Under traffic anxiety, can Miniso replicate a Pop Mart?

In 2013, Ye Guofu founded Miniso, starting with the offline sale of household goods. Over the past 12 years, with a network of stores connecting urban commercial circles and county streets, Miniso has become a new retail darling that transcends market trends.

In 2024, Miniso opened 1,219 new stores, bringing the total number of stores to 7,780 by the end of the year. In 2024, Miniso achieved a revenue of 16.994 billion yuan, with a year-on-year growth rate of 22.8%. All signs indicate that Miniso's logic of generating revenue through large-scale store openings has not changed.

On the other hand, the focus of Miniso's expansion has shifted from domestic to international markets, as well as the addition of new IP licensing to improve the efficiency of individual stores.

At this turning point, understanding the essence of Miniso's business model will allow one to predict its future trajectory.

01 Domestic malls are running out

Since its establishment, Miniso's business model has always been closely linked to shopping malls, as Ye Guofu believes that the consumers who enjoy shopping at ten-yuan stores are precisely young people aged 18 to 29 in first-tier cities.

Subsequently, while Miniso claimed that true consumption upgrades involve eliminating logos and returning to the essence of products, representing China's mature supply chain, reducing markups and lowering profits; it cleverly positioned its prices at 9.9, 19.9, 29.9 yuan... and opened stores in large shopping centers, effectively turning itself into a "brand among white labels."

With a store opening strategy that started in first-tier cities, then moved to third-tier or lower-tier cities, Miniso grew from just 27 stores in 2013 to 3,500 stores five years later, a tenfold increase, averaging 700 new stores per year. By the end of 2024, the number of Miniso stores in China had reached 4,386.

However, under the aggressive store opening pace, Miniso gradually faced a development bottleneck.

Breaking it down, in 2024, Miniso had 587 stores in first-tier cities, with a penetration rate in existing shopping centers in these cities approaching 50%. If we exclude the number of suburban shopping centers (referencing a 50%-55% penetration rate in Shanghai), Miniso's store openings in first-tier city malls are nearly saturated, and the Q4 performance information for 2024 also confirms this.

Moreover, in the past five years, Miniso's pace of store openings in first-tier cities has gradually slowed. The strategy of gradually penetrating into second-tier, third-tier, and lower-tier cities has lowered the efficiency of Miniso's single-store model: in 2024, the same-store GMV of Miniso in mainland China experienced a high single-digit decline.

Taking a step back, even if Miniso stubbornly pushes further into marginal areas and fully occupies domestic shopping center locations, according to data showing that there are nearly 6,700 existing shopping center projects in China (China Chain Store & Franchise Association, 2022), Miniso's 4,386 stores have already achieved a penetration rate of 66% in malls, leaving little room for growth.

All signs indicate that domestic malls are running out, and Miniso's revenue in China is nearing its ceiling Miniso's solution is to change the scene and apply a formula. Ye Fuguo proposed "Hundreds of Countries, Thousands of Billions, and Ten Thousand Stores," which means that Miniso is determined to occupy most shopping malls both domestically and internationally.

Since opening its first store in Singapore, Miniso has continued to expand, extending its footprint to the Americas, Europe, and other regions, stepping into the precious Manhattan and the luxurious Times Square in New York. Among the 1,219 new stores opened in 2024, more than half (631 stores) are newly opened overseas, and the overseas market contributes nearly 40% of revenue, becoming the second growth curve for the group.

However, with the shift in store locations, Miniso's single-store operating costs are also rising. For example, sales and distribution expenses, including rent and labor costs, have surged by 54.32%, far exceeding the speed of revenue or store expansion.

With domestic shopping malls saturated and overseas mall costs high, why doesn't Miniso change its approach? Why is it so persistent about the mall format?

02 Ye Guofu's Anxiety Over Traffic

Wang Jianlin, the founder of Wanda Group, once emphasized: When building shopping centers, one must first lease and then build, with leasing taking precedence over construction. A commercial real estate project is like assembling building blocks; it is essential to find suitable merchants to place in appropriate storefronts.

Based on different functions, shopping mall formats can be divided into two categories: those that attract foot traffic and those that monetize traffic.

Generally speaking, in shopping malls, high-frequency, essential dining options may have average leasing capabilities, but due to high customer stickiness and long dwell times, they become the backbone of mall operations because of their strong traffic attraction. The frequent queues at Haidilao and Wenheyou can drive traffic to real estate, allowing them to negotiate lower rents due to their "internet celebrity effect."

On the other hand, the retail format, which is the most numerous in shopping malls, has relatively high leasing capabilities and plays a monetization role. They bear high rents to enter malls primarily for traffic, such as beauty products, shoes, and clothing on the first floor of the mall.

Overall, although Miniso strives to position itself as a lifestyle brand with high-frequency consumption attributes, in reality, as a representative of offline retail, its entry into shopping malls is deeply rooted in traffic anxiety.

Firstly, Miniso's own appeal to users is not particularly high.

From a category perspective, daily necessities, due to their immediate consumption characteristics, are typically supplied by street hardware stores and community supermarkets, which have extended operating hours from 5:00 AM to 11:00 PM to meet the demand for on-the-go purchases.

Miniso clearly does not possess this characteristic. According to "101 New Retail Details of Miniso," it was found that Miniso stores in third- and fourth-tier cities or street corner stores in first- and second-tier cities had lower sales than those in first- and second-tier city malls. This indicates that Miniso does not have sufficient appeal to customers.

After later entering malls, Miniso also racked its brains to monetize mall traffic, such as the Miniso located at Beijing Yingke Center, which was chosen at the intersection of the subway and the mall; or the Miniso at Beijing Heshenghui, which was located at the escalator entrance... and so on Secondly, Miniso's member stickiness is relatively mediocre compared to comparable companies.

According to the Q4 2024 performance communication data, Miniso's global registered member count surpassed 100 million, with member consumption accounting for nearly 60%. It is worth noting that Muji, which has a similar business model and higher average transaction value, has a member sales ratio as high as 80%. This indicates that Miniso still has room for improvement in enhancing member stickiness and repurchase rates.

Finally, Miniso defines itself as an experiential consumption brand, with customers spending a short amount of time in stores.

Miniso's store layout places the checkout counter at the entrance, which provides convenience for consumers but this ultra-short layout design reduces the duration of user stay and weakens the potential for increasing average transaction value. Comparable examples include IKEA, which places the checkout at the exit, and Watsons, which places it in the center of the store, both of which emphasize exploratory shopping and have higher average transaction values compared to peers.

03 Can it replicate a Pop Mart?

Understanding the traffic anxiety behind Miniso's parasitic mall business model allows us to smoothly comprehend why it has crossed over from physical retail to the "guzi" economy—

Since the volume ceiling is clear, it might as well take a different route to pursue premium pricing.

Following the path of Pop Mart, Miniso has quietly raised prices through IP collaboration:

On one hand, it has increased premiums overall by collaborating on IP licensed products. Data shows that the number of IP collaborations for Miniso increased from 17 in 2020 to 80 in 2023, covering popular IPs such as Marvel, Barbie, and Chiikawa. In 2023, the proportion of overseas IP for Miniso has risen to over 40%.

Correspondingly, IP licensed products are expected to be priced 25%-200% higher than ordinary products, thus, as the proportion of IP licensing increases, the average selling price of Miniso products is also slowly climbing, with domestic market pricing rising from 13.8 yuan to 14.3 yuan in 2024.

On the other hand, it is independently incubating the IP business TOP TOY. In 2024, the number of stores for the trendy toy brand TOP TOY, incubated by Miniso, increased from 148 to 276, with an average price of 57.8 yuan, which is four times that of Miniso, and total GMV increased by 41% year-on-year to 1.15 billion yuan. According to reports cited by Bloomberg, Miniso Group is considering expanding TOP TOY to the global market and spinning it off for a listing in Hong Kong.

This is remarkably consistent with Pop Mart's early path of operating IP through licensing. A market value of 200 billion is certainly enticing, but the most concerning question for investors is—

Can Miniso replicate a Pop Mart?

We believe it is difficult:

Pop Mart's history tells the market that only by fundamentally owning IP autonomy can one emerge from the competitive environment with an independent market performance.

In its early days, Pop Mart hit the jackpot with Sonny Angel among many licensed IPs, but after Sonny Angel became popular, the copyright holder worried that a single channel would become uncontrollable and thus cut off the authorization to Pop Mart, opting instead to cultivate more distributors After that, Pop Mart realized that "borrowing traffic for blood transfusion is not as good as actively using IP for blood production," and began to firmly pursue the path of IP incubation, directly cooperating with upstream designers and establishing studios to buy out copyrights, which led to the emergence of a phenomenon-level IP brand.

In contrast, Miniso's IP library mainly binds upstream copyright holders to seek cooperation, a model that significantly reduces its revenue and profit margins.

Taking Barbie as an example, according to the copyright holder Mattel's external introduction, they have signed licensing agreements with over 100 brands, including partners like XBOX, Zara, Crocs, Balmain, Vivienne Westwood, and Gap, covering areas such as dining, clothing, gaming, and socializing. It can be said that in the real world after the movie became popular, the collaboration of "Barbie" has made everything possible to be Barbie.

Miniso is just one percent of that. According to data from Zhejiang Merchants Securities, due to the dilution at the physical level, the foot traffic in Miniso stores quickly fell back after reaching a peak in the short term, which forced Miniso to constantly seek new IP collaborations in the market.

Ultimately, this model of buying IP to open stores has almost no barriers to entry, which is also the reason why many new players emerged in the booming economy this year. KKV, Kis King, TOP TOY, and other IP transporters are essentially no different.

Finally, in 2024, TOP TOY has just turned a profit, but the cost paid is a decrease in average pricing and a nearly 30% year-on-year increase in licensing IP costs. Whether TOP TOY can stabilize its departure from losses and whether Miniso can truly break free from the physical limitations of growth in shopping channels will likely depend on whether they can incubate their own "MOLLY."

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