On a brisk winter day in Beijing, with temperatures barely scraping three degrees Celsius, a vibrant scene unfolds outside the Miniso store in The Box shopping mallIt’s January 15, 2024, and anticipation hangs thick in the air as eager shoppers gather to be among the first to access exclusive merchandise from “Black Myth: Wukong,” a sensational video game that has captured the imagination of many.

As midday approaches, the line outside the store snakes back, with nearly 150 individuals braving the cold for a chance to buy limited-edition items from the collaborationTheir breath puffs out in clouds of white as they chat excitedly about their quest to secure plush toys, badges, socks, and a variety of other themed products that serve as tangible connections to the beloved IP (intellectual property).

Leveraging IP to Boost Product Value

Once inside, it becomes evident that Miniso isn’t merely a store for cosmetics and household items anymore; it has transformed into a brand that attracts a diverse range of consumers

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To my surprise, men are seen filtering through the aisles, selecting themed merchandise reminiscent of their favorite video gameThis strategy reflects Miniso’s adaptability to reach varied demographics by tapping into popular culture in innovative ways.

An enthusiastic male customer, having queued for two hours, shares his storySurrounded by gamer friends, he splurged over a thousand yuan on merchandise for the approaching New YearThe highlight of his haul is a meticulously designed tapestry, priced at 499 yuanHe explains how the intricate artwork not only reminds him of pivotal scenes from the game but also evokes fond memoriesThis emotional connection undeniably adds to the tapestry’s value in his eyes.

Beyond the “Black Myth: Wukong” section, a plethora of products from other popular IPs captivates customers

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From Harry Potter to Disney, Miniso’s strategy hinges on maximizing IP potential, as indicated by Liu Xiaobin, the Group’s Vice President and Chief Marketing Officer“IP is central to our strategy; we boast an extensive IP product portfolio,” he asserts.

It's clear that integrating IP elements into products has allowed Miniso to significantly enhance its product valueLiu notes that the average transaction value at the Miniso Land stores is approximately 2.5 times higher than at regular locationsThe integration of beloved characters and themes into their offerings resonates deeply with customers, resulting in increased sales.

The financial benefits are evidentIn the first half of 2024, Miniso reported that their licensing fees soared to 183 million yuan, reflecting a 24% increase from the previous year

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As their IP collection grows and product availability increases, licensing fees surged by 38% in the third quarter alone.

Liu attributes much of this growth to the rising sales of IP productsAs customers become more interested in exclusive merchandise, Miniso’s pricing and profit margins are on the riseTheir gross profit margin reached 44.9% in the third quarter of 2024, a notable increase from 41.8% the year before.

However, it’s not just about numbers; Liu emphasizes the uniqueness of Miniso’s approach compared to other brandsWhile many beverage brands experiment with mere packaging changes, Miniso’s deep integration of IP with diverse product categories enriches their offerings, thereby amplifying market presence.

Additionally, Miniso’s robust supply chain allows it to rapidly convert trending IP characters into tangible goods, ensuring they reach consumers through extensive distribution channels.

Securing exclusive rights to certain products, such as licensed plush toys from Disney, grants Miniso a competitive edge

This exclusivity is further complemented by their first-mover advantage in spotting and partnering with emerging IPs, ensuring they capitalize on market opportunities before others.

Expanding Internationally through IP

As Miniso reflects on its decade-long journey since first venturing overseas in 2015, it’s evident that the landscape has drastically changedInitially recognized for offering cost-effective products, the brand now navigates a market that increasingly prioritizes engagement and visual appeal over price alone.

In the context of international expansion, Liu points to the large store in Jakarta’s Central Park as a prime exampleOpened in August 2023, within one month, it generated sales of 11.2 million yuan

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With the introduction of Harry Potter merchandise in October, sales soared to 14 million yuan, demonstrating the impact of popular IP.

The allure of franchises like Harry Potter and Barbie has propelled Miniso's expansion strategy on a global scale, driving both initial and repeat sales.

By the first half of 2024, close to 50% of Miniso’s sales in international markets came from IP products, showcasing remarkable growth compared to just 30% in the domestic market, where growth has also been strong at around 40%.

The growth trajectory is impressive, with new overseas store openings skyrocketing from 72 to 266 in just one yearAs a result, international revenue has increased from 30.9% to 35.2% of total earnings

Currently, Miniso operates in over 112 countries and regions worldwide, boasting more than 7,200 stores, with approximately 4,250 locations domestically and 2,936 abroad.

As Liu predicts, “While the domestic market remains our cornerstone, we anticipate a tripartite market structure between our international franchise operations, overseas self-operated markets, and domestic salesThis means the potential of overseas markets could mirror the scale of Miniso’s domestic growth.”

Liu further elaborates on the company’s approach to agent operations, describing it as a "light asset model" that facilitates swift market entryHowever, if the performance of certain agents falls short, Miniso is willing to reassess its strategy and take over operations, particularly in high-value markets.

On the challenge of taking IP global, Liu acknowledges cultural differences as significant barriers

The aesthetics and themes encapsulated within IP must resonate with international audiences to ensure acceptanceHe notes that while products rooted in Chinese culture are gaining traction domestically, they are also becoming increasingly well-received overseas.

“Nonetheless, Miniso operates with an underlying mission beyond mere business,” Liu statesThe brand's expansive footprint as a global retailer positions it to spearhead the international presence of Chinese IPs.

Since the company articulated its IP strategy in 2023, it has now adopted an updated brand positioning as a global IP collaboration hubThe founder and CEO, Ye Guofu, envisions a future where 100 Chinese IPs are introduced to the world over the next decade, emphasizing an exciting phase of growth and cultural export for Miniso.