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Business

Muji operator to cut prices on 40% of lineup

Retailer to pass on cost savings from volume procurement to consumers

A Muji store in central Tokyo.

TOKYO -- The Japanese company behind Muji stores will carry out its largest-ever markdown in January, targeting some 2,400 items in furniture, clothing, food and elsewhere.

Ryohin Keikaku has about 2,300 household goods lined up for reductions. Best-selling mattresses will fall from 35,000 yen ($308) to 29,900 yen. The company is saving on production costs through such means as standardizing legs for mattresses and sofas.

Laptop computer bags will sell for 2,990 yen, down 1,000 yen, while three-pair sock packs will be lowered by 100 yen to 890 yen.

Curry and tea products will also get reductions. Prices will be lowered and simplified through rounding the final digit down to zero.

Ryohin Keikaku has been opening a net 50 to 60 Muji stores a year, mainly abroad, operating about 850 in total. Expanded sales volume has helped reduce procurement costs, allowing it to pass savings on to customers via lower prices. Overhauling logistics and simplifying packaging have also saved on costs.

Although markdowns can hurt profitability, in the case of Ryohin Keikaku, same-store sales at directly run locations grew 7% for the March-August half after prices were lowered on some 300 spring and summer products this year. Customer traffic also rose 6%, while spending per customer edged up 1%. The company sees reductions leading to more new and repeat customers.

Many retailers are cutting prices to compete with the likes of Amazon.com. Ikea Japan has done so by an average of 22% on about 890 products, while Aoyama Trading has marked down roughly 40% of clothing items at American Eagle Outfitters locations.

(Nikkei)

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