From urban flagships to neighbourhood mid-sized stores — Nobuo Domae’s “second founding” (2021)

How to step off the scale race — the opposite direction a global SPA chose

The heart of this decision lies less in the V-shaped rebound in results than in how it resolved the contradiction of declaring that it would not chase scale while holding up a very large number. President Domae did not copy at MUJI the scale race Fast Retailing had run in the world’s city centres; instead he steered resources toward the regional catchments of Japan where his own former employer was thin. That a manager who had walked the same global-SPA path deliberately set a course in the opposite direction captures the character of this decision well. It can be read as seeking the answer to the fragility of concentrated profit that COVID exposed not in expansion abroad but in a broad, area-by-area deepening of the domestic living sphere.

That said, $27.3B (¥3tn) in sales by 2030 is still a long way from the $4.4B (¥662bn) of the year ended August 2024. The touchstone will be whether the worldview proven in the urban flagship can be made to pay, and standardised, in a 600-tsubo mid-sized store. In September 2024 President Domae moved up to chairman, and execution passed to President Satoshi Shimizu. Between the predecessor who set the direction and the number and the successor who must turn it over on the sales floor day after day, whether the neighbourhood model stays a statement of ideals or takes root as a form of profit — the success of the “second founding” rests on each of the mid-sized stores to come.