miniso’s IP products to access broader markets.

As Ye Guofu quipped in response to skeptics, "If everyone understood, I would have no opportunity." This sentiment encapsulates Miniso's strategy—be bold, be innovative, and carve out paths others might overlook

By October, Miniso debuted its first global MINISO LAND flagship store in Shanghai, offering a diverse array of globally recognized IP productsThis move marked a significant initial step in its global channel upgrade.

Further underscoring their ambitions, the company announced its vision at the "2024 Global Brand Strategy Upgrade Results Conference," asserting its aim to become the world's premier IP design retail group in the next decade, leading 100 Chinese IPs onto the global stageMiniso fervently believes that its business model within the IP sphere holds immense potential and maintains that it has established a viable path for global IP industry expansion—an achievement they claim took Disney and Lego decades to realize, while Miniso has done so in just eight years.

Thus, to achieve this ambitious status as the foremost player in the IP design retail sector, Miniso is pivoting its focus significantly to international markets

Ye Guofu has articulated plans for half of its new stores to be opened overseas, with targeted expansions in Europe and North AmericaHe believes that Miniso is equipped to succeed because its product offerings and marketing strategies exhibit differentiation, alongside localization efforts from suppliers and a global talent acquisition approach.

As of September 30, 2024, Miniso surpassed 7,000 stores globally, with 7,186 outlets in total, 773 of which were newly established this yearNotably, of these, 2,936 are located overseas, signifying greater international growth compared to domestic openingsWith flagship stores introduced in global cities like New York and Paris, Miniso's New York flagship alone generates nearly ten million yuan in monthly revenuesIn short, Miniso views itself not merely as a store, but as a global IP enterprise, achieving the potential to launch 100 Chinese IPs worldwide with aspirations to ascend to the top.

Yet, the critical question remains: Has it truly reached the pinnacle? The ambition undoubtedly exists, but assessing its feasibility is essential.

Yet, it would be unwise to focus solely on the bright side

While Miniso's growth trajectory is genuine, it emerges alongside various cost factors that merit considerationTheir overarching strategy revolves around leveraging multiple IP agreements; however, this can inflate operational costs significantly, notably in licensing deals.

Recent fiscal reports reveal that the authorization costs surged by 38% in the first three quarters, with total expenses escalating by 54%—figures that far surpass revenue and profit increasesAdditionally, allowances for marketing and staffing expenditures tied to expansion are also climbing sharplyDespite the rush to acquire IP partnerships, the overall performance of their stores shows a less uniform growth patternCompounded by growing inventory, Miniso's physical retail landscape faces challenges suited for analysis, particularly when compared to upstarts like Pop Mart that focus on proprietary IPThe margins and returns from their operational models appear starkly different.

Data from the first three quarters indicate that same-store sales growth within Miniso’s brick-and-mortar locations has continued to decline—a major portion of revenue now stemming from new openings and online channels

Miniso earns at least ten times more from off-line than online sales, indicating that a slowdown in physical storefront revenue could jeopardize the business's overarching scaleComparisons with Pop Mart starkly illustrate this; while Pop Mart reported impressive average monthly store revenues around 179.4 million yuan overseas, Miniso's average for its 2,936 international outlets is a mere 17.2 million yuan—under a tenth of Pop Mart's income rates.

This sheds light on how Pop Mart’s dedicated focus on a singular IP has yielded a superior return-on-investment relative to Miniso's more diffuse approach—each unique IP attracts distinct audiences, leading to fluctuating product demands that can dilute insider profit margins and yield inconsistent sales returns compared to Pop Mart's streamlined strategy.

Moreover, another detail from Miniso's financial reports shows approximately 12% of inventory had been untouched for over 180 days—a figure that dwarfs the industry average of 5%. Meanwhile, turnover ratios for overseas store inventories have lengthened from 135 days to 173 days, again exceeding industry standards.

Given that Miniso's partnerships for IP also means it cannot guarantee exclusivity over these collaborations, the risk grows that rivals in the domestic arena—such as KKV, Jiuwu Zawuxianshe, and Cool Play—could engage in their own IP marketing strategies, thus diluting Miniso's potential consumer base